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EXHIBIT 1.1
1,500,000 Shares of Common Stock
and
1,500,000 Redeemable Common Stock Purchase Warrants
of
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
UNDERWRITING AGREEMENT
Atlanta, Georgia
May ___, 1997
ARGENT SECURITIES, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Professional Transportation Group Ltd., Inc., a Georgia corporation
(the "Company"), confirms its agreement with Argent Securities, Inc.
("Argent"), and each of the other underwriters named in Schedule I hereto
(collectively, the "Underwriters," which term shall also include any
underwriter substituted as hereinafter provided in Section 11), for whom Argent
is acting as representative (in such capacity, Argent shall hereinafter be
referred to as the "Representative"), with respect to the sale by the Company,
and the purchase by the Underwriters, acting severally and not jointly, of One
Million Five Hundred Thousand (1,500,000) shares (the "Shares") of the
Company's common stock, no par value (the "Common Stock"), and One Million Five
Hundred Thousand (1,500,000) Redeemable Common Stock Purchase Warrants (the
"Redeemable Warrants") (collectively, the Shares and the Redeemable Warrants
are sometimes referred to herein as the "Firm Securities"), each of the
Redeemable Warrants entitles the holder thereof to purchase one share of Common
Stock at an exercise price of $______ per share pursuant to a warrant agreement
(the "Warrant Agreement") between the Company and the warrant agent, set forth
in Schedule II, and with respect to the grant by the Company to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of 225,000 additional Shares
and 225,000 Redeemable Warrants (the "Additional Securities") for the purpose
of covering over-allotments, if any. The aforesaid Firm Securities together
with all or any part of the Additional Securities are hereinafter collectively
referred to as the "Securities." The Company also proposes to issue and sell
to the Underwriters for an approximate price of $150 ($0.001 per warrant),
non-callable warrants entitling the Underwriters to purchase from the Company
an option pursuant to the Underwriters' Common Stock Purchase Warrant and
Warrant Purchase Option (the "Underwriters' Purchase Option") for the purchase
of an aggregate of 150,000 Shares (the "Underwriters' Shares") and 150,000
Redeemable Common Stock Purchase Warrants (the "Underwriters' Warrants"). The
shares of Common Stock issuable upon exercise of the
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Redeemable Warrants and the Underwriters' Warrants are hereinafter sometimes
referred to as the "Warrant Shares." The Shares, the Redeemable Warrants, the
Underwriters' Shares, the Underwriters' Warrants, and the Warrant Shares are
more fully described in the Registration Statement (as defined in Section 1(a)
hereof) and the Prospectus (as defined in Section 1(a) hereof) referred to
below. Unless the context otherwise requires, all references to the "Company"
shall include all subsidiaries (as defined in Section 2(c) hereof) referred to
below and identified in the Prospectus, as if separately stated herein. All
representations, warranties and opinions of counsel shall cover such
subsidiaries.
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters as of the
date hereof, and as of the Closing Date and any Option Closing Date, (as
defined in Section 2 (c) hereof), if any, as follows:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement, and an amendment or amendments thereto, on Form SB-2
(File No. 333-24619) under the Act (the "Registration Statement"), including a
preliminary prospectus relating to the Shares and Redeemable Warrants which
registration statement and any amendment or amendments have been prepared by
the Company in material compliance with the requirements of the Act. The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective, or, if the registration statement became effective
prior to the execution of this Agreement, as supplemented or amended prior to
the execution of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Firm Securities may commence, the term "Registration Statement" as used in
this Agreement means the registration statement as amended by said
post-effective amendment. If an abbreviated registration statement is prepared
and filed with the Commission in accordance with Rule 462(b) under the Act (an
"Abbreviated Registration Statement"), the term "Registration Statement" as
used in this Agreement includes the Abbreviated Registration Statement. The
term "Prospectus" as used in this Agreement means the final prospectus included
in the Registration Statement on the date it became effective, or, if the
prospectus included in the Registration Statement omits information in reliance
on Rule 430A under the Act and such information is included in a prospectus
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement as supplemented by the addition of the
Rule 430A information contained in the prospectus filed with the Commission
pursuant to Rule 424(b). The term "Preliminary Prospectus" as used in this
Agreement means a preliminary prospectus in the form included in the
registration statement at the time of the initial filing of the registration
statement with the Commission, and as such prospectus shall have been amended
from time to time prior to the date of the Prospectus.
(b) Neither the Commission nor any state regulatory
authority has issued any order preventing or suspending the use of any
Preliminary Prospectus, the Registration Statement or Prospectus or any part
thereof and no proceedings for a stop order have been instituted or are
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pending or, to the best knowledge of the Company, threatened. Each of the
Preliminary Prospectus, the Registration Statement and Prospectus at the time
of filing thereof conformed in all material respects with the requirements of
the Act, and neither the Preliminary Prospectus, the Registration Statement or
Prospectus at the time of filing thereof contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
and necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that this representation and
warranty does not apply to statements made or statements omitted in reliance
upon and in conformity with written information furnished to the Company with
respect to the Underwriters by or on behalf of the Underwriters expressly for
use in such Preliminary Prospectus, Registration Statement or Prospectus.
(c) When the Registration Statement becomes effective and
at all times subsequent thereto up to the Closing Date and the Option Closing
Date, if any, and during such longer period as the Prospectus may be required
to be delivered in connection with sales by the Underwriters or a dealer, the
Registration Statement and the Prospectus will contain all material statements
which are required to be stated therein in material compliance with the Act,
and will in all material respects conform to the requirements of the Act;
neither the Registration Statement, nor any amendment thereto, at the time the
Registration Statement or such amendment is declared effective under the Act,
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus at the time the Registration
Statement becomes effective, at the Closing Date and at the Option Closing
Date, if any, will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty does not apply to
statements made or statements omitted in reliance upon and in conformity with
information supplied to the Company in writing by or on behalf of the
Underwriters expressly for use in the Registration Statement or Prospectus or
any amendment thereof or supplement thereto.
(d) The Company has been duly organized and is now, and
at the Closing Date and the Option Closing Date, if any, will be, validly
existing as a corporation in good standing under the laws of the State of
Georgia. Other than the Company's Subsidiaries (as defined in Section 1(e)),
the Company does not own, directly or indirectly, an interest in any
corporation, partnership, trust, joint venture or other business entity;
provided, that the foregoing shall not be applicable to the investment of the
net proceeds from the sale of the Securities in short-term, low-risk
investments as set forth under "Use of Proceeds" in the Prospectus. The
Company is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of its
properties or the character of its operations require such qualification or
licensing, except where the failure to so register or qualify does not have a
material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole (a "Material Adverse Effect"). The Company has
all requisite power and authority (corporate and other), and has obtained any
and all necessary material applications, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental or regulatory
officials and bodies (including, without limitation, those having jurisdiction
over environmental or similar matters), to own or lease its properties and
conduct its business as described in the Prospectus; the
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Company is and has been doing business in material compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises and
permits and all material federal, state, local and foreign laws, rules and
regulations; and the Company has not received any notice of proceedings
relating to the revocation or modification of any such authorization, approval,
order, license, certificate, franchise, or permit which, singly or in the
aggregate, would have a Material Adverse Effect. The disclosures in the
Registration Statement concerning the effects of federal, state and local laws,
rules and regulations on the Company's business as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which they were made.
(e) The Company's subsidiaries (collectively, the
"Subsidiaries") are Timely Transportation, Inc., Truck-Net, Inc. and PTG, Inc.
Each Subsidiary is a corporation duly organized, validly existing and in good
standing in the jurisdiction of its incorporation, with full corporate power
and authority to own, lease and operate its properties and to conduct its
business, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not,
singly or in the aggregate, have a Material Adverse Effect; all of the
outstanding shares of capital stock of each of the Subsidiaries, have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned
by the Company free and clear of any lien, adverse claim, security interest,
equity or other encumbrance, except as otherwise disclosed in the Prospectus.
(f) The Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus under
"Capitalization" and will have the adjusted capitalization set forth therein on
the Closing Date and the Option Closing Date, if any, based upon the
assumptions set forth therein, and the Company is not a party to or bound by
any instrument, agreement or other arrangement providing for the Company to
issue any capital stock, rights, warrants, options or other securities, except
for this Agreement and as otherwise described in the Prospectus. The
Securities, the Underwriters Shares, the Underwriter's Warrants, and the
Warrant Shares and all other securities issued or issuable by the Company
conform or, when issued and paid for, will conform in all material respects to
all statements with respect thereto contained in the Registration Statement and
the Prospectus. All issued and outstanding securities of the Company have been
duly authorized and validly issued and are fully paid and non-assessable; the
holders thereof have no rights of rescission with respect thereto, and are not
subject to personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any holders of
any security of the Company, or similar contractual rights granted by the
Company. The Securities, the Underwriters' Shares, and the Underwriter's
Warrants to be issued and sold by the Company hereunder, and the Warrant Shares
issuable upon exercise of the Redeemable Warrants and the Underwriter's
Warrants and payment therefor, are not and will not be subject to any
preemptive or other similar rights of any shareholder, have been duly
authorized and, when issued, paid for and delivered in accordance with the
terms hereof and thereof, will be validly issued, fully paid and non-assessable
and will conform in all material respects to the descriptions thereof contained
in the Prospectus; and the holders thereof will not be subject to any liability
solely as such holders.
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Upon the issuance and delivery pursuant to the terms hereof of the Securities
to be sold by the Company hereunder, the Underwriters will acquire good and
marketable title to such Securities free and clear of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity
of any kind whatsoever.
