Exhibit 1.1
MASTER GRAPHICS, INC.
(A TENNESSEE CORPORATION)
COMMON STOCK
FORM OF
UNDERWRITING AGREEMENT
DATED: JUNE ____, 1998
MASTER GRAPHICS, INC.
FORM OF
UNDERWRITING AGREEMENT
June ___, 1998
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, INC.
SUNTRUST EQUITABLE SECURITIES CORPORATION
As Representatives of the Several
Underwriters Named in Schedule A hereto
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Master Graphics, Inc., a Tennessee corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
underwriters named in Schedule A (collectively, the "Underwriters") an aggregate
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of 3,400,000 shares of common stock, $.001 par value per share (the "Common
Stock"), of the Company (the "Firm Company Shares") and Sirrom Capital
Corporation (the "Selling Shareholder") proposes, subject to the terms and
conditions stated herein, to sell to the Underwriters an aggregate of 200,000
shares of Common Stock (the "Selling Shareholder Shares" and, together with the
Firm Company Shares, the "Firm Shares"). The Firm Shares are to be sold to each
Underwriter, acting severally and not jointly, in such amounts as are set forth
in Schedule A opposite the name of such Underwriter.
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The Company also grants to the Underwriters the option described in Section
3 to purchase, on the same terms as the Firm Shares, up to 540,000 additional
shares of Common Stock (the "Option Shares") solely to cover over-allotments.
The Firm Shares, together with all or any part of the Option Shares, are
collectively herein called the "Shares."
Prior to the date hereof, the Company has acquired each of the companies set
forth in Schedule B (the "Acquired Companies"). Each of the Acquired Companies
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was merged with and into Premier Graphics, Inc., a wholly owned subsidiary of
the Company, except Harperprints, Inc. and ▇▇▇▇▇▇▇▇ Litho Co., Inc., with
respect to which the Company acquired 100% of the capital stock and which are
wholly-owned subsidiaries of Premier Graphics, Inc. ("Premier Graphics"), a
wholly owned subsidiary of the Company (collectively, the "Subsidiaries") and
except ▇▇▇▇▇▇▇▇▇▇ Printing Company, Inc., with respect to which the Company
acquired certain assets and assumed certain liabilities.
Section 1. Representations and Warranties of the Company. The Company
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represents and warrants to and agrees with each of the Underwriters that:
A. A registration statement on Form S-1 (File No. 333-49861) with
respect to the Shares, including a preliminary form of prospectus subject to
completion, has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "1933 Act"), and
the applicable rules and regulations (the "1933 Act Regulations") of the
Securities and Exchange Commission (the "Commission"), and has been filed
with the Commission; and such amendments to such registration statement as
may have been required prior to the date hereof have been filed with the
Commission, and such amendments have been similarly prepared. Copies of
such registration statement and amendment or amendments and of each related
preliminary prospectus, and the exhibits, financial statements and
schedules, as finally amended and revised, have been delivered to you. The
Company has prepared in the same manner, and proposes so to file with the
Commission, one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form of
final prospectus, (ii) if the Company does not rely on Rule 434 of the 1933
Act, a final prospectus in accordance with Rules 430A and 424(b) of the 1933
Act Regulations or (iii) if the Company relies on Rule 434 of the 1933 Act,
a term sheet relating to the Shares that shall identify the preliminary
prospectus that it supplements containing such information as is required or
permitted by Rules 434, 430A and 424(b) of the 1933 Act. The Company also
may file a related registration statement with the Commission pursuant to
Rule 462(b) of the 1933 Act for the purpose of registering certain
additional shares of Common Stock, which registration statement will be
effective upon filing with the Commission. As filed, such amendment, any
registration statement filed pursuant to Rule 462(b) of the 1933 Act and any
term sheet and form of final prospectus, or such final prospectus, shall
include all Rule 430A Information (as defined below) and, except to the
extent that you shall agree in writing to a modification, shall be in all
respects in the form furnished to you prior to the date and time that this
Agreement was executed and delivered by the parties hereto, or, to the
extent not completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest preliminary prospectus) as the Company shall have previously advised
you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Time (as hereinafter defined), shall also
mean such registration statement as so amended; provided, however, that such
term shall also include all Rule 430A Information (as hereinafter defined)
contained in any Prospectus and any Term Sheet (as hereinafter defined) and
deemed to be included in such registration statement at the time such
registration statement becomes effective as provided by Rule 430A of the
1933 Act Regulations. The term "Preliminary Prospectus" shall mean any
preliminary prospectus referred to in the preceding paragraph and any
preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus"
as used in this Agreement shall mean (a) if the Company relies on Rule 434
of the 1933 Act, the Term Sheet relating to the Shares that is first filed
pursuant to Rule 424(b)(7) of the 1933 Act, together with the Preliminary
Prospectus identified therein that such Term Sheet supplements or (b) if the
Company does not rely on Rule 434 of the 1933 Act, the prospectus relating
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to the Shares in the form in which it is first filed with the Commission
pursuant to Rule 424(b) of the 1933 Act Regulations or, if no filing
pursuant to Rule 424(b) of the 1933 Act Regulations is required, shall mean
the form of final prospectus included in the Registration Statement at the
time such Registration Statement becomes effective. The term "Rule 430A
Information" means information with respect to the Shares and the offering
thereof permitted pursuant to Rule 430A of the 1933 Act Regulations to be
omitted from the Registration Statement when it becomes effective. The term
"462(b) Registration Statement" means any registration statement filed with
the Commission pursuant to Rule 462(b) under the 1933 Act (including the
Registration Statement and any Preliminary Prospectus or Prospectus
incorporated therein at the time such registration statement becomes
effective). The term "Term Sheet" means any term sheet that satisfies the
requirements of Rule 434 of the 1933 Act. Any reference to the "date" of a
Prospectus that includes a Term Sheet shall mean the date of such Term
Sheet.
B. No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and no proceedings for that
purpose have been instituted or, to the knowledge of the Company, threatened
by the Commission or the state securities or blue sky authority of any
jurisdiction, and each Preliminary Prospectus and any amendment or
supplement thereto, at the time of filing thereof, conformed in all material
respects to the requirements of the 1933 Act and the 1933 Act Regulations,
and did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter expressly for use in the Registration Statement or any
462(b) Registration Statement.
C. When the Registration Statement and any 462(b) Registration
Statement shall become effective, or any Term Sheet that is part of the
Prospectus is filed with the Commission pursuant to Rule 434, when the
Prospectus is first filed pursuant to Rule 424(b) of the 1933 Act
Regulations, when any amendment to the Registration Statement or any 462(b)
Registration Statement becomes effective, and when any supplement to the
Prospectus or any Term Sheet is filed with the Commission and at the Closing
Time and Date of Delivery (as hereinafter defined), (i) the Registration
Statement, the 462(b) Registration Statement, the Prospectus, the Term Sheet
and any amendments thereof and supplements thereto will conform in all
material respects with the applicable requirements of the 1933 Act and the
1933 Act Regulations, and (ii) neither the Registration Statement, the
462(b) Registration Statement, the Prospectus, any Term Sheet nor any
amendment or supplement thereto will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter expressly
for use in the Registration Statement or any 462(b) Registration Statement.
