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EXHIBIT 1.1
▇▇▇▇▇▇▇ CENTRAL HOLDINGS, INC.
SHARES(1)
COMMON STOCK
FORM OF UNDERWRITING AGREEMENT
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, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
THE ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY, INC.
as Representatives of the
Several Underwriters
▇/▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇ Central Holdings, Inc., a Delaware corporation (herein called the
Company), proposes to issue and sell shares of its authorized but unissued
Common Stock, $.001 par value (herein called the Common Stock), and ▇▇▇▇▇▇▇
Central Holdings, Inc. Profit Sharing Plan Trust (herein called the Plan) and
[ ] (herein called [ ] and, together with the Plan, called the
Selling Securityholders) propose to sell an aggregate of shares of Common
Stock of the Company (said
shares of Common Stock being herein called the Underwritten Stock). The Trust
Company of Knoxville Inc. as Trustee of the Plan (herein called the Trustee)
shall be a party to this Agreement for the limited purpose of making the
representations and warranties set forth in Section 2(c). The Company and
[ ] propose to grant to the Underwriters (as hereinafter defined) an
option to purchase up to additional shares of Common Stock (herein called
the Option Stock and with the Underwritten Stock herein collectively called the
Stock). The Common Stock is more fully described in the Registration Statement
and the Prospectus hereinafter mentioned.
The Company and the Selling Securityholders severally hereby confirm the
agreements made with respect to the purchase of the Stock by the several
underwriters, for whom you are acting, named in Schedule I hereto (herein
collectively called the Underwriters, which term shall also include any
underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent and
warrant that you have been authorized by each of the other Underwriters to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
1. Registration Statement. The Company has filed with the Securities and
Exchange Commission (herein called the Commission) a registration statement on
Form S-1 (No. 333- ), including the related preliminary prospectus, for the
registration under the Securities Act of 1933, as amended (herein called the
Securities Act) of the Stock. Copies of such registration statement and of each
amendment thereto, if any, including the related preliminary prospectus (meeting
the requirements of Rule 430A of the rules and regulations of the Commission)
heretofore filed by the Company with the Commission have been delivered to you.
The term Registration Statement as used in this Agreement shall mean such
registration statement, including all documents incorporated by reference
therein, all exhibits and financial statements, all
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(1) Plus an option to purchase from the Company and [ ] up to
additional shares to cover over-allotments.
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information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, in the form in which it became effective, and any
registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (herein called the Effective
Date), shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended (including any Rule 462(b) registration
statement). The term Prospectus as used in this Agreement shall mean the
prospectus, including the documents incorporated by reference therein, relating
to the Stock first filed with the Commission pursuant to Rule 424(b) and Rule
430A (or if no such filing is required, as included in the Registration
Statement) and, in the event of any supplement or amendment to such prospectus
after the Effective Date, shall also mean (from and after the filing with the
Commission of such supplement or the effectiveness of such amendment) such
prospectus as so supplemented or amended. The term Preliminary Prospectus as
used in this Agreement shall mean each preliminary prospectus, including the
documents incorporated by reference therein, included in such registration
statement prior to the time it becomes effective.
2. Representations and Warranties of the Company and the Selling
Securityholders. (a) The Company hereby represents and warrants as follows:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full corporate
power and authority to own or lease its properties and conduct its business
as described in the Registration Statement and the Prospectus and as
currently being conducted, and is duly qualified as a foreign corporation
and in good standing in all jurisdictions in which the character of the
property owned or leased or the nature of the business transacted by it
makes qualification necessary (except where the failure to be so qualified
would not have a material adverse effect on the business, properties,
condition (financial or otherwise), income or business prospects of the
Company and its subsidiaries, taken as a whole (herein called a Material
Adverse Effect). The outstanding shares of capital stock of each such
subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable and are owned by the Company free and clear of all liens,
encumbrances and security interests, and no options, warrants or other
rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into shares of capital stock or ownership
interests in any such subsidiary are outstanding. The Company does not own
or control, directly or indirectly, any corporation, association or other
entity other than the subsidiaries listed in Exhibit 21.1 of the
Registration Statement. All capital stock issued by the Company and its
subsidiaries during the past three years has been issued in accordance with
all applicable Federal and state laws, rules and regulations.
(ii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
Material Adverse Change, whether or not arising from transactions in the
ordinary course of business, other than as set forth in the Registration
Statement and the Prospectus, and since such dates, except in the ordinary
course of business, neither the Company nor any of its subsidiaries has
entered into any material transaction not referred to in the Registration
Statement and the Prospectus.
(iii) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus, nor instituted
proceedings for that purpose or to the knowledge of the Company, threatened
to issue such an order or institute such proceedings. The Registration
Statement and the Prospectus comply, and on the Closing Date (as defined in
Section 5(a) hereof) and any later date on which Option Stock is to be
purchased, the Registration Statement and the Prospectus will comply, in
all material respects, with the provisions of the Securities Act and the
rules and regulations of the Commission thereunder. On the Effective Date
and on the Closing Date and any later date on which Option Stock may be
purchased, neither the Registration Statement nor any amendment thereto
contained or will contain any untrue statement of a material fact or
omitted or will omit to state any material fact
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required to be stated therein or necessary in order to make the statements
therein not misleading; on the Effective Date and on the Closing Date and
any later date on which Option Stock may be purchased, neither the
Prospectus or any supplements thereto contained or will contain any untrue
statement of a material fact or omitted or will omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations
and warranties in this subparagraph (iii) shall apply to statements in, or
omissions from, the Registration Statement or the Prospectus made in
reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of the Underwriters for use in the Registration
Statement or the Prospectus under the caption "Underwriting". There are no
contracts or documents of the Company or any of its subsidiaries which
would be required by the Securities Act or by the rules and regulations of
the Commission to be filed as exhibits to the Registration Statement which
have not been so filed.
The Registration Statement, in the form delivered to you, has been
declared effective under the Securities Act, and no post-effective
amendment to the Registration Statement has been filed as of the date of
this Agreement. The Company has caused to be delivered to you copies of the
Registration Statement and each Preliminary Prospectus and has consented to
the use of such copies for the purposes permitted by the Securities Act.
(iv) The authorized, issued and outstanding capital stock of the
Company and the outstanding long term debt of the Company is as described
in the Prospectus. The Stock is duly and validly authorized, is (or, in the
case of shares of the Stock to be sold by the Company, will be, when issued
and sold to the Underwriters as provided herein) duly and validly issued,
fully paid and nonassessable, free of preemptive rights and conforms to the
description thereof in the Prospectus. There are no outstanding options,
warrants or other rights granted to or by the Company to purchase shares of
Common Stock or other securities of the Company other than as described in
the Prospectus; and no such option, warrant or other rights has been
granted to any person, the exercise of which would cause such person to own
more than five percent of the Common Stock outstanding immediately after
the offering other than as described in the Prospectus. No person or entity
holds a right to require or participate in the registration under the
Securities Act of shares of Common Stock of the Company which right has not
been waived by the holders thereof as of the date hereof with respect to
the registration of shares pursuant to the Registration Statement, and
except as described in the Prospectus, no person holds a right to require
registration under the Securities Act of shares of Common Stock of the
Company at any other time. The Company is not a party to any agreement or
understanding, and has no knowledge of any agreement or understanding,
granting any person or entity a right of participation with respect to the
sale of shares of the Stock by the Company or the Selling Securityholders.
No further approval or authority of the stockholders or the Board of
Directors of the Company will be required for the transfer and sale of the
Stock to be sold by the Selling Securityholders or the issuance and sale of
the Stock as contemplated herein.
(v) The Company and its subsidiaries now hold, and at the Closing Date
will hold, all consents, approvals, authorizations, orders, registrations,
qualifications, licenses, certificates and permits from state, Federal and
other regulatory authorities which are necessary to own, lease, and operate
their properties and the conduct of the business of the Company and its
subsidiaries taken as a whole (except where the defined failure to hold
such consent, approval, authorization, order, registration, qualification,
license, certificate or permit would not have a Material Adverse Effect).