(g) The financial statements of the Company, together
with the related notes and schedules thereto, included in the Registration
Statement, the Preliminary Prospectus and the Prospectus fairly present the
financial position and the results of operations of the Company at the
respective dates and for the respective periods to which they apply; and such
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved,
except as may be otherwise disclosed in the Prospectus. There has been no
material adverse change or development involving a prospective change in the
condition, financial or otherwise, or in the earnings, business affairs,
position, prospects, value, operation, properties, business, or results of
operation of the Company, not arising in the ordinary course of business, since
the dates of the financial statements included in the Registration Statement
and the Prospectus and prior to the Closing Date or the Option Closing Date, if
any, and the outstanding debt, the property, both tangible and intangible, and
the business of the Company, conforms in all material respects to the
descriptions thereof contained in the Registration Statement and in the
Prospectus.
(h) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, whose report is filed with the
Commission as a part of the Registration Statement, is an independent public
accountant as required by the Act.
(i) The Company (i) has paid or accrued all federal,
state and local taxes for which it is liable, including, but not limited to,
withholding taxes and taxes payable under Chapters 21 through 24 of the
Internal Revenue Code of 1986 (the "Code"), (ii) has furnished all tax and
information returns it is required to furnish pursuant to the Code, and has
established adequate reserves for such taxes which are not due and payable, and
(iii) does not have knowledge of any tax deficiency or claims outstanding,
proposed or assessed against it (other than certain state or local tax returns,
as to which the failure to file, singly or in the aggregate, would not have a
Material Adverse Effect.)
(j) The Company maintains insurance, which is in full
force and effect, of the types and in the amounts which it reasonably believes
to be necessary for its business, including, but not limited to, personal and
product liability insurance covering all personal and real property owned or
leased by the Company against fire, theft, damage and all risks customarily
insured against.
(k) There is no action, suit, proceeding, inquiry,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, pending or, to the knowledge of the Company, threatened
against (or circumstances known to the Company that may give rise to the same),
or involving the properties or business of the Company which: (i) is required
to be disclosed in the Registration Statement which is not so disclosed (and
such proceedings as are summarized in the Registration Statement are
accurately summarized in all respects); or (ii) singly or in the aggregate
would have a Material Adverse Effect.
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(l) The Company has full legal right, power and authority
to enter into this Agreement, the Underwriters' Purchase Option and the Warrant
Agreement and to consummate the transactions provided for in such agreements;
and this Agreement, the Underwriters' Purchase Option and the Warrant Agreement
have each been duly and properly authorized, executed and delivered by the
Company. Each of this Agreement, the Underwriters' Purchase Option and the
Warrant Agreement, constitutes a legal, valid and binding agreement of the
Company, subject to due authorization, execution and delivery by the
Representative and/or the Underwriters, enforceable against the Company in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and the application of equitable principles in any action, legal or equitable,
and except as rights to indemnity or contribution may be limited by applicable
law). Neither the Company's execution or delivery of this Agreement, the
Underwriters' Purchase Option, and the Warrant Agreement, its performance
hereunder and thereunder, its consummation of the transactions contemplated
herein and therein, nor the conduct of its business as described in the
Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or
will constitute a default under, or result in the creation or imposition of any
lien, charge, claim, encumbrance, pledge, security interest defect or other
restriction or equity of any kind whatsoever upon any property or assets
(tangible or intangible) of the Company pursuant to the terms of: (i) the
Articles of Incorporation or Bylaws of the Company, as amended; (ii) any
material license, contract, indenture, mortgage, deed of trust, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any other
agreement or instrument to which the Company is a party or by which the Company
is bound or to which any of its properties or assets (tangible or intangible)
is or may be subject, other than conflicts that, singly or in the aggregate,
will not have a Material Adverse Effect; or (iii) any statute, judgment,
decree, order, rule or regulation applicable to the Company of any arbitrator,
court, regulatory body or administrative agency or other governmental agency or
body (including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, having jurisdiction
over the Company or any of its activities or properties.
(m) No consent, approval, authorization or order of, and
no filing with, any court, regulatory body, government agency or other body,
domestic or foreign, is required for the issuance of the Securities pursuant to
the Prospectus and the Registration Statement, the performance of this
Agreement and the transactions contemplated hereby, except such as have been or
may be obtained under the Act, under the bylaws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") or may be required under
state securities or Blue Sky laws in connection with (i) the Underwriters'
purchase and distribution of the Securities to be sold by the Company
hereunder; or (ii) the issuance and delivery of the Underwriters' Shares, the
Underwriter's Warrants or the Warrant Shares.
(n) All executed agreements or copies of executed
agreements filed as exhibits to the Registration Statement to which the Company
is a party or by which the Company may be bound or to which any of its assets,
properties or businesses may be subject have been duly and validly authorized,
executed and delivered by the Company, and constitute the legal, valid and
binding agreements of the Company, enforceable against it in accordance with
its respective
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terms subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and subject, as to enforceability
to general principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law) and except with respect to provisions
requiring indemnification or contribution under applicable law. The
descriptions contained in the Registration Statement of contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown with respect thereto by the Act and there are
no material contracts or other documents which are required by the Act to be
described in the Registration Statement or filed as exhibits to the
Registration Statement which are not described or filed as required, and the
exhibits which have been filed are complete and correct copies of the documents
of which they purport to be copies.
(o) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus and prior
to the Closing Date or the Option Closing Date, if any, and except as may
otherwise be indicated or contemplated herein or therein, the Company has not:
(i) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money in any material amount; (ii) entered into any
transaction other than in the ordinary course of business; (iii) declared or
paid any dividend or made any other distribution on or in respect of its
capital stock; or (iv) made any changes in capital stock, material changes in
debt (long or short term) or liabilities other than in the ordinary course of
business, material changes in or affecting the general affairs, management,
financial operations, shareholders' equity or results of operations of the
Company.
(p) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus and prior
to the Closing Date or the Option Closing Date, if any, and except as may
otherwise be indicated or contemplated herein or therein, no default exists in
the due performance and observance of any material term, covenant or condition
of any license, contract, indenture, mortgage, installment sales agreement,
lease, deed of trust, voting trust agreement, stockholders agreement, note,
loan or credit agreement, or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or instrument to which
the Company is a party or by which the Company may be bound or to which any of
the property or assets (tangible or intangible) of the Company is subject or
affected, except that this representation shall not apply to defaults which in
the aggregate would not have a Material Adverse Effect.
(q) To the best knowledge of the Company, the Company has
generally enjoyed a satisfactory employer-employee relationship with its
employees and is in compliance in all material respects with all federal, state
and local laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours.
(r) To the best knowledge of the Company, since its
inception, the Company has not incurred any liability arising under or as a
result of the application of the provisions of the Act.
(s) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus and prior
to the Closing Date or the Option Closing
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Date, if any, and except as may otherwise be indicated or contemplated herein
or therein, the Company does not presently maintain, sponsor or contribute to,
and never has maintained, sponsored or contributed to, any program or
arrangement that is an "employee pension benefit plan," a "multi-employer plan"
as such terms are defined in Sections 3(2), 3(l) and 3(37) respectively of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (any of
such plan being referred to herein as "ERISA Plans"). The Company does not
maintain or contribute, now or at any time previously, to a defined benefit
plan, as defined in Section 3(35) of ERISA.
(t) To the best knowledge of the Company, the Company is
not in violation in any material respect of any domestic or foreign laws,
ordinances or governmental rules or regulations to which it is subject, except
to the extent that any such violation would not, singly or in the aggregate,
have a Material Adverse Effect.
(u) No holders of any securities of the Company or of any
options, warrants or other convertible or exchangeable securities of the
Company exercisable for or convertible or exchangeable for securities of the
Company have the right to include any securities issued by the Company in the
Registration Statement or any registration statement to be filed by the Company
within twelve (12) months of the date hereof or to require the Company to file
a registration statement under the Act during such twelve (12) month period,
except such registration rights as have been waived or disclosed in the
Prospectus.
(v) Neither the Company, nor, to the Company's best
knowledge, any of its employees, directors, principal shareholders or
affiliates (within the meaning of the Act) has taken, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result in, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of
the Securities or otherwise.
(w) Except as described in the Prospectus, to the best of
the Company's knowledge, the Company owns and has the unrestricted right to use
all material trade secrets, trademarks, trade names, know-how (including all
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), inventions, designs, processes, works of authorship,
computer programs and technical data and information (collectively herein
"Intellectual Property") required for or incident to the operations of the
Company's business, free and clear of and without violating any right, lien, or
claim of others, including without limitation, former employers of its
employees; provided, however, that the possibility exists that other persons or
entities, completely independently of the Company, or employees or agents,
could have developed trade secrets or items of technical information similar or
identical to those of the Company.
(x) The Company has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and personal
property owned or leased by it free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects, or other restrictions or
equities of any kind whatsoever, other than those referred to in the
Prospectus,
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liens for taxes or assessments not yet due and payable or those that are not
material to the business of the Company.
(y) The Company has obtained such duly executed legally
binding and enforceable agreements as required by the Representative pursuant
to which the Company's Chief Executive Officer and President has agreed not to,
directly or indirectly, offer to sell, sell, grant any option for the sale of,
assign, transfer, pledge, hypothecate or otherwise encumber any of their shares
of Common Stock or other securities of the Company (either pursuant to Rule 144
of the Act or otherwise) or dispose of any beneficial interest therein for
certain periods of up to 60 months subject to earlier release upon the
Company's achievement of certain performance thresholds, following the
effective date of the Registration Statement without the prior written consent
of the Representative. The Company will cause the Transfer Agent, as defined
below, to ▇▇▇▇ an appropriate legend on the face of stock certificates
representing all of such shares of Common Stock and other securities of the
Company.
