EXHIBIT 1
_______________ Shares
First Horizon Pharmaceutical Corporation
Common Stock
($0.001 Par Value)
EQUITY UNDERWRITING AGREEMENT
_______________ ___, 2002
Deutsche Banc Alex. Xxxxx Inc.
Banc of America Securities LLC
X.X. Xxxxxx Securities Inc.
Xxxxxx Xxxxxx Partners LLC
LaSalle Capital Markets
As Representatives of the
Several Underwriters
c/o Deutsche Banc Alex. Xxxxx Inc.
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
First Horizon Pharmaceutical Corporation, a Delaware corporation (the
"Company"), proposes to sell to the several underwriters (the "Underwriters")
named in Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of __________ shares of the Company's Common
Stock, $0.001 par value (the "Firm Shares"). The respective amounts of the Firm
Shares to be so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. The Company also proposes to sell at the
Underwriters' option an aggregate of up to __________ additional shares of the
Company's Common Stock (the "Option Shares") as set forth below.
As the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the numbers of Firm Shares set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option Shares
if you elect to
exercise the over-allotment option in whole or in part for the accounts of the
several Underwriters. The Firm Shares and the Option Shares (to the extent the
aforementioned option is exercised) are herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the
Underwriters as follows:
(a) A registration statement on Form S-1 (File No.
333-______) with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and has been
filed with the Commission. Copies of such registration statement, including any
amendments thereto, the preliminary prospectuses (meeting the requirements of
the Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore been
delivered by the Company to you. Such registration statement, together with any
registration statement filed by the Company pursuant to Rule 462 (b) of the Act,
is herein referred to as the "Registration Statement," which shall be deemed to
include all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, has become effective under the
Act and no post-effective amendment to the Registration Statement has been filed
as of the date of this Agreement. "Prospectus" means the form of prospectus
first filed with the Commission pursuant to Rule 424(b). Each preliminary
prospectus included in the Registration Statement prior to the time it becomes
effective is herein referred to as a "Preliminary Prospectus."
(b) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. The subsidiary
of the Company, First Horizon Services, LLC as listed in Exhibit A hereto (the
"Subsidiary") has been duly organized and is validly existing as a limited
liability company in good standing under the laws of the jurisdiction of its
organization, with power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. The Subsidiary
is the only subsidiary, direct or indirect, of the Company. The Company and the
Subsidiary are duly qualified to transact business in all jurisdictions in which
the conduct of their business requires such qualification, except where absence
of qualification would not have a material adverse effect on the conduct or
operations of such business. The outstanding membership interests of the
Subsidiary are owned by the Company free and clear of all liens, encumbrances
and equities and claims (other than the pledge to the Company's senior lenders);
and no options, warrants or other
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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
the Subsidiary are outstanding.
(c) The outstanding shares of Common Stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; the Shares to be issued and sold by the Company have been duly
authorized and when issued and paid for as contemplated herein will be validly
issued, fully paid and non-assessable; and no preemptive rights of stockholders
exist with respect to any of the Shares or the issue and sale thereof. Neither
the filing of the Registration Statement nor the offering or sale of the Shares
as contemplated by this Agreement gives rise to any rights, other than those
which have been waived or satisfied, for or relating to the registration of any
shares of Common Stock.
(d) The information set forth under the caption
"Capitalization" in the Prospectus is fairly presented on a basis consistent
with the Company's financial statements. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the corporate law of the jurisdiction of
the Company's incorporation.
(e) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Shares nor instituted proceedings for that purpose. The Registration Statement
contains, and the Prospectus and any amendments or supplements thereto will
contain, in all material respects, all statements which are required to be
stated therein by, and will conform, in all material respects, to the
requirements of the Act and the Rules and Regulations. The Registration
Statement and any amendment thereto do not contain, and will not contain, any
untrue statement of a material fact and do not omit, and will not omit, to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus and any amendments and
supplements thereto do not contain, and will not contain, any untrue statement
of material fact; and do not omit, and will not omit, to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
any Underwriter through the Representatives, specifically for use in the
preparation thereof.
(f) The consolidated financial statements of the Company
and the Subsidiary, together with related notes and schedules as set forth or
incorporated by reference in the Registration Statement, present fairly the
financial position and the results of operations and cash flows of the Company
and the Subsidiary, at the indicated dates and for the indicated periods. Such
financial statements and related schedules have been prepared in accordance with
generally accepted principles of accounting, consistently applied throughout the
periods involved, except as disclosed therein, and all adjustments necessary for
a fair presentation of results for such periods have been made. The
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summary financial and statistical data included in the Registration Statement
presents fairly the information shown therein and such data has been compiled on
a basis consistent with the financial statements presented therein and the books
and records of the Company. The pro forma financial statements and other pro
forma financial information included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial statements, have been properly compiled on the pro forma bases
described therein, and, in the opinion of the Company, the assumptions used in
the preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(g) Xxxxxx Xxxxxxxx LLP, who have certified certain of
the financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and the
Rules and Regulations.