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D. The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the state of Tennessee with
all requisite corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus. The Company is duly qualified to transact
business as a foreign corporation and is in good standing in each of the
jurisdictions in which the ownership or leasing of its properties or the
nature or conduct of its business as described in the Registration Statement
and the Prospectus requires such qualification, except where the failure to
do so would 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.
E. Each of the Subsidiaries has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state of
its incorporation with all requisite corporate power and authority to own,
lease and operate its properties and conduct its business as described in
the Registration Statement and the Prospectus. Each such entity is duly
qualified to do business and is in good standing as a foreign corporation in
each other jurisdiction in which the ownership or leasing of its properties
or the nature or conduct of its business as described in the Registration
Statement and the Prospectus conducted requires such qualification, except
where the failure to do so would 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.
F. The Company has full corporate right, power and authority to enter
into this Agreement, to issue, sell and deliver the Firm Company Shares and
the Option Shares as provided herein and to consummate the transactions
contemplated herein. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of
the Company, enforceable in accordance with its terms, except to the extent
that enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws of general applicability relating to or
affecting creditors' rights, or by general principles of equity whether
considered at law or at equity and except to the extent enforcement of the
indemnification provisions set forth in Section 8 of this Agreement may be
limited by federal or state securities laws or the public policy underlying
such laws.
G. Each consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing by or with any
governmental agency or body necessary for the valid authorization, issuance,
sale and delivery of the Shares, the execution, delivery and performance of
this Agreement and the consummation by the Company of the transactions
contemplated hereby has been made or obtained and is in full force and
effect, except as may be required under applicable state securities laws.
H. Neither the issuance, sale and delivery by the Company of the Firm
Company Shares and the Option Shares, nor the execution, delivery and
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performance of this Agreement, nor the consummation of the transactions
contemplated hereby will conflict with or result in a breach or violation of
any of the terms and provisions of, or (with or without the giving of notice
or the passage of time or both) constitute a default under the charter or
bylaws of the Company or the Subsidiaries, respectively, or under any
indenture, mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument to which the Company or the Subsidiaries,
respectively, is a party or to which the Company or the Subsidiaries,
respectively, any of their respective properties or other assets is subject;
or any applicable statute, judgment, decree, order, rule or regulation of
any court or governmental agency or body applicable to any of the foregoing
or any of their respective properties; or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or
asset of the Company or the Subsidiaries, respectively.
I. The Shares to be issued and sold to the Underwriters hereunder have
been validly authorized by the Company. When issued and delivered against
payment therefor as provided in this Agreement, the Shares will be duly and
validly issued, fully paid and nonassessable. No preemptive rights of
shareholders exist with respect to any of the Shares which have not been
satisfied or waived. No person or entity holds a right to require or
participate in the registration under the 1933 Act of the Shares pursuant to
the Registration Statement which has not been satisfied or waived, and,
except as set forth in the Prospectus, no person holds a right to require
registration under the 1933 Act of any shares of Common Stock of the Company
at any other time which has not been satisfied or waived.
J. The Company's authorized, issued and outstanding capital stock is
as disclosed in the Prospectus. All of the issued shares of capital stock
of the Company have been duly authorized and validly issued, are fully paid
and nonassessable and conform to the description of the Company's capital
stock contained in the Prospectus.
K. All of the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and are owned directly by the Company or Premier Graphics,
as applicable, free and clear of all liens, security interests, pledges,
charges, encumbrances, defects, shareholders' agreements, voting trusts,
equities or claims of any nature whatsoever, except as disclosed in the
Prospectus. Other than the Subsidiaries, the Company does not own, directly
or indirectly, any capital stock or other equity securities of any other
corporation or any ownership interest in any partnership, joint venture or
other association.
L. Except as disclosed in the Prospectus, there are no outstanding
(i) securities or obligations of the Company or any of its Subsidiaries
convertible into or exchangeable for any capital stock of the Company or any
such Subsidiary, (ii) warrants, rights or options to subscribe for or
purchase from the Company or any such Subsidiary any such capital stock or
any such convertible or exchangeable securities or obligations, or (iii)
obligations of the Company or any such Subsidiary to issue any shares of
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capital stock, any such convertible or exchangeable securities or
obligation, or any such warrants, rights or options.
M. The Company and the Subsidiaries have good and marketable title in
fee simple to all real property, if any, and good title to all personal
property owned by them, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects, except
such as are disclosed in the Prospectus or such as do not materially and
adversely interfere with the use made or proposed to be made of such
property by the Company and the Subsidiaries; and any real property and
buildings held under lease by the Company or any Subsidiary are held under
valid, existing and enforceable leases, with such exceptions as are
disclosed in the Prospectus or are not material and do not interfere with
the use made or proposed to be made of such property and buildings by the
Company or such Subsidiary.
N. The financial statements of the Company and those Acquired
Companies whose financial statements are included in the Registration
Statement and Prospectus present fairly the financial position of the
Company and such Acquired Companies as of the dates indicated and the
results of operations and cash flows for the Company and such Acquired
Companies for the periods specified, all, except with respect to the
Combined Financial Data, in conformity with generally accepted accounting
principles applied on a consistent basis. The financial statement schedules
included in the Registration Statement and the amounts in the Prospectus
under the captions "Prospectus Summary -- Summary Pro Forma Financial Data"
and "Selected Historical, Pro Forma and Combined Financial Data" fairly
present the information shown therein and have been compiled on a basis
consistent with the financial statements included in the Registration
Statement and the Prospectus. The unaudited pro forma condensed
consolidated financial data (including the related notes) included in the
Prospectus or any Preliminary Prospectus complies as to form in all material
respects to the applicable accounting requirements of the 1933 Act and the
1933 Act Regulations, and the Company believes that the assumptions
underlying the pro forma adjustments are reasonable. Such pro forma
adjustments have been properly applied to the historical amounts in the
compilation of the information and such information fairly presents with
respect to the Company and the Acquired Companies, the financial position,
results of operations and other information purported to be shown therein at
the respective dates and for the respective periods specified.
