EXHIBIT 1
THE A CONSULTING TEAM, INC.
COMMON STOCK
_____________________________
UNDERWRITING AGREEMENT
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__________, 1997
THE ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY, INC.
WHEAT FIRST BUTCHER SINGER
As Representatives of the several Underwriters named in Schedule I hereto
c/o The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The A Consulting Team, Inc., a New York corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I (the "Underwriters") an aggregate of
1,800,000 shares of common stock, par value $.01 per share ("Common Stock"), of
the Company (the "Firm Shares"), and at the election of the Underwriters, the
Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Selling Shareholder") propose, subject to the
terms and conditions stated herein, to issue and sell to the Underwriters up to
135,000 and 135,000 additional shares, respectively, of Common Stock
(collectively, the "Optional Shares") (the Firm Shares and the Optional Shares
that the Underwriters elect to purchase pursuant to Section 2 hereof are
collectively called the "Shares" ).
1. (a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(i) A registration statement on Form SB-2 (File No. 333-29233)
(the "Initial Registration Statement") with respect to the Shares,
including a prospectus subject to completion, has been filed by the Company
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), and one or more amendments
to such Initial Registration Statement have been so filed. After the
execution of this Agreement, the Company will file with the Commission
either (A) if such Initial Registration
Statement, as it may have been amended, has become effective under the Act
and information has been omitted therefrom in accordance with Rule 430A
under the Act, a prospectus in the form most recently included in an
amendment to such Initial Registration Statement with such changes or
insertions as are required by Rule 430A or permitted by Rule 424(b) under
the Act and as have been provided to and approved by the Representatives,
(B) if such Initial Registration Statement, as it may have been amended,
has not become effective under the Act, an amendment to such Initial
Registration Statement, including a form of prospectus, a copy of which
amendment has been provided to and approved by the Representatives prior to
the execution of this Agreement (which approval shall not be unreasonably
withheld or delayed) or (C) if such Initial Registration Statement, as it
may have been amended, has become effective under the Act and the number of
shares to be offered has subsequently been increased, a registration
statement (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Act and as has been provided to and approved by the
Representatives. As used in this Agreement, the term "Registration
Statement" means such Initial Registration Statement, as amended at the
time when it was or is declared effective, including all financial
statement schedules and exhibits thereto together with any Rule 462(b)
Registration Statement and including any information omitted therefrom
pursuant to Rule 430A under the Act and included in the Prospectus (as
hereinafter defined); the term "Preliminary Prospectus" means each
prospectus subject to completion included in such Initial Registration
Statement or any amendment or post-effective amendment thereto (including
the prospectus subject to completion, if any, included in the Registration
Statement at the time it was or is declared effective); and the term
"Prospectus" means the prospectus first filed with the Commission pursuant
to Rule 424(b) under the Act or, if no prospectus is required to be so
filed, such term means the prospectus included in the Registration
Statement. For purposes of the following representations and warranties, to
the extent reference is made to the Prospectus and at the relevant time the
Prospectus is not yet in existence, such reference shall be deemed to be to
the most recent Preliminary Prospectus.
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued and no proceeding for that purpose has been
instituted or threatened by the Commission or the securities authority of
any state or other jurisdiction. If the Registration Statement has become
effective under the Act, no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceeding for that purpose has been instituted or threatened or, to the
best knowledge of the Company, is contemplated by the Commission or the
securities authority of any state or other jurisdiction.
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(iii) When the Preliminary Prospectus dated July 23, 1997 was
filed with the Commission it (A) contained all statements required to be
stated therein in accordance with, and complied in all material respects
with the requirements of, the Act and the rules and regulations of the
Commission thereunder and (B) did not include 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 under which they
were made, not misleading. When the Registration Statement or any
amendment thereto was or is declared effective, and at each Time of
Delivery (as hereinafter defined), it (A) contained or will contain all
statements required to be stated therein in accordance with, and complied
or will comply in all material respects with the requirements of, the Act
and the rules and regulations of the Commission thereunder and (B) did not
or will not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading. When the Prospectus or any amendment or supplement thereto is
filed with the Commission pursuant to Rule 424(b) (or, if the Prospectus or
such amendment or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto containing such amendment
or supplement to the Prospectus was or is declared effective) and at each
Time of Delivery, the Prospectus, as amended or supplemented at any such
time, (A) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the rules and regulations of
the Commission thereunder and (B) did not or will not include 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
under which they were made, not misleading. The foregoing provisions of
this paragraph (iii) do not apply to statements or omissions made in any
Preliminary Prospectus, the Registration Statement or any amendment thereto
or the Prospectus or any amendment or supplement thereto in reliance upon
and in conformity with written information furnished to the Company by any
Underwriter through you specifically for use therein. The Company and the
Underwriters hereby acknowledge that the following constitutes the only
information furnished in writing to the Company by the Underwriters
specifically for use in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any such amendment or supplement: (i) the
statements in the last paragraph on the cover page of the Prospectus; (ii)
the statements with respect to stabilization in the paragraph at the bottom
of the inside front cover page of the Prospectus; and (iii) the statements
under the caption "Underwriting" in the Prospectus.
(iv) The descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings or contracts and
other documents are accurate in all material respects and fairly present
the information required to be shown; and there are no statutes or legal or
governmental
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proceedings required to be described in the Registration Statement or the
Prospectus that are not described as required and no contracts or documents
of a character that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described and filed as required.
(v) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of New York
and has full corporate power and authority to own or lease its properties
and conduct its business as described in the Prospectus. The Company has
full corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The Company is duly qualified to
transact business as a foreign corporation and is in good standing under
the laws of each other jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such qualification, except where
the failure to so qualify would not have a material adverse effect on the
financial position, results of operations or business of the Company.
(vi) The Company's authorized, issued and outstanding capital
stock is as disclosed in the Prospectus. All of the issued shares of
capital stock of the Company have been duly authorized and validly issued,
are fully paid and nonassessable and conform to the description of the
Common Stock contained in the Prospectus. None of the issued shares of
capital stock of the Company or its predecessors has been issued or is
owned or held in violation of any preemptive rights of shareholders, and no
person or entity (including any holder of outstanding shares of capital
stock of the Company) has any preemptive or other rights to subscribe for
any of the Shares.
(vii) The Company does not own, directly or indirectly, any
capital stock or other equity securities of any corporation or any
ownership interest in any partnership, joint venture or other association.
(viii) Except as disclosed in the Prospectus, there are no
outstanding (A) securities or obligations of the Company convertible into
or exchangeable for any capital stock of the Company, (B) warrants, rights
or options to subscribe for or purchase from the Company any such capital
stock or any such convertible or exchangeable securities or obligations, or
(C) obligations of the Company to issue any shares of capital stock, any
such convertible or exchangeable securities or obligations, or any such
warrants, rights or options.
(ix) Since the date of the most recent audited financial
statements included in the Prospectus, the Company has not sustained any
material loss or interference with its business from fire, explosion, flood
or other calamity,
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whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as disclosed in or
contemplated by the Prospectus.
(x) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus and other than as
disclosed in or contemplated by the Registration Statement and the
Prospectus, (A) the Company has not incurred any liabilities or
obligations, direct or contingent, or entered into any transactions, not in
the ordinary course of business, that are material to the Company, (B) the
Company has not purchased any of its outstanding capital stock or declared,
paid or otherwise made any dividend or distribution of any kind on its
capital stock, (C) there has not been any material change in the capital
stock, long-term debt or short-term debt of the Company, and (D) there has
not been any material adverse change, or any development including a
prospective material adverse change, in or affecting the financial
position, results of operations or business of the Company.
(xi) The Shares to be issued and sold by the Company have been
duly authorized and, when issued and delivered against payment therefor as
provided herein, will be validly issued and fully paid and nonassessable
and will conform to the description of the Common Stock contained in the
Prospectus; and the certificates evidencing the Shares comply with all
applicable requirements of New York law.
(xii) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Act.