(z) Except as disclosed in the Prospectus, the Company
has not incurred any liability and there are no written arrangements or
understandings for services in the nature of a finder's or origination fee with
respect to the sale of the Securities or any other written arrangements,
agreements, understandings, payments or issuances with respect to the Company
or any of its officers, directors, employees or affiliates that may adversely
affect the Underwriters' compensation, as determined by the NASD.
(aa) The Securities have been approved for quotation on
the Nasdaq SmallCap Market of the Nasdaq Stock Market, Inc., subject to
official notice of issuance.
(bb) Neither the Company nor to the Company's best
knowledge any of its respective officers, employees, agents or any other person
acting on behalf of the Company, has, directly or indirectly, given or agreed
to give any money, gift or similar benefit (other than legal price concessions
to customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or official or employee of any
governmental agency (domestic or foreign) or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who was, is, or may be in a position to help or
hinder the business of the Company (or assist the Company in connection with
any actual or proposed transaction) which: (a) might subject the Company, or
any other such person to any damage or penalty in any civil, criminal or
governmental litigation or proceeding (domestic or foreign); (b) if not given
in the past, might have had a materially adverse effect on the assets, business
or operations of the Company; or (c) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the Company.
To the best of the Company's knowledge, the Company's internal accounting
controls are sufficient to cause the Company to comply with the Foreign Corrupt
Practices Act of 1977, as amended.
(cc) Except as set forth in the Prospectus, and to the
best knowledge of the Company, no officer, director or principal shareholder of
the Company, or any "affiliate" or "associate" (as these terms are defined in
Rule 405 promulgated pursuant to the Act) of any such person or entity or the
Company, has or has had, either directly or indirectly, (i) an interest in
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any person or entity which (A) furnishes or sells services or products which
are furnished or sold or are proposed to be furnished or sold by the Company,
or (B) purchases from or sells or furnishes to the Company any goods or
services, except with respect to the beneficial ownership of not more than 1%
of the outstanding shares of capital stock of any publicly-held entity; or (ii)
a beneficial interest in any contract or agreement to which the Company is a
party or by which it may be bound or affected. Except as set forth in the
Prospectus under "Certain Transactions," there are no existing agreements,
arrangements, understandings or transactions, or proposed agreements,
arrangements, understandings or transactions, between or among the Company, and
any officer, director, or principal shareholder of the Company, or any
affiliate or associate of any such person or entity, which is required to be
disclosed pursuant to Rule 404 of Regulation S-B.
(dd) Any certificate signed by any officer of the Company
and delivered to the Underwriters or to Underwriters' Counsel shall be deemed a
representation and warranty by the Company to the Underwriters as to the
matters covered thereby.
(ee) The Company has entered into an employment agreement
with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as described in the Prospectus. Unless waived by the
Representative, the Company shall use its reasonable efforts at reasonable cost
to obtain a key-man life insurance policy in the amount of not less than
$1,000,000 on the life of ▇▇. ▇▇▇▇▇, which policy shall be owned by the Company
and shall name the Company as the sole beneficiary thereunder.
(ff) No securities of the Company have been sold by the
Company within three years prior to the date hereof, except for grants of
options to purchase Common Stock under the Company's 1996 Stock Option Plan or
as disclosed in Part II of the Registration Statement.
(gg) The minute books of the Company have been made
available to Underwriter's Counsel and contain a complete summary of all
material meetings and consent actions of the Board of Directors and
Shareholders of the Company since the date of its incorporation.
2. Purchase, Sale and Delivery of the Securities, Additional
Securities and Agreement to Issue Underwriters' Purchase
Option.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter,
and each Underwriter, severally and not jointly, agree to purchase from the
Company at the price per share and the price per warrant set forth below, that
proportion of the number of Shares and Redeemable Warrants set forth in
Schedule I opposite the name of such Underwriter that such number of Shares and
Redeemable Warrants bears to the total number of Shares and Redeemable
Warrants, respectively, subject to such adjustment as the Underwriters in their
discretion shall make to eliminate any sales or purchases of fractional
Securities, plus any additional numbers of Securities which such Underwriter
may become obligated to purchase pursuant to the provisions of Section 11
hereof.
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(b) In addition, on the basis of the representations,
warranties, covenants and agreements, herein contained, but subject to the
terms and conditions herein set forth, the Company hereby grants an option to
the Underwriters, severally and not jointly, to purchase up to an additional
225,000 Shares and 225,000 Redeemable Warrants from the Company at the prices
set forth below. The option granted hereby will expire 45 days after the date
of this Agreement, and may be exercised in whole or in part from time to time
(but not more than once) only for the purpose of covering over-allotments which
may be made in connection with the offering and distribution of the Additional
Securities upon notice by the Representative to the Company setting forth the
number of Additional Securities as to which the Underwriters are then
exercising the option and the time and date of payment and delivery for such
Additional Securities. Any such time and date of delivery shall be determined
by the Underwriters, but shall not be later than seven full business days after
the exercise of said option, nor in any event prior to the Closing Date, as
defined in paragraph (c) below, unless otherwise agreed to between the
Representative and the Company. In the event such option is exercised, each of
the Underwriters, acting severally and not jointly, shall purchase such number
of Option Securities then being purchased which shall have been allocated to
such Underwriter by the Representative, and which such Underwriter shall have
agreed to purchase, subject in each case to such adjustments as the
Underwriters in their discretion shall make to eliminate any sales or purchases
of fractional Securities. Nothing herein contained shall obligate the
Underwriters to make any over-allotments. No Additional Securities shall be
delivered unless the Firm Securities shall be simultaneously delivered or shall
theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Securities shall be made at the offices of counsel
to the Representative in Atlanta, Georgia, or at such other place as shall be
agreed upon by the Underwriters and the Company. Such delivery and payment
shall be made at 10:00 a.m. (New York City time) on the third full business day
following the date of this Agreement or at such other time and date as shall be
agreed upon by the Representative and the Company (such time and date of
payment and delivery being hereafter called "Closing Date"). In addition, in
the event that any or all of the Additional Securities are purchased by the
Underwriters, payment of the purchase price for, and delivery of certificates
for such Additional Securities shall be made at the above-mentioned office or
at such other place and at such time (such time and date of payment and
delivery being hereinafter called "Option Closing Date") as shall be agreed
upon by the Representative and the Company on the Option Closing Date as
specified in the notice from the Representative to the Company. Delivery of
the certificates for the Firm Securities and the Additional Securities, if any,
shall be made to the Underwriters against payment by the Underwriters of the
purchase price for the Firm Securities and the Additional Securities, if any,
to the order of the Company as the case may be by certified check in New York
Clearing House funds or, at the election of the Representative and the Company,
all or a portion of the funds may be paid by Bank wire transfer of funds or by
Representative's commercial check. Certificates for the Firm Securities and
the Additional Securities, if any, shall be in definitive, fully registered
form, shall bear no restrictive legends and shall be in such denominations and
registered in such names as the Underwriters may request in writing at least
two (2) business days prior to Closing Date or the Option Closing Date, as the
case may be. The certificates or the Depository Trust Corporation electronic
notifications, as the case may be, for the Firm Securities and the Additional
Securities, if any, shall be made available to the Underwriters at the
above-mentioned office or such other
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place as the Underwriters may designate for inspection, checking and packaging
no later than 9:30 a.m. on the last business day prior to Closing Date or the
Option Closing Date, as the case may be.
The purchase price of the Shares and Redeemable
Warrants to be paid by each of the Underwriters, severally and not jointly, to
the Company for the Securities purchased under Clauses (a) and (b) above will
be $______ per Share and $______ per Redeemable Warrant (which price is net of
the Underwriters' discount). The Company shall not be obligated to sell any
Securities hereunder unless all Securities to be sold by the Company are
purchased hereunder.
(d) On the Closing Date, the Company shall issue and sell
to the Underwriters the Underwriters' Purchase Option at a purchase price of
$150.00, which purchase option shall entitle the holders thereof to purchase an
aggregate of 150,000 Shares and 150,000 Warrants. The Underwriters' Purchase
Option shall be exercisable for a period of four (4) years commencing one (1)
year from the effective date of the Registration Statement at an initial
exercise price equal to one hundred fifty percent (150%) of the initial public
offering price of the Shares and Redeemable Warrants. The Underwriter's
Purchase Option Agreement and form of Purchase Option Certificate shall be
substantially in the form filed as an exhibit to the Registration Statement.
Payment for the Underwriters' Purchase Option shall be made on Closing Date.
The Company has reserved and shall continue to reserve a sufficient number of
Shares for issuance upon exercise of the Underwriters' Purchase Option.
3. Public Offering of the Securities. As soon after the
Registration Statement becomes effective and as the Representative deems
advisable, but in no event more than three (3) business days after such
effective date, the Underwriters shall make a public offering of the securities
(other than to residents of or in any jurisdiction in which qualification of
the Securities is required and has not become effective) at the price and upon
the other terms set forth in the Prospectus. The Underwriters may allow such
concessions and discounts upon sales to other dealers as set forth in the
Prospectus.
4. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters as follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as practicable and will not at any time, whether before or after the
effective date of the Registration Statement but prior to the Closing Date or
Option Closing Date, if any, file any amendment to the Registration Statement
or supplement to the Prospectus or file any document under the Exchange Act (i)
before termination of the offering of the Securities by the Underwriters, which
the Underwriters shall not previously have been advised and furnished with a
copy, or (ii) to which the Underwriters shall have objected or (iii) which is
not in compliance with the Act or the Exchange Act.