(h) There is no action, suit, claim or proceeding pending
or, to the knowledge of the Company, threatened against the Company or the
Subsidiary before any court or administrative agency or otherwise which if
determined adversely to the Company or its Subsidiary might result in any
material adverse change in the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects of
the Company and of the Subsidiary taken as a whole or prevent the consummation
of the transactions contemplated hereby, except as set forth in the Registration
Statement.
(i) Each of the Company and the Subsidiary has good and
marketable title to all of the properties and assets reflected in the
consolidated financial statements hereinabove described or described in the
Registration Statement, subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except those reflected in such financial statements or
described in the Registration Statement or which are not material in amount. The
Company and the Subsidiary occupy their leased properties under valid and
binding leases conforming in all material respects to the description thereof
set forth in the Registration Statement.
(j) Each of the Company and the Subsidiary has filed all
Federal, State, local and foreign tax returns which have been required to be
filed and have paid all taxes indicated by such 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 and for which an adequate reserve for
accrual has been established in accordance with generally accepted accounting
principles. All tax liabilities have been adequately provided for in the
financial statements of the Company, and the Company does not know of any actual
or proposed additional material tax assessments.
(k) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented, there
has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the earnings,
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business, management, properties, assets, rights, operations, condition
(financial or otherwise), or prospects of the Company and its Subsidiary taken
as a whole, whether or not occurring in the ordinary course of business, and
there has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company or the
Subsidiary, other than transactions in the ordinary course of business and
changes and transactions described in the Registration Statement, as it may be
amended or supplemented. The Company and the Subsidiary have no material
contingent obligations which are not disclosed in the Company's financial
statements which are included in the Registration Statement.
(l) Neither the Company nor the Subsidiary is or with the
giving of notice or lapse of time or both, will be, in violation of or in
default under (i) its Charter or By-Laws or (ii) under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a party or
by which it, or any of its properties, is bound and, solely with respect to this
clause (ii), which violation or default would have a material adverse effect on
the earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and the
Subsidiary taken as a whole. The execution and delivery of this Agreement and
the consummation of the transactions herein contemplated and the fulfillment of
the terms hereof will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or the
Subsidiary is a party or by which the Company or the Subsidiary or any of their
respective properties is bound, or of the Charter or By-Laws of the Company or
any law, order, rule or regulation judgement, order, writ or decree applicable
to the Company or the Subsidiary of any court or of any government, regulatory
body or administrative agency or other governmental body having jurisdiction
where, except for the Charter or By-Laws, such conflict, breach or default would
not have a material adverse effect on the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and the Subsidiary taken as a whole.
(m) The Company has adequate corporate power and
authority to enter into this Agreement and to issue, sell and deliver to the
Underwriters the Shares to be issued and sold by it under this Agreement. The
execution and delivery of, and the performance by the Company of its obligations
under, this Agreement has been duly and validly authorized by all necessary
corporate action on the part of the Company, and this Agreement has been duly
executed and delivered by the Company.
(n) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws) has been obtained
or made and is in full force and effect.
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(o) Each of the Company and the Subsidiary hold all
material licenses, certificates and permits from governmental authorities which
are necessary to the conduct of their businesses; the Company and the Subsidiary
each own or possess the right to use all patents, patent rights, trademarks,
trade names, service marks, service names, copyrights, license rights, know-how
(including trade secrets and other unpatented and unpatentable proprietary or
confidential information, systems or procedures) and other intellectual property
rights ("Intellectual Property") necessary to carry on their businesses in all
material respects; neither the Company nor the Subsidiary has, to its or the
Company's knowledge, infringed, and neither the Company nor the Subsidiary has
received notice of conflict with, any Intellectual Property of any other person
or entity. The Company has taken all reasonable steps necessary to secure
interests in such Intellectual Property from its contractors. There are no
outstanding options, licenses or agreements of any kind relating to the
Intellectual Property of the Company that are required to be described in the
Prospectus and are not described in all material respects. The Company is not a
party to or bound by any options, licenses or agreements with respect to the
Intellectual Property of any other person or entity that are required to be set
forth in the Prospectus and are not described in all material respects. None of
the technology employed by the Company has been obtained or is being used by the
Company in violation of any contractual obligation binding on the Company or any
of its officers, directors or employees or, to its knowledge, otherwise in
violation of the rights of any persons; the Company has not received any written
or oral communications alleging that the Company has violated, infringed or
conflicted with, or, by conducting its business as set forth in the Prospectus,
would violate, infringe or conflict with, any of the Intellectual Property of
any other person or entity. The Company knows of no infringement by others of
Intellectual Property owned by or licensed to the Company.
(p) Neither the Company, nor to the Company's knowledge,
any of its affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of the
Shares. The Company acknowledges that the Underwriters may engage in passive
market making transactions in the Shares on the Nasdaq National Market in
accordance with Regulation M under the Exchange Act.