No such consent, approval, authorization, order, registration,
qualification, license, certificate or permit contains a materially
burdensome restriction not adequately described in the Registration
Statement and the Prospectus. Neither the Company nor any of its
subsidiaries is in violation of its corporate charter or bylaws, or in
default in the performance or observance of any provision of any
obligation, agreement, covenant or condition contained in any bond,
debenture or in any contract, lease, indenture, mortgage, loan agreement,
joint venture or other agreement
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or instrument to which the Company or such subsidiary is a party or by
which it or any of its properties is bound or is in violation of any law,
order, rule, regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign.
(vi) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and its subsidiaries owns or possesses adequate
rights to use sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals and governmental authorizations to conduct
their businesses as now conducted and as proposed to be conducted; the
expiration of any trademarks, trade names, patent rights, copyrights,
licenses, approvals or governmental authorizations of the Company or its
subsidiaries would not have a Material Adverse Effect; and the Company has
no knowledge of any material infringement by the Company or its
subsidiaries of trademarks, trade name rights, patent rights, copyrights,
licenses, trade secret or other similar rights of others, and there is no
claim being made against the Company or its subsidiaries regarding
trademark, trade name, patent, copyright, license, trade secret or other
infringement which could have a Material Adverse Effect nor, to the best of
the Company's knowledge, is there a basis therefore.
(vii) This Agreement has been duly authorized, executed and delivered
by the Company; the performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, (A) any indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the property of the Company or any of
the subsidiaries is bound, (B) the corporate charter or bylaws of the
Company or any of the subsidiaries or (C) (assuming the making of all
filings required under Rule 424(b) or Rule 430A and the due qualification
of the Stock for public offering by the Underwriters under state and
foreign securities laws) any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or over the properties of the Company.
(viii) Except as set forth in the Prospectus, there is not any action,
investigation, suit or proceeding before or with any court or
administrative agency, at law or in equity, pending against the Company or
any subsidiary or to which they may be subject and which, if determined
adversely, would individually or in the aggregate have a Material Adverse
effect, or prevent consummation of the transactions contemplated hereby.
(ix) The consolidated financial statements of (a) the Company and its
subsidiaries, (b) InfoMed Holdings, Inc. ("IMHI") and (c) ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, CPAs-Consulting Division ("S&S"), together, in each case, with the
related notes and schedules as set forth in the Registration Statement,
present fairly the consolidated financial position and the results of
operations of (a) the Company and its subsidiaries (b) IMHI and (c) S&S,
respectively, at the indicated dates and for the indicated periods. Such
financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, and all adjustments necessary for a fair presentation of results
for such periods have been made. The summary, selected, and pro forma
financial and statistical data included in the Registration Statement
present fairly the information shown therein and have been compiled on a
basis consistent with the financial statements presented therein.
(x) The Company, its subsidiaries and IMHI have filed all Federal,
state and foreign income tax returns which have been required to be filed
(or have filed extensions therefor or obtained any required extensions in
connection therewith), and have paid all taxes indicated by said returns
and all assessments received by them or any of them to the extent that such
taxes have become due and are not being contested in good faith.
(xi) Each approval, consent, order, authorization, designation,
declaration or filing by or with any United States regulatory,
administrative or other governmental body necessary in connection with the
execution and delivery by the Company of this Agreement and the
consummation by the Company of the transactions herein contemplated (except
(A) such additional steps as may be
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required by the National Association of Securities Dealers, Inc. (herein
called the NASD), (B) as may be necessary to make the Registration
Statement effective (and to maintain such effectiveness) and to qualify the
Stock for public offering by the Underwriters under state and foreign
securities laws or (C) filings required under Rule 424(b) or Rule 430(A))
has been obtained or made and is in full force and effect.
(xii) Ernst & Young LLP, who has certified the financial statements
filed with the Commission as part of the Registration Statement, has
represented to the Company that they are independent public accountants as
required by the Securities Act and the rules and regulations thereunder.
(xiii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and McGladrey & ▇▇▇▇▇▇, LLP have
represented to the Company that they are independent public accountants as
required by the Securities Act and the rules and regulations thereunder.
(xiv) The Company and the subsidiaries have good and marketable title
or leasehold title, as the case may be, to all of the properties and assets
reflected in the financial statements (or as described in the Registration
Statement) hereinabove described, subject to no lien, mortgage, pledge,
charge or encumbrance of any kind except those reflected in such financial
statements (or as described in the Registration Statement) or which are not
material in amount.
(xv) Neither the Company nor any of its subsidiaries is involved in
any material labor dispute nor, to the knowledge of the Company, is any
such dispute threatened.
(xvi) The statements set forth in the Prospectus under the caption
"Description of Capital Stock," insofar as they purport to constitute a
summary of the terms of the Stock, are an accurate and complete description
of such terms in all material respects.
(xvii) The Company has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Stock.
(xviii) The Company has filed an application to list the Stock on the
Nasdaq National Market, and has received notification that the listing has
been approved, subject to notice of issuance of the Stock.
(xix) The Company and each of its subsidiaries maintain insurance of
the types and in the amounts generally deemed adequate for their business,
including, but not limited to, director and officer insurance, errors and
omission insurance, general liability insurance, fiduciary breach insurance
and insurance covering real and personal property owned or leased by the
Company or any of its subsidiaries against theft, damage, destruction, acts
of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(xx) The Company is not aware that (A) any executive officer, key
employee or significant group of employees of the Company or any of its
subsidiaries plans to terminate employment with the Company or any of its
subsidiaries or (B) any such executive officer or key employee is subject
to any non-competition, non-disclosure, confidentiality, employment,
consulting or similar agreement that would be violated by the present or
proposed business activities of the Company or any of its subsidiaries.
(xxi) The Company is not and, after giving effect to the offering and
sale of the Stock, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(xxii) The Company has timely and properly filed with the Commission
all reports and other documents required to have been filed with the
Commission.
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(xxiii) The Company has not been advised, and has no reason to
believe, that it is not conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local,
state and Federal environmental laws and regulations, except where failure
to be so in compliance would not have a Material Adverse Effect.
(xxiv) The Company does not know, of any failure of any party to
comply with any laws applicable with respect to the Plan. With respect to
the Plan, the Company does not know of any (a) "prohibited transaction," as
defined in Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or Section 4975 of the Code, (b) breach of any
duty under ERISA, other applicable law or any agreement or (c)
non-deductible contribution, which, in the case of any of (a), (b) or (c),
could subject the Plan, the Company or any of its subsidiaries to liability
or a loss either directly or indirectly (including, without limitation,
through any obligation of indemnification or contribution) for any damages,
penalties, or taxes, or any other loss or expense which could have a
Material Adverse Effect.
(b) Each of the Selling Securityholders hereby represents and warrants as
follows (except with respect to the matters set forth in paragraph (ix) of this
Section 2(b), as to which only the Plan shall represent and warrant to):
(i) Such Selling Securityholder has good and marketable title to all
the shares of Stock to be sold by such Selling Securityholder hereunder,
free and clear of all liens, encumbrances, equities, security interests and
claims whatsoever, with full right and authority to deliver the same
hereunder, subject in the case of each Selling Securityholder, to the
rights of [ ] as Custodian (herein called the Custodian), and that
upon the delivery of and payment for such shares of the Stock hereunder,
the several Underwriters will receive good and marketable title thereto,
free and clear of all liens, encumbrances, equities, security interests and
claims whatsoever.
(ii) Certificates in negotiable form for the shares of the Stock to be
sold by such Selling Securityholder have been placed in custody under a
Custody Agreement for delivery under this Agreement with the Custodian;
such Selling Securityholder specifically agrees that the shares of the
Stock represented by the certificates so held in custody for such Selling
Securityholder are subject to the interests of the several Underwriters and
the Company, that the arrangements made by such Selling Securityholder for
such custody, including the Power of Attorney provided for in such Custody
Agreement, are to that extent irrevocable, and that the obligations of such
Selling Securityholder shall not be terminated by any act of such Selling
Securityholder or by operation of law, whether by the death or incapacity
of such Selling Securityholder (or, in the case of a Selling Securityholder
that is not an individual, dissolution or liquidation of such Selling
Securityholder) or the occurrence of any other event; if any such death,
incapacity, dissolution, liquidation or other such event should occur
before the delivery of such shares of the Stock hereunder, certificates for
such shares of the Stock shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such death,
incapacity, dissolution, liquidation or other event had not occurred,
regardless of whether the Custodian shall have received notice of such
death, incapacity, dissolution, liquidation or other event.