(xiii) All offers and sales of the Company's capital stock prior
to the date hereof were at all relevant times duly registered under the Act
or exempt from the registration requirements of the Act by reason of
Sections 3(b), 4(2) or 4(6) thereof and were duly registered or the subject
of an available exemption from the registration requirements of the
applicable state securities or blue sky laws
(xiv) The Company is not, or with the giving of notice or
passage of time or both would not be, in violation of its Certificate of
Incorporation or Bylaws or in default under any material term of any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Company is a party or to which any of
its properties or assets are subject.
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(xv) The issue and sale of the Shares to be issued and sold by
the Company and the performance of this Agreement and the consummation of
the transactions herein contemplated will not conflict with, or (with or
without the giving of notice or the passage of time or both) result in a
breach or violation of any of the material terms or material provisions of,
or constitute a material default under, any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which the
Company is a party or to which any of its properties or assets is subject
nor will such action conflict with or violate any provision of the
Certificate of Incorporation or Bylaws of the Company or any statute, rule
or regulation or any order, judgment or decree of any court or governmental
agency or body having jurisdiction over the Company or any of its
properties or assets.
(xvi) The Company owns no real property, and all real property
and buildings held under lease by the Company are held under leases which
are valid and enforceable as to the Company and, to the Company's
knowledge, as to others, with such exceptions as are disclosed in the
Prospectus or are not material and do not interfere with the use made or
proposed to be made of such property and buildings by the Company.
(xvii) No consent, approval, authorization, order or declaration
of or from, or registration, qualification or filing with, any court or
governmental agency or body is required for the sale of the Shares or the
consummation of the transactions contemplated by this Agreement, except the
registration of the Shares under the Act (which, if the Registration
Statement is not effective as of the time of execution hereof, shall be
obtained as provided in this Agreement) and such as may be required from
the National Association of Securities Dealers, Inc. (the "NASD") and under
state securities or blue sky laws in connection with the offer, sale and
distribution of the Shares by the Underwriters.
(xviii) There is no litigation, arbitration, claim, proceeding
(formal or informal) or investigation pending or, to the Company's
knowledge, threatened (or any basis therefor) in which the Company is a
party or of which any of its properties or assets are the subject which, if
determined adversely to the Company, would individually or in the aggregate
reasonably be expected to have a material adverse effect on the financial
position, results of operations or business of the Company. The Company is
not in violation of, or in default with respect to, any statute, rule,
regulation, order, judgment or decree, except as such as do not and will
not individually or in the aggregate have a material adverse effect on the
financial position, results of operations or business of the Company.
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(xix) To the Company's knowledge, Ernst & Young LLP, who have
certified certain financial statements of the Company, are and were during
the periods covered by their reports included in the Registration Statement
and the Prospectus, independent public accountants as required by the Act
and the rules and regulations of the Commission thereunder.
(xx) The financial statements and schedules (including the
related notes) of the Company included in the Registration Statement, the
Prospectus or any Preliminary Prospectus were prepared in accordance with
generally accepted accounting principles consistently applied throughout
the periods involved and fairly present the financial position and results
of operations of the Company, on a consolidated basis, at the dates and for
the periods presented. The selected financial data set forth under the
caption "Selected Historical and Pro Forma Financial Data" in the
Prospectus fairly present, on the basis stated in the Prospectus, the
information included therein.
(xxi) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding agreement of
the Company enforceable against the Company in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or affecting
the enforcement of creditors' rights generally and to general equitable
principles.
(xxii) Neither the Company nor any of its officers, directors or
other affiliates has (A) taken, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares
or (B) since the filing of the Registration Statement (1) sold, bid for,
purchased or paid anyone any compensation for soliciting purchases of, the
Shares or (2) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(xxiii) The Company has obtained for the benefit of the Company
and the Underwriters from each of its directors and executive officers a
written agreement that for a period of 180 days from the date of the
Prospectus such director or executive officer will not, without your prior
written consent, sell, offer to sell, contract to sell, solicit an offer to
buy, grant any option for the purchase or sale of, assign, pledge,
distribute or otherwise transfer, dispose of or encumber (or make any
announcement with respect to any of the foregoing), directly or indirectly,
any shares of Common Stock, or any options, rights, warrants or other
securities convertible into or exercisable or exchangeable for Common Stock
or evidencing any right to purchase or subscribe for shares of Common
Stock,
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whether or not beneficially owned by such director or executive officer,
except as provided in Section 2.
(xxiv) Neither the Company nor any director, officer, agent,
employee or other person associated with or acting on behalf of the Company
has, directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment,
using corporate funds.
(xxv) The operations of the Company with respect to any real
property currently leased or owned or by any means controlled by the
Company (the "Real Property") are in compliance with all material federal,
state, and local laws, ordinances, rules, and regulations relating to
occupational health and safety and the environment applicable to the
Company (collectively, "Laws"); the Company has all material licenses,
permits and authorizations necessary to operate under all Laws and is in
compliance with all terms and conditions of such licenses, permits and
authorizations except where the failure to comply singly or in the
aggregate would not have a material adverse effect on the financial
position, results of operations or business of the Company; and there is no
pending or threatened claim, litigation or any administrative agency
proceeding, nor has the Company received any written or oral notice from
any governmental entity or third party, that: (A) alleges a violation of
any Laws by the Company; (B) alleges the Company is a liable party under
the Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. (S) 9601 et seq. or any state superfund law; (C) alleges possible
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contamination of the environment by the Company; or (D) alleges possible
contamination of the Real Property by the Company.
(xxvi) Except as disclosed in the Prospectus, the Company owns
or has the right to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, franchises,
trade secrets, proprietary or other confidential information and intangible
properties and assets (collectively, "Intangibles") necessary to its
business as presently conducted or as the Prospectus indicates the Company
proposes to conduct; to the best knowledge of the Company and except as
disclosed in the Prospectus, the Company has not infringed and is not
infringing, and the Company has not received notice of infringement with
respect to, asserted Intangibles of others; and, to the best knowledge of
the Company and except as disclosed in the Prospectus, there is no
infringement by others of Intangibles of the Company.
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(xxvii) The Company has delivered or made available to you prior
to the date the Registration Statement was declared effective copies of all
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus or other incentive
plans, all other written employee programs, arrangements or agreements, all
medical, vision, dental or other health plans, all life insurance plans and
all other employee benefit plans or fringe benefit plans, including,
without limitation, "employee benefit plans" as that term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), adopted, maintained, sponsored in whole or in part or
contributed to by the Company or its predecessors for the benefit of
employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors or other
beneficiaries are eligible to participate as of the date of this Agreement
(collectively, the "Company Benefit Plans").
The Company (and each predecessor of the Company that adopted or
contributed to a Company Benefit Plan) has maintained all Company Benefit
Plans (including filing all reports and returns required to be filed with
respect thereto) in accordance with their terms and in compliance with the
applicable terms of ERISA, the Internal Revenue Code and any other
applicable federal and state laws, except for any breach or violation which
would not have, individually or in the aggregate, a material adverse effect
on the financial position, results of operations or business of the
Company. Each Company Benefit Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code has either received a favorable
determination letter from the Internal Revenue Service or will timely
request such a letter prior to the expiration of any remedial amendment
period applicable without penalty to the Company Benefit Plan under the
Internal Revenue Code and has at all times been maintained in accordance
with Section 401 of the Internal Revenue Code, except where any failure to
so maintain such Company Benefit Plan would not have, individually or in
the aggregate, a material adverse effect on the financial position, results
of operations or business of the Company. The Company has not engaged in a
transaction with respect to any Company Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would
subject the Company or any subsidiary to a tax or penalty imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in
amounts which are reasonably likely to have, individually or in the
aggregate, a material adverse effect on the financial position, results of
operations or business of the Company.
The Company is not obligated to provide post-retirement medical
benefits or any other unfunded post-retirement welfare benefits (except
continuation coverage under the Consolidated Omnibus Budget Reconciliation
Act required to
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be provided by ERISA Section 601), which such liabilities to the Company
would have, individually or in the aggregate, a material adverse effect on
the financial position, results of operations or business of the Company.