(q) Neither the Company nor any Subsidiary is or, after
giving effect to the offering and sale of the Shares contemplated hereunder and
the application of the net proceeds from such sale as described in the
Prospectus, will be an "investment company" within the meaning of such term
under the Investment Company Act of 1940, (as amended, the "1940 Act") and the
rules and regulations of the Commission thereunder.
(r) The Company and the Subsidiary maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting
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principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(s) Each of the Company and the Subsidiary carry, or are
covered by, insurance in such amounts and covering such risks as is generally
deemed adequate for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies engaged in similar
businesses.
(t) Each of the Company and the Subsidiary is in
compliance in all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company and the Subsidiary would have any
liability; the Company and the Subsidiary each have not incurred and do not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company or the Subsidiary would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
(u) To the Company's knowledge, there are no affiliations
or associations between any member of the NASD and any of the Company's
officers, directors or 5% or greater securityholders, except as set forth in the
Registration Statement.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set forth, the
Company agrees to sell to the Underwriters and each Underwriter agrees,
severally and not jointly, to purchase, at a price of $_____ per share, the
number of Firm Shares set forth opposite the name of each Underwriter in
Schedule I hereof, subject to adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is
to be made in Federal (same day) funds against delivery of certificates therefor
to the Representatives for the several accounts of the Underwriters. Such
payment and delivery are to be made through the facilities of The Depository
Trust Company, New York, New York at 10:00 a.m., New York time, on the third
business day after the date of this Agreement or at such other time and date not
later than five business days thereafter as you and the Company shall agree
upon, such time and date being herein referred to as the "Closing
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Date." (As used herein, "business day" means a day on which the New York Stock
Exchange is open for trading and on which banks in New York are open for
business and are not permitted by law or executive order to be closed.)
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase the Option Shares at the price per share as set forth in the first
paragraph of this Section 2. The option granted hereby may be exercised in whole
or in part by giving written notice (i) at any time before the Closing Date and
(ii) only once thereafter within 30 days after the date of this Agreement, by
you, as Representatives of the several Underwriters, to the Company setting
forth the number of Option Shares as to which the several Underwriters are
exercising the option and the time and date at which such certificates are to be
delivered. The time and date at which certificates for Option Shares are to be
delivered shall be determined by the Representatives but shall not be earlier
than three nor later than 10 full business days after the exercise of such
option, nor in any event prior to the Closing Date (such time and date being
herein referred to as the "Option Closing Date"). If the date of exercise of the
option is three or more days before the Closing Date, the notice of exercise
shall set the Closing Date as the Option Closing Date. The number of Option
Shares to be purchased by each Underwriter shall be in the same proportion to
the total number of Option Shares being purchased as the number of Firm Shares
being purchased by such Underwriter bears to the total number of Firm Shares,
adjusted by you in such manner as to avoid fractional shares. The option with
respect to the Option Shares granted hereunder may be exercised only to cover
over-allotments in the sale of the Firm Shares by the Underwriters. You, as
Representatives of the several Underwriters, may cancel such option at any time
prior to its expiration by giving written notice of such cancellation to the
Company. To the extent, if any, that the option is exercised, payment for the
Option Shares shall be made on the Option Closing Date in Federal (same day
funds) through the facilities of The Depository Trust Company in New York, New
York drawn to the order of the Company.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a
public offering of the Firm Shares as soon as the Representatives deem it
advisable to do so. The Firm Shares are to be initially offered to the public at
the initial public offering price set forth in the Prospectus. The
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option Shares
are purchased pursuant to Section 2 hereof, the Underwriters will offer them to
the public on the foregoing terms.
It is further understood that you will act as the
Representatives for the Underwriters in the offering and sale of the Shares in
accordance with a Master Agreement Among Underwriters entered into by you and
the several other Underwriters.
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4. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) use its best efforts to cause
the Registration Statement to become effective or, if the procedure in Rule 430A
of the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved by the Representatives containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and Regulations, (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations and (C) file on a timely basis all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission subsequent to the date of the Prospectus and
prior to the termination of the offering of the Shares by the Underwriters.
(ii) The Company will advise the Representatives promptly
(A) when the Registration Statement or any post-effective amendment thereto
shall have become effective, (B) of receipt of any comments from the Commission,
(C) of any request of the Commission for amendment of the Registration Statement
or for supplement to the Prospectus or for any additional information, and (D)
of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the use of the Prospectus or of the institution
of any proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives
in endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. 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 the Representatives may reasonably request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of,
the Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period when
delivery of a Prospectus is required under the Act, as many copies of the
Prospectus in final
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form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), and of all amendments thereto, as the Representatives
may reasonably request.
(v) The Company will comply with the Act and the Rules
and Regulations, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder, so
as to permit the completion of the distribution of the Shares as contemplated in
this Agreement and the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in the reasonable
opinion of the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the law.