(b) As soon as the Company is advised or obtains
knowledge thereof, the Company will advise the Underwriters and confirm by
notice in writing: (i) when the Registration Statement, as amended, becomes
effective, if the provisions of Rule 430A
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promulgated under the Act will be relied upon, when the Prospectus has been
filed in accordance with said Rule 430A and when any post-effective amendment
to the Registration Statement becomes effective; (ii) of the issuance by the
Commission of any stop order or of the initiation, or the threatening of any
proceeding, suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of the Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto, or the institution or
proceeding for that purpose; (iii) of the issuance by any state securities
commission of any proceedings for the suspension of the qualification of the
Securities for offering or sale in any jurisdiction or of the initiation, or
the threatening, of any proceeding for that purpose; (iv) of the receipt of any
comments from the Commission; and (v) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information. If the Commission or any state
securities commission or regulatory authority shall enter a stop order or
suspend such qualification at any time, the Company will make every effort to
obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and
substance satisfactory to the Underwriters) or transmit the Prospectus by a
means reasonably calculated to result in filing with the Commission pursuant to
Rule 424(b)(1) (or, if applicable and if consented to by the Underwriters
pursuant to Rule 424(b)(4)) not later than the Commission's close of business
on the earlier of (i) the second business day following the execution and
delivery of this Agreement and (ii) the fifth business day after the effective
date of the Registration Statement.
(d) During such period as the Prospectus is required by
law to be delivered in connection with of the Securities by an underwriter or
dealer, the Company will give the Underwriters notice of its intention to file
or prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Securities which differs
from the corresponding prospectus on file with the Commission at the time the
Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Act), will
furnish the Underwriters with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file any such prospectus to which the Underwriters or ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇▇ ("Underwriters' Counsel") shall reasonably object.
(e) The Company shall cooperate in good faith with the
Underwriters, and Underwriters' Counsel, at or prior to the time the
Registration Statement becomes effective, in endeavoring to qualify the
Securities for offering and sale under the securities laws of such
jurisdictions as the Underwriters may reasonably designate, and shall cooperate
with the Underwriters and Underwriters' Counsel in the making of such
applications, and filing such documents and shall furnish such information as
may be required for such purpose; provided, however, the Company shall not be
required to: (i) qualify as a foreign corporation or file a general consent to
service of process in any such jurisdiction; or (ii) qualify or "blue sky" in
any state which requires a lock-up of securities held by officers, directors or
affiliates of the Company for a period greater than five (5) years (or such
earlier date if the Representative has exercised the Underwriters' Purchase
Option). In each jurisdiction where such qualification shall
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be effected, the Company will, unless the Underwriters agree that such action
is not at the time necessary or advisable, use all reasonable efforts to file
and make such statements or reports at such times as are or may reasonably be
required by the laws of such jurisdiction to continue such qualification.
(f) During the time when the Prospectus is required to be
delivered under the Act, the Company shall use all reasonable efforts to comply
with all requirements imposed upon it by the Act and the Exchange Act, as now
and hereafter amended, so far as necessary to permit the continuance of sales
of or dealings in the Securities in accordance with the provisions hereof and
the Prospectus, or any amendments or supplements thereto. If at any time when
the Prospectus relating to the Securities is required to be delivered under the
Act, any event shall have occurred as a result of which, in the opinion of
counsel for the Company or Underwriters' Counsel, the Prospectus, as then
amended or supplemented, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company will notify the Underwriters
promptly and prepare and file with the Commission an appropriate amendment or
supplement in accordance with Section 10 of the Act, each such amendment or
supplement to be reasonably satisfactory to Underwriters' Counsel, and the
Company will furnish to the Underwriters a reasonable number of copies of such
amendment or supplement.
(g) As soon as practicable, but in any event not later
than 90 days after the end of the 12-month period commencing on the day after
the end of the fiscal quarter of the Company during which the effective date of
the Registration Statement occurs, the Company shall make generally available
to its security holders, in the manner specified in Rule 158(b) of the Act, and
to the Underwriters, an earning statement which will be in such form and detail
required by, and will otherwise comply with, the provisions of Section 11(a)
and Rule 158(a) of the Act, which statement need not be audited unless required
by the Act, covering a period of at least 12 consecutive months after the
effective date of the Registration Statement.
(h) During a period of five (5) years after the date
hereof and provided that the Company is required to file reports with the
Commission under Section 12 of the Exchange Act, the Company will provide the
Representative's director Designee or Attendee, as defined herein, copies of
the below described documents prior to release where applicable and will
furnish to its shareholders and to the Underwriter as soon as practicable after
the end of the Company's fiscal year end, annual reports (including financial
statements audited by independent public accountants):
(i) as soon as they are available, copies of all
reports (financial or other) mailed to shareholders;
(ii) as soon as they are available, copies of all
reports and financial statements furnished to or filed with the Commission, the
NASD or any securities exchange;
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(iii) every press release and every material news
item or article of interest to the financial community in respect of the
Company and any future subsidiaries or their affairs which was released or
prepared by the Company;
(iv) any additional information of a public nature
concerning the Company and any future subsidiaries or their respective
businesses which the Underwriters may reasonably request;
(v) a copy of any Schedule 13D, 13G, 14D-1, 13E-3
or 13E-4 received or filed by the Company from time to time;
(vi) such other information as may be reasonably
requested with reference to the property, business, shareholders and affairs of
the Company and its subsidiaries.
During such five-year period, if the Company has active
subsidiaries, the foregoing financial statements will be on a consolidated
basis to the extent that the accounts of the Company and its subsidiaries are
consolidated, and will be accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(i) For as long as the Company is required to file
reports with the Commission under Section 12 of the Exchange Act, the Company
will maintain a Transfer Agent and a Warrant Agent, which may be the same
entity, and, if necessary under the jurisdiction of incorporation of the
Company, a Registrar (which may be the same entity as the Transfer and Warrant
Agent) for its Common Stock and Redeemable Warrants.
(j) The Company will furnish to the Underwriters or
pursuant to the Underwriters' direction, without charge, at such place as the
Underwriters may designate, copies of each Preliminary Prospectus, the
Registration Statement and any pre-effective or post-effective amendments
thereto (two of which copies will be signed and will include all financial
statements and exhibits), the Prospectus, and all amendments and supplements
thereto, including any prospectus prepared after the effective date of the
Registration Statement, in each case as soon as available and in such
quantities as the Underwriters may reasonably request.
(k) Neither the Company, nor its officers or directors,
nor affiliates of any of them (within the meaning of the Act) will take,
directly or indirectly, any action designed to, or which might in the future
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any securities of the Company.
(1) The Company shall apply the net proceeds from the
sale of the Securities in substantially the manner, and subject to the
provisions, set forth under "Use of Proceeds" in the Prospectus. No portion of
the net proceeds will be used directly or indirectly to acquire any securities
issued by the Company.
(m) The Company shall timely file all such reports, forms
or other documents as may be required (including but not limited to a Form SR
as may be required pursuant to Rule 463 under the Act) from time to time, under
the Act and the Exchange Act and all such reports,
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forms and documents filed will comply as to form and substance with the
applicable requirements under the Act and the Exchange Act.
(n) The Company shall furnish to the Underwriters as
early as practicable prior to each of the date hereof, the Closing Date and the
Option Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than forty-five
(45) days prior to the effective date of the Registration Statement) which have
been read by the Company's independent public accountants, as stated in their
letters to be furnished pursuant to Section 6(k) hereof.
(o) For a period of five (5) years from the Closing Date
(or such earlier date if the Representative has exercised the Underwriters'
Purchase Option), the Company shall furnish to the Underwriters, at the
Company's sole expense, (i) daily consolidated transfer sheets relating to the
Securities; (ii) a list of holders of Securities upon the Representative's
reasonable request; (iii) a list of, if any, the securities positions of
participants in the Depository Trust Company.
(p) For a period of five (5) years after the effective
date of the Registration Statement (or such earlier date if the Representative
has exercised the Underwriters' Purchase Option), the Company shall use its best
efforts to cause one (1) individual (the "Designee") selected by the
Representative to be elected to the Board of Directors of the Company (the
"Board"), if requested by the Representative. Alternatively, the
Representative shall be entitled to appoint an individual who shall be
permitted to attend, but not vote at, all meetings of the Board (the
"Attendee") and to receive all notices and other correspondence and
communications sent by the Company to members of the Board. Upon election to
the Board, the Designee shall be entitled to call special meetings of the Board
(but not more than once per month unless with the request of another member of
the Board) and to serve on the Audit or Compensation Committees. The Designee
may be removed by the Board only for "Cause" as that term is defined in the
employment agreement between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇. The Company
shall reimburse the Designee or Attendee for his or her out-of-pocket expenses
reasonably incurred and authorized in advance by the Company in connection
with his or her attendance of the Board meetings and pay such individual a fee
of $1,000 month. The Designee or Attendee shall also be entitled to
participate in any stock option plan of the Company for non-employees. To the
extent permitted by law, the Company agrees to indemnify and hold the Designee
(as a director) or Attendee harmless against any and all claims, actions,
awards and judgements arising out of his or her service as a director or
Attendee and in the event the Company maintains a liability insurance policy
affording coverage for the action of its officer and directors, to include
such Designee as an insured under such policy.
(q) For a period equal to the lesser of (i) five (5)
years from the date hereof, or (ii) the sale to the public of the Warrant
Shares, the Company will use its best efforts not to take any action or actions
which may prevent or disqualify the Company's use of Forms S-1 or, if
applicable, S-2 and S-3 (or other appropriate form) for the registration under
the Act of the Warrant Shares.