O. (i) KPMG Peat Marwick, LLP who have examined and are reporting
upon the audited financial statements of (A) Master Graphics, Inc. as of and
for the periods ended June 30, 1996 and 1997 and December 31, 1997 and (B)
Lithograph Printing Company of Memphis, ▇▇▇▇▇▇▇▇▇ Lithographers, Inc., The
Argus Press, Inc., ▇▇▇▇▇ Printing Company, Inc., Phoenix Communications,
Inc., and ▇▇▇▇▇▇▇▇ Brothers, Inc. included in the Registration Statement,
(ii) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.L.L.C. who have examined and are reporting upon
the audited financial statements of Master Graphics, Inc. as of and for the
period ended June 30, 1995 included in the Registration Statement, (iii)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. LLP who have examined and are reporting on the audited
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financial statements of Phoenix Communications, Inc. included in the
Registration Statement, (iv) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C. who have examined and
are reporting on the audited financial statements of ▇▇▇▇▇▇▇▇ Printing
Company, Inc. included in the Registration Statement, (v) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and Company who have examined and are reporting on the financial statements
of ▇▇▇▇▇ Printing Company, Inc., (vi) ▇. ▇. ▇▇▇▇▇ & Company who have
examined and are reporting on the financial statements of ▇▇▇▇▇▇▇▇ Litho
Co., Inc., and (vii) ▇▇▇▇▇▇ & Company, P.C. who have examined and are
reporting on the financial statements of Harperprints, Inc., are, and were
during the periods covered by their reports included in the Registration
Statement and the Prospectus, independent public accountants within the
meaning of the 1933 Act and the 1933 Act Regulations.
P. None of the Company or the Subsidiaries has sustained, since
December 31, 1997 any material loss or interference with its business from
fire, explosion, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or arbitrators' or court
or governmental action, order or decree; and, since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, and except as otherwise stated in the Registration Statement and
Prospectus, there has not been (i) any material change in the capital stock,
long-term debt, obligations under capital leases or short-term borrowings of
the Company or the Subsidiaries, or (ii) any material adverse change, or any
development which could reasonably be seen as involving a prospective
material adverse change, in or affecting the business, prospects,
properties, assets, results of operations or condition (financial or other)
of the Company and the Subsidiaries taken as a whole.
Q. Neither the Company nor either of the Subsidiaries is in violation
of its respective charter, or by-laws, and no default exists, and no event
has occurred, nor state of facts exists, which, with notice or after the
lapse of time to cure or both, would constitute a default in the due
performance and observance of any obligation, agreement, term, covenant,
consideration or condition contained in any indenture, mortgage, deed of
trust, loan agreement, note, lease or other agreement or instrument to which
any such entity is a party or to which any such entity or any of its
properties is subject. None of the Company or the Subsidiaries is in
violation of, or in default with respect to, any statute, rule, regulation,
order, judgment or decree, except as may be properly described in the
Prospectus or such as in the aggregate do not now have and will not in the
future have a material adverse effect on the financial position, results of
operations or business of the Company and the Subsidiaries taken as a whole.
R. There is not pending or, to the knowledge of the Company,
threatened, any action, suit, proceeding, inquiry or investigation against
the Company, the Subsidiaries or any of their respective officers and
directors or to which the properties, assets or rights of any such entity
are subject, before or brought by any court or governmental agency or body
or board of arbitrators that are required to be described in the
Registration Statement or the Prospectus but are not described as required.
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S. The descriptions in the Registration Statement and the Prospectus
of the contracts, leases and other legal documents therein described present
fairly the information required to be shown, and there are no contracts,
leases, or other documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed as required.
T. The Company and each of the Subsidiaries owns, possesses or has
obtained all material permits, licenses, franchises, certificates, consents,
orders, approvals and other authorizations of governmental or regulatory
authorities or other entities as are necessary to own or lease, as the case
may be, and to operate its respective properties and to carry on its
respective business as presently conducted, or as contemplated in the
Prospectus to be conducted, and the Company has not received any notice of
proceedings relating to revocation or modification of any such licenses,
permits, franchises, certificates, consents, orders, approvals or
authorizations.
U. The Company and each of the Subsidiaries owns or possesses
adequate license or other rights to use all patents, trademarks, service
marks, trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") necessary to entitle the Company and the
Subsidiaries, to conduct their respective businesses as described in the
Prospectus, and neither the Company nor either of the Subsidiaries has
received notice of infringement of or conflict with (and knows of no such
infringement of or conflict with) asserted rights of others with respect to
any Intangibles which could materially and adversely affect the business,
prospects, properties, assets, results of operations or condition (financial
or otherwise) of the Company and the Subsidiaries taken as a whole.
V. The Company's and the Subsidiaries' respective systems of internal
accounting controls taken as a whole is sufficient to meet the broad
objectives of internal accounting control insofar as those objectives
pertain to the prevention or detection of errors or irregularities in
amounts that would be material in relation to the Company's or the
Subsidiaries' financial statements; and, none of the Company, the
Subsidiaries, or, to the knowledge of the Company, any employee or agent
thereof, has made any payment of funds of the Company or the Subsidiaries,
or received or retained any funds and no funds of the Company or the
Subsidiaries, have been set aside to be used for any payment, in each case
in violation of any law, rule or regulation.
W. Each of the Company and the Acquired Companies has filed on a
timely basis all necessary federal, state, local and foreign income and
franchise tax returns required to be filed through the date hereof and have
paid all taxes shown as due thereon; and no tax deficiency has been asserted
against any such entity or the Company with respect to another such entity,
nor does the Company or any such entity know of any tax deficiency which is
likely to be asserted against the Company or any other such entity which if
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determined adversely to any such entity, could materially adversely affect
the business, prospects, properties, assets, results of operations or
condition (financial or otherwise) of the Company and the Subsidiaries taken
as a whole. All tax liabilities are adequately provided for on the
respective books of such entities.
X. Each of the Company and its Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and
in the amounts generally deemed adequate for their respective businesses
and, consistent with insurance coverage maintained by similar companies in
similar businesses, including, but not limited to, insurance covering real
and personal property owned or leased by the Company and its Subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect.
Y. Each of the Company, the Subsidiaries, and, to the knowledge of
the Company, their officers, directors or affiliates has not taken and will
not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in or constitute the
stabilization or manipulation of any security of the Company or to
facilitate the sale or resale of the Shares.
Z. The Company is not, will not become as a result of the
transactions contemplated hereby, or will not conduct its respective
businesses in a manner in which the Company would become, "an investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
Section 2. Representations and Warranties of the Selling Shareholder. The
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Selling Shareholder represents and warrants to, and agrees with, each of the
several Underwriters and the Company that:
A. The Selling Shareholder has full right, power and authority to
enter into this Agreement, the Power of Attorney and the Custody Agreement
(as hereinafter defined) and to sell, assign, transfer and deliver to the
Underwriters the Shares to be sold by the Selling Shareholder hereunder; and
the execution and delivery of this Agreement, the Power of Attorney and the
Custody Agreement have been duly authorized by all necessary action of the
Selling Shareholder.
B. The Selling Shareholder has duly executed and delivered this
Agreement, the Power of Attorney and the Custody Agreement, and each
constitutes the valid and binding agreement of the Selling Shareholder
enforceable against the Selling Shareholder in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or affecting
the enforcement of creditors' rights generally and to general equitable
principles and except to the extent enforcement of the indemnification
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provisions set forth in Section 8 of this Agreement may be limited by
federal or state securities laws or public policy underlying such laws.