(vi) The Company will make generally available to its
security holders, as soon as it is practicable to do so, but in any event not
later than 45 days after the end of the fiscal quarter first occurring after the
first anniversary of the effective date of the Registration Statement, an
earnings statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise you in writing when such statement has been so made
available.
(vii) Prior to the Closing Date, the Company will furnish
to the Underwriters, as soon as they have been prepared by or are available to
the Company, a copy of any unaudited interim financial statements of the Company
for any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus.
(viii) No offering, sale, short sale or other disposition of
any shares of Common Stock of the Company or other securities convertible into
or exchangeable or exercisable for shares of Common Stock or derivative of
Common Stock (or agreement for such), except for shares of Common Stock issued
by the Company pursuant to the stock purchase plan of the Company or upon the
exercise of options granted under the stock option plans of the Company, all as
in effect as of the date of the Prospectus and options to purchase Common Stock
granted under existing stock option plans of the Company provided that the
options do not vest during the period ending 90 days
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following the effective date of the Registration Statement, will be made for a
period of 90 days after the date of this Agreement, directly or indirectly, by
the Company otherwise than hereunder or with the prior written consent of
Deutsche Banc Alex. Xxxxx.
(ix) The Company will use its best efforts to list,
subject to notice of issuance, the Shares on the Nasdaq National Market.
(x) The Company has caused each officer and director of
the Company and Kapoor-Pharma Investments, L.P. to furnish to you, on or prior
to the date of this agreement, a letter or letters, in the form attached hereto
as Appendix A or in such form and substance satisfactory to the Underwriters,
pursuant to which each such person shall agree not to offer, sell, sell short or
otherwise dispose of any shares of Common Stock of the Company or other capital
stock of the Company, or any other securities convertible, exchangeable or
exercisable for Common Shares or derivative of Common Shares owned by such
person or request the registration for the offer or sale of any of the foregoing
(or as to which such person has the right to direct the disposition of) for a
period of 90 days after the date of the Prospectus, directly or indirectly,
except with the prior written consent of Deutsche Banc Alex. Xxxxx ("Lockup
Agreements") or as otherwise provided in the Lockup Agreements.
(xi) The Company shall apply the net proceeds of its sale
of the Shares as set forth in the Prospectus and shall file such reports with
the Commission with respect to the sale of the Shares and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(xii) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Shares in such a manner as
would require the Company or the Subsidiary to register as an investment company
under the 1940 Act.
(xiii) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock.
(xiv) The Company will not take, directly or indirectly,
any action designed to cause or result in, that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Company under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the
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Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Underwriters' Selling Memorandum, the Underwriters' Invitation
Letter, the Listing Application, the Blue Sky Survey and any supplements or
amendments thereto; the filing fees of the Commission; the filing fees and
expenses (including legal fees and disbursements) incident to securing any
required review by the NASD of the terms of the sale of the Shares; the Listing
Fee of the Nasdaq National Market; and the expenses, including the fees and
disbursements of counsel for the Underwriters, incurred in connection with the
qualification of the Shares under State securities or Blue Sky laws. The Company
shall not, however, be required to pay for any of the Underwriters expenses
(other than those related to qualification under NASD regulation and State
securities or Blue Sky laws) except that, if this Agreement shall not be
consummated because the conditions in Section 6 hereof are not satisfied, or
because this Agreement is terminated by the Representatives pursuant to Section
11 hereof, or by reason of any failure, refusal or inability on the part of the
Company to perform any undertaking or satisfy any condition of this Agreement or
to comply with any of the terms hereof on its part to be performed, unless such
failure, refusal or inability is due primarily to the default or omission of any
Underwriter, the Company shall reimburse the several Underwriters for reasonable
out-of-pocket expenses, including fees and disbursements of counsel, reasonably
incurred in connection with investigating, marketing and proposing to market the
Shares or in contemplation of performing their obligations hereunder; but the
Company shall not in any event be liable to any of the several Underwriters for
damages on account of loss of anticipated profits from the sale by them of the
Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the
Firm Shares on the Closing Date and the Option Shares, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date or the Option
Closing Date, as the case may be, of the representations and warranties of the
Company contained herein, and to the performance by the Company of its covenants
and obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective and any and all filings required
by Rule 424 and Rule 430A of the Act shall have been made within the applicable
time period prescribed by, and in compliance with, the Rules and Regulations,
and any request of the Commission for additional information (to be included in
the Registration Statement or otherwise) shall have been disclosed to the
Representatives and complied with to their reasonable satisfaction. No stop
order suspending the effectiveness of the Registration Statement, as amended
from time to time, shall have been issued and no proceedings for that purpose
shall have been taken or, to the knowledge of the Company, shall be contemplated
or threatened by the Commission and no injunction, restraining order or order of
any nature by a Federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance of the Shares.