(iii) To the extent that any statements or omissions made in the
Registration Statement, the Prospectus or any amendment or supplement
thereto are made in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder expressly
for use therein, the Registration Statement and the Prospectus conform, and
on the Closing Date, the Registration Statement and the Prospectus will
conform, in all material respects, to the provisions of the Securities Act
and the rules and regulations of the Commission thereunder. Such Selling
Securityholder has reviewed the Registration Statement and Prospectus and,
although such Selling Securityholder has not independently verified the
accuracy or completeness of all the information contained therein, nothing
has come to the attention of such Selling Securityholder that would
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lead such Selling Securityholder to believe that on the Effective Date, or
the Closing Date, or any later date on which Option Stock may be purchased
the Registration Statement contained or will contain any untrue statement
of a material fact or omitted or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or that on the Effective Date or, on the Closing
Date, or any later date on which Option Stock may be purchased the
Prospectus contained or will contain any untrue statement of a material
fact or omitted or will omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(iv) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Stockholder of this Agreement
and the Power of Attorney and the Custody Agreement referred to herein, and
for the sale and delivery of the Stock to be sold by such Selling
Stockholder hereunder, have been obtained; and such Selling Stockholder has
full right, power and authority to enter into this Agreement, the Power of
Attorney and the Custody Agreement and to sell, assign, transfer and
deliver the Stock to be sold by such Selling Stockholder hereunder.
(v) The sale of the Stock to be sold by such Selling Stockholder
hereunder and the compliance by such Selling Stockholder with all of the
provisions of this Agreement, the Power of Attorney and the Custody
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which such Selling Stockholder is a party or by
which such Selling Stockholder is bound or to which any of the property or
assets of such Selling Stockholder is subject, nor will such action result
in any violation of the provisions of the charter or by-laws of such
Selling Stockholder or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over such Selling
Stockholder or the property of such Selling Stockholder.
(vi) Without having undertaken to determine independently the accuracy
or completeness of either the representations or warranties of the Company
contained herein or the information contained in the Registration
Statement, such Selling Securityholder has no reason to believe that the
representations and warranties of the Company contained in this Section 2
are not true and correct, is familiar with the Registration Statement and
has no knowledge of any material facts conditions or information not
disclosed in the Registration Statement which has or may have a Material
Adverse Effect.
(vii) The sale of the Stock by such Selling Securityholder pursuant
hereto is not prompted by any information concerning the Company nor any of
its subsidiaries which is not set forth in the Registration Statement. The
information pertaining to such Selling Securityholder under the caption
"Principal and Selling Stockholders" in the Prospectus is complete and
accurate in all material respects.
(viii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Securityholder will deliver to you prior to or
at the Closing Date or any later date on which Option Stock is purchased a
properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(ix) The Plan is a profit sharing plan which is qualified under
Section 401(a) of the Internal Revenue Code 1986, as amended (the "Code"),
and the related trust is exempt from tax under Section 501(a) of the Code,
and is a duly organized, validly existing trust in good standing under the
laws of the jurisdiction of its organization. The Plan has received a
favorable determination letter from the Internal Revenue Service regarding
its qualification under Section 401(a) of the Code and has, in fact, been
qualified under such section from the effective date of the Plan
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through and including the Effective Date. The Plan is not aware of any
event or omission which would cause the Plan to lose its qualification
under such Code section. The Plan does not know of any failure of any party
to comply with any laws applicable with respect to the Plan. With respect
to the Plan, there has been no (a) "prohibited transaction," as defined in
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or Section 4975 of the Code, (b) breach of any duty under
ERISA, other applicable law or any agreement or (c) non-deductible
contribution, which, in the case of any of (a), (b) or (c), could subject
the Plan, the Company or any of its subsidiaries to liability or a loss
either directly or indirectly (including, without limitation, through any
obligation of indemnification or contribution) for any damages, penalties,
or taxes, or any other loss or expense which could have a Material Adverse
Effect. The execution, delivery and performance of this Agreement by the
Plan will not result in a "prohibited transaction," as defined in Section
406 of ERISA or Section 4975 of the Code. Except as set forth in the
Prospectus, no litigation or governmental administrative proceeding (or
investigation) or other proceeding (other than those relating to routine
claims for benefits) is pending or threatened with respect to the Plan.
(c) The Trustee, individually and not in its capacity as trustee of the
Plan, represents and warrants as follows:
(i) The Trustee is a trust company duly organized, validly existing
and in good standing under the laws of the state of [Tennessee] and has all
requisite power and authority to act as Trustee and exercise trust powers
on behalf of the Plan. The Trustee has full corporate power and authority
to execute and deliver this Agreement on behalf of the Plan and to carry
out the transactions contemplated hereby.
(ii) The performance of this Agreement and the consummation of the
transactions contemplated herein will not result in a breach or violation
of any of the terms and provisions of, or constitute a default under, (A)
any Plan documents, charter, by-laws, indenture, deed of trust, loan
agreement or other material agreement to which the Trustee is a party or by
which it is bound or (B) (assuming the making of all filings required under
Rule 424(b) or Rule 430A and the due qualification of the Stock for public
offering by the Underwriters under state and foreign securities laws) any
statute or order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Plan or over the properties of the Plan.
(iii) The execution, delivery and performance of this Agreement by the
Plan will not result in a "prohibited transaction," as defined in Section
406 of ERISA or Code Section 4975.
3. Purchase of the Stock by the Underwriters. (a) On the basis of the
representations and warranties and subject to the terms and conditions herein
set forth, the Company agrees to issue and sell shares of the Underwritten
Stock to the several Underwriters, each of the Selling Securityholders agree to
sell to the several Underwriters the respective aggregate number of shares of
the Underwritten Stock set forth opposite its name on Schedule II and each of
the Underwriters agrees to purchase from the Company and the Selling
Securityholders the respective aggregate number of shares of Underwritten Stock
set forth opposite its name in Schedule I. The price at which such shares of
Underwritten Stock shall be sold by the Company and the Selling Securityholders
and purchased by the several Underwriters shall be $ per share. The
obligation of each Underwriter to the Company and to the Selling Securityholders
shall be to purchase from the Company and the Selling Securityholders that
number of shares of the Underwritten Stock which represents the same proportion
of the total number of shares of the Underwritten Stock to be sold by each of
the Company and the Selling Securityholders pursuant to this Agreement as the
number of shares of the Underwritten Stock set forth opposite the name of such
Underwriter in Schedule I hereto represents of the total number of shares of the
Underwritten Stock to be purchased by all Underwriters pursuant to this
Agreement, as adjusted by you in such manner as you deem advisable to avoid
fractional shares. In making this Agreement, each Underwriter is contracting
severally and not jointly; except as provided
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in paragraphs (b) and (c) of this Section 3, the agreement of each Underwriter
is to purchase only the respective number of shares of the Underwritten Stock
specified in Schedule 1.