Neither the Company nor any member of a group of trades or businesses under
common control (as defined in ERISA Sections 4001(a)(14) and 4001(b)(1))
with the Company have at any time within the last six years sponsored,
contributed to or been obligated under Title I or IV of ERISA to contribute
to a "defined benefit plan" (as defined in ERISA Section 3(35)). Within the
last six years, neither the Company nor any member of a group of trades or
businesses under common control (as defined in ERISA Sections 4001(a)(14)
and 4001(b)(1)) with Company have had an "obligation to contribute" (as
defined in ERISA Section 4212) to a "multiemployer plan" (as defined in
ERISA Sections 4001(a)(3) and 3(37)(A)).
(xxviii) No labor dispute exists with the Company's employees
or, to the Company's knowledge, is imminent which could materially
adversely affect the financial position, results of operations or business
of the Company. The Company is not aware of any existing or imminent labor
disturbance by its employees which could be expected to adversely affect
the financial position, results of operations or business of the Company.
(xxix) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as are customary in the businesses in which it is engaged; and the Company
does not have any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or that would
prevent the Company from obtaining similar coverage from similar insurers
as may be necessary to continue its business at a comparable cost, except
as disclosed in the Prospectus.
(xxx) The Company makes and keeps accurate books and records
reflecting its assets and maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of the Company's financial statements in
accordance with generally accepted accounting principles and to maintain
accountability for the assets of the Company, (C) access to the assets of
the Company is permitted only in accordance with management's
authorization, and (D) the recorded accountability for assets of the
Company is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxxi) The Company's software systems include design,
performance and functionality so that the Company does not reasonably
expect to experience invalid or incorrect results or abnormal software
operation related to calendar year 2000. The Company's software systems
include calendar year 2000
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date conversion and compatibility capabilities, including, but not limited
to, date data century recognition, same century and multiple century
formula and date value calculations, and user interface date data values
that reflect the century.
(xxxii) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed by it and has paid all
taxes shown as due on such returns as well as all other taxes, assessments
and governmental charges that are due and payable, and no material
deficiency with respect to any such return has been assessed or proposed.
All applicable income and employment taxes have been withheld and paid for
any individuals who would be considered common law employees of the Company
for federal income and employment tax withholding purposes.
(xxxiii) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become, an "investment company"
or a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(b) REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDER. The
Selling Shareholder represents and warrants to, and agrees with, each of the
several Underwriters and the Company that:
(i) Such Selling Shareholder has full right, power and authority
to enter into this Agreement, the Power of Attorney (as hereinafter
defined) and the Custody Agreement (as hereinafter defined) and to sell,
assign, transfer and deliver to the Underwriters the Shares to be sold by
such Selling Shareholder hereunder.
(ii) Such Selling Shareholder has duly executed and delivered
this Agreement, the Power of Attorney and the Custody Agreement, and each
constitutes the valid and binding agreement of such Selling Shareholder
enforceable against such Selling Shareholder in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or affecting
the enforcement of creditors' rights generally and to general equitable
principles.
(iii) No consent, approval, authorization, order or declaration
of or from, or registration, qualification or filing with, any court or
governmental agency or body is required for the sale of the Shares to be
sold by such Selling Shareholder or the consummation of the transactions
contemplated by this Agreement, the Power of Attorney or the Custody
Agreement, except the registration of such Shares under the Act (which, if
the Registration Statement is
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not effective as of the time of execution hereof, shall be obtained as
provided in this Agreement) and such as may be required from the NASD and
under state securities or blue sky laws in connection with the offer, sale
and distribution of such Shares by the Underwriters.
(iv) The sale of the Shares to be sold by such Selling
Shareholder and the performance 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 (with or without the
giving of notice or the passage of time or both) result in a breach of
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which such Selling Shareholder is a party
or to which any of its properties or assets is subject, nor will such
action conflict with or violate any statute, rule or regulation or any
order, judgment or decree of any court or governmental agency or body
having jurisdiction over such Selling Shareholder or any of such Selling
Shareholder's properties or assets.
(v) Such Selling Shareholder has, and immediately prior to each
Time of Delivery (as defined in Section 4 hereof), such Selling Shareholder
will have, good and valid title to the Shares to be sold by such Selling
Shareholder hereunder, free and clear of all liens, security interests,
pledges, charges, encumbrances, defects, shareholders' agreements, voting
trusts, equities or claims of any nature whatsoever; and, upon delivery of
such Shares against payment therefor as provided herein, good and valid
title to such Shares, free and clear of all liens, security interests,
pledges, charges, encumbrances, defects, shareholders' agreements, voting
trusts, equities or claims of any nature whatsoever, will pass to the
several Underwriters.
(vi) Except as contemplated by this Agreement, such Selling
Shareholder has not (A) taken, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares
or (B) since the filing of the Registration Statement (1) sold, bid for,
purchased or paid anyone any compensation for soliciting purchases of, the
Shares or (2) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(vii) When any Preliminary Prospectus was filed with the
Commission it (A) contained all statements required to be stated therein
regarding such Selling Shareholder in accordance with, and complied in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission
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thereunder and (B) did not include any untrue statement of a material fact
or omit to state any material fact regarding such Selling Shareholder
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. When the
Registration Statement or any amendment thereto was or is declared
effective, and at each Time of Delivery (as hereinafter defined), it (A)
contained or will contain all statements required to be stated therein
regarding such Selling Shareholder in accordance with, and complied or will
comply in all material respects with the requirements of, the Act and the
rules and regulations of the Commission thereunder and (B) did not or will
not include any untrue statement of a material fact regarding such Selling
Shareholder or omit to state any material fact regarding such Selling
Shareholder necessary to make the statements therein regarding such Selling
Shareholder not misleading. When the Prospectus or any amendment or
supplement thereto is filed with the Commission pursuant to Rule 424(b)
(or, if the Prospectus or such amendment or supplement is not required to
be so filed, when the Registration Statement or the amendment thereto
containing such amendment or supplement to the Prospectus was or is
declared effective) and at each Time of Delivery, the Prospectus, as
amended or supplemented at any such time, (A) contained or will contain all
statements required to be stated therein regarding such Selling Shareholder
in accordance with, and complied or will comply in all material respects
with the requirements of, the Act and the rules and regulations of the
Commission thereunder and (B) did not or will not include any untrue
statement of a material fact regarding such Selling Shareholder or omit to
state any material fact regarding such Selling Shareholder necessary in
order to make the statements therein regarding such Selling Shareholder, in
the light of the circumstances under which they were made, not misleading.
The foregoing provisions of this paragraph (iii) do not apply to statements
or omissions made in any Preliminary Prospectus, the Registration Statement
or any amendment thereto or the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through you specifically for
use therein. Such Selling Shareholder and the Underwriters hereby
acknowledge that the following constitutes the only information furnished
in writing to the Company by the Underwriters specifically for use in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or
any such amendment or supplement: (i) the statements in the last paragraph
on the cover page of the Prospectus; (ii) the statements with respect to
stabilization in the paragraph at the bottom of the inside front cover page
of the Prospectus; and (iii) the statements under the caption
"Underwriting" in the Prospectus.
In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Internal Revenue Code of 1986, as amended,
with respect to the transactions herein contemplated, the Selling Shareholder
agrees to deliver to you
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prior to or at the First Time of Delivery (as hereinafter defined) 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).
The Selling Shareholder represents and warrants that certificates in
negotiable form representing all of the Shares to be sold by such Selling
Shareholder hereunder have been placed in custody under a Custody Agreement (the
"Custody Agreement"), in the form heretofore furnished to and approved by you,
duly executed and delivered by such Selling Shareholder to the Company, as
custodian (the "Custodian"), and that such Selling Shareholder has duly executed
and delivered a Power of Attorney (the "Power of Attorney") in the form
heretofore furnished to you and approved by you, which Power of Attorney
appoints __________________ as such Selling Shareholder's attorney-in-fact (the
"Attorney-in-Fact") with authority to execute and deliver this Agreement on
behalf of such Selling Shareholder, to determine the purchase price to be paid
by the Underwriters to the Selling Shareholders as provided in Section 2 hereof,
to authorize the delivery of the Shares to be sold by such Selling Shareholder
hereunder and otherwise to act on behalf of such Selling Shareholder in
connection with the transactions contemplated by this Agreement and the Custody
Agreement.