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(r) For a period of five (5) years from the date hereof,
the Company shall use its best efforts at its cost and expense to maintain the
listing of the Securities on the Nasdaq SmallCap Market or Nasdaq National
Market System if the Company meets all of the requirements and qualifications
promulgated by the NASD, provided, however, that the Company may elect, with
the consent of the Representative which shall not be unreasonably withheld, to
have the Securities listed on the New York Stock Exchange in lieu of (or in
addition to) listing on Nasdaq.
(s) On or before the effective date of the Registration
Statement, the Company shall retain or make arrangements to retain a financial
public relations firm and a publicist reasonably satisfactory to the
Representative which shall be continuously engaged from such engagement date to
a date 24 months from the effective date of the Registration Statement. Upon
the expiration of such two (2) year period, such engagement shall continue
until the expiration of any lock-up period provided for in the lock-up
agreement with the Company's Chief Executive Officer and President subject to
the Company's right to terminate any such firm with the consent of the Designee
or Attendee, which consent will not be unreasonably withheld. Further, the
Company shall engage for a period of two years at least three firms (one of
which shall be the Representative and one of which shall be Standard & Poor's
Stock Reports Professional Edition) which are reasonably acceptable to the
Representative to provide industry research and advice to the Company. Upon
the expiration of such two-year period, such engagement shall continue until
the expiration of any lock-up period provided hereunder, subject to the
Company's right to terminate any such firm with the consent of the Designee or
Attendee, which consent will not be unreasonably withheld.
(t) The Company shall (i) file a Form 8-A with the
Commission providing for the registration under the Exchange Act of the
Securities and (ii) as soon as practicable, but in no event more than five (5)
business days after the effective date of the Registration Statement promptly
take all necessary and appropriate actions to be included in Standard and
Poor's Corporation Descriptions and/or ▇▇▇▇▇'▇ OTC Manual and to continue such
inclusion for a period of not less than five (5) years.
(u) Following the Effective Date of the Registration
Statement and for a period of five (5) years thereafter (or such earlier date
if the Representative has exercised the Underwriters' Purchase Option), the
Company shall, at its sole cost and expense, prepare and file such blue sky
trading applications with such jurisdictions as the Representative may
reasonably request after consultation with the Company, and on the
Representative's reasonable request, furnish the Underwriters with a secondary
trading survey prepared by securities counsel to the Company.
(v) The Company shall not amend or alter any term of any
written employment agreement nor lock-up agreement between the Company and any
executive officer, director or affiliate, during the term thereof, in a manner
more favorable to such employee or entity, without the express written consent
of the Representative, until such time as the Underwriter's Purchase Option has
been exercised in full.
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(w) Until the completion of the distribution of the
Securities, the Company shall not, without the prior written consent of the
Representative and Underwriters' Counsel, which consent shall not be
unreasonably withheld, issue, directly or indirectly, any press release or
other communication or hold any press conference with respect to the Company or
its activities or the offering contemplated hereby, other than trade releases
issued in the ordinary course of the Company's business consistent with past
practices with respect to the Company's operations.
(x) Commencing one (1) year from the date hereof, upon
the exercise of any Redeemable Warrant, the exercise of which was solicited by
the Underwriters in accordance with the applicable rules and regulations of the
NASD prevailing at the time of such solicitation, the Company shall pay to the
soliciting Underwriter a fee of 5% of the aggregate exercise price of such
Redeemable Warrant (the "Warrant Solicitation Fee") within five (5) business
days of such exercise, so long as the Underwriters provided bona fide services
in exchange for the Warrant Solicitation Fee and the Underwriters have been
specifically designated in writing by the holders of the Redeemable Warrant as
the broker. The Company further agrees that it will not solicit the exercise
of any Redeemable Warrant other than through the Underwriters, unless either:
(i) the Underwriters cannot legally solicit the exercise of the Redeemable
Warrants at the time of such solicitation; (ii) the Representative declines, in
writing, to solicit the exercise of the Redeemable Warrants within five (5)
business days of such a written request by the Company; or (iii) the
Representative consents to the solicitation of the exercise of the Redeemable
Warrants by the Company or another entity.
(y) The Company will use its best efforts to maintain its
registration under the Exchange Act in effect for a period of five (5) years
from the Closing Date.
(z) For a period of twenty-four (24) months commencing on
the effective date of the Registration Statement (or such later date if at
least 20% of the Redeemable Warrants remain unexercised or otherwise
outstanding), except with the written consent of the Representative, which
consent shall not be unreasonably withheld, the Company will not issue or sell,
directly or indirectly, any shares of its capital stock, or sell or grant
options, or warrants or rights to purchase any shares of its capital stock,
except pursuant to (i) this Agreement, (ii) the Underwriters' Purchase Option,
(iii) warrants and options of the Company heretofore issued and described in
the Prospectus, and (iv) the grant of options and the issuance of shares upon
exercise of options issued or to be issued under the Company's 1996 Stock
Option Plan which is described in the Prospectus; except that, during such
period, the Company may issue securities in connection with an acquisition,
merger or similar transaction, provided that such securities are not publicly
registered or issued pursuant to Regulation S of the Act, and the acquirer of
the securities is not granted registration rights with respect thereto which
are effective prior to 24 months after the effective date of the Registration
Statement and until the Underwriters' Purchase Option is exercised, the
Representative grants its consent, which consent will not be unreasonably
withheld. Notwithstanding anything to the contrary set forth in the prior
sentence, the Company may not issue any class or series of its preferred stock
for a period of 24 months from the effective date of the Registration Statement
(or such later date if at least 20% of the Redeemable Warrants remain
unexercised or otherwise outstanding) without the unanimous vote or consent of
the members (eligible to vote under applicable law) of the Board of Directors
of the Company. Prior to the
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effective date of the Registration Statement, the Company will not issue any
options or warrants without the prior written consent of the Underwriters.
(aa) The Company will not file any registration statement
relating to the offer or sale of any of the Company's securities, except for
any registration statement on Form S-8, during the 12 months following the
Closing Date without the Underwriters' prior written consent, which consent
will not be unreasonably withheld.
(bb) The Company, for a period of twenty-four (24) months
following the effective date of the Registration Statement (or such earlier
date if the Representative has exercised the Underwriters' Purchase Option),
shall not redeem any of its securities, and shall not pay any dividends or make
any other cash distribution in respect of its securities in excess of the
amount of the Company's current or retained earnings derived after the
effective date of the Registration Statement without obtaining the
Representative's prior written consent, which consent shall not be unreasonably
withheld. The Representative shall either approve or disapprove such
contemplated redemption of securities or dividend payment or distribution
within five (5) business days from the date the Representative receive written
notice of the Company's proposal with respect thereto; a failure of the
Representative to respond within the five (5) business day period shall be
deemed approval of the transaction.
(cc) The Company maintains and will continue to maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary
in order to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences, and
(v) all quarterly reports filed on Form 10-Q or 10-QSB shall be reviewed by the
Company's accountant in accordance with SAS 71.
(dd) The Company, for a period of twenty-four (24) months
following the effective date of the Registration Statement (or such earlier
date if the Representative has exercised the Underwriters' Purchase Option),
shall implement the following procedures:
(i) Sixty days prior to fiscal year end, the
President will present to the Board of Directors a business plan to be adopted
by the Board at fiscal year end. The business plan will include the following:
a) monthly projections - including
balance sheet, profit/loss statement and cash
flow statements with underlying assumptions
b) upon Board approval, this document
becomes the annual budget
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(ii) No later than the end of each month, the
Company will provide the Board with comparative financial statements for the
previous month showing actual balance sheet, profit/loss and cash flow vs.
budget with written explanations for deviation in excess of $50,000 or 10% of
line item presented (where the amount in such line item is material).
(iii) Monthly Board meetings (which may be by
telephone) to be held within 25 days of the end of the previous month to
include, if appropriate, discussion of the Company's quarterly report on Form
10-Q or 10- QSB and approval of any changes to the business plan based on
change of circumstances.
(iv) Implementation of a compensation committee,
which will be headed by an independent director or include the Designee, if
any, to make recommendations to the Board for compensation for all consultants,
officers and directors.
(v) Implementation of an audit committee which
will have as a member the Designee, if any, and one independent Director.
If the Company fails to comply with or breaches the provisions of Section 4(g),
(h), (i), (m), (n), (o), (r), (s), (t), (w), (y), (cc) or (dd) of this
Agreement in any material manner which continues for a period in excess of 90
days, the Underwriters may cause the Company to retain one or more consultants,
accountants or other professionals to assist the Company in curing the breach
or failure and the Company will reimburse such third party directly for
reasonable costs and expenses incurred.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the
Closing Date and the Option Closing Date (to the extent not paid at the Closing
Date) all expenses and fees (other than fees of Underwriters' Counsel, except
as provided in (iv) below) incident to the performance of the obligations of
the Company under this Agreement, including, without limitation: (i) the fees
and expenses of accountants and counsel for the Company; (ii) all costs and
expenses incurred in connection with the preparation, duplication, printing,
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the Prospectus and any amendments
and supplements thereto and the printing, mailing and delivery of this
Agreement, the Selected Dealer Agreements, the Agreement Among Underwriters,
Underwriters Questionnaires, Powers of Attorney and related documents,
including the cost of all copies thereof and of the Preliminary Prospectuses
and of the Prospectus and any amendments thereof or supplements thereto
supplied to the Underwriters in quantities as hereinabove stated; (iii) the
printing, engraving, issuance and delivery of the Securities including any
transfer or other taxes payable thereon; (iv) disbursements and fees of
Underwriters' Counsel in connection with the qualification of the Securities
under state securities or "Blue Sky" laws and determination of the status of
such securities under legal investment laws, including the costs of printing
and mailing the "Preliminary Blue Sky Memorandum," the "Supplemental Blue Sky
Memorandum" and "Legal Investments Survey," if any, which Underwriters' Counsel
Blue Sky fees (exclusive of filing fees and disbursements) shall be $1,000 for
each state in which application for registration or qualification is made up to
an aggregate of $35,000 for all states combined; (v) advertising
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costs and expenses, including but not limited to costs and expenses in
connection with the "road show," information meetings and presentations, and
prospectus memorabilia all of which costs and expenses shall be approved in
advance by the Company; (vi) fees and expenses of the Transfer Agent; (vii) the
fees payable to the NASD; (viii) the fees and expenses incurred in connection
with the listing of the Securities on the Nasdaq SmallCap Market and any other
fees for application and admission to a registered stock exchange for which the
Representative requires, after consultation with the Company, the Company to
register the Securities; (ix) fees and expenses for any tombstone
advertisements reasonably requested by the Representative; (x) closing
binders; and (xi) lucite cubes containing a miniature definite Prospectus. All
fees and expenses payable to the Underwriters shall be payable at the Closing
Date or Option Closing Date, as applicable.