(b) If for any reason one or more of the Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 8 or 9 hereof) to purchase and pay for
the number of shares of the Stock agreed to be purchased by such Underwriter or
Underwriters, the Company shall immediately give notice thereof to you, and the
non-defaulting Underwriters shall have the right within 24 hours after the
receipt by you of such notice to purchase, or procure one or more other
Underwriters to purchase, in such proportions as may be agreed upon between you
and such purchasing Underwriter or Underwriters and upon the terms herein set
forth, all or any part of the shares of the Stock which such defaulting
Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such shares
and portion, the number of shares of the Stock which each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the remaining shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase;
provided, however, that the non-defaulting Underwriters shall not be obligated
to purchase the shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such shares of the
Stock exceeds 10% of the total number of shares of the Stock which all
Underwriters agreed to purchase hereunder. If the total number of shares of the
Stock which the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company and the Selling Securityholders shall have the right, within 24 hours
next succeeding the 24-hour period above referred to, to make arrangements with
other underwriters or purchasers satisfactory to you for purchase of such shares
and portion on the terms herein set forth. In any such case, either you or the
Company and the Selling Securityholders shall have the right to postpone the
Closing Date determined as provided in Section 5 hereof for not more than seven
business days after the date originally fixed as the Closing Date pursuant to
said Section 5 in order that any necessary changes in the Registration
Statement, the Prospectus or any other documents or arrangements may be made. If
neither the non-defaulting Underwriters nor the Company and the Selling
Securityholders shall make arrangements within the 24-hour periods stated above
for the purchase of all the shares of the Stock which the defaulting Underwriter
or Underwriters agreed to purchase hereunder, this Agreement shall be terminated
without further act or deed and without any liability on the part of the Company
or the Selling Securityholders to any non-defaulting Underwriter and without any
liability on the part of any non-defaulting Underwriter to the Company or the
Selling Securityholders. Nothing in this paragraph (b), and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Company
and [ ] grant an option to the several Underwriters to purchase, severally
and not jointly, up to shares in the aggregate of the Option Stock from the
Company and [ ] at the same price per share as the Underwriters shall pay
for the Underwritten Stock. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Stock by the Underwriters and
may be exercised in whole or in part at any time (but not more than once) on or
before the thirtieth (30th) day after the date of this Agreement upon written or
telegraphic notice by you to the Company setting forth the aggregate number of
shares of the Option Stock as to which the several Underwriters are exercising
the option. Delivery of certificates for the shares of Option Stock, and payment
therefor, shall be made as provided in Section 5 hereof. The number of shares of
the Option Stock to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Option Stock to be purchased by
the several Underwriters as such Underwriter is purchasing of the Underwritten
Stock, as adjusted by you in such manner as you deem advisable to avoid
fractional shares.
4. Offering by Underwriters. (a) The terms of the public offering by the
Underwriters of the Stock to be purchased by them shall be as set forth in the
Prospectus. The Underwriters may from time
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to time change the public offering price after the closing of the initial public
offering and increase or decrease the concessions and discounts to dealers as
they may determine.
(b) The information set forth in the last paragraph on the front cover page
and under "Underwriting" in the Registration Statement, any Preliminary
Prospectus and the Prospectus (insofar as such information relates to the
Underwriters) constitutes the only information furnished by the Underwriters to
the Company for inclusion in the Registration Statement, any Preliminary
Prospectus, and the Prospectus, and you on behalf of the respective Underwriters
represent and warrant to the Company that the statements made therein are
correct.
5. Delivery of and Payment for the Stock. (a) Delivery of certificates for
the shares of the Underwritten Stock and the Option Stock (if the option granted
by Section 3(c) hereof shall have been exercised not later than 7:00 a.m., San
Francisco time, on the date two business days preceding the Closing Date), and
payment therefor, shall be made at the office of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 7:00 a.m., San Francisco time, on
the third business day after the date of this Agreement, or at such time on such
other day, not later than five full business days after such third business day,
as shall be agreed upon in writing by the Company, the Selling Securityholders
and you. The date and hour of such delivery and payment (which may be postponed
as provided in Section 3(b) hereof) are herein called the Closing Date.
(b) If the option granted by Section 3(c) hereof shall be exercised after
7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 7:00 a.m., San Francisco time, on the
third business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be made to the
Company or its order, and payment for the Stock purchased from the Selling
Securityholders shall be made to the Custodian, for the account of the Selling
Securityholders, in each case by one or more certified or official bank check or
checks in same day funds. Such payment shall be made upon delivery of
certificates for the Stock to you for the respective accounts of the several
Underwriters against receipt therefor signed by you. Certificates for the Stock
to be delivered to you shall be registered in such name or names and shall be in
such denominations as you may request at least two business days before the
Closing Date, in the case of Underwritten Stock, and at least two business days
prior to the purchase thereof, in the case of the Option Stock. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging at the offices of Lewco Securities Corporation, ▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at least two business days prior to the Closing Date or, in
the case of the Option Stock, by 3:00 p.m., New York time, at least two business
days preceding the date of purchase. Time shall be of the essence and delivery
at the time and place specified above is a further condition to the obligations
of the Underwriters.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
and the Selling Securityholders for shares to be purchased by any Underwriter
whose check shall not have been received by you on the Closing Date or any later
date on which Option Stock is purchased for the account of such Underwriter. Any
such payment by you shall not relieve such Underwriter from any of its
obligations hereunder.
6. Further Agreements of the Company and the Selling Securityholders. Each
of the Company and, with respect to the matters specifically designated in this
Section 6, the Selling Securityholders respectively covenants and agrees as
follows:
(a) The Company will prepare and timely file with the Commission under
Rule 424(b) a Prospectus containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule
430A; provided, however, that the Company will not file such Prospectus
under Rule 424(b) or any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have been
advised and furnished with a copy or
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to which you shall have reasonably objected in writing or which is not in
compliance with the Securities Act or the rules and regulations of the
Commission. The Company will provide evidence satisfactory to the
Underwriters of the timely filing of the Prospectus filed under Rule 424(b)
and any registration statement filed under Rule 462(b). If the Company
elects to rely on Rule 462(b), the Company shall file a 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m.,
Washington D.C. time, on the date of this Agreement, and the Company shall
at the time of filing either pay to the Commission the filing fee for the
Rule 462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Act.
(b) The Company will promptly notify each Underwriter in the event of
(i) the request by the Commission for amendment of the Registration
Statement or for any supplement to the Prospectus or for any additional
information, (ii) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, (iii) the
institution or notice of intended institution of any action or proceeding
for that purpose, (iv) the receipt by the Company of any notification with
respect to the suspension of the qualification of the Stock for sale in any
jurisdiction, or (v) the receipt by it of notice of the initiation or
threatening of any proceeding for such purpose. The Company and the Selling
Securityholders will make every reasonable effort to prevent the issuance
of such a stop order and, if such an order shall at any time be issued, to
obtain the withdrawal thereof at the earliest possible moment.
(c) The Company will (i) on or before the date hereof and, with
respect to documents filed after the date hereof, on or before the Closing
Date, deliver to you a signed copy of the Registration Statement as
originally filed and of each amendment thereto filed prior to the time the
Registration Statement becomes effective and, promptly upon the filing
thereof, a signed copy of each post-effective amendment, if any, to the
Registration Statement (together with, in each case, all exhibits thereto
unless previously furnished to you) and will also deliver to you, for
distribution to the Underwriters, a sufficient number of additional
conformed copies of each of the foregoing (but without exhibits) so that a
sufficient number of copies of each may be distributed to each Underwriter,
(ii) as promptly as possible deliver to you and send to the several
Underwriters, at such office or offices as you may designate, as many
copies of the Prospectus as you may reasonably request, and (iii)
thereafter from time to time during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, likewise send
to the Underwriters as many additional copies of the Prospectus and as many
copies of any supplement to the Prospectus and of any amended prospectus,
filed by the Company with the Commission, as you may reasonably request for
the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing
by you, shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or of counsel for the Underwriters, to supplement
or amend the Prospectus in order to make the Prospectus not misleading in
the light of the circumstances existing at the time it is delivered to a
purchaser of the Stock, the Company will forthwith prepare and file with
the Commission, at its own expense, a supplement or amendment to the
Prospectus so that the Prospectus as so supplemented or amended will not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time such Prospectus is
delivered to such purchaser, not misleading. If, after the public offering
of the Stock by the Underwriters and during such period, the Underwriters
shall propose to vary the terms of offering thereof by reason of changes in
general market conditions or otherwise, you will advise the Company in
writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission, at its own expense, a
supplement or amendment to the Prospectus setting forth such variation. The
Company autho-
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rizes the Underwriters and all dealers to whom any of the Stock may be sold
by the several Underwriters to use the Prospectus, as from time to time
amended or supplemented, in connection with the sale of the Stock in
accordance with the applicable provisions of the Securities Act and the
applicable rules and regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment
to the Registration Statement and any supplement or amendment to the
Prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue
sky laws of such jurisdictions as you may designate and, during the period
in which a prospectus is required by law to be delivered by an Underwriter
or dealer, in keeping such qualifications in good standing under said
securities or blue sky laws; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to
qualify as a foreign corporation in any jurisdiction in which it is not so
qualified. The Company will, from time to time, prepare and file such
statements, reports, and other documents as are or may be required to
continue such qualifications in effect for so long a period as you may
reasonably request for distribution of the Stock.