The Selling Shareholder specifically agrees that the Shares
represented by the certificates held in custody for such Selling Shareholder
under the Custody Agreement are subject to the interests of the Underwriters
hereunder, and that the arrangements made by such Selling Shareholder for such
custody, and the appointment by such Selling Shareholder of the Attorney-in-
Fact, are irrevocable. The Selling Shareholder specifically agrees that the
obligations of the Selling Shareholder hereunder shall not be terminated by
operation of law, whether by the death or incapacity of the Selling Shareholder
or, in the case of an estate or trust, by the death or incapacity of any
executor or trustee or the termination of such estate or trust, or in the case
of a partnership or corporation, by the dissolution of such partnership or
corporation, or by the occurrence of any other event.
2. PURCHASE AND SALE OF SHARES. Subject to the terms and conditions
herein set forth, (a) the Company agrees to sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to purchase from
the Company at a purchase price of $_____ per share, the number of Firm Shares
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying the aggregate number of Firm Shares to be sold by the Company by a
fraction, the numerator of which is the aggregate number of Firm Shares to be
purchased by such Underwriter as set forth opposite the name of such Underwriter
in Schedule I hereto, and the denominator of which is the aggregate number of
Firm Shares to be purchased by the Underwriters from the Company and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company agrees to issue and sell
to each of the Underwriters and the Selling Shareholder agrees to sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the
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Company and the Selling Shareholder, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
to be sold by the Company and the Selling Shareholder as set forth opposite
their respective names in Schedule II hereto as to which such election shall
have been exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of Optional Shares by a fraction, the
numerator of which is the maximum number of Optional Shares that such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of the Optional Shares that all of the Underwriters are entitled to
purchase hereunder.
The Company and the Selling Shareholder hereby grant to the
Underwriters the right to purchase, at the Underwriters' election in whole or in
part at the First Time of Delivery (as hereinafter defined) and/or one time
thereafter, up to a total of 135,000 and 135,000 Optional Shares, respectively,
at the purchase price per share set forth in clause (a) in the paragraph above,
for the sole purpose of covering over-allotments in the sale of Firm Shares.
Any such election to purchase Optional Shares may be exercised by written notice
from you to the Company and the Selling Shareholder, given within two business
days after the date of this Agreement with respect to any Optional Shares to be
purchased at the First Time of Delivery and within a period of 30 calendar days
after the date of this Agreement with respect to any Optional Shares to be
purchased other than at the First Time of Delivery and setting forth the
aggregate number of Optional Shares to be purchased and the date on which such
Optional Shares are to be delivered, as determined by you but in no event
earlier than the First Time of Delivery or, unless you, the Company and the
Selling Shareholder otherwise agree in writing, earlier than two or later than
ten business days after the date of such notice. In the event you elect to
purchase all or a portion of the Optional Shares, the Company and the Selling
Shareholder agree to furnish or cause to be furnished to you the certificates,
letters and opinions, and to satisfy all conditions, set forth in Section 7
hereof at each Subsequent Time of Delivery (as hereinafter defined).
3. OFFERING BY THE UNDERWRITERS. Upon the authorization by you of
the release of the Shares, the several Underwriters propose to offer the Shares
for sale upon the terms and conditions disclosed in the Prospectus.
4. DELIVERY OF SHARES; CLOSING. Certificates in definitive form for the
Shares to be purchased by each Underwriter hereunder, and in such denominations
and registered in such names as The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, Inc. may request
upon at least 48 hours' prior notice to the Company, shall be delivered by or on
behalf of the Company and the Selling Shareholder to you for the account of such
Underwriter against payment by such Underwriter on its behalf of the purchase
price therefor by wire transfer, payable to the order of the Company and the
Custodian, as their interests may appear, in same-day available funds. The
closing of the sale and purchase of the Shares shall be held at the offices of
▇▇▇▇▇▇ & Bird LLP, One Atlantic Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
-▇▇-
▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at such other location as you, the Company and the
Attorney-in-Fact may agree upon, except that physical delivery of such
certificates shall be made at the office of The Depository Trust Company, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, at 9:00 a.m., Atlanta time,
on the third (or if the Firm Shares are priced, as contemplated by Rule 15c6-
1(c) promulgated pursuant to the Securities Act of 1934, as amended (the
"Exchange Act"), after 4:30 p.m., Washington, D.C. time, the fourth) full
business day after this Agreement is executed or at such other time and date not
less than the seventh full business day thereafter as you, the Company and the
Attorney-in-Fact may agree upon in writing, and, with respect to the Optional
Shares, at 9:00 a.m., Atlanta time, on the date and at the location specified by
you in the written notice given by you of the Underwriters' election to purchase
all or part of such Optional Shares, or at such other time and date as you, the
Company and the Attorney-in-Fact may agree upon. Such time and date for
delivery of the Firm Shares is herein called the "First Time of Delivery," such
time and date for delivery of any Optional Shares, if not the First Time of
Delivery, is herein called a "Subsequent Time of Delivery," and each such time
and date for delivery is herein called a "Time of Delivery." The Company will
make such certificates available for checking and packaging at least 24 hours
prior to each Time of Delivery at the office of The Depository Trust Company, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other location in New York,
New York specified by you in writing at least 48 hours prior to such Time of
Delivery.
5. (A) COVENANTS OF THE COMPANY. The Company covenants and agrees with
each of the Underwriters:
(i) If the Registration Statement has been declared effective
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by you,
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement
or (B) the fifth business day after the date on which the Registration
Statement is declared effective. The Company will advise you promptly of
any such filing pursuant to Rule 424(b).
(ii) The Company will not file with the Commission the
prospectus or the amendment referred to in the second sentence of Section
l(a)(i) hereof, any amendment or supplement to the Prospectus or any
amendment to the Registration Statement unless you have received a
reasonable period of time to review any such proposed amendment or
supplement and consented (which consent shall not be unreasonably withheld
or delayed) to the filing thereof and will use its best efforts to cause
any such amendment to the Registration Statement to be declared effective
as promptly as possible. Upon the reasonable request of the Representatives
or counsel for the Underwriters, the Company will promptly
-16-
prepare and file with the Commission, in accordance with the rules and
regulations of the Commission, any amendments to the Registration Statement
or amendments or supplements to the Prospectus that may be necessary or
advisable in connection with the distribution of the Shares by the several
Underwriters and will use its best efforts to cause any such amendment to
the Registration Statement to be declared effective as promptly as
possible. If required, the Company will file any amendment or supplement to
the Prospectus with the Commission in the manner and within the time period
required by Rule 424(b) under the Act. The Company will advise the
Representatives, promptly after receiving notice thereof, of the time when
the Registration Statement or any amendment thereto has been filed or
declared effective or the Prospectus or any amendment or supplement thereto
has been filed and will provide evidence to the Representatives of each
such filing or effectiveness.
(iii) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 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.
(iv) The Company will advise you promptly after receiving notice
or obtaining knowledge of (A) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
part thereof or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto or of the initiation or threatening of any proceeding for any such
purpose, (B) the suspension of the qualification of the Shares for offer or
sale in any jurisdiction or of the initiation or threatening of any
proceeding for any such purpose, or (C) any request made by the Commission
or any securities authority of any other jurisdiction for amending the
Registration Statement, for amending or supplementing the Prospectus or for
additional information. The Company will use its best efforts to prevent
the issuance of any such stop order and, if any such stop order is issued,
to obtain the withdrawal thereof as promptly as possible.
(v) If the delivery of a prospectus relating to the Shares is
required under the Act at any time prior to the expiration of nine months
after the date of the Prospectus and if at such time any events have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or if for any reason it is necessary during such same period to
amend or supplement the Prospectus to comply with the Act or the rules and
-17-
regulations thereunder, the Company will promptly notify you and, at the
Company's expense, prepare and file with the Commission an amendment or
supplement to the Prospectus that corrects such statement or omission or
effects such compliance and will furnish without charge to each Underwriter
and to any dealer in securities as many copies of such amended or
supplemented Prospectus as you may from time to time reasonably request. If
the delivery of a prospectus relating to the Shares is required under the
Act at any time nine months or more after the date of the Prospectus, upon
your request but at the expense of such Underwriter, the Company will
prepare and deliver to such Underwriter as many copies as you may request
of an amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act. Neither your consent to, nor the Underwriters' delivery of, any
such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 7.