C. No consent, approval, authorization, order or declaration of or
from, or registration, qualification or filing with, any court or
governmental agency or body is required for the sale of the Shares to be
sold by the Selling Shareholder or the consummation of the transactions
contemplated by this Agreement, the Power of Attorney or the Custody
Agreement, except the registration of such Shares under the 1933 Act (which,
if the Registration Statement is not effective as of the time of execution
hereof, shall be obtained as provided in this Agreement) and such as may be
required under state securities or blue sky laws in connection with the
offer, sale and distribution of such Shares by the Underwriters.
D. The sale of the Shares to be sold by such Selling Shareholder and
the performance of this Agreement, the Power of Attorney and the Custody
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with, or (with or without the giving of
notice or the passage of time or both) result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, lease or other agreement
or instrument to which the Selling Shareholder is a party or to which any of
its properties or assets is subject, nor will such action conflict with or
violate any provision of the charter or bylaws or other governing
instruments of the Selling Shareholder, if any, or any statute, rule or
regulation or any order, judgment or decree of any court or governmental
agency or body having jurisdiction over the Selling Shareholder or any of
the Selling Shareholder's properties or assets.
E. At the Closing Time (as defined in Section 3 hereof), the Selling
Shareholder will have good and valid title to the Selling Shareholder Shares
free and clear of all liens, security interests, pledges, charges,
encumbrances, defects, shareholders' agreements, voting trusts and claims of
any nature whatsoever; and, upon delivery of such Selling Shareholder Shares
against payment therefor as provided herein, good and valid title to such
Selling Shareholder Shares, free and clear of all liens, security interests,
pledges, charges, encumbrances, defects, shareholders' agreements, voting
trusts, equities or claims of any nature whatsoever, will pass to the
several Underwriters.
F. The Selling Shareholder has not (i) taken, directly or indirectly,
any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of
the Shares or (ii) since the filing of the Registration Statement (A) sold,
bid for, purchased or paid anyone any compensation for soliciting purchases
of, the Shares or (B) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company.
G. When any Preliminary Prospectus was filed with the Commission (i)
it contained all statements required to be stated therein regarding the
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Selling Shareholder in accordance with, and complied in all material
respects regarding the Selling Shareholder with the requirements of, the
1933 Act and the rules and regulations of the Commission thereunder, and
(ii) such statements in the Preliminary Prospectus as are made in reliance
upon and in conformity with written information furnished to the Company by
the Selling Shareholder for use therein did not include any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. When the Registration Statement or any
amendment thereto or any 462(b) Registration Statement or any amendment
thereto was or is declared effective and at the Closing Time or the Date of
Delivery, as the case may be, (i) it contained or will contain all
statements required to be stated therein regarding the Selling Shareholder
in accordance with, and complied or will comply in all material respects
regarding the Selling Shareholders with the requirements of, the 1933 Act
and the rules and regulations of the Commission thereunder and (ii) such
statements in the Registration Statement, any 462(b) Registration Statement
or any amendment thereto as are made in reliance upon and in conformity with
written information furnished to the Company by the Selling Shareholder
specifically for use therein did not or will not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading. When the Prospectus or any
amendment or supplement thereto is filed with the Commission pursuant to
Rule 424(b) (or, if the Prospectus or such amendment or supplement is not
required to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was or is
declared effective), and at the Closing Time or the Date of Delivery, as the
case may be, (i) the Prospectus, as amended or supplemented at any such
time, contained or will contain all statements required to be stated therein
regarding the Selling Shareholder in accordance with, and complied or will
comply in all material respects regarding the Selling Shareholder with the
requirements of, the 1933 Act and the rules and regulations of the
Commission thereunder and (ii) such statements in the Prospectus, as amended
or supplemented at any such time, as are made in reliance upon and in
conformity with written information furnished to the Company by the Selling
Shareholder specifically for use therein did not or will not include any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Internal Revenue Code of 1986, as amended, with
respect to the transactions herein contemplated, the Selling Shareholder agrees
to deliver to you prior to or at the Closing Time (as hereinafter defined) a
properly completed and executed United States Treasury Department form W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
The Selling Shareholder represents and warrants that the certificates in
negotiable form representing the Selling Shareholder Shares have been placed in
custody under a custody agreement (the "Custody Agreement"), in the form
heretofore furnished to and approved by you, duly executed and delivered by such
Selling Shareholder to Union Planters Bank, N.A. as custodian (the "Custodian"),
and that such Selling
11
Shareholder has duly executed and delivered a power of attorney (the "Power of
Attorney"), in the form heretofore furnished to and approved by you, appointing
▇▇▇▇▇ ▇. Fair and ▇▇▇▇ ▇. ▇▇▇▇▇▇ as such Selling Shareholder's attorneys-in-fact
(the "Attorneys-in-Fact") with authority to execute and deliver this Agreement
on behalf of such Selling Shareholder, to determine the purchase price to be
paid by the Underwriters to the Selling Shareholder as provided in Section 3
hereof, to authorize the delivery of the Shares to be sold by such Selling
Shareholder hereunder and otherwise to act on behalf of such Selling Shareholder
in connection with the transactions contemplated by this Agreement and the
Custody Agreement.
The Selling Shareholder specifically agrees that the Shares represented by
the certificates held in custody for the Selling Shareholder under the Custody
Agreement are subject to the interests of the Underwriters hereunder, and that
the arrangements made by such Selling Shareholder for such custody, and the
appointment by the Selling Shareholder of the Attorneys-in-Fact by the Power of
Attorney, are irrevocable. The Selling Shareholder specifically agrees that the
obligations of the Selling Shareholder hereunder shall not be terminated by
operation of law, whether by the dissolution of the Selling Shareholder, or by
the occurrence of any other event.
Section 3. Sale and Delivery of the Shares to the Underwriters; Closing.
------------------------------------------------------------
A. On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to each of the Underwriters the Firm
Company Shares, and the Selling Shareholder agrees to sell to each of the
Underwriters the Selling Shareholder Shares and each Underwriter agrees,
severally and not jointly, to purchase from the Company and the Selling
Shareholder the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule A (the proportion which each Underwriter's share of
----------
the total number of the Firm Shares bears to the total number of Firm Shares
is hereinafter referred to as such Underwriter's "underwriting obligation
proportion"), at a purchase price of $__________ per share.
B. In addition, on the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
the Company hereby grants an option to the Underwriters to purchase up to an
additional 540,000 Option Shares at the same purchase price as shall be
applicable to the Firm Shares. The option hereby granted will expire if not
exercised within the thirty (30) day period after the date of the Prospectus
by giving written notice to the Company. The option granted hereby may be
exercised in whole or in part (but not more than once), only for the purpose
of covering over-allotments that may be made in connection with the offering
and distribution of the Firm Shares. The notice of exercise shall set forth
the number of Option Shares as to which the several Underwriters are
exercising the option, and the time and date of payment and delivery
thereof. Such time and date of delivery (the "Date of Delivery") shall be
determined by you but shall not be later than three full business days after
the exercise of such option, nor in any event prior to the Closing Time. If
the option is exercised as to all or any portion of the Option Shares, the
12
Option Shares as to which the option is exercised shall be purchased by the
Underwriters, severally and not jointly, in their respective underwriting
obligation proportions.