(g) During a period of five years commencing with the date hereof, the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports furnished to
stockholders of the Company and of all information, documents and reports
filed with the Commission.
(h) Not later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the Effective Date,
the Company will make generally available to its security holders an
earnings statement in accordance with Section 11(a) of the Securities Act
and Rule 158 thereunder.
(i) Whether or not the transactions contemplated hereunder are
consummated or this Agreement terminated, the Company and the Selling
Securityholders jointly and severally agree to pay all costs and expenses
incident to the performance of their obligations under this Agreement,
including all costs and expenses incident to (i) the preparation, printing
and filing with the Commission and the NASD of the Registration Statement,
any Preliminary Prospectus and the Prospectus, (ii) the furnishing to the
Underwriters of copies of any Preliminary Prospectus and of the several
documents required by paragraph (c) of this Section 6 to be so furnished,
(iii) the printing of this Agreement and related documents delivered to the
Underwriters, (iv) the preparation, printing and filing of all supplements
and amendments to the Prospectus referred to in paragraph (d) of this
Section 6, (v) the furnishing to you and the Underwriters of the reports
and information referred to in paragraph (g) of this Section 6 and (vi) the
printing and issuance of stock certificates, including the transfer agent's
fees. The Selling Securityholders will pay any transfer taxes incident to
the transfer to the Underwriters of the shares the Stock being sold by the
Selling Securityholders.
(j) The Company and the Selling Securityholders jointly and severally
agree to reimburse you, for the account of the several Underwriters, for
blue sky fees and related disbursements (including, without limitation,
filing fees, counsel fees and disbursements and the cost of printing
memoranda for the Underwriters) paid by or for the account of the
Underwriters or their counsel in qualifying the Stock under state
securities or blue sky laws and for filing fees incident to the review of
the offering by the NASD.
(k) The provisions of paragraphs (i) and (j) of this Section are
intended to relieve the Underwriters from the payment of the expenses and
costs which the Company and the Selling Securityholders hereby agree to pay
and shall not affect any agreement which the Company and the Selling
Securityholders may make, or may have made, for the sharing of any such
expenses and costs.
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(l) The Company and each of the Selling Securityholders hereby agrees
that, without the prior written consent of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC on behalf
of the Underwriters, the Company or such Selling Securityholder, as the
case may be, will not, for a period of 90 days following the Effective
Date, directly or indirectly, (i) issue, sell, offer, contract to sell,
make any short sale, pledge, issuer or sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of any of the
Company's equity securities or any securities convertible into or
exchangeable or exercisable for or any rights to purchase or acquire any of
the Company's equity securities or (ii) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic
consequences or ownership of any of the Company's equity securities,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of any of the Company's equity securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Stock to be
sold to the Underwriters pursuant to this Agreement, (B) shares of Common
Stock issued by the Company upon the exercise of options granted under the
stock option plans of the Company (the "Option Plans") or upon the exercise
of warrants outstanding as of the date hereof, all as described in the
Prospectus, and (C) options to purchase Common Stock granted under the
Option Plans.
(m) The Company agrees to use its best efforts to (i) cause all
holders of 5% or more of the outstanding Common Stock or options or
warrants therefor, and all of its directors and officers to agree that,
without the prior written consent of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC on behalf of the
Underwriters, such persons will not, for a period of 90 days following the
Effective Date, directly or indirectly, (i) sell, offer, contract to sell,
make any short sale, pledge, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of any of the Company's equity
securities or any securities convertible into or exchangeable or
exercisable for or any rights to purchase or acquire any of the Company's
equity securities or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences or
ownership of the Company's equity securities, whether any such transaction
described in clause (a) or (b) above is to be settled by delivery of any of
the Company's equity securities, in cash or otherwise; and (ii) enforce any
rights it may have to cause all holders of 5% or more of the outstanding
Common Stock or options or warrants therefor, directors and officers to
ensure that they do not take any of the foregoing actions during the
above-mentioned 90-day period.
(n) The Company is familiar with the Investment Company Act of 1940,
as amended, and has in the past conducted its affairs, and will in the
future conduct its affairs, in such a manner to ensure that the Company was
not and will not be an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations thereunder. The Company
will apply the net proceeds of the sale of the Stock sold by it
substantially in accordance with its statements under the caption "Use of
Proceeds" in the Prospectus.
(o) If at any time during the 90-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price for the Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after
written notice from you advising the Company to the effect set forth above,
forthwith 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.
7. Indemnification and Contribution. (a) The Company and the Selling
Securityholders jointly and severally agree to indemnify and hold harmless each
Underwriter and each person (including each partner or officer thereof) who
controls any Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the
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Securities Exchange Act of 1934, as amended, or the common law or otherwise, and
the Company and the Selling Securityholders jointly and severally agree to
reimburse each such Underwriter and controlling person for any legal or other
expenses (including, except as otherwise hereinafter provided, reasonable fees
and disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus constituting a part thereof and any Rule 462(b)
Registration Statement) or any post-effective amendment thereto (including any
Rule 462(b) Registration Statement), or 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, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus or
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) or the omission
or alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that (1) the indemnity agreements of
the Company and the Selling Securityholders contained in this paragraph (a)
shall not apply to any such losses, claims, damages, liabilities or expenses if
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter for use under the caption "Underwriting" in any Preliminary
Prospectus or the Registration Statement or the Prospectus or any such amendment
thereof or supplement thereto, and (2) the indemnity agreement contained in this
paragraph (a) with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages, liabilities or expenses purchased the Stock which is the
subject thereof (or to the benefit of any person controlling such Underwriter)
if at or prior to the written confirmation of the sale of such Stock a copy of
the Prospectus (or the Prospectus as amended or supplemented) was not sent or
delivered to such person and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented) unless the failure is the result of
noncompliance by the Company with paragraph (c) of Section 6 hereof. The
indemnity agreements of the Company and the Selling Securityholders contained in
this paragraph (a) and the representations and warranties of the Company and the
Selling Securityholders contained in Section 2 hereof shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
any indemnified party and shall survive the delivery of and payment for the
Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its officers who signs the Registration Statement on his own
behalf or pursuant to a power of attorney, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Securities Act, and the Selling Securityholders from and against any
and all losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject under the Securities Act,
the Exchange Act, or the common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, reasonable fees and disbursements of counsel) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus constituting a part thereof and
any Rule 462(b) Registration Statement) or any post-effective amendment thereto
(including any Rule 462(b) Registration Statement) or 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 or (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (as amended or as supplemented if the Company shall have
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filed with the Commission any amendment thereof or supplement thereto) or the
omission or alleged omission to state therein a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, if such statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of such indemnifying Underwriter for use under the
caption "Underwriting" in the Registration Statement or the Prospectus or any
such amendment thereof or supplement thereto. The indemnity agreement of each
Underwriter contained in this paragraph (b) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a) and (b) of
this Section 7 agrees that, upon the service of a summons or other initial legal
process upon it in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceeding against, it in respect of which indemnity may be sought on account
of any indemnity agreement contained in such paragraphs, it will promptly give
written notice (herein called the Notice) of such service or notification to the
party or parties from whom indemnification may be sought hereunder. No
indemnification provided for in such paragraphs shall be available to any party
who shall fail so to give the Notice if the party to whom such Notice was not
given was unaware of the action, suit, investigation, inquiry or proceeding to
which the Notice would have related and was prejudiced by the failure to give
the Notice, but the omission so to notify such indemnifying party or parties of
any such service or notification shall not relieve such indemnifying party or
parties from any liability which it or they may have to the indemnified party
for contribution or otherwise than on account of such indemnity agreement. Any
indemnifying party shall be entitled at its own expense to participate in the
defense of any action, suit or proceeding against, or investigation or inquiry
of, an indemnified party. Any indemnifying party shall be entitled, if it so
elects within a reasonable time after receipt of the Notice by giving written
notice (herein called the Notice of Defense) to the indemnified party, to assume
(alone or in conjunction with any other indemnifying party or parties) the
entire defense of such action, suit, investigation, inquiry or proceeding, in
which event such defense shall be conducted, at the expense of the indemnifying
party or parties, by counsel chosen by such indemnifying party or parties and
reasonably satisfactory to the indemnified party or parties; provided, however,
that (i) if the indemnified party or parties reasonably determine that there may
be a conflict between the positions of the indemnifying party or parties and of
the indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties and (ii) in any event, the
indemnified party or parties shall be entitled to have counsel chosen by such
indemnified party or parties participate in, but not conduct, the defense. If,
within a reasonable time after receipt of the Notice, an indemnifying party
gives a Notice of Defense and the counsel chosen by the indemnifying party or
parties is reasonably satisfactory to the indemnified party or parties, the
indemnifying party or parties will not be liable under paragraphs (a) through
(c) of this Section 7 for any legal or other expenses subsequently incurred by
the indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding, except that (A) the indemnifying
party or parties shall bear the legal and other expenses incurred in connection
with the conduct of the defense as referred to in clause (i) of the proviso to
the preceding sentence and (B) the indemnifying party or parties shall bear such
other expenses as it or they have authorized to be incurred by the indemnified
party or parties. If, within a reasonable time after receipt of the Notice, no
Notice of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party or
parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is unavailable or
insufficient to hold harmless an indemnified party under paragraph (a) or (b) of
this Section 7, then each indemnifying
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party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in paragraph (a) or (b) of this
Section 7 (i) in such proportion as is appropriate to reflect the relative
benefits received by each indemnifying party from the offering of the Stock or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
each indemnifying party in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, or actions in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Securityholders on the one hand
and the Underwriters on the other shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Stock received by
the Company and the Selling Securityholders and the total underwriting discount
received by the Underwriters, as set forth in the table on the cover page of the
Prospectus, bear to the aggregate public offering price of the Stock. Relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by each
indemnifying party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
The parties agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) were to be 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 into account the equitable
considerations referred to in the first sentence of this paragraph (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities, or actions in respect thereof, referred to in the first sentence
of this paragraph (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigation,
preparation or defense against any action or claim which is the subject of this
paragraph (d). Notwithstanding the provisions of this paragraph (d), no
Underwriter shall be required to contribute any amount in excess of the
underwriting discount applicable to the Stock purchased by such Underwriter. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this paragraph (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).