(vi) The Company promptly from time to time will take such
action as you may reasonably request to qualify the Shares for offering and
sale under the securities or blue sky laws of such jurisdictions as you may
reasonably request and will continue such qualifications in effect for as
long as may be necessary to complete the distribution of the Shares,
provided that in connection therewith 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.
(vii) The Company will promptly provide you, without charge,
(A) three manually executed copies of the Registration Statement as
originally filed with the Commission and of each amendment thereto, (B) for
each other Underwriter a conformed copy of the Registration Statement as
originally filed and of each amendment thereto, without exhibits, and (C)
so long as a prospectus relating to the Shares is required to be delivered
under the Act, as many copies of each Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto as you may reasonably
request.
(viii) As soon as practicable, but in any event not later than
45 days after the end of the Company's fiscal quarter in which the first
anniversary of the effective date of the Registration Statement occurs, the
Company will make generally available to its security holders an earnings
statement of the Company and its subsidiaries, if any, covering a period of
at least 12 months beginning after the effective date of the Registration
Statement (which need not be audited) complying with Section 11(a) of the
Act and the rules and regulations thereunder.
(ix) During the period beginning on the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, the Company will not, without your prior written consent,
offer, pledge, issue, sell, contract to sell, grant any option for the sale
of, or otherwise dispose of (or
-18-
announce any of the foregoing, directly or indirectly, any shares of
Common Stock or securities convertible into, exercisable or exchangeable
for, shares of Common Stock, except as provided in Section 2 and except
that the Company may (aa) grant options pursuant to the Company's stock
option plans described in the Registration Statement with the prior
approval of The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, Inc.; and (bb) issue shares of
Common Stock upon the exercise of any of the Company's outstanding stock
options as described in the Registration Statement or stock options granted
under clause (aa) above.
(x) During a period of two years from the effective date of the
Registration Statement, the Company will furnish to you and, upon request,
to each of the other Underwriters, without charge, (A) copies of all
reports or other communications (financial or other) generally distributed
to shareholders, (B) as soon as they are available, copies of any reports
and financial statements furnished to or filed with the Commission, the
NASD or any national securities exchange, and (C) such additional
information (other than material non-public information) concerning the
business and financial condition of the Company and its subsidiaries, if
any, as you may reasonably request.
(xi) Neither the Company nor any of its officers or directors
will (A) take, directly or indirectly, prior to the termination of the
underwriting syndicate contemplated by this Agreement, any action designed
to cause or to result in, or that might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Shares, (B)
sell, bid for, purchase or pay anyone any compensation for soliciting
purchases of, the Shares or (C) pay or agree to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.
(xii) The Company will apply the net proceeds from the offering
in the manner set forth under "Use of Proceeds" in the Prospectus.
(xiii) The Company will cause the Shares to be listed on the
Nasdaq Stock Market's National Market at each Time of Delivery and will use
its best efforts to continue such listing for at least one year from the
date hereof.
(xiv) If at any time during the period beginning on the date
the Registration Statement becomes effective and ending on the later of (A)
the date 30 days after such effective date and (B) the date that is the
earlier of (1) the date on which the Company first files with the
Commission a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K
after such effective date and (2) the date on which the Company first
issues a quarterly or annual financial report to shareholders after such
effective date, any rumor, publication or event relating to
-19-
or affecting the Company shall occur as a result of which in your
reasonable opinion the market price of the Common Stock has been or is
likely to be materially affected (regardless of whether such rumor,
publication or event necessitates an amendment of or supplement to the
Prospectus), the Company will, after written notice from you advising the
Company to the effect set forth above, consult with you in good faith
concerning the substance and dissemination of a press release or other
public statement, reasonably satisfactory to you, responding to or
commenting on such rumor, publication or event.
(xv) The Company will file timely and accurate reports on Form
SR with the Commission in accordance with Rule 463 of the Commission under
the Act or any successor provision or requirement.
(xvi) During the initial two-year term of the Employment
Agreement between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇ described in the Prospectus
and filed as an exhibit to the Registration Statement (the "Employment
Agreement"), the Company and ▇▇. ▇▇▇▇▇▇ each agree not to (i) pay or cause
to be paid a cash bonus to ▇▇. ▇▇▇▇▇▇ in 1997, (ii) increase ▇▇. ▇▇▇▇▇▇'▇
compensation as set forth in the Employment Agreement, or (iii) otherwise
amend ▇▇. ▇▇▇▇▇▇'▇ Employment Agreement in order to increase any component
of his compensation (including base salary or bonus). The Board of
Directors of the Company will adopt resolutions to such effect as of the
First Time of Delivery.
(B) COVENANTS OF THE SELLING SHAREHOLDER. The Selling Shareholder
covenants and agrees with each of the Underwriters:
(i) During the period beginning on the date hereof and continuing to and
including the date 180 days after the date of the Prospectus, such Selling
Shareholder will not, without your prior written consent, sell, offer to
sell, contract to sell, solicit an offer to buy, grant any option for the
purchase or sale of, assign, pledge, distribute or otherwise transfer,
dispose of or encumber (or make any announcement with respect to any of the
foregoing), directly or indirectly, any shares of Common Stock, or any
options, rights, warrants or other securities convertible into or
exercisable or exchangeable for Common Stock or evidencing any right to
purchase or subscribe for shares of Common Stock, whether or not
beneficially owned by the undersigned, except as provided in Section 2.
(ii) Such Selling Shareholder will not (A) take, directly or indirectly,
prior to the termination of the underwriting syndicate contemplated by this
Agreement, any action designed to cause or to result in, or that might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of any of the Shares,
-20-
(B) sell, bid for, purchase or pay anyone any compensation for soliciting
purchases of, the Shares or (C) pay to or agree to pay any person any
compensation for soliciting another to purchase any other securities of the
Company.
6. EXPENSES. The Company will pay all costs and expenses incurred by it
incident to the performance of its obligations and the obligations of the
Selling Shareholder under this Agreement, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated pursuant to
Section 10 hereof, including, without limitation, all costs and expenses
incident to (i) the reasonable fees, disbursements and expenses of the Company's
counsel and accountants in connection with the registration of the Shares under
the Act and all other expenses in connection with the preparation, printing and
filing of the Registration Statement (including all amendments thereto), any
Preliminary Prospectus, the Prospectus and, if applicable, any amendments and
supplements thereto, this Agreement and any blue sky memoranda; (ii) the
delivery of copies of the foregoing documents to the Underwriters; (iii) the
filing fees of the Commission and the NASD relating to the Shares; (iv) the
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Shares, including transfer agent's and registrar's fees; (v) the
qualification of the Shares for offering and sale under state securities and
blue sky laws, including filing fees and reasonable fees and disbursements of
counsel for the Underwriters relating thereto; (vi) any listing of the Shares on
the Nasdaq Stock Market's National Market and (vii) any reasonable expenses for
travel, lodging and meals incurred by the Company and any of its officers,
directors and employees in connection with any meetings with prospective
investors in the Shares. In addition, the Selling Shareholder will pay all
costs and expenses incident to the fees, disbursements and expenses of any
counsel for such Selling Shareholder in addition to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, L.L.P. It is understood, however, that, except as provided in this
Section, Section 8 and Section 10 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, stock transfer
taxes on resale of any of the Shares by them, and any advertising expenses
relating to the offer and sale of the Shares.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters hereunder to purchase and pay for the Shares to be delivered at
each Time of Delivery shall be subject, in their discretion, to the accuracy of
the representations and warranties of the Company and the Selling Shareholder
contained herein as of the date hereof and as of such Time of Delivery, to the
accuracy in all material respects of the statements of Company officers made
pursuant to the provisions hereof, to the performance in all material respects
by the Company and the Selling Shareholder of their respective covenants and
agreements hereunder, and to the following additional conditions precedent:
(a) If the registration statement as amended to date has not become
effective prior to the execution of this Agreement, such registration statement
shall have
-21-
been declared effective not later than 4:00 p.m., Atlanta time, on the day
following the date of this Agreement or such later date and/or time as shall
have been consented to by you in writing. The Prospectus and any amendment or
supplement thereto shall have been filed with the Commission pursuant to Rule
424(b) within the applicable time period prescribed for such filing and in
accordance with Section 5(a) of this Agreement; if the Company has elected to
rely upon Rule 462(b), the Rule 462(b) Registration Statement shall have become
effective by 10:00 p.m., Washington D.C. time, on the date of this Agreement; no
stop order suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceedings for that purpose shall
have been instituted, threatened or, to the knowledge of the Company and the
Representatives, contemplated by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to your
reasonable satisfaction.