(b) If this Agreement is terminated by reason of any
action by the Representative in accordance with the provisions of Section 6,
Section 10(a) or Section 12, the Company shall reimburse and indemnify the
Underwriters for the actual and documented out-of-pocket expenses of the
Representative reasonably incurred in connection with the transactions
contemplated hereby; provided, however that the Company's reimbursement
obligation pursuant hereto shall be limited to $150,000.
(c) The Company further agrees that, in addition to the
expenses payable pursuant to subsection (a) of this Section 5, it will pay to
the Underwriters a non-accountable expense allowance equal to two and one-half
percent (2.5%) of the gross proceeds received by the Company from the sale of
the Securities. The Company will pay the non-accountable expense allowance on
the Closing Date by direct payment to third parties for fees and expenses
including, but not limited to, fees and expenses of Underwriter's Counsel and
the balance by deduction from the proceeds of the offering contemplated herein.
In the event the Underwriters elect to exercise the over-allotment option
described in Section 2(b) hereof, the Company further agrees to pay to the
Underwriters on the Option Closing Date (by deduction from the proceeds of the
offering) a non-accountable expense allowance equal to two and one-half percent
(2 1/2%) of the gross proceeds received by the Company from the sale of the
Additional Securities.
6. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters hereunder shall be subject to the continuing accuracy of
the representations and warranties of the Company herein as of the Closing Date
and the Option Closing Date, if any, as if they had been made on and as of the
Closing Date or the Option Closing Date, as the case may be; the accuracy on
and as of the Closing Date or Option Closing Date, if any, of the statements of
officers of the Company made pursuant to the provisions hereof; and the
performance by the Company on and as of the Closing Date and the Option Closing
Date, if any, of each of its covenants and obligations hereunder and to the
following further conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 P.M., New York City time, on the date of this
Agreement or such later date and time as shall be consented to in writing by
the Underwriters, and, at the Closing Date and the Option Closing Date, if any,
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or shall be pending or contemplated by the Commission and any request on the
part of the Commission for
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additional information shall have been complied with to the reasonable
satisfaction of Underwriter and Underwriters' Counsel. If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, the price of the
Securities and any price-related information previously omitted from the
effective Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the Act
within the prescribed time period, and prior to the Closing Date the Company
shall have provided evidence satisfactory to the Underwriters of such timely
filing, or a post-effective amendment providing such information shall have
been promptly filed and declared effective in accordance with the requirements
of Rule 430A of the Act.
(b) The Underwriters shall not have advised the Company
that the Registration Statement, or any amendment thereto, in the Underwriters'
reasonable opinion contains an untrue statement of fact which, is material or
omits to state a fact which is material and is required to be stated therein or
is necessary to make the statements therein not misleading, or that the
Prospectus, or any supplement thereto, in the Underwriters' reasonable opinion,
is material, contains an untrue statement of or omits to state a fact which is
material and is required to be stated therein or is necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) On or prior to the Closing Date and the Option
Closing Date, as the case may be, the Underwriters shall have received from
Underwriters' Counsel, such opinion or opinions with respect to the
organization of the Company the validity of the Securities, the Registration
Statement, the Prospectus and other related matters as the Underwriters
reasonably may request and such counsel shall have received such papers and
information as they request to enable them to pass upon such matters.
(d) At the Closing Date and the Option Closing Date, if
any, the Underwriters shall have received an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇▇, L.L.P., counsel to the Company, dated the Closing Date, or Option
Closing Date, as the case may be, addressed to the Underwriter and in form and
substance satisfactory to Underwriters' Counsel, to the effect that:
(i) The Company: (A) has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Georgia with full corporate power and authority to own and operate its
properties and to carry on its business as set forth in the Registration
Statement and Prospectus; (B) to the best knowledge of such counsel, the
Company is duly registered or qualified as a foreign corporation in all
jurisdictions in which by reason of maintaining an office in such jurisdiction
or by owning or leasing real property in such jurisdiction it is required to be
so registered or qualified except where failure to register or qualify does not
have, singly or in the aggregate, a Material Adverse Effect; and (C) to the
best knowledge of such counsel, the Company has not received any notice of
proceedings relating to the revocation or modification of any such registration
or qualification.
(ii) The Registration Statement, each Preliminary
Prospectus that has been circulated and the Prospectus and any post-effective
amendments or supplements thereto (other than the financial statements,
schedules and other financial and statistical data included therein, including
such information set forth under the caption "Management's Discussion and
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Analysis of Financial Condition and Results of Operations", as to which no
opinion need be rendered) comply as to form in all material respects with the
requirements of the Act and the conditions for use of a registration statement
on Form SB-2 have been satisfied by the Company. Such counsel shall state that
such counsel has participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company and representatives of the Underwriters at which
the contents of the Registration Statement, the Prospectus and related matters
were discussed and, although such counsel is not passing upon, has not
undertaken to determine independently and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus, on the basis of the foregoing, no facts
have come to the attention of such counsel which lead them to believe that
either the Registration Statement or any amendment thereto at the time such
Registration Statement or amendment became effective or the Prospectus as of
the date thereof contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or to make the
statements therein in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no opinion
with respect to the financial statements and schedules and other financial and
statistical data included in the Registration Statement or Prospectus,
including such information set forth under caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations," or with respect to
statements or omissions made therein in reliance upon information furnished in
writing to the Company on behalf of any Underwriter expressly for use in the
Registration Statement or the Prospectus).
(iii) To the best of such counsel's knowledge, the
Company has a duly authorized, issued and outstanding capitalization as set
forth in the Prospectus as of the date indicated therein, under
"Capitalization." The Shares, the Redeemable Warrants, the Underwriters'
Purchase Option, the Underwriters' Warrants, and the Warrant Shares conform in
all material respects to all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and outstanding
securities of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof, to counsel's best
knowledge, are not subject to personal liability by reason of being such
holders, and none of such securities were issued in violation of the preemptive
rights of any holder of any security of the Company.
(iv) The issuance of the Shares, Redeemable
Warrants and the Warrant Shares have been duly authorized and when issued and
paid for in accordance with this Agreement and the Warrant Agreement,
respectively, will be validly issued, fully paid and non-assessable securities
of the Company. The holders of the Securities when issued and paid for, will
not be subject to personal liability by reason of being such holders. To the
best of such counsel's knowledge, the Securities are not and will not be
subject to the preemptive or similar contractual rights of any shareholder of
the Company. The certificates representing the Shares and Redeemable Warrants
will comply with all applicable requirements of Georgia law.
(v) Based solely on telephonic, verbal
confirmation provided to such counsel by the staff of the Commission, the
Registration Statement and all post-effective amendments, if any, have become
effective under the Act, and, if applicable, filing of all pricing information
has been timely made in the appropriate form under Rule 430A, and, to the best
of
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such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and to the best of such counsel's
knowledge, no proceedings for that purpose have been instituted or are pending
or threatened or contemplated under the Act; and any required filing of the
Prospectus pursuant to Rule 424(b) has been made.
(vi) To the best of such counsel's knowledge, (A)
there are no material contracts or other documents required to be described in
the Registration Statement and the Prospectus and filed as exhibits to the
Registration Statement other than those described in the Registration Statement
and the Prospectus and filed as exhibits thereto, and (B) the descriptions in
the Registration Statement and the Prospectus and any supplement or amendment
thereto regarding such material contracts or other documents to which the
Company is a party or by which it is bound, are accurate in all material
respects and fairly represent the information required to be shown by
Regulation SB and the Act.
(vii) This Agreement, the Underwriters' Purchase
Option Agreement and the Warrant Agreement have each been duly and validly
authorized, executed and delivered by the Company, and assuming that it is a
valid and binding agreement of the Underwriters, as the case may be,
constitutes a legal, valid and binding agreement of the Company enforceable as
against the Company in accordance with its respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law or pursuant to public policy).
(viii) Neither the execution or delivery by the
Company of this Agreement, the Underwriters' Purchase Option Agreement, and the
Warrant Agreement, nor its performance hereunder or thereunder, nor its
consummation of the transactions contemplated herein or therein, nor the
conduct of its business as described in the Registration Statement, the
Prospectus, and any amendments or supplements thereto, nor the issuance of the
securities conflicts with or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or constitutes or
will constitute a material default under, or result in the creation or
imposition of any material lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever upon any
property or assets (tangible or intangible) of the Company pursuant to the
terms of (A) the Articles of Incorporation, as amended, of the Company, or (B)
to the best knowledge of such counsel, and except to the extent it would not
have a Material Adverse Effect on the Company, any statute, judgment, decree,
order, rule or regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or body,
having jurisdiction over the Company or any of its respective activities or
properties.