C. Payment of the purchase price for and delivery of certificates in
definitive form representing the Firm Shares shall be made at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or
at such other place as shall be agreed upon by the Company and you, at 10:00
a.m., either (i) on the third full business day after the execution of this
Agreement, or (ii) at such other time not more than ten full business days
thereafter as you and the Company shall determine (unless, in either case,
postponed pursuant to the term hereof), (such date and time of payment and
delivery being herein called the "Closing Time"). In addition, in the event
that any or all of the Option Shares are purchased by the Underwriters,
payment of the purchase price for and delivery of certificates in definitive
form representing the Option Shares shall be made at the offices of ▇▇▇▇▇▇
▇▇▇▇▇▇ & Company, Inc. in the manner set forth above, or at such other place
as the Company and you shall determine, on the Date of Delivery as specified
in the notice from you to the Company. Payment for the Firm Shares and the
Option Shares shall be made to the Company and the Selling Shareholder by
wire transfer in same-day funds to the accounts designated to the
Underwriters in writing by the Company, respectively, and the Selling
Shareholder against delivery to you for the respective accounts of the
Underwriters of the Shares to be purchased by them.
D. The certificates representing the Shares to be purchased by the
Underwriters shall be in such denominations and registered in such names as
you may request in writing at least two full business days before the
Closing Time or the Date of Delivery, as the case may be. The certificates
representing the Shares will be made available at the offices of ▇▇▇▇▇▇
▇▇▇▇▇▇ & Company, Inc. or at such other place as ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company,
Inc. may designate for examination and packaging not later than 10:00 a.m.
at least one full business day prior to the Closing Time or the Date of
Delivery as the case may be.
E. After the Registration Statement becomes effective, you intend to
offer the Shares to the public as set forth in the Prospectus, but after the
initial public offering of such Shares you may in your discretion vary the
public offering price.
Section 4. Certain Covenants of the Company. The Company covenants and
--------------------------------
agrees with each Underwriter as follows:
A. The Company will use its best efforts to cause the Registration
Statement to become effective (if not yet effective at the date and time
that this Agreement is executed and delivered by the parties hereto). If the
Company elects to rely upon Rule 430A of the 1933 Act Regulations or the
filing of the Prospectus is otherwise required under Rule 424(b) of the 1933
Act Regulations, the Company will comply with the requirements of Rule 430A
and will file the Prospectus, properly completed, pursuant to the applicable
provisions of Rule 424(b), or a Term Sheet pursuant to and in accordance
with Rule 434, within the time period prescribed. If the Company elects to
13
rely upon Rule 462(b), the Company shall file a 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m.,
Washington, D.C. time on the date of this Agreement, and the Company shall
at the time of filing either pay to the Commission the filing fee for the
Rule 462(b) Registration Statement or give irrevocable instructions for the
payment of such fee. The Company will notify you immediately, and confirm
the notice in writing, (i) when the Registration Statement, 462(b)
Registration Statement or any post-effective amendment to the Registration
Statement, shall have become effective, or any supplement to the Prospectus
or any amended Prospectus shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission to
amend the Registration Statement or 462(b) Registration Statement or amend
or supplement the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or any 462(b) Registration Statement or of any
order preventing or suspending the use of any Preliminary Prospectus or the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or of the institution or threatening of any proceeding for any
such purposes. The Company will use every reasonable effort to prevent the
issuance of any such stop order or of any order preventing or suspending
such use and, if any such order is issued, to obtain the withdrawal thereof
at the earliest possible moment.
B. The Company will not at any time file or make any amendment to the
Registration Statement, or any amendment or supplement (i) to the
Prospectus, if the Company has not elected to rely upon Rule 430A, (ii) if
the Company has elected to rely upon Rule 430A, to either the Prospectus
included in the Registration Statement at the time it becomes effective or
to the Prospectus filed in accordance with Rule 424(b) or any Term Sheet
filed in accordance with Rule 434, or (iii) if the Company has elected to
rely upon Rule 462(b), to any 462(b) Registration Statement in any case if
you shall not have previously been advised and furnished a copy thereof a
reasonable time prior to the proposed filing, or if you or counsel for the
Underwriters shall reasonably object to such amendment or supplement.
C. The Company has furnished or will furnish to you, at its expense,
as soon as available, three copies of the Registration Statement as
originally filed and of all amendments thereto, whether filed before or
after the Registration Statement becomes effective, copies of all exhibits
and documents filed therewith and signed copies of all consents and
certificates of experts, as you may reasonably request, and has furnished or
will furnish to each Underwriter, one conformed copy of the Registration
Statement as originally filed and of each amendment thereto.
D. The Company will deliver to each Underwriter, at the Company's
expense, from time to time, as many copies of each Preliminary Prospectus as
such Underwriter may reasonably request, and the Company hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The Company
will deliver to each Underwriter, at the Company's expense, as soon as the
Registration Statement shall have become effective and thereafter from time
to time as requested during the period when the Prospectus is required to be
14
delivered under the 1933 Act, such number of copies of the Prospectus (as
supplemented or amended) as each Underwriter may reasonably request. The
Company will comply to the best of its ability with the 1933 Act and the
1933 Act Regulations so as to permit the completion of the distribution of
the Shares as contemplated in this Agreement and in the Prospectus. If the
delivery of a prospectus is required at any time prior to the expiration of
nine months after the time of issue of the Prospectus or any Term Sheet in
connection with the offering or sale of the Shares and if at such time any
events shall have occurred as a result of which the Prospectus or any Term
Sheet as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made when such Prospectus or any Term Sheet is delivered not misleading, or,
if for any reason it shall be necessary during such same period to amend or
supplement the Prospectus or any Term Sheet in order to comply with the 1933
Act or the 1933 Act Regulations, the Company will notify you and upon your
request prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as you may from time to time reasonably
request of an amended Prospectus or any Term Sheet or a supplement to the
Prospectus or any Term Sheet or an amendment or supplement to any such
incorporated document which will correct such statement or omission or
effect such compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time nine
months or more after the time of issue of the Prospectus or any Term Sheet,
upon your request but at the expense of such Underwriter, the Company will
prepare and deliver to such Underwriter as many copies as you may request of
an amended or supplemented Prospectus or any Term Sheet complying with
Section 10(a)(3) of the 1933 Act.
E. The Company will use its best efforts to qualify the Shares for
offering and sale under the applicable securities laws of such states and
other jurisdictions as you may designate and to maintain such qualifications
in effect for as long as may be necessary to complete the distribution of
the Shares; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified or to make
any undertakings in respect of doing business in any jurisdiction in which
it is not otherwise so subject. The Company will file such statements and
reports as may be required by the laws of each jurisdiction in which the
Shares have been qualified as above provided.
F. The Company will make generally available to its security holders
as soon as practicable, but in any event not later than the end of the
fiscal quarter first occurring after the first anniversary of the "effective
date of the Registration Statement" (as defined in Rule 158(c) of the 1933
Act Regulations), an earnings statement (in reasonable detail but which need
not be audited) complying with the provisions of Section 11(a) of the 1933
Act and Rule 158 thereunder and covering a period of at least 12 months
beginning after the effective date of the Registration Statement.