(b) ▇▇▇▇▇▇ & Bird LLP, counsel for the Underwriters, shall have furnished
to you such opinion or opinions, dated such Time of Delivery, with respect to
the incorporation of the Company, the validity of the Shares being delivered at
such Time of Delivery, the Registration Statement, the Prospectus, and other
related matters as you may reasonably request, and the Company shall have
furnished to such counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(c) You shall have received an opinion, dated such Time of Delivery, of
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., counsel for the Company, in form and
substance reasonably satisfactory to you and your counsel, to the effect that:
(i) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of New York and
has the corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement and the
Prospectus and to enter into this Agreement and perform its obligations
hereunder. The Company is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of each other
jurisdiction in which it owns or leases property, except where the failure
to so qualify would not have a material adverse effect on the financial
position, results of operations or business of the Company.
(ii) The Company's authorized, issued and outstanding capital stock is
as disclosed in the Prospectus. All of the issued shares of capital stock
of the Company (including the Shares to be sold by the Selling Shareholder)
have been duly authorized and validly issued, are fully paid and
nonassessable and conform in all material respects to the description of
the Common Stock contained in the Prospectus. None of the issued shares of
capital stock of the Company has been issued or is owned or held in
violation of any statutory preemptive rights of shareholders, and no person
or entity (including any holder of outstanding shares
-22-
of capital stock of the Company) has any statutory preemptive or, to the
knowledge of such counsel, similar rights to subscribe for any of the
Shares.
(iii) Except as disclosed in the Prospectus, to the knowledge of such
counsel, there are no outstanding (A) securities or obligations of the
Company convertible into or exchangeable for any capital stock of the
Company, (B) warrants, rights or options to subscribe for or purchase from
the Company any such capital stock or any such convertible or exchangeable
securities or obligations, or (C) obligations of the Company to issue any
shares of capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(iv) The Shares to be issued and sold by the Company have been duly
authorized and, when issued and delivered against payment therefor as
provided herein, will be validly issued and fully paid and nonassessable
and will conform to the description of the Common Stock contained in the
Prospectus; the form of certificate evidencing the Shares complies in all
material respects with all applicable requirements of New York law; and the
Shares have been listed on the Nasdaq Stock Market's National Market.
(v) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings known to such counsel between the Company and
any person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to
any other registration statement filed by the Company under the Act.
(vi) All offers and sales of the Company's capital stock prior to the
date hereof were at all relevant times duly registered under the Act or
exempt from the registration requirements of the Act by reason of Sections
3(b), 4(2) or 4(6) thereof, or if not registered or exempt in compliance
with the Act, any private rights of action for rescission or damages
arising from such failure to register any such securities are time barred
by applicable statutes of limitations or equitable principles, including
laches.
(vii) The Company is not, or with the giving of notice or passage of
time or both, would not be, in violation of its Certificate of
Incorporation or Bylaws.
(viii) The issue and sale of the Shares being issued at such Time of
Delivery and the performance of this Agreement and the consummation of the
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transactions herein contemplated will not conflict with, or (with or
without the giving of notice or the passage of time or both) result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which the Company is a party or
to which any of its properties or assets is subject that is an exhibit to
the Registration Statement nor will such action conflict with or violate
any provision of the Certificate of Incorporation or Bylaws of the Company
or any statute, rule or regulation (assuming compliance with all applicable
state securities or blue sky laws, as to which such counsel need express no
opinion) or any order, judgment or decree of any court or governmental
agency or body having jurisdiction over the Company or any of its
respective properties or assets.
(ix) No consent, approval, authorization, order or declaration of or
from, or registration, qualification or filing with, any court or
governmental agency or body is required for the issue and sale of the
Shares or the consummation of the transactions contemplated by this
Agreement, except the registration of the Shares under the Act and such as
may be required from the NASD or under state securities or blue sky laws in
connection with the offer, sale and distribution of the Shares by the
Underwriters.
(x) All real property and buildings held by the Company under leases are
held under leases which are valid and enforceable as to the Company and, to
such counsel's knowledge, as to others, with such exceptions as are
disclosed in the Prospectus or are not material and do not interfere with
the use made of such property and buildings by the Company.
(xi) The employment agreements in effect between the Company and its
employees in New York are valid and enforceable under New York law;
provided, however, that such counsel need not render any opinion with
regard to the validity and enforceability of any non-compete provision
contained therein; and provided further, that the invalidity or
unenforceability of any such non-compete agreement shall not render the
remainder of such agreement, or any of the other provisions thereof,
invalid or unenforceable.
(xii) This Agreement has been duly authorized, executed and delivered
by the Company and, assuming that this Agreement is a valid and binding
agreement of the other parties hereto, constitutes the valid and binding
agreement of the Company enforceable against the Company in accordance with
its terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws relating to
or affecting the enforcement of creditors' rights generally, to general
equitable principles and to applicable
-24-
securities laws or principles of public policy underlying such laws with
regard to rights to indemnity and contribution.
(xiii) The Registration Statement and the Prospectus and each amendment
or supplement thereto (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion), as of
their respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act and the rules and
regulations thereunder. The descriptions in the Registration Statement and
the Prospectus of statutes, legal and governmental proceedings or contracts
and other documents are accurate in all material respects and fairly
present the information required to be shown; and such counsel do not know
of any contracts or documents of a character required to be described in
the Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as required.
(xiv) Such counsel has been advised by the Staff of the SEC that the
Registration Statement is effective under the Act; any required filing of
the Prospectus pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement or any part
thereof has been issued and no proceedings for that purpose have been
instituted or threatened or, to the knowledge of such counsel, are
contemplated by the Commission.
(xv) The Company is not, and will not be as a result of the consummation
of the transactions contemplated by this Agreement, an "investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
Such counsel shall also state that they have no reason to believe (i) that
the Registration Statement, or any further amendment thereto made prior to such
Time of Delivery, on its effective date and as of such Time of Delivery,
contained or contains any untrue statement of a material fact or omitted or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) that the Prospectus, or any
amendment or supplement thereto made prior to such Time of Delivery, as of its
issue date and as of such Time of Delivery, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (provided that such counsel need
express no belief regarding the financial statements, notes and related
schedules and other financial or statistical data contained in the Registration
Statement, any amendment thereto, or the Prospectus, or any amendment or
supplement thereto).
-25-
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials.
(d) You shall have received an opinion, dated such Time of Delivery, of
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, special counsel for the Selling Shareholder,
in form and substance reasonably satisfactory to you and your counsel, to the
effect that:
(i) A Power of Attorney and a Custody Agreement have been duly
executed and delivered by such Selling Shareholder, and assuming that the
Custody Agreement is a valid and binding agreement of the other parties
thereto, each of the Power of Attorney and the Custody Agreement is
enforceable against such Selling Shareholder in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or affecting
the enforcement of creditors' rights generally and to general equitable
principles.
(ii) This Agreement has been duly executed and delivered by or
on behalf of such Selling Shareholder; the sale of the Shares to be sold by
such Selling Shareholder at such Time of Delivery and the performance 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 (with or without the giving of notice or the passage of
time or both) result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument known to
us to which such Selling Shareholder is a party or to which any of its
properties or assets is subject, nor will such action conflict with or
violate any statute, rule or regulation or any order, judgment or decree of
any court or governmental agency or body having jurisdiction over such
Selling Shareholder or any of such Selling Shareholder's properties or
assets.
(iii) No consent, approval, authorization, order or declaration
of or from, or registration, qualification or filing with, any court or
governmental agency or body is required for the issue and sale of the
Shares being sold by such Selling Shareholder or the consummation of the
transactions contemplated by this Agreement, the Power of Attorney or the
Custody Agreement, except the registration of such Shares under the Act and
such as may be required under state securities or blue sky laws in
connection with the offer, sale and distribution of such Shares by the
Underwriters.