(ix) No consent, approval, authorization or order,
and no filing with, any court, regulatory body, government agency or other body
(other than such as may be required by the NASD or under state securities laws,
as to which no opinion need be rendered) is required in connection with the
issuance by the Company of the Securities pursuant to the Prospectus and the
Registration Statement, the performance of this Agreement, the Underwriters'
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Purchase Option and the Warrant Agreement by the Company, and the taking of any
action by the Company contemplated hereby or thereby, which has not been
obtained.
(x) To the best of such counsel's knowledge,
except as described in the Prospectus, no person, corporation, trust,
partnership, association or other entity holding securities of the Company has
the contractual right to include and/or register any securities of the Company
in the Registration Statement, require the Company to file any registration
statement or, if filed, to include any security in such registration statement
for twelve months from the date hereof.
(xi) The Securities have been approved for
quotation on the Nasdaq SmallCap Market.
In rendering such opinion such counsel may rely, (A) as to
matters involving the application of laws other than the laws of the United
States, the corporate laws of Georgia and jurisdictions in which they are
admitted, to the extent such counsel deems proper and to the extent specified
in such opinion, if at all, upon an opinion or opinions (in form and in
substance reasonably satisfactory to Underwriters' Counsel) of other counsel
reasonably acceptable to Underwriters' Counsel, familiar with the applicable
laws, and (B) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company; provided, that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel if requested. The
opinion of such counsel for the Company shall state that the opinion of any
such other counsel is in form satisfactory to such counsel and, in their
opinion, the Underwriters and they are justified in relying thereon.
(e) On or prior to each of the Closing Date and the
Option Closing Date, if any, Underwriters' Counsel shall have been furnished
such documents, certificates and opinions as they may reasonably require for
the purpose of enabling them to review or pass upon the matters referred to in
subsection (c) of this Section 6, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
(f) Prior to the Closing Date and the Option Closing
Date, if any: (i) there shall have been no material adverse change nor
development involving a prospective change in the condition, financial or
otherwise, prospects or the business activities of the Company, whether or not
in the ordinary course of business, from the latest dates as of which such
condition is set forth in the Registration Statement and Prospectus; (ii) there
shall have been no transaction, not in the ordinary course of business, entered
into by the Company, from the latest date as of which the financial condition
of the Company is set forth in the Registration Statement and Prospectus which
is materially adverse to the Company; (iii) the Company shall not be in
material default under any provision of any instrument relating to any
outstanding indebtedness; (iv) no material amount of the assets of the Company
shall have been pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus; (v) no action, suit or proceeding, at law or in
equity, shall have been pending or to its knowledge threatened against
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the Company, or affecting any of its properties or businesses before or by any
court or federal or state commission, board or other administrative agency
wherein an unfavorable decision, ruling or finding may materially adversely
affect the business, operations, prospects or financial condition or income of
the Company, except as set forth in the Registration Statement and Prospectus;
and (vi) no stop order shall have been issued under the Act and no proceedings
therefor shall have been initiated, threatened or contemplated by the
Commission.
(g) At the Closing Date and the Option Closing Date, if
any, the Underwriters shall have received a certificate of the Company signed
by the principal executive officer and by the chief financial or chief
accounting officer of the Company, dated the Closing Date or Option Closing
Date, as the case may be, to the effect that:
(i) The representations and warranties of the
Company in this Agreement are true and correct, as if made on and as of the
Closing Date or the Option Closing Date, as the case may be, and the Company
has complied with all agreements and covenants and satisfied all conditions
contained in this Agreement on its part to be performed or satisfied at or
prior to such Closing Date or Option Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or, to the best of each of such person's
knowledge, are contemplated or threatened under the Act;
(iii) The Registration Statement and the Prospectus
and, if any, each amendment and each supplement thereto, contain all material
statements and information required to be included therein, and none of the
Registration Statement, the Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading and
neither the Preliminary Prospectus nor any supplement thereto includes any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and
(iv) Subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus and
except as otherwise contemplated therein: (A) the Company has not incurred up
to and including the Closing Date or the Option Closing Date as the case may
be, other than in the ordinary course of its business, any material liabilities
or obligations, direct or contingent; (B) the Company has not paid or declared
any dividends or other distributions on its capital stock; (C) the Company has
not entered into any transactions not in the ordinary course of business; (D)
there has not been any change in the capital stock or any increase in long-term
debt or any increase in the short-term borrowings (other than any increase in
the short term borrowings in the ordinary course of business) of the Company;
(E) the Company has not sustained any material loss or damage to its property
or assets, whether or not insured; (F) there is no litigation which is pending
or threatened against the Company
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which is required to be set forth in an amended or supplemented Prospectus
which has not been set forth;
(v) Neither the Company nor any of its officers
or affiliates shall have taken, and the Company, its officers and affiliates
will not take, directly or indirectly, any action designed to, or which might
reasonably be expected to, cause or result in the stabilization or manipulation
of the price of the Company's securities to facilitate the sale or resale of
the Shares.
References to the Registration Statement and the Prospectus in
this subsection (g) are to such documents as amended and supplemented at the
date of such certificate.
(h) By the effective date of the Registration Statement,
the Underwriters shall have received clearance from the NASD as to the amount
of compensation allowable or payable to the Underwriters, as described in the
Registration Statement.
(i) At the time this Agreement is executed, the
Representative shall have received a letter, dated such date, addressed to the
Representative in form and substance satisfactory in all respects (including
the non-material nature of the changes or decreases, if any, referred to in
clause (iii) below) to the Underwriters, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP:
(i) confirming that they are independent public
accountants with respect to the Company within the meaning of the Act;
(ii) stating that it is their opinion that the
financial statements of the Company included in the Registration Statement
comply as to form in all material respects with the applicable accounting
requirements of the Act;
(iii) stating that, on the basis of a limited
review which included a reading of the latest available unaudited interim
condensed financial statements of the Company (with an indication of the date
of the latest available unaudited interim condensed financial statements), a
reading of the latest available minutes of the shareholders and board of
directors and the various committees of the boards of directors of the Company,
consultations with officers and other employees of the Company responsible for
financial and accounting matters and other specified procedures and inquiries,
all of which have been agreed to by the Representative, nothing has come to
their attention which would lead them to believe that (A) the unaudited
condensed financial statements of the Company included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the Act or are not fairly presented in conformity
with generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements of the Company
included in the Registration Statement, or (B) at a specified date not more
than five (5) days prior to the effective date of the Registration Statement,
there has been any change in the capital stock, or any increase in total
borrowings of the Company, or any decrease in the shareholders' equity or
working capital of the Company as compared with amounts shown in the financial
statements included in the Registration Statement, other than as set forth in
or contemplated by the Registration Statement, or, if there was any change or
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decrease, setting forth the amount of such change or decrease, and (C) during
the period from the closing date of the latest statement of income included in
the Prospectus to a specified date not more than five (5) days prior to the
effective date of the Registration Statement, there was any decrease in
revenue, net income or earnings per common share of the Company, in each case
as compared with the corresponding period of the prior year other than as set
forth in or contemplated by the Registration Statement, or, if there was any
such decrease, setting forth the amount of such decrease;
(iv) stating that they have compared specific
dollar amounts, numbers of Securities, percentages of revenue and earnings,
statements and other financial information pertaining to the Company set forth
in the Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the general
accounting records, including work sheets, of the Company and excluding any
questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures did not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement; and
(v) statements as to such other matters incident
to the transaction contemplated hereby as the Underwriters may reasonably
request.
(j) At the Closing Date and the Option Closing Date, if
any, the Underwriters shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, a letter,
dated as of the Closing Date, or Option Closing Date, as the case may be, to
the effect that they reaffirm that statements made in the letter furnished
pursuant to Subsection (i) of this Section, except that the specified date
referred to shall be a date not more than five days prior to the Closing Date
and, if the Company has elected to rely on Rule 430A of the Rules and
Regulations, to the further effect that they have carried out procedures as
specified in clause (iii) of subsection (i) of this Section with respect to
certain amounts, percentages and financial information as specified by the
Underwriters and deemed to be a part of the Registration Statement pursuant to
Rule 430A(b) and have found such amounts, percentages and financial information
to be in agreement with the records specified in such clause (iii).
(k) On each of the Closing Date and the Option Closing
Date, if any, there shall have been duly tendered to the Underwriters for the
several Underwriters' accounts the appropriate number of Securities.
(l) No order suspending the sale of the Securities in any
jurisdiction designated by the Underwriters pursuant to subsection (e) of
Section 4 hereof shall have been issued on either the Closing Date or the
Option Closing Date, if any, and no proceedings for that purpose shall have
been instituted or to its knowledge or that of the Company shall be
contemplated.