- 12 -
(b) The Representatives shall have received on the
Closing Date or the Option Closing Date, as the case may be, the opinion of
Xxxxxx Xxxxxx Xxxxxxx LLP, counsel for the Company, dated the Closing Date or
the Option Closing Date, as the case may be, addressed to the Underwriters (and
stating that it may be relied upon by counsel to the Underwriters) to the effect
that:
(i) The Company has been incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement; the
Subsidiary has been duly organized under the laws of the jurisdiction of its
organization, with power and authority to own or lease its properties and
conduct its business as is currently or proposed to be conducted; the Company is
duly qualified to transact business in Georgia, North Carolina and Arizona and
the Subsidiary is duly qualified to transact business in Illinois; and the
membership interests of the Subsidiary are owned by the Company; and, except as
stated therein, to the best of such counsel's knowledge, such membership
interests are owned free and clear of all liens, encumbrances and equities and
claims, and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligations into any
shares of capital stock or of ownership interests in the Subsidiary are
outstanding.
(ii) The Company has authorized and outstanding
capital stock as of December 31, 2001 as set forth under the caption
"Capitalization" in the Prospectus; the authorized shares of the Company's
Common Stock have been duly authorized; the outstanding shares of the Company's
Common Stock have been duly authorized and validly issued and are fully paid and
non-assessable; all of the Shares conform to the description thereof contained
in the Prospectus; the form of the certificates for the Shares, assuming they
are in the form filed with the Commission, comply with Delaware law; the Shares
of Common Stock, including the Option Shares, if any, to be sold by the Company
pursuant to this Agreement have been duly authorized and will be validly issued,
fully paid and non-assessable when issued and paid for as contemplated by this
Agreement; and no preemptive rights of, or rights of refusal in favor of,
stockholders exist with respect to any of the Shares or the issue or sale
thereof, pursuant to the Charter or By-Laws of the Company.
(iii) Except as described in or contemplated by
the Prospectus, to such counsel's knowledge, there are no outstanding securities
of the Company convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of capital stock of the Company and there
are no outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to such counsel's knowledge, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Shares or the right to have any Common Stock or other securities of the Company
included in
- 13 -
the Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Act of any shares of
Common Stock or other securities of the Company.
(iv) The Registration Statement has become
effective under the Act and, to the best of the knowledge of such counsel, no
stop order proceedings with respect thereto have been instituted or are pending
or threatened under the Act.
(v) The Registration Statement, the Prospectus
and each amendment or supplement thereto complied as to form in all material
respects with the requirements of the Act and the applicable rules and
regulations thereunder at the time the Registration Statement was declared
effective under the Act (except that such counsel need express no opinion as to
the financial statements and schedules and other financial data contained
therein).
(vi) The statements under the captions "Risk
Factors," "Business," "Management," "Certain Relationships and Related
Transactions," "Description of Capital Stock" and "Shares Eligible for Future
Sale" in the Prospectus, insofar as such statements constitute a summary of
documents referred to therein to which the Company is a party or matters of law,
fairly summarize in all material respects the information called for with
respect to such documents and matters (except that such counsel need express no
opinion on trademarks, patents or other intellectual property matters).
(vii) Such counsel does not know of any contracts
or documents which in such counsel's opinion are required to be filed as
exhibits to the Registration Statement or described in the Registration
Statement or the Prospectus which are not so filed or described as required.
(viii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company or the
Subsidiary which are required to be disclosed in the Prospectus except as set
forth in the Prospectus.
(ix) The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Charter or By-Laws of the Company, or any
material indenture, mortgage, deed of trust or other agreement or instrument
known to such counsel to which the Company or the Subsidiary is a party or by
which the Company or the Subsidiary may be bound.
(x) The Company has adequate corporate power and
authority to enter into the Underwriting Agreement and to issue, sell and
deliver to the Underwriters the Shares to be issued and sold by it under this
Agreement.
- 14 -
(xi) This Agreement has been duly authorized,
executed and delivered by the Company.
(xii) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated (other than as may be required by the NASD State securities and
Blue Sky laws or federal or provincial laws of Canada as to which such counsel
need express no opinion) except such as have been obtained or made, specifying
the same.
(xiii) The Company is not, and will not become, as
a result of the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
(xiv) The information required to be set forth in
the Registration Statement in answer to Items 9, 10 (insofar as it relates to
such counsel) and 11(c) of Form S-1 is to 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, such counsel's knowledge, the
description of the Company's stock option plans and the options granted and
which may be granted thereunder set forth in the Prospectus accurately and
fairly presents the information required to be shown with respect to said plans
and options to the extent required by the Act and the rules and regulations of
the Commission thereunder.