15
G. The Company will use the net proceeds received by it from the sale
of the Shares in the manner specified in the Prospectus under the caption
"Use of Proceeds."
H. The Company will furnish to its securityholders, as soon as
practicable after the end of each respective period, annual reports
(including financial statements audited by independent public accountants)
and unaudited quarterly reports of operations for each of the first three
quarters of the fiscal year. During a period of five years after the date
hereof, the Company will furnish to you: (i) concurrently with furnishing
such reports to its securityholders, statements of operations of the Company
for each of the first three quarters in the form furnished to the Company's
securityholders; (ii) concurrently with furnishing to its securityholders, a
balance sheet of the Company as of the end of such fiscal year, together
with statements of operations, of cash flows and of securityholders' equity
of the Company for such fiscal year, accompanied by a copy of the
certificate or report thereon of independent public accountants; (iii) as
soon as they are available, copies of all reports (financial or otherwise)
mailed to securityholders; (iv) as soon as they are available, copies of all
reports and financial statements furnished to or filed with the Commission,
any securities exchange or the National Association of Securities Dealers,
Inc. (the "NASD"); (v) every material press release in respect of the
Company or its affairs which is released by the Company; and (vi) any
additional information of a public nature concerning the Company or its
business that you may reasonably request. During such five-year period, the
foregoing financial statements shall be on a consolidated basis to the
extent that the accounts of the Company are consolidated with any
subsidiaries, and shall be accompanied by similar financial statements for
any significant subsidiary that is not so consolidated.
I. During the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the Prospectus, the
Company will not, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Company, Inc., offer, pledge, issue, sell, contract to sell, grant any
option for the sale of, or otherwise dispose of, or announce any offer,
pledge, sale, grant of any option to purchase or other disposition, directly
or indirectly, any shares of Common Stock or securities convertible into,
exercisable or exchangeable for, shares of Common Stock, except (i) as
provided in Section 3 of this Agreement; (ii) issuances by the Company of
unregistered Common Stock in connection with the acquisition of printing
companies; (iii) issuances by the Company of Common Stock pursuant to the
exercise of stock purchase warrants or options outstanding on the date of
the Prospectus; or (iv) issuances or registration of options or other rights
granted under the Company's 1998 Equity Compensation Plan or the Company's
1998 Non-Employee Director Stock Option Plan.
J. The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be
the same entity as the transfer agent) for its Common Stock.
K. The Company will use its best efforts to cause the Shares to be
listed, subject to notice of issuance, on the Nasdaq Stock Market's National
16
Market (the "Nasdaq Stock Market") and will use its best efforts to maintain
the listing of the Shares on the Nasdaq Stock Market.
L. The Company has in the past conducted its affairs, and will in the
future conduct its affairs, in such a manner so as to ensure that the
Company was not and will not be an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
M. The Company will not, and will use its best efforts to cause its
officers, directors and affiliates not to, (i) take, directly or indirectly
prior to termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in
the future reasonably be expected to cause or result in, the stabilization
or manipulation of the price of any security of the Company, to facilitate
the sale or resale of any of the Shares, (ii) sell, bid for, purchase or pay
anyone any compensation for soliciting purchases of the Shares or (iii) pay
or agree to pay to any person any compensation for soliciting any order to
purchase any other securities of the Company.
N. If at any time during the 30-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your reasonable
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus) and after
written notice from you advising the Company to the effect set forth above,
the Company agrees to forthwith prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event.
O. The Company will file timely and accurate information with the
Commission in accordance with Rule 463 of the Commission under the 1933 Act
or any successor provision.
Section 5. Covenants of the Selling Shareholder. The Selling Shareholder
------------------------------------
covenants and agrees with each of the Underwriters:
A. During the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the Prospectus, the
Selling Shareholder will not, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇ & Company, Inc., offer, pledge, sell, contract to sell, grant any
option for the sale of, or otherwise dispose of, (or announce any offer,
pledge, sale, grant of an option to purchase or other disposition, directly
or indirectly) any shares of Common Stock or securities convertible into,
exercisable or exchangeable for, shares of Common Stock, except as provided
in Section 3 of this Agreement.
17
B. The Selling Shareholder will not (i) take, directly or indirectly,
prior to the termination of the underwriting syndicate contemplated by this
Agreement, any action designed to cause or to result in, or that might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of
any of the Shares, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of, the Shares or (iii) pay to or
agree to pay any person any compensation for soliciting another to purchase
any other securities of the Company.
Section 6. Payment of Expenses. The Company and the Selling Shareholder
-------------------
will pay and bear all costs, fees and expenses incident to the performance of
their respective obligations under this Agreement pro rata based on the number
of shares to be sold by the Company and the Selling Shareholder hereunder
(excluding fees and expenses of counsel for the Underwriters, except as
specifically set forth in this Agreement), including (a) the preparation,
printing and filing of the Registration Statement (including financial
statements and exhibits), as originally filed and as amended, the Preliminary
Prospectuses, the Prospectus and any Term Sheet and any amendments or
supplements thereto, and the cost of furnishing copies thereof to the
Underwriters, (b) the preparation, printing and distribution of this Agreement,
the certificates representing the Shares and any instruments relating to any of
the foregoing, (c) the issuance and delivery of the Shares to the Underwriters,
including any transfer taxes payable upon the sale of the Shares to the
Underwriters (other than transfer taxes on resales by the Underwriters), (d) the
fees and disbursements of the Company's counsel and accountants, (e) the
qualification of the Shares under the applicable securities laws in accordance
with the terms of this Agreement, including filing fees and fees and
disbursements of counsel for the Underwriters in connection therewith, (f) all
costs, fees and expenses in connection with the notification to the Nasdaq Stock
Market of the proposed issuance of the Shares, (g) filing fees relating to the
review of the offering by the NASD, (h) the transfer agent's and registrar's
fees and all miscellaneous expenses referred to in Part II of the Registration
Statement, (i) costs related to travel and lodging incurred by the Company and
its representatives relating to meetings with and presentations to prospective
purchasers of the Shares reasonably determined by the Underwriters to be
necessary or desirable to effect the sale of the Shares to the public, and (j)
all other costs and expenses incident to the performance of their respective
obligations hereunder (including costs incurred in closing the purchase of the
Option Shares, if any) that are not otherwise specifically provided for in this
section. In addition, the Selling Shareholder will pay all costs and expenses
incident to (i) the fees, disbursements and expenses of its counsel; (ii) the
fees and expenses of the Attorneys-in-Fact and the Custodian; and (iii) the sale
and delivery of the Shares to be sold by it to the Underwriters hereunder. The
Company, upon your request, will provide funds in advance for filing fees in
connection with "blue sky" qualifications.