If any condition to the Underwriters' obligations hereunder to
be fulfilled prior to or at the Closing Date or the Option Closing Date, as the
case may be, is not so fulfilled, the
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Underwriters may terminate this Agreement or, if the Underwriters so elect, it
may waive any such conditions which have not been fulfilled or extend the time
for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each of the Underwriters, including specifically each person who may be
substituted for an Underwriter as provided in Section 11 hereof and each
person, if any, who controls any Underwriter ("controlling person") within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all losses, claims, damages, expenses or liabilities, joint or several
(and actions in respect thereof), whatsoever (including but not limited to any
and all expenses whatsoever reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever), as such are incurred, to which such Underwriter or such
controlling person may become subject under the Act, the Exchange Act or any
other federal or state statutory laws or regulations at common law or otherwise
or under the laws of foreign countries arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained (i) in any
Preliminary Prospectus (except that the indemnification contained in this
paragraph with respect to any preliminary prospectus shall not inure to the
benefit of the Underwriter or to the benefit of any person controlling the
Underwriter on account of any loss, claim, damage, liability or expense arising
from the sale of the Securities by the Underwriter to any person if a copy of
the Prospectus, as amended or supplemented, shall not have been delivered or
sent to such person within the time required by the Act, and the untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in such Preliminary Prospectus was corrected in the
Prospectus, as amended and supplemented, and such correction would have
eliminated the loss, claim, damage, liability or expense), the Registration
Statement or the Prospectus (as from time to time amended and supplemented);
(ii) in any post-effective amendment or amendments or any new registration
statement and prospectus in which is included securities of the Company issued
or issuable upon exercise of the Underwriters' Purchase Option; or (iii) in any
application or other document or written communication (in this Section 7
collectively called "application") executed by the Company or based upon
written information furnished by the Company in any jurisdiction in order to
qualify the Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, Nasdaq Stock Market,
Inc. or any other securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), unless such statement
or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to any Underwriter by or on
behalf of such Underwriter expressly for use in any Preliminary Prospectus, the
Registration Statement or Prospectus, or any amendment thereof or supplement
thereto, in any post-effective amendment, new registration statement or
prospectus or in any application, as the case may be, or (iv) any failure of
the Company to comply with any provision of this Underwriting Agreement
resulting in a claim or loss to the Underwriters.
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Company may have at common law or
otherwise.
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(b) Each of the Underwriters agrees severally, but not
jointly, to indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the Registration Statement, and each other
person, if any, who controls the Company within the meaning of Section 20 of
the Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to the Underwriters but only with respect to
statements or omissions, if any, made in any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment thereof or supplement
thereto in any post-effective amendment, new registration statement or
prospectus, or in any blue sky application or any other such application made
in reliance upon, and in strict conformity with, written information furnished
to the Company with respect to any Underwriter by such Underwriter expressly
for use in such Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment thereof or supplement thereto or in any
post-effective amendment, new registration statement or prospectus, or in any
such application, provided that such written information or omissions only
pertain to disclosures in the Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment thereof or supplement thereto, in any
post-effective amendment, new registration statement or prospectus or in any
such application, provided, further, that the liability of each Underwriter to
the Company shall be limited to the amount of the net proceeds of the Offering
received by the Company. The Company acknowledges that the statements with
respect to the public offering of the Securities set forth under the heading
"Underwriting" and the stabilization legend and the last paragraph of the cover
page in the Prospectus have been furnished by the Underwriters expressly for
use therein and any information furnished by or on behalf of the Underwriter
filed in any jurisdiction in order to qualify the Securities under state
securities laws or filed with the Commission, the NASD or any securities
exchange constitute the only information furnished in writing by or on behalf
of the Underwriters for inclusion in the Prospectus and the Underwriters hereby
confirm that such statements and information are true and correct. This
indemnity will be in addition to any liability that the Underwriters might
otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, suit or proceeding,
such indemnified party shall, if a claim in respect thereof is to be made
against one or more indemnifying parties under this Section 7, notify each
party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure to so notify an indemnifying party shall
not relieve it from any liability which it may have under this Section 7 except
to the extent that it has been prejudiced in any material respect by such
failure or from any liability which it may have otherwise avoided). In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party or parties of the commencement thereof, the indemnifying
party or parties will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action at the expense of the indemnifying party, (ii) the indemnifying parties
shall not have employed counsel reasonably satisfactory to such indemnified
party to have
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charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnifying party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party
or parties), in any of which events such fees and expenses of one additional
counsel shall be borne by the indemnifying parties. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Anything in this Section 7 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement
of any claim or action effected without its written consent; provided however,
that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes claim for
indemnification pursuant to this Section 7, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that the express provisions of this Section 7 provide for indemnification
in such case, or (ii) contribution under the Act may be required on the part of
any indemnified party, then each indemnifying party in lieu of indemnifying
such indemnified party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, expenses or
liabilities (or actions in respect thereof) (A) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand from the offering of the Securities or (B) if the allocation
provided by clause (A) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (A) above but also the relative fault of each of the contributing
parties, on the one hand, and the party to be indemnified on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In any case where the Company is the contributing
party and the Underwriters are the indemnified party the relative benefits
received by the Company on the one hand, and the Underwriters, on the other,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) bear to the total
underwriting discount received by the Underwriters hereunder, in each case as
set forth in the table on the Cover Page of the Prospectus. 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 by
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, expenses or liabilities (or actions in respect
thereof) referred to above in this subdivision (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d), the Underwriters shall
not be required to contribute any amount in excess of the amount of the net
proceeds of
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the Offering received by the Company. 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. For purposes of this Section 7, each person, if any, who
controls the Company within the meaning of the Act, each officer of the Company
who has signed the Registration Statement, and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to this subparagraph (d). Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect to which a claim for contribution may be made
against another party or parties under this subparagraph (d), notify such party
or parties from whom contribution may be sought, but the omission so to notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this subparagraph (d), or to the extent that such party or
parties were not adversely affected by such omission. The contribution
agreement set forth above shall be in addition to any liabilities which any
indemnifying party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto,
shall be deemed to be representations, warranties and agreements at the Closing
Date and the Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the indemnity agreements contained
in Section 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, the
Company, or any controlling person, and shall survive termination of this
Agreement or the issuance and delivery of the Securities to the Underwriters.
9. Effective Date.
This Agreement shall become effective: (i) upon the execution and
delivery hereof by the parties hereto; or (ii) if, at any time this Agreement
is executed and delivered, it is necessary for the Registration Statement or a
post- effective amendment thereto to be declared effective before the offering
of the Securities may commence, when notification of the effectiveness of the
Registration Statement or such post-effective amendment has been released by
the Commission. Until such time as this Agreement shall have become effective,
it may be terminated by the Company, by notifying you, or by you, as
Representative of the several Underwriters, by notifying the Company.
10. Termination.
(a) The Underwriters shall have the right to terminate
this Agreement (i) if any calamitous domestic or international event or act or
occurrence has materially disrupted, or in the Underwriters' opinion will in
the immediate future materially disrupt general securities markets in the
United States; or (ii) if trading on the New York Stock Exchange, the American
Stock Exchange, the Nasdaq National Market, or in the over-the-counter market
shall have been suspended or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been
required on the over-the-counter market by the
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NASD or by order of the Commission or any other government authority having
jurisdiction; or (iii) if the United States shall have become involved in a war
or major hostilities; or (iv) if a banking moratorium has been declared by a
New York State or federal authority; or (v) if a moratorium in foreign exchange
trading has been declared; or (vi) if the Company shall have sustained a
material adverse loss, whether or not insured, by reason of fire, flood,
accident or other calamity that materially impairs the investment quality of
the Securities; or (vii) if there shall have been such material adverse change
in the conditions or prospects of the Company, involving a change not
contemplated by the Registration Statement.
(b) Notwithstanding any contrary provision contained in
this Agreement, any election hereunder or any termination of this Agreement
(including, without limitation, pursuant to Sections 9 and 10 hereof), and
whether or not this Agreement is otherwise carried out, the provisions of
Section 5 shall not be in any way affected by such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
11. Substitution of the Underwriters. If one or more of the
Underwriters shall fail (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 6, Section 10 or
Section 12 hereof) to purchase the Securities which it or they are obligated to
purchase on such date under this Agreement (the "Defaulted Securities), the
Underwriters shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
Underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Underwriters shall not have completed such arrangements
within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the total number of Firm Securities to be purchased on such date, the
non-defaulting Underwriters shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all nondefaulting
Underwriters; or
(b) if the number of Defaulted Securities exceeds 10% of
the total number of Firm Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of any default by such
Underwriter under this Agreement.
In the event of any such default which does not result in a
termination of this Agreement, the Underwriters shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
12. Default by the Company. If the Company shall fail at the
Closing Date or the Option Closing Date, as applicable, to sell and deliver the
number of Securities which it is obligated to sell hereunder on such date, then
this Agreement shall terminate (or, if such default
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shall occur with respect to any Additional Securities to be purchased on the
Option Closing Date, the Underwriters may at the Underwriters' option, by
notice from the Underwriters to the Company, terminate the Underwriters'
several obligations to purchase Securities from the Company on such date)
without any liability on the part of any non-defaulting party other than
pursuant to Section 5 and Section 7 hereof. No action taken pursuant to this
Section 12 shall relieve the Company from liability, if any, in respect of such
default.
13. Notices. All notices and communications hereunder, except as
herein otherwise specifically provided, shall be in writing and shall be deemed
to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representative at Argent Securities, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, One Buckhead Plaza,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq. Notices to the Company shall be directed to the
Company, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P., ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, N.E., First ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
14. Parties. This Agreement shall inure solely to the benefit of
and shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal representatives and assigns, and their respective
heirs and legal representatives and no other person shall have or be construed
to have any legal or equitable right, remedy or claim under or in respect of or
by virtue of this Agreement or any provisions herein contained. No purchaser
of Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
15. Construction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
without giving effect to the choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
among us.
Very truly yours,
PROFESSIONAL TRANSPORTATION GROUP
LTD., INC.
By:
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Confirmed and accepted as of the date first above written
on behalf of themselves and the other several underwriters
named in Schedule I hereto:
Argent Securities, Inc., as
Representative of the Several Underwriters
By:
-----------------------------------------
Name: ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman
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SCHEDULE I
Underwriter Number of Securities
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Argent Securities, Inc. 1,500,000 Shares of Common Stock
1,500,000 Redeemable Common
Stock Purchase Warrants
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SCHEDULE II
Warrant Agent -
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37