(e) Neither the Company nor the Selling Securityholders will, without the
prior written consent of each Underwriter, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of such Underwriter and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding.
8. Termination. This Agreement may be terminated by you at any time prior
to the Closing Date by giving written notice to the Company and the Custodian on
behalf of the Selling Securityholders if after the date of this Agreement
trading in the Common Stock shall have been suspended, or if there shall have
occurred (i) the engagement in hostilities or an escalation of major hostilities
by the United States or the declaration of war or a national emergency by the
United States on or after the date hereof, (ii) any outbreak of hostilities or
other national or international calamity or crisis or change in
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economic or political conditions if the effect of such outbreak, calamity,
crisis or change in economic or political conditions in the financial markets of
the United States would, in the Underwriters' reasonable judgment, make the
offering or delivery of the Stock impracticable, (iii) suspension of trading in
securities generally or a material adverse decline in value of securities
generally on the New York Stock Exchange, the American Stock Exchange, or the
NASD Automated Quotation System or The Nasdaq Stock Market, or limitations on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such exchange or system, (iv) the enactment, publication,
decree or other promulgation of any Federal or state statute, regulation, rule
or order of, or commencement of any proceeding or investigation by, any court,
legislative body, agency or other governmental authority which in the
Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by either Federal or New York State
authorities or (vi) the taking of any action by any Federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters' reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 8, there shall be no liability of the Company or the Selling
Securityholders to the Underwriters and no liability of the Underwriters to the
Company or the Selling Securityholders; provided, however, that in the event of
any such termination the Company and the Selling Securityholders agree to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof.
9. Conditions of Underwriters' Obligations. The obligations of the several
Underwriters to purchase and pay for the Stock shall be subject to the accuracy
of the representations and warranties on the part of the Company and the Selling
Securityholders herein set forth and the performance by the Company and by the
Selling Securityholders of all of their respective obligations to be performed
hereunder, in each case at or prior to the Closing Date and any later date on
which Option Stock is to be purchased, as the case may be, and to the following
further conditions:
(a) The Registration Statement shall have become effective; and no
stop order suspending the effectiveness thereof shall have been issued and
no proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock hereunder
and the validity and form of the certificates representing the Stock, all
corporate proceedings and other legal matters incident to the foregoing,
and the form of the Registration Statement and of the Prospectus (except as
to the financial statements contained therein), shall have been approved at
or prior to the Closing Date by ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, counsel for
the Underwriters.
(c) You shall have received from Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP, counsel for the Company, and , counsel for the Selling
Securityholders and , counsel for the Trustee, opinions,
addressed to the Underwriters and dated the Closing Date, covering the
matters set forth in Annex A and Annex B hereto, respectively, and if
Option Stock is purchased at any date after the Closing Date, additional
opinions from counsel to the Company and counsel to the Selling
Securityholders, as the case may be, addressed to the Underwriters and
dated such later date, confirming that the statements expressed as of the
Closing Date in such opinions remain valid as of such later date.
(d) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true
and correct and neither the Registration Statement nor the Prospectus
omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, respectively, not
misleading, (ii) since the Effective Date, no event has occurred which
should have been set forth in a supplement or amendment to the Prospectus
which has not been set forth in such a supplement or amendment filed with
the Commission, (iii) since the respective dates as of which information is
given in the
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Registration Statement in the form in which it originally became effective
and the Prospectus contained therein, there has been any material adverse
change or any development involving a prospective material adverse change
in or affecting the business, properties, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, and,
since such dates, except in the ordinary course of business, neither the
Company nor any of its subsidiaries has entered into any material
transaction not referred to in the Registration Statement in the form in
which it originally became effective and the Prospectus contained therein,
(iv) neither the Company nor any of its subsidiaries has any material
contingent obligations which are not disclosed in the Registration
Statement and the Prospectus, (v) there are not any pending or known
threatened legal proceedings to which the Company or any of its
subsidiaries is a party or of which property of the Company or any of its
subsidiaries is the subject which are material and which are not disclosed
in the Registration Statement and the Prospectus, (vi) there are not any
franchises, contracts, leases or other documents which are required to be
filed as exhibits to the Registration Statement which have not been filed
as required, (vii) the representations and warranties of the Company, the
Selling Securityholders and the Trustee herein are true and correct in all
material respects as of the Closing Date and any later date on which Option
Stock is to be purchased, as the case may be, (viii) there has not been any
material change in the market for securities in general or in political,
financial or economic conditions from those reasonably foreseeable as to
render it impracticable in your reasonable judgment to make a public
offering of the Stock, or a material adverse change in market levels for
securities in general (for those of companies in particular) or financial
or economic conditions which render it inadvisable to proceed, and (xix)
there has not occurred any circumstances described in clauses (i), (ii),
(iii), (iv), (v) or (vi) of Section 8 hereof.
(e) You shall have received on the Closing Date and on any later date
on which Option Stock is purchased a certificate, dated the Closing Date or
such later date, as the case may be, and signed by the President and the
Chief Financial Officer of the Company, stating that the respective signers
of said certificate have carefully examined the Registration Statement in
the form in which it originally became effective and the Prospectus
contained therein and any supplements or amendments thereto, and that the
statements included in clauses (i) through (vii) of paragraph (d) of this
Section 9 are true and correct.
(f) You shall have received from Ernst & Young LLP a letter or
letters, addressed to the Underwriters and dated the Closing Date and any
later date on which Option Stock is purchased, confirming that they are
independent public accountants with respect to the Company and its
subsidiaries within the meaning of the Securities Act and the applicable
published rules and regulations thereunder and based upon the procedures
described in its letter delivered to you concurrently with the execution of
this Agreement (herein called the Original Letter), but carried out to a
date not more than three business days prior to the Closing Date or such
later date on which Option Stock is purchased (i) confirming, to the extent
true, that the statements and conclusions set forth in the Original Letter
are accurate as of the Closing Date or such later date, as the case may be,
and (ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter which are necessary to reflect
any changes in the facts described in the Original Letter since the date of
the Original Letter or to reflect the availability of more recent financial
statements, data or information. The letters shall not disclose any change,
or any development involving a prospective change, in or affecting the
business or properties of the Company or any of its subsidiaries which, in
your sole judgment, makes it impractical or inadvisable to proceed with the
public offering of the Stock or the purchase of the Option Stock as
contemplated by the Prospectus. [▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and McGladrey &
▇▇▇▇▇▇, LLP]
(g) You shall have received from Ernst & Young LLP a letter stating
that their review of the Company's system of internal accounting controls,
to the extent they deemed necessary in establishing the scope of their
examination of the Company's financial statements as at Decem-
18
19
ber 31, 1996, did not disclose any weakness in internal controls that they
considered to be material weaknesses.