In rendering such opinion Xxxxxx Xxxxxx Xxxxxxx LLP may rely
as to matters governed by the laws of states other than Georgia or Federal laws
on local counsel in such jurisdictions, provided that in each case Xxxxxx Xxxxxx
Xxxxxxx LLP shall state that they believe that they and the Underwriters are
justified in relying on such other counsel. In addition to the matters set forth
above, such opinion shall also include a statement to the effect that nothing
has come to the attention of such counsel which leads them to believe that (i)
the Registration Statement, at the time it became effective under the Act
(including the information deemed to be a part of the Registration Statement at
the time it became effective pursuant to Rule 430A under the Act) and as of the
Closing Date or the Option Closing Date, as the case may be, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Prospectus, or any supplement thereto, on
the date it was filed pursuant to the Rules and Regulations and as of the
Closing Date or the Option Closing Date, as the case may be, contained or
contains an untrue statement of a material fact or omitted 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 (except that such
counsel need express no view as to financial statements, schedules and other
financial data therein). With respect
- 15 -
to such statement, Xxxxxx Xxxxxx Xxxxxxx LLP may state that their belief is
based upon the procedures set forth therein, but is without independent check
and verification.
(c) The Representatives shall have received on the
Closing Date or the Option Closing Date, as the case may be, the opinions of
Xxxxxxxxxx Xxxxxxxx LLP, patent counsel for the Company, dated the Closing Date
or the Option Closing Date, as the case may be, addressed to the Underwriters
(and stating that it may be relied upon by counsel to the Underwriters) covering
the matters set forth in Annex A.
(d) The Representatives shall have received from Xxxxxx
Xxxxxx White & XxXxxxxxx LLP, counsel for the Underwriters, an opinion dated the
Closing Date or the Option Closing Date, as the case may be, substantially to
the effect specified in subparagraphs (ii), (iii), (iv), (x) and (xiii) of
Paragraph (b) of this Section 6, and that the Company is a duly organized and
validly existing corporation under the laws of the State of Delaware. In
rendering such opinion Xxxxxx Xxxxxx White & XxXxxxxxx LLP may rely as to all
matters governed other than by the laws of the State of Delaware or Federal laws
on the opinion of counsel referred to in Paragraph (b) of this Section 6. In
addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such counsel
which leads them to believe that (i) the Registration Statement, or any
amendment thereto, as of the time it became effective under the Act (including
the information deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 430A under the Act) as of the Closing Date or
the Option Closing Date, as the case may be, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Prospectus, or any supplement thereto, on the date it
was filed pursuant to the Rules and Regulations and as of the Closing Date or
the Option Closing Date, as the case may be, contained or contains an untrue
statement of a material fact or omitted 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 (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Xxxxxx Xxxxxx
White & XxXxxxxxx LLP may state that their belief is based upon the procedures
set forth therein, but is without independent check and verification.
(e) You shall have received, on each of the date hereof,
the Closing Date and, if applicable, the Option Closing Date, a letter dated the
date hereof, the Closing Date or the Option Closing Date, as the case may be, in
form and substance satisfactory to you, of Xxxxxx Xxxxxxxx LLP confirming that
they are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating that in their
opinion the financial statements and schedules examined by them and included in
the Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial
- 16 -
statements and certain financial and statistical information contained in the
Registration Statement and Prospectus.
(f) The Representatives shall have received on the
Closing Date and, if applicable, the Option Closing Date, as the case may be, a
certificate or certificates of the Chief Executive Officer and the Chief
Financial Officer of the Company to the effect that, as of the Closing Date or
the Option Closing Date, as the case may be, each of them severally represents
as follows:
(i) The Registration Statement has become
effective under the Act and no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such purpose have
been taken or are, to his knowledge, contemplated or threatened by the
Commission;
(ii) The representations and warranties of the
Company contained in Section 1 hereof are true and correct as of the Closing
Date or the Option Closing Date, as the case may be;
(iii) All filings required to have been made
pursuant to Rules 424 or 430A under the Act have been made as and when required
by such rules;
(iv) He or she has carefully examined the
Registration Statement and the Prospectus and, in his or her opinion, as of the
effective date of the Registration Statement, the statements contained in the
Registration Statement were true and correct, and such Registration Statement
and Prospectus did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading, and
since the effective date of the Registration Statement, no event has occurred
which should have been set forth in a supplement to or an amendment of the
Prospectus which has not been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects of
the Company and the Subsidiary taken as a whole, whether or not arising in the
ordinary course of business.
(g) The Company shall have furnished to the
Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested.
(h) The Firm Shares and Option Shares, if any, have been
approved for designation upon notice of issuance on the Nasdaq National Market.
-17-
(i) The Lockup Agreements described in Section 4 (x) are
in full force and effect.
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are
in all material respects satisfactory to the Representatives and to Xxxxxx
Xxxxxx White & XxXxxxxxx LLP, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this
Section 6 shall not have been fulfilled when and as required by this Agreement
to be fulfilled, the obligations of the Underwriters hereunder may be terminated
by the Representatives by notifying the Company of such termination in writing
or by telegram at or prior to the Closing Date or the Option Closing Date, as
the case may be.