Section 7. Conditions of Underwriters' Obligations. The obligations of
---------------------------------------
the Underwriters to purchase and pay for (i) the Firm Shares that they have
respectively agreed to purchase pursuant to this Agreement (and any Option
Shares as to which the option granted in Section 3 has been exercised and the
Date of Delivery determined by you is the same as the Closing Time) at the
Closing Time and (ii) the Option Shares at the Date of Delivery of the Option
18
Shares, are subject to the accuracy of the representations and warranties of the
Company and the Selling Shareholder contained herein as of the Closing Time or
the Date of Delivery, as the case may be, and to the accuracy of the
representations and warranties of the Company and the Selling Shareholder
contained in certificates of any officer of the Company and the Selling
Shareholder delivered pursuant to the provisions hereof, to the performance by
the Company and the Selling Shareholder of their respective obligations
hereunder, and to the following further conditions:
A. The Registration Statement shall have become effective not later
than 5:30 p.m. on the date of this Agreement or, with your consent, at a
later time and date not later, however, than 5:30 p.m. on the first business
day following the date hereof, or at such later time or on such later date
as you may agree to in writing; if the Company has elected to rely upon Rule
462(b), the 462(b) Registration Statement shall have become effective by
10:00 p.m., Washington, D.C. time, on the date of this Agreement; and at the
Closing Time no stop order suspending the effectiveness of the Registration
Statement or any 462(b) Registration Statement shall have been issued under
the 1933 Act and no proceedings for that purpose shall have been instituted
or shall be pending or, to your knowledge or the knowledge of the Company,
shall be contemplated by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
satisfaction of counsel for the Underwriters. If the Company has elected to
rely upon Rule 430A, a Prospectus or a Term Sheet containing the Rule 430A
Information shall have been filed with the Commission in accordance with
Rule 424(b) (or a post-effective amendment providing such information shall
have been filed and declared effective in accordance with the requirements
of Rule 430A).
B. At the Closing Time, you shall have received a favorable opinion
of Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇, counsel for the Company, dated as of
the Closing Time, together with signed or reproduced copies of such opinion
for each of the other Underwriters, in form and substance satisfactory to
counsel for the Underwriters, to the effect that:
1. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Tennessee with the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus. The Company is qualified
or registered to transact business as a foreign corporation and is in
good standing as a foreign corporation in each of the jurisdictions in
which the ownership or leasing of the Company's properties or the
nature or conduct of its business requires such qualification, except
where the failure to do so would 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.
2. Each of the Subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
19
the state of its incorporation. Each such entity has all requisite
corporate power and authority to own, lease and operate its properties
and conduct its business as described in the Registration Statement
and the Prospectus. Each such entity is duly qualified to do business
and is in good standing as a foreign corporation in each other
jurisdiction in which the ownership or leasing of its properties or
the nature or conduct of its business requires such qualification,
except where the failure to do so would 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.
3. The Company has the corporate power and authority to enter
into this Agreement, to issue, sell and deliver the Shares as provided
herein and to consummate the transactions contemplated herein. This
Agreement has been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and delivery by the
other parties thereto, constitutes a valid and binding agreement of
the Company, enforceable in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws affecting creditors' rights
or by general principles of equity whether considered at law or in
equity and except to the extent that enforcement of the
indemnification provisions set forth in Section 8 of this Agreement
may be limited by federal or state securities laws or the public
policy underlying such laws.
4. Each consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing by or with
any governmental agency or body necessary for the valid authorization,
issuance, sale and delivery of the Firm Company Shares and Option
Shares, the execution, delivery and performance of this Agreement and
the consummation by the Company of the transactions contemplated
hereby, has been made or obtained and is in full force and effect,
except such as may be necessary under state securities laws or
required by the NASD in connection with the purchase and distribution
of the Shares by the Underwriters, as to which such counsel need
express no opinion.
5. Neither the issuance, sale and delivery by the Company of the
Firm Company Shares and Option Shares, nor the execution, delivery and
performance of this Agreement, nor the consummation of the
transactions contemplated hereby by the Company will conflict with or
result in a breach or violation of any of the terms and provisions of,
or (with or without the giving of notice or the passage of time or
both) constitute a default under, the charter or by-laws of the
Company or the Subsidiaries, respectively, or, under any indenture,
mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument to which the Company or the Subsidiaries,
respectively, is a party or to which the Company or Subsidiaries,
respectively, any of their respective properties or other assets, is
20
subject; or, to such counsel's knowledge, any applicable statute,
judgment, decree, order, rule or regulation of any court or
governmental agency or body; or to such counsel's knowledge, result in
the creation or imposition of any lien, charge, claim or encumbrance
upon any property or asset of the Company or the Subsidiaries,
respectively.
6. The Common Stock conforms in all material respects as to
legal matters to the description thereof contained in the Registration
Statement and the Prospectus under the heading "Description of Capital
Stock."
7. The Shares to be issued and sold to the Underwriters hereunder
have been validly authorized by the Company. When issued and delivered
against payment therefor as provided in this Agreement, the Shares
will be validly issued, fully paid and nonassessable. To such
counsel's knowledge, no preemptive rights of shareholders exist with
respect to any of the Shares which have not been satisfied or waived.
To such counsel's knowledge, no person or entity holds a right to
require or participate in the registration under the 1933 Act of the
Shares pursuant to the Registration Statement which has not been
satisfied or waived, and, except as set forth in the Prospectus, no
person holds a right to require registration under the 1933 Act of any
shares of Common Stock at any other time which has not been satisfied
or waived. The form of certificates evidencing the Shares complies
with all applicable requirements of Tennessee law.
8. The Company has an authorized capitalization as set forth in
the Prospectus under the caption "Capitalization." All of the issued
shares of capital stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable. None of the issued
shares of capital stock of the Company has been issued or is owned or
held in violation of any preemptive rights of shareholders. All
offers and sales of the Company's capital stock prior to the date
hereof were at all relevant times duly registered under the 1933 Act
or were exempt from the registration requirements of the 1933 Act by
reason of Sections 3(b), 4(2) or 4(6) thereof and, solely with respect
to offers and sales of the Company's securities to residents of
Tennessee and Mississippi, were duly registered or the subject of an
available exemption from the registration requirements of the
applicable state securities or blue sky laws, provided, however, that
such counsel need not express any opinion with respect to the
registration or availability of an exemption under applicable state
securities or blue sky laws for shares of Common Stock issued pursuant
to an underwritten public offering.
9. All of the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned directly by the Company free and
clear of all liens, security interests, pledges, charges,
encumbrances, defects, shareholders' agreements, voting trusts,
21
equities or claims of any nature whatsoever. Other than the
Subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other equity securities of any other corporation or
any ownership interest in any partnership, joint venture or other
association.
10. Except as disclosed in the Prospectus, there are no
outstanding (i) securities or obligations of the Company or any of its
Subsidiaries convertible into or exchangeable for any capital stock of
the Company or any such Subsidiary, (ii) warrants, rights or options
to subscribe for or purchase from the Company or any such Subsidiary
any such capital stock or any such convertible or exchangeable
securities or obligations, or (iii) obligations of the Company or any
such Subsidiary to issue any shares of capital stock, any such
convertible or exchangeable securities or obligation, or any such
warrants, rights or options.