(h) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in paragraph (f) of Section 6 hereof.
(i) Prior to the Closing Date, the Stock to be issued and sold by the
Company shall have been duly authorized for listing by the Nasdaq National
Market upon official notice of issuance.
(j) On or prior to the Closing Date, you shall have received from all
holders of 5% or more of the outstanding Common Stock or options or
warrants therefore, directors and officers agreements, in form reasonably
satisfactory to ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, substantially to the effect of the
agreements of such persons set forth in Section 6(m) hereof.
All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, counsel for the
Underwriters, shall be satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company and to the Custodian on behalf of the Selling Securityholders. Any such
termination shall be without liability of the Company or the Selling
Securityholders to the Underwriters and without liability of the Underwriters to
the Company or the Selling Securityholders; provided, however, that (i) in the
event of such termination, the Company and the Selling Securityholders agree to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof, and (ii) if this Agreement is
terminated by you because of any refusal, inability or failure on the part of
the Company or the Selling Securityholders to perform any agreement herein, to
fulfill any of the conditions herein, or to comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the transactions contemplated hereby.
10. Conditions of the Obligation of the Company and the Selling
Securityholders. The obligation of the Company and the Selling Securityholders
to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall not be
fulfilled, this Agreement may be terminated by the Company and the Selling
Securityholders by giving notice to you and such failure of condition is not
because of any refusal, inability or failure of the Company or the Selling
Securityholders to perform any agreement herein, to fulfill any condition herein
or to comply with any provisions hereof. Any such termination shall be without
liability of the Company and the Selling Securityholders to the Underwriters and
without liability of the Underwriters to the Company or the Selling
Securityholders; provided, however, that in the event of any such termination
the Company and the Selling Securityholders jointly and severally agree to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company and the Selling
Securityholders under this Agreement, including all costs and expenses referred
to in paragraphs (i) and (j) of Section 6 hereof.
11. Reimbursement of Certain Expenses. In addition to their other
obligations under Section 7 of this Agreement, the Company and the Selling
Securityholders hereby jointly and severally agree to reimburse on a quarterly
basis the Underwriters for all reasonable legal and other expenses incurred in
connection with investigating or defending any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission,
19
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described in paragraph (a) of Section 7 of this Agreement, notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the obligations under this Section 11 and the possibility that such payments
might later be held to be improper; provided, however, that (i) to the extent
any such payment is ultimately held to be improper, the persons receiving such
payments shall promptly refund them and (ii) such persons shall provide to the
Company, upon request, reasonable assurances of their ability to effect any
refund, when and if due.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of the Company, the Selling Securityholders and the several
Underwriters and, with respect to the provisions of Section 7 hereof, the
several parties (in addition to the Company, the Selling Securityholders and the
several Underwriters) indemnified under the provisions of said Section 7, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision herein contained. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Stock from any of the several Underwriters.
13. Notices. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and if to the Company or the Selling
Securityholders, shall be mailed, telegraphed or delivered to it at its office,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇. All
notices given by telegraph shall be promptly confirmed by letter.
14. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or the Selling Securityholders or their respective directors or
officers, and (c) delivery and payment for the Stock under this Agreement;
provided, however, that if this Agreement is terminated prior to the Closing
Date, the provisions of paragraphs (l) and (m) of Section 6 hereof shall be of
no further force or effect.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California.
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SIGNATURES
Please sign and return to the Company and to the Selling Securityholders in
care of the Company the enclosed duplicates of this letter, whereupon this
letter will become a binding agreement among the Company, the Selling
Securityholders and the several Underwriters in accordance with its terms.
Very truly yours,
▇▇▇▇▇▇▇ CENTRAL HOLDINGS, INC.
By
--------------------------------------
SELLING SECURITYHOLDERS
By
--------------------------------------
Attorney-in-Fact
TRUSTEE
By
--------------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
THE ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY, INC.
By ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
By
-----------------------------------------------------
Managing Director
Acting on behalf of the several Underwriters,
including themselves, named in Schedule I hereto.
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SCHEDULE I
UNDERWRITERS
NUMBER OF
SHARES
TO BE
UNDERWRITERS PURCHASED
------------ ---------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC.......................................
▇▇▇▇▇▇▇▇▇ & Company, Inc....................................
The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, Inc..........................
Total.............................................
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23
[SCHEDULE II]
[SELLING SECURITYHOLDERS]
NUMBER OF
SHARES
NAME AND ADDRESS OF SELLING SECURITYHOLDERS TO BE SOLD
------------------------------------------- ----------
▇▇▇▇▇▇▇ Central Holdings, Inc...............................
Profit Sharing Plan Trust...................................
C/o Trust Company of Knoxville, Inc.........................
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Total.............................................
23
24
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF POWELL, GOLDSTEIN, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
COUNSEL FOR THE COMPANY
[EXCEPT AS OTHERWISE INDICATED, ALL REFERENCES TO THE COMPANY SHOULD INCLUDE ALL
SUBSIDIARIES]
(i) Each of the Company and its subsidiaries has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified as a foreign corporation
and in good standing in all jurisdictions in which the character of the property
owned or leased or the nature of the business transacted by it makes
qualification necessary (except where the failure to be so qualified would not
have a material adverse effect on the business, properties, condition (financial
or otherwise), income or business prospects of the Company and its subsidiaries,
taken as a whole), and has full corporate power and authority to own or lease
its properties and conduct its business as described in the Registration
Statement and the Prospectus and as currently being conducted; all the issued
and outstanding shares of capital stock of each of subsidiary of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, and are owned by the Company free and clear of all liens,
encumbrances and security interests, and to the best of such counsel's
knowledge, no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into shares of
capital stock or ownership interests in such subsidiaries are outstanding;
(ii) the authorized capital stock of the Company consists of 10,000,000
shares of Preferred Stock, par value $.001 per share, of which no shares will be
outstanding, and 20,000,000 shares of Common Stock, par value $.001 per share,
of which there are outstanding [ ] shares (including the Underwritten
Stock and the shares of Option Stock); proper corporate proceedings have been
taken to validly authorize such authorized capital stock; all of the outstanding
shares of such capital stock (or, in the case of shares of the Stock sold by the
Company, will be, when issued and sold to the Underwriters as provided in the
Underwriting Agreement) have been duly and validly issued and are fully paid and
nonassessable; and no preemptive rights of, or rights of refusal in favor of,
stockholders exist with respect to the Stock, or the issue and sale thereof,
pursuant to the Certificate of Incorporation or Bylaws of the Company and, to
the knowledge of such counsel, there are no contractual preemptive rights that
have not been waived, rights of first refusal or rights of co-sale which exist
with respect to the Stock being sold by the Selling Securityholders or the issue
and sale of the Stock by the Company;
(iii) except as disclosed in or specifically contemplated by the
Registration Statement, to the knowledge of such counsel, there are no
outstanding options, warrants or other rights calling for the issuance of, and
no commitments, plans or arrangements to issue, any shares of capital stock of
the Company or any security convertible or exchangeable for capital stock of the
Company;
(iv) the Registration Statement has become effective under the Securities
Act and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or suspending or preventing the use
of the Prospectus is in effect and no proceedings for that purpose have been
instituted or are pending or contemplated by the Commission;
(v) the Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial [and statistical] data
contained therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the requirements of the Securities Act and
with the rules and regulations of the Commission thereunder;
(vi) the information required to be set forth in the Registration Statement
in answer to Item 9, Item 10 (insofar as it relates to such counsel) and Item
11(c) of Form S-1 is to the best of such counsel's knowledge accurately and
adequately set forth therein in all material respects or no response is required
with respect to such Items, and, to the best of such counsel's knowledge, the
description of the Company's stock option plans and the options granted and
which may be granted thereunder and the options and warrants granted otherwise
than under such plans set forth in the Prospectus
A-1
25
accurately and fairly presents the information required to be shown with respect
to said plans, options and warrants to the extent required by the Securities Act
and the rules and regulations of the Commission thereunder;
(vii) such counsel does not know of any franchises, contracts, leases,
documents or legal or governmental proceedings, pending or threatened, which in
the opinion of such counsel are of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement, which are not described and filed as required;
(viii) the Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(ix) the issue and sale by the Company of the shares of Stock sold by the
Company as contemplated by the Underwriting Agreement will not conflict with, or
result in a breach of, the Certificate of Incorporation or Bylaws of the Company
or any of its subsidiaries or any agreement or instrument known to such counsel
to which the Company or any of its subsidiaries is a party or any applicable law
or regulation, or so far as is known to such counsel, any order, writ,
injunction or decree, of any jurisdiction, court or governmental
instrumentality;
(x) all holders of securities of the Company having rights to the
registration of shares of Common Stock, or other securities, because of the
filing of the Registration Statement by the Company have waived such rights or
such rights have expired by reason of lapse of time following notification of
the Company's intent to file the Registration Statement;
(xi) no consent, approval, authorization or order of any court or
governmental agency or body is required for the issuance or sale of the Stock or
consummation of the transactions contemplated in the Underwriting Agreement,
except such as have been obtained under the Securities Act and such as may be
required under state securities or blue sky laws in connection with the purchase
and distribution of the Stock by the Underwriters;
(xii) The Stock has been duly authorized for listing on the National Market
System upon official notice of issuance.