(iv) Such Selling Shareholder has, and immediately prior to such
Time of Delivery such Selling Shareholder will have, good and valid title
to the Shares to be sold by such Selling Shareholder hereunder, free and
clear of all liens,
-26-
security interests, pledges, charges, encumbrances, defects, shareholders'
agreements, voting trusts, equities or claims of any nature whatsoever;
and, upon delivery of such Shares against payment therefor as provided
herein, good and valid title to such Shares, free and clear of all liens,
security interests, pledges, charges, encumbrances, defects, shareholders'
agreements, voting trusts, equities or claims of any nature whatsoever,
will pass to the several Underwriters.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company, the Selling Shareholder and public officials.
(e) You shall have received from Ernst & Young LLP letters dated,
respectively, the date hereof and each Time of Delivery, in form and
substance satisfactory to you, stating that they are independent auditors
with respect to the Company within the meaning of the Act and the
applicable published rules and regulations thereunder, and to the effect
that:
(i) In their opinion, the financial statements and schedules
audited by them and included in the Registration Statement comply as
to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder with respect to registration statements on Form SB-2. With
respect to the six-month periods ended June 30, 1997 and June 30,
1996, they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in SAS No. 71, Interim Financial
Information, on the unaudited condensed balance sheet as of June 30,
1997 and the unaudited condensed statements of operations and retained
earnings and statements of cash flows for the six-month periods ended
June 30, 1997 and June 30, 1996 included in the Registration
Statement;
(ii) The unaudited summary and selected financial information
included in the Preliminary Prospectus and the Prospectus under the
captions "Prospectus Summary" and "Selected Historical and Pro Forma
Financial Data" agrees with the corresponding amounts in the audited
financial statements included in the Prospectus or previously reported
on by them;
(iii) On the basis of a reading of the latest available
unaudited interim financial statements of the Company, a reading of
the minute books of the Company, inquiries of officials of the Company
responsible for financial and accounting matters and other specified
procedures, all of
-27-
which have been agreed to by the Representatives, nothing came to
their attention that caused them to believe that:
(A) the unaudited financial statements described in
paragraph (i) above and included in the Registration Statement do
not comply as to form in all material respects with the
accounting requirements of the Act and the related published
rules and regulations thereunder and any material modifications
should be made to such unaudited financial statements for them to
be in conformity with generally accepted accounting principles;
(B) at a specified date not more than five days prior to
the date of delivery of such respective letter, there was any
change in the capital stock, decline in stockholders' equity or
increase in long-term debt of the Company, or other items
specified by the Underwriters, in each case as compared with
amounts shown in the latest balance sheets included in the
Prospectus, except in each case for changes, decreases or
increases which the Prospectus discloses have occurred or may
occur or which are described in such letters; and
(C) for the period from the closing date of the latest
statement of operations and retained earnings included in the
Prospectus to a specified date not more than five days prior to
the date of delivery of such respective letter, there were any
decreases in revenues or net income of the Company, or other
items specified by the Underwriters, or any increases in any
items specified by the Underwriters, in each case as compared
with the corresponding period of the preceding year, except in
each case for decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter.
(iv) They have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information specified by you which are derived from the
general accounting records of the Company, which appear in the
Prospectus and have compared and agreed such amounts, percentages and
financial information with the accounting records of the Company or to
analyses and schedules prepared by the Company from its detailed
accounting records.
In the event that the letters to be delivered referred to above set
forth any such changes, decreases or increases, it shall be a further
condition to the obligations of the Underwriters that the Underwriters
shall have determined, after
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discussions with officers of the Company responsible for financial and
accounting matters and with Ernst & Young LLP, that such changes, decreases
or increases as are set forth in such letters do not reflect a material
adverse change in the stockholder's equity or long-term debt of the Company
as compared with the amounts shown in the latest balance sheets of the
Company included in the Prospectus, or a material adverse change in
revenues or net income of the Company, in each case as compared with the
corresponding period of the prior year.
(f) Since the date of the latest audited financial statements included
in the Prospectus, the Company shall not have sustained (i) any material loss or
material interference with its business from fire, explosion, flood, hurricane
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as
disclosed in or contemplated by the Prospectus, or (ii) any material adverse
change, or any development involving a prospective material adverse change
(including without limitation a material adverse change in management or control
of the Company), in or affecting the position (financial or otherwise), results
of operations, net worth or business of the Company, otherwise than as disclosed
in or contemplated by the Prospectus, the effect of which, in either such case,
is in your reasonable judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the purchase, sale and delivery of
the Shares being delivered at such Time of Delivery as contemplated by the
Registration Statement, as amended as of the date hereof.
(g) The Shares shall be listed on the Nasdaq Stock Market's National
Market, subject to notice of issuance.
(h) Subsequent to the date hereof there shall not have occurred any of
the following: (i) any suspension or limitation in trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices for
trading on such exchange, or in the Common Stock by the Commission or the NASD
or the Nasdaq Stock Market's National Market; (ii) a moratorium on commercial
banking activities in New York declared by either federal or state authorities;
or (iii) any outbreak or escalation of hostilities involving the United States,
declaration by the United States of a national emergency or war or any other
national or international calamity or emergency if the effect of any such event
specified in this clause (iii) is in your reasonable judgment so material and
adverse as to make it impracticable or inadvisable to proceed with the purchase,
sale and delivery of the Shares being delivered at such Time of Delivery as
contemplated by the Registration Statement, as amended as of the date hereof.
(i) The Company shall have furnished to you at such Time of Delivery
certificates of officers of the Company and a certificate of the Selling
Shareholder, satisfactory to you, as to the accuracy of the representations and
warranties in all material respects of the Company and such Selling Shareholder
herein at and as of such Time of
-29-
Delivery, as to the performance by the Company and such Selling Shareholder of
all of their respective obligations hereunder to be performed at or prior to
such Time of Delivery and as to such other matters as you may reasonably
request, and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (f) of this
Section 7, and as to such other matters as you may reasonably request.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement made by the Company in Section
l(a) of this Agreement; (ii) any untrue statement or alleged untrue statement of
any material fact contained in (A) the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or (B) any application or other document, or any amendment
or supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or blue sky laws thereof or filed with
the Commission or any securities association or securities exchange (each an
"Application"); (iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or any Application a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (iv) any failure of the Company to perform its obligations
hereunder or under law, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
---------
however, that the Company shall not be liable in any such case to the extent
-------
that any such loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto or
any Application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through you expressly for use
therein; provided further, that such indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or any director,
officer, employee or agent of such Underwriter) from whom the person asserting
any such loss, claim, damage, liability or action purchased the Shares that are
the subject thereof if such person did not receive a copy of the Prospectus (or
the Prospectus as supplemented) at or prior to the confirmation of the sale of
such Shares to such person in any case where such delivery is required under the
Act and such untrue statement or omission of a material fact contained in any
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
supplemented). The Company will not, 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
-30-
proceeding (or related cause of action or portion thereof) in respect of which
indemnification may be sought hereunder (whether or not such Underwriter is a
party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of such Underwriter from
all liability arising out of such claim, action, suit or proceeding (or related
cause of action or portion thereof).
(b) The Selling Shareholder agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon: (i) any untrue statement or alleged untrue statement made
by such Selling Shareholder in Section l(b) of this Agreement; (ii) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, the Power of Attorney, the
Custody Agreement or any Application, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; or (iii) any failure of such Selling
Shareholder to perform his obligations hereunder, under the Custody Agreement or
under law, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
-----------------
Selling Shareholder shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto or any
Application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through you expressly for use
therein; and provided further, that such indemnity with respect to any
----------------
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or any
director, officer, employee or agent of such Underwriter) from whom the person
asserting any such loss, claim, damage, liability or action purchased the Shares
that are the subject thereof if such person did not receive a copy of the
Prospectus (or the Prospectus as supplemented) at or prior to the confirmation
of the sale of such Shares to such person in any case where such delivery is
required under the Act and such untrue statement or omission of a material fact
contained in any Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as supplemented). The Selling Shareholder will not, 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 (or related cause of action or portion thereof) in respect of which
indemnification may be sought hereunder (whether or not such Underwriter is a
party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of such Underwriter from
all liability arising out of such claim, action, suit or proceeding (or related
cause of action or portion thereof). Notwithstanding any provision
-31-
of this Section 8 to the contrary, the liability of the Selling Shareholder
pursuant to this Agreement shall not exceed the total net proceeds from the
offering (before deducting expenses) received by the Selling Shareholder
(including the net proceeds from the offering that are used by the Company to
pay the Distribution (as such term is defined in the Prospectus) to the Selling
Shareholder).