In such event, the Company and the Underwriters shall not be
under any obligation to each other (except to the extent provided in Sections 5
and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion
of the Shares required to be delivered as and when specified in this Agreement
are subject to the conditions that at the Closing Date or the Option Closing
Date, as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees:
(1) to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act, against
any losses, claims, damages or liabilities to which such Underwriter or
any such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, (ii)
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made or (iii) any act or failure to act, or any alleged act
or failure to act by any Underwriter in connection with, or relating in
any manner to, the Shares or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by
clause (i) or (ii) above (provided, that the Company shall
-18-
not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly
from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful
misconduct); provided, however, that the Company will not be liable in
any such case to the extent (A) that the person asserting any such
losses, claims, damages, liabilities or expenses purchased the Shares
which are the subject thereof (or to the benefit of any person
controlling such Underwriter) was not sent or delivered at or prior to
the written confirmation of the sale of such Shares a copy of the
Prospectus or any amendment or supplement and the untrue statement or
omission of a material fact contained in such Preliminary Prospectus
was corrected in the Prospectus or any such amendment or supplement, or
(B) that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement, or omission
or alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with written information furnished to
the Company by or through the Representatives specifically for use in
the preparation thereof; and
(2) except as otherwise provided in Section 8(a)(1), to
reimburse each Underwriter and each such controlling person upon demand
for any legal or other out-of-pocket expenses reasonably incurred by
such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental
inquiry related to the offering of the Shares, whether or not such
Underwriter or controlling person is a party to any action or
proceeding. In the event that it is finally judicially determined that
the Underwriters were not entitled to receive payments for legal and
other expenses pursuant to this subparagraph, the Underwriters will
promptly return all sums that had been advanced pursuant hereto.
(b) Each Underwriter severally and not jointly will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of the Act, against any losses,
claims, damages or liabilities to which the Company or any such director,
officer, or controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made; and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that each Underwriter will
be liable in each case to the extent, but only to the extent, that such untrue
statement or alleged
-19-
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
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 the
provisions of Section 8(a) or (b). In case any such proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred (or within 30 days of presentation) the fees and
expenses of the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 8(a) and by the Company in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if settled
with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim,
-20-
action or proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action or proceeding.
(d) To the extent the indemnification provided for in
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or (b) above in respect of any losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
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 the Company
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this Section 8(d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
-21-
(e) In any proceeding relating to the Registration
Statement, any Preliminary Prospectus, the Prospectus or any supplement or
amendment thereto, each party against whom contribution may be sought under this
Section 8 hereby consents to the jurisdiction of any court having jurisdiction
over any other contributing party, agrees that process issuing from such court
may be served upon it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join it
as an additional defendant in any such proceeding in which such other
contributing party is a party.
(f) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 8 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case
may be, any Underwriter shall fail to purchase and pay for the portion of the
Shares which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company), you, as
Representatives of the Underwriters, shall use your reasonable efforts to
procure within 36 hours thereafter one or more of the other Underwriters, or any
others, to purchase from the Company in such amounts as may be agreed upon and
upon the terms set forth herein, the Shares which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as such
Representatives, shall not have procured such other Underwriters, or any others,
to purchase the Shares agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Shares to be purchased on
the Closing Date or the Option Closing date, as the case may be, the other
Underwriters shall be obligated, severally, in proportion to the respective
numbers of Shares which they are obligated to purchase hereunder, to purchase
the Shares which such defaulting Underwriter or Underwriters failed to purchase,
or (b) if the aggregate number of Shares with respect to which such default
shall occur exceeds 10% of the Shares to be purchased on the Closing Date or the
Option Closing Date, as the case may be, the Company or you as the
Representatives of the Underwriters will have the right, by written notice given
within the next 36-hour period to the parties to this Agreement, to terminate
this Agreement without liability on the part of the non-defaulting
-22-
Underwriters or of the Company except to the extent provided in Sections 5 and 8
hereof. In the event of a default by any Underwriter or Underwriters, as set
forth in this Section 9, the Closing Date or Option Closing Date, as the case
may be, may be postponed for such period, not exceeding seven days, as you, as
Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section 9
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to Deutsche Banc
Alex. Xxxxx Inc., Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000; Attention:
Syndicate Manager, with a copy to Deutsche Banc Alex. Xxxxx Inc., 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: General Counsel; if to the Company,
to
First Horizon Pharmaceutical Corporation
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
11. TERMINATION.
(a) This Agreement may be terminated by you by notice to
the Company at any time prior to the Closing Date or any Option Closing Date (if
different from the Closing Date and then only as to Option Shares) if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change in or
affecting the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company and
the Subsidiary taken as a whole, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or crisis
or change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make it
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares, or (iii) suspension of trading in securities generally
on the New York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market or limitation on prices (other than limitations on hours or
numbers of days of trading) for securities on either such Exchange, (iv) the
enactment, publication, decree or other promulgation of any statute, regulation,
rule or order of any court or other governmental authority which in your opinion
materially and
-23-
adversely affects or may materially and adversely affect the business or
operations of the Company, (v) the declaration of a banking moratorium by United
States or New York State authorities, (vi) any downgrading, or placement on any
watch list for possible downgrading, in the rating of any of the Company's debt
securities by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Exchange Act); (vii) the
suspension of trading of the Company's common stock by the Nasdaq National
Market, the Commission, or any other governmental authority or, (viii) the
taking of any action by any governmental body or agency in respect of its
monetary or fiscal affairs which in your reasonable opinion has a material
adverse effect on the securities markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of
the Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that
the only information furnished or to be furnished by any Underwriter to the
Company for inclusion in any Prospectus or the Registration Statement consists
of the information set forth in the first, third, fifth, and ninth through
twelfth paragraphs under the caption "Underwriting" in the Prospectus.