(xiii) neither the Company nor any of its subsidiaries is an "investment
company" or an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940;
(xiv) such counsel has no reason to believe that the Registration Statement
or the Prospectus (A) contains any untrue statement of a material fact with
respect to patents, trade secrets, trademarks, service marks or other
proprietary information or materials owned or used by the Company, or the manner
of its use thereof, or any allegation on the part of any person that the Company
is infringing any patent rights, trade secrets, trademarks, service marks or
other proprietary information or materials of any such person or (B) omits to
state any material fact relating to patents, trade secrets, trademarks, service
marks or other proprietary information or materials owned or used by the
Company, or the manner of its use thereof, or any allegation of which such
counsel has knowledge, that is required to be stated in the Registration
Statement or the Prospectus or is necessary to make the statements therein not
misleading;
(xv) to the best of such counsel's knowledge there are no legal or
governmental proceedings pending relating to patent rights, trade secrets,
trademarks, service marks or other proprietary information or materials of the
Company, and to the best of such counsel's knowledge no such proceedings are
threatened or contemplated by governmental authorities or others;
(xvi) such counsel does not know of any contracts or other documents,
relating to governmental regulation affecting the Company or the Company's
patents, trade secrets, trademarks, service marks or other proprietary
information or materials of a character 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 filed or described as required;
A-2
26
(xvii) to the best of such counsel's knowledge, the Company is not
infringing or otherwise violating any patents, trade secrets, trademarks,
service marks or other proprietary information or materials, of others which, in
the judgment of such counsel, could affect materially the use thereof by the
Company or result in material liability to the Company, and to the best of such
counsel's knowledge there are no infringements by others of any of the Company's
patents, trade secrets, trademarks, service marks or other proprietary
information or materials;
(xviii) to the best of such counsel's knowledge, the Company owns or
possesses sufficient licenses or other rights to use all patents, trade secrets,
trademarks, service marks or other proprietary information or materials
necessary to conduct the business now being or proposed to be conducted by the
Company as described in the Prospectus; and
(xix) the Company and its subsidiaries are in all material respects in
compliance with and conduct their business in conformity with all applicable
Federal and state laws, rules and regulations; otherwise than are set forth in
the Registration Statement and the Prospectus, no respective change in any of
such Federal or state laws, rules or regulations has been adopted which, when
made effective would have a material adverse effect on the operations of the
Company and its subsidiaries prospective; and the statements made in the
Registration Statement under the caption "Regulation" are true and correct and
fairly represent the information required to be disclosed.
---------------------
In addition to the matters set forth above, counsel rendering the foregoing
opinion shall also include a statement to the effect that nothing has come to
the attention of such counsel that leads them to believe that the Registration
Statement (except as to the financial statements and schedules and other
financial data contained or incorporated by reference therein, as to which such
counsel need not express any opinion or belief) at the Effective Date contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, that the Prospectus (except as to the financial statements and
schedules and other financial data contained or incorporated by reference
therein, as to which such counsel need not express any opinion or belief) as of
its date or at the Closing Date (or any later date on which Option Stock is
purchased), contained or contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
Counsel rendering the foregoing opinion may rely as to questions of law not
involving the laws of the United States or the State of Delaware upon opinions
of local counsel satisfactory in form and scope to counsel for the Underwriters.
Copies of any opinions so relied upon shall be delivered to the Representatives
and to counsel for the Underwriters and the foregoing opinion shall also state
that counsel knows of no reason the Underwriters are not entitled to rely upon
the opinions of such local counsel.
A-3
27
ANNEX B
MATTERS TO BE COVERED IN THE OPINION OF
COUNSEL TO THE SELLING SECURITYHOLDERS
(i) The Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Securityholders and the Custody
Agreement between the Selling Securityholders and [ ], as Custodian,
and the Power of Attorney referred to in such Custody Agreement have been duly
executed and delivered by the Selling Securityholders; the Custody Agreement
entered into by, and the Power of Attorney given by, the Selling Securityholder
is valid and binding on the Selling Securityholder; and the Selling
Securityholder has full legal right and authority to enter into the Underwriting
Agreement and to sell, transfer and deliver in the manner provided for in the
Underwriting Agreement, the Shares of stock being sold by the Selling
Securityholder;
(ii) the sale by the Selling Securityholders of the shares of Stock and the
consummation of the transactions as contemplated by the Underwriting Agreement
will not conflict with or result in a breach or violation of, or a default
under, any charter or bylaws of the Selling Securityholders or any statute,
indenture, mortgage, deed of trust, agreement or instrument known to such
counsel to which any of the Selling Securityholders is a party or by which any
Selling Securityholder is bound or by which any of the properties or assets of
the Selling Securityholders is subject, or any applicable law or regulation, or
so far as is known to such counsel, any order, writ, injunction or decree, of
any jurisdiction, court or governmental instrumentality;
(iii) good and marketable title to the shares of Stock sold by the Selling
Securityholders under the Underwriting Agreement, free and clear of all liens,
encumbrances, equities, security interests and claims, has been transferred to
the Underwriters who have severally purchased such shares of Stock under the
Underwriting Agreement, assuming for the purpose of this opinion that the
Underwriters purchased the same in good faith without notice of any adverse
claims;
(iv) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the transactions
contemplated in the Underwriting Agreement, except such as have been obtained
under the Securities Act and such as may be required under state securities or
blue sky laws in connection with the purchase and distribution of the Stock by
the underwriters;
(v) to the knowledge of such counsel, there will be no contractual
preemptive rights that have not been waived or rights of first refusal or rights
of co-sale which exist with respect to the Stock being sold by the Selling
Securityholder;
(vi) the Plan is a profit sharing plan which is qualified under Section
401(a) of the Code, and the related trust is exempt from tax under Section
501(a) of the Code, and is a duly organized, validly existing trust in good
standing under the laws of the state of [ ] and has full power and
authority to execute and deliver the Underwriting Agreement and carry out the
transactions contemplated thereby. The execution, delivery and performance of
the Underwriting Agreement by the Plan will not result in a "prohibited
transaction," as defined in Section 406 of ERISA or Section 4973 of the Code.
[from counsel to the Plan only]; and
(vii) The Trustee is a trust company duly organized, validly existing and
in good standing under the laws of the state of [Tennessee] and has all
requisite power and authority to act as Trustee and exercise trust powers on
behalf of the Plan. The Trustee has full corporate power and authority to
execute and deliver this Agreement on behalf of the Plan and to carry out the
transactions contemplated hereby [from counsel to the Trustee only].
B-1