(c) Each Underwriter, severally but not jointly, agrees to indemnify
and hold harmless the Company and the Selling Shareholder against any losses,
claims, damages or liabilities to which the Company or the Selling Shareholder
may become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or any Application or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through you expressly for use therein; and will reimburse the Company and the
Selling Shareholder for any legal or other expenses reasonably incurred by the
Company or such Selling Shareholder in connection with investigating or
defending any such loss, claim, damage, liability or action.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party, unless and to the extent such omission results in the
forfeiture by the indemnifying party of substantial rights and defenses, shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (unless such counsel
is ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, in which case no consent shall be
required and who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party); provided, however, that if the defendants in
-----------------
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have been advised in writing by outside counsel
that there may be one or more legal defenses available to it or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party and such
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indemnified party shall have the right to select separate counsel to defend such
action on behalf of such indemnified party. After such notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence or (ii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. Nothing in this Section 8(d) shall preclude an
indemnified party from participating at its own expense in the defense of any
such action so assumed by the indemnifying party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Shareholder 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 or if the indemnified party failed to give the
notice required under subsection (d) above, 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 and the Selling Shareholder on the one hand
and the Underwriters on the other 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 Shareholder 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 and the Selling Shareholder (including, in the
case of the Selling Shareholder, the net proceeds of the offering that are used
by the Company to pay the Distribution to the Selling Shareholder) bear to the
total underwriting discounts and commissions received by the Underwriters. 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 or the Selling Shareholder 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, the
Selling Shareholder and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (e) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any
-33-
other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(e) 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 (e), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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 subsection
(e) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Shareholder under
this Section 8 shall be in addition to any liability which the Company or such
Selling Shareholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to the Selling Shareholder and to each
person, if any, who controls the Company and such Selling Shareholder within the
meaning of the Act.
9. DEFAULT OF UNDERWRITERS. (a) If any Underwriter defaults in its
obligation to purchase Shares at a Time of Delivery, you may in your discretion
arrange for you or another party or other parties to purchase such Shares on the
terms contained herein. If within thirty-six (36) hours after such default by
any Underwriter you do not arrange for the purchase of such Shares, the Company
and the Selling Shareholder shall be entitled to a further period of thirty-six
(36) hours within which to procure another party or other parties reasonably
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company and the Selling
Shareholder that you have so arranged for the purchase of such Shares, or the
Company and the Selling Shareholder notify you that they have so arranged for
the purchase of such Shares, you or the Company and the Selling Shareholder
shall have the right to postpone a Time of Delivery for a period of not more
than seven days in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus that in your
reasonable opinion may thereby be made necessary. The cost of preparing,
printing and filing any such amendments shall be paid for by the Underwriters.
The term "Underwriter" as used
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in this Agreement shall include any person substituted under this Section with
like effect as if such person had originally been a party to this Agreement with
respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Shareholder as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of Shares to be purchased at such Time of Delivery, then
the Company and the Selling Shareholder shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made, but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. TERMINATION. (a) This Agreement may be terminated with respect to
the Firm Shares or any Optional Shares in the sole discretion of the
Representatives by notice to the Company given prior to the First Time of
Delivery or any Subsequent Time of Delivery, respectively, in the event that (i)
any condition to the obligations of the Underwriters set forth in Section 7
hereof has not been satisfied in all material respects, or (ii) the Company or
the Selling Shareholder shall have failed, refused or been unable to deliver the
Shares or to perform all obligations and satisfy all conditions on their
respective parts to be performed or satisfied hereunder at or prior to such Time
of Delivery, in either case other than by reason of a default by any of the
Underwriters. If this Agreement is terminated pursuant to this Section 10(a),
the Company will reimburse the Underwriters severally upon demand for all out-
of-pocket expenses (including reasonable counsel fees and disbursements) that
shall have been incurred by them in connection with the proposed purchase and
sale of the Shares. Neither the Company nor any Selling Shareholder shall in
any event be liable to any of the Underwriters for the loss of anticipated
profits from the transactions covered by this Agreement.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Shareholder as provided in Section 9(a), the aggregate number of
such Shares which remains unpurchased exceeds one-eleventh of the aggregate
number of Shares to be purchased at such Time of Delivery, or if the Company and
the Selling Shareholder shall not exercise the right described in Section 9(b)
to require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to a
Subsequent Time of Delivery, the obligations of the Underwriters to purchase and
of the Company to sell the Optional Shares) shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Shareholder, except for the expenses to be borne by the Company, the
Selling Shareholder
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and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
11. SURVIVAL. The respective indemnities, agreements, representations,
warranties and other statements of the Company, its officers, the Selling
Shareholder and the several Underwriters, as set forth in this Agreement or made
by or on behalf of them, respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation (or any statement as
to the results thereof) made by or on behalf of any Underwriter or any
controlling person referred to in Section 8(e) or the Company, any Selling
Shareholder or any officer or director or controlling person of the Company or
the Selling Shareholder referred to in Section 8(e), and shall survive delivery
of and payment for the Shares. The respective agreements, covenants,
indemnities and other statements set forth in Sections 6 and 8 hereof shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement.
12. NOTICES. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed, delivered or sent by facsimile
transmission and confirmed in writing to you in care of The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Finance Department (with a copy to ▇▇▇▇▇▇ & Bird LLP, One Atlantic
Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇); if sent to the Company, shall be mailed, delivered or sent by
facsimile transmission and confirmed in writing to the Company at The A
Consulting Team, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Executive Officer (with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇); and if sent to any Selling Shareholder, shall
be mailed, delivered or sent by facsimile transmission and confirmed in writing
to the Selling Shareholder and the Attorney-in-Fact at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, , Attention: ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇).
13. REPRESENTATIVES. You will act for the several Underwriters in
connection with the transactions contemplated by this Agreement, and any action
under this Agreement taken by you jointly or by The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company,
Inc. will be binding upon all the Underwriters.
14. BINDING EFFECT. This Agreement shall be binding upon, and inure
solely to the benefit of, the Underwriters, the Company and the Selling
Shareholder and, to the extent provided in Sections 8 and 10 hereof, the
officers and directors and controlling persons referred to therein and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
-36-
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia without giving effect to any
provisions regarding conflicts of laws.
16. COUNTERPARTS. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.
-37-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us one of the counterparts hereof, and upon
the acceptance hereof by The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, Inc., on behalf of each
of the Underwriters, this letter will constitute a binding agreement among the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in the Master Agreement among Underwriters, a copy of which shall be
submitted to the Company for examination upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
THE A CONSULTING TEAM, INC.
By:
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman of the Board, Chief
Executive Officer and President
▇▇▇▇▇▇ ▇▇▇▇▇▇, as the Selling
Shareholder
By:
----------------------------------------
Name: ___________, as
Attorney-in-Fact
-38-
The foregoing Agreement is hereby confirmed and accepted as of the date first
written above at Atlanta, Georgia.
THE ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMPANY, INC.
WHEAT FIRST BUTCHER SINGER
By: The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, Inc.
By:
(Authorized Representative)
On behalf of each of the Underwriters
-39-
SCHEDULE I
Number of Optional
Total Number of Firm Shares to be Purchased
Shares to be if Maximum Option
Underwriter Purchased Exercised
----------- -------------------- ----------------------
The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Company, Inc.
Wheat First Butcher Singer
_________ __________
Total 1,800,000 270,000
========= =======
-40-
SCHEDULE II
Number of Optional
Selling Party Shares to be Sold
------------- -----------------
Company 135,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ 135,000
Total 270,000
=======
-41-