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
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
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 Maryland.
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If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
FIRST HORIZON PHARMACEUTICAL CORPORATION
By _____________________________________
President
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
DEUTSCHE BANC ALEX. XXXXX INC.
BANC OF AMERICA SECURITIES LLC
X.X. XXXXXX SECURITIES INC
XXXXXX XXXXXX PARTNERS LLC
LASALLE CAPITAL MARKETS
As Representatives of the several
Underwriters listed on Schedule I
By: Deutsche Banc Alex. Xxxxx Inc.
By: ______________________________
Authorized Officer
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SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
Deutsche Banc Alex. Xxxxx Inc.
Banc of America Securities LLC
X.X. Xxxxxx Securities Inc.
Xxxxxx Xxxxxx Partners LLC
LaSalle Capital Markets, a
division of ABN AMRO Financial
Services, Inc.
----------
Total
----------
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EXHIBIT A
SUBSIDIARIES
-27-
APPENDIX A
_________________________, 2002
First Horizon Pharmaceutical Corporation
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Deutsche Banc Alex. Xxxxx Inc.
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
The undersigned understands that Deutsche Banc Alex. Xxxxx Inc.
("DBAB"), Banc of America Securities LLC, X.X. Xxxxxx Securities Inc., Xxxxxx
Xxxxxx Partners LLC and LaSalle Capital Markets, a division of ABN AMRO
Financial Services, Inc., as representatives (the "Representatives") of the
several underwriters (the "Underwriters"), propose to enter into an Underwriting
Agreement (the "Underwriting Agreement") with First Horizon Pharmaceutical
Corporation (the "Company"), providing for the public offering by the
Underwriters, including the Representatives, of common stock the "Common
Stock"), of the Company (the "Public Offering").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned agrees that, without the prior written consent of DBAB, the
undersigned will not, directly or indirectly offer, sell, pledge, contract to
sell, (including any short sale), grant any option to purchase or otherwise
dispose of any shares of Common Stock (including, without limitation, shares of
Common Stock of the Company which may be deemed to be beneficially owned by the
undersigned on the date hereof in accordance with the rules and regulations of
the Securities and Exchange Commission, shares of Common Stock which may be
issued upon exercise of a stock option or warrant and any other security
convertible into or exchangeable for Common Stock) or enter into any Hedging
Transaction (as defined below) relating to the Common Stock (each of the
foregoing referred to as a "Disposition") for a period from the date hereof
until and including the date that is 90 days after the date of the final
prospectus relating to the Public Offering (the "Lock-Up Period"). The foregoing
restriction is expressly intended to preclude the undersigned from engaging in
any Hedging Transaction or other transaction which is designed to or reasonably
expected to lead to or result in a Disposition during the Lock-Up Period even if
the securities would be disposed of by someone other than the undersigned.
"Hedging Transaction" means any short sale (whether or not against the box) or
any purchase, sale or grant of any right (including, without limitation, any put
or call option) with respect to any security (other than a broad-
-1-
based market basket or index) that includes, relates to or derives any
significant part of its value from the Common Stock.
Notwithstanding the foregoing, the undersigned may transfer (a) shares
of Common Stock acquired in open market transactions by the undersigned after
the completion of the Public Offering, and (b) any or all of the shares of
Common Stock or other Company securities if the transfer is by (i) gift, will or
intestacy, or (ii) distribution to partners, members or shareholders of the
undersigned; provided, however, that in the case of a transfer pursuant to
clause (b) above, it shall be a condition to the transfer that the transferee
execute an agreement stating that the transferee is receiving and holding the
securities subject to the provisions of this letter agreement.
The undersigned agrees that the Company may, and that the undersigned
will, (i) with respect to any shares of Common Stock or other Company securities
for which the undersigned is the record holder, cause the transfer agent for the
Company to note stop transfer instructions with respect to such securities on
the transfer books and records of the Company and (ii) with respect to any
shares of Common Stock or other Company securities for which the undersigned is
the beneficial holder but not the record holder, cause the record holder of such
securities to cause the transfer agent for the Company to note stop transfer
instructions with respect to such securities on the transfer books and records
of the Company.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this letter agreement. All authority
herein conferred or agreed to be conferred shall survive the death or incapacity
of the undersigned and any obligations of the undersigned shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Signature:
--------------------------
Print Name:
-------------------------
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ANNEX A
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