11. To such counsel's knowledge, the Company and the
Subsidiaries have good and marketable title in fee simple to all real
property, if any, and good title to all personal property owned by
them, in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, mortgages and defects, except such as
are disclosed in the Prospectus or such as do not materially and
adversely affect the value of such property and do not interfere with
the use made or proposed to be made of such property by the Company
and the Subsidiaries; and any real property and buildings held under
lease by the Company or any Subsidiary are held under valid, existing
and enforceable leases, with such exceptions as are disclosed in the
Prospectus or are not material and do not interfere with the use made
or proposed to be made of such property and buildings by the Company
or such Subsidiary.
12. Neither the Company nor any of the Subsidiaries is in
violation of its respective charter or by-laws, and to such counsel's
knowledge no material default exists, and no event has occurred nor
state of facts exist which, with notice or after the lapse of time to
cure or both, would constitute a material default in the due
performance and observance of any obligation, agreement, term,
covenant, or condition contained in any indenture, mortgage, deed of
trust, loan agreement, note, lease or other agreement or instrument to
which any such entity is a party or to which any such entity or any of
its properties is subject.
13. To such counsel's knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation
against the Company, the Subsidiaries or any of their respective
officers and directors or to which the properties, assets or rights of
any such entity are subject, before or brought by any court or
governmental agency or body or board of arbitrators, that are required
to be described in the Registration Statement or the Prospectus but
are not described as required.
22
14. The descriptions in the Registration Statement and the
Prospectus of the contracts, leases and other legal documents therein
described present fairly the information required to be shown and
there are no contracts, leases or other documents known to such
counsel of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed as required.
15. The Common Stock has been approved for quotation on the
Nasdaq Stock Market upon official notification of issuance.
16. The Registration Statement and any 462(b) Registration
Statement have become effective under the 1933 Act and, to the
knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement or any 462(b) Registration Statement has
been issued and no proceeding for that purpose has been instituted or
is pending or contemplated under the 1933 Act. Other than financial
statements and other financial and operating data and schedules
contained therein, as to which counsel need express no opinion, the
Registration Statement, any 462(b) Registration Statement, all
Preliminary Prospectuses, the Prospectus and any amendment or
supplement thereto, appear on their face to conform as to form in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations.
17. The Company is not, or solely as a result of the
consummation of the transactions contemplated hereby will not become,
an "investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
18. The descriptions in the Prospectus of statutes, regulations,
legal or governmental proceedings are accurate and present fairly a
summary of the information required to be shown under the 1933 Act and
the 1933 Act Regulations. The information in the Prospectus under the
caption "Shares Available for Future Sale" to the extent that it
constitutes matters of law or legal conclusions, has been reviewed by
such counsel, is correct in all material respects and presents fairly
the information required to be disclosed therein under the 1933 Act
and the 1933 Act Regulations.
Such counsel also shall state that they have no reason to believe that
the Registration Statement, any 462(b) Registration Statement or any further
amendment thereto made prior to the Closing Time or the Date of Delivery, as
the case may be, on its effective date and as of the Closing Time or the
Date of Delivery, as the case may be, contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus, or any amendment or supplement
thereto made prior to the Closing Time or the Date of Delivery, as the case
23
may be, as of its issue date and as of the Closing Time or the Date of
Delivery, as the case may be, contained or contains any untrue statement of
a material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading (provided that such counsel need
express no belief regarding the financial statements and related schedules
and other financial data contained in the Registration Statement, any 462(b)
Registration Statement, any amendment thereto, or the Prospectus, or any
amendment or supplement thereto).
C. You shall have received an opinion, dated such Closing Time or
Date of Delivery, as the case may be, of Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇
counsel for the Selling Shareholder, in form and substance satisfactory to
you and your counsel, to the effect that:
1. The Power of Attorney and the Custody Agreement have been
duly executed and delivered by the Selling Shareholder, and each is
enforceable against the Selling Shareholder in accordance with its
terms subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws relating
to or affecting the enforcement of creditors' rights generally and to
general equitable principles.
2. This Agreement has been duly executed and delivered by or on
behalf of the Selling Shareholder; the sale of the Shares to be sold
by the Selling Shareholder at Closing Time and the performance of this
Agreement, the Power of Attorney and the Custody Agreement and the
consummation of the transactions herein and therein contemplated will
not conflict with or (with or without the giving of notice or the
passage of time or both) result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument known to counsel to which the Selling
Shareholder is a party or to which any of its properties or assets is
subject, nor will such action conflict with or violate any provision
of the charter or bylaws or other governing instruments of the Selling
Shareholder or any statute, rule or regulation or any order, judgment
or decree of any court or governmental agency or body having
jurisdiction over the Selling Shareholder or any of the Selling
Shareholder's properties or assets.
3. No consent, approval, authorization, order or declaration of
or from, or registration, qualification or filing with, any court or
governmental agency or body is required for the issue and sale of the
Shares being sold by the Selling Shareholder or the consummation of
the transactions with respect to the Selling Shareholder contemplated
by this Agreement, the Power of Attorney or the Custody Agreement,
except the registration of such Shares under the Act and such as may
be required under state securities or blue sky laws in connection with
the offer, sale and distribution of such Shares by the Underwriters.
24
4. The Selling Shareholder has, and immediately prior to such
Closing Time the Selling Shareholder will have, good and valid title
to the Shares to be sold by the Selling Shareholder hereunder, free
and clear of all liens, security interests, pledges, charges,
encumbrances, defects, shareholders' agreements, voting trusts,
equities or claims of any nature whatsoever; and, upon delivery of
such Shares against payment therefor as provided herein, good and
valid title to such Shares, free and clear of all liens, security
interests, pledges, charges, encumbrances, defects, shareholders'
agreements, voting trusts, equities or claims of any nature
whatsoever, will pass to the several Underwriters.
In rendering the opinions set forth in Sections 7(b) and 7(c), such
counsel may rely on the following:
(a) as to matters involving the application of laws other than
the laws of the United States and jurisdictions in which they are
admitted, to the extent such counsel deems proper and to the extent
specified in such opinion, upon an opinion or opinions (in form and
substance reasonably satisfactory to Underwriters' counsel) of other
counsel familiar with the applicable laws, and
(b) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and certificates
or other written statements of officers or departments of various
jurisdictions, having custody of documents respecting the existence or
good standing of the Company provided that copies of all such
opinions, statements or certificates shall be delivered to
Underwriters' counsel. The opinion of counsel for the Company shall
state that the opinion of any other counsel, or certificate or written
statement, on which such counsel is relying is in form satisfactory to
such counsel and that you and they are justified in relying thereon.
D. At the Closing Time, you shall have received a favorable opinion
from King & Spalding counsel for the Underwriters, dated as of the Closing
Time, with respect to the incorporation of the Company, the issuance and
sale of the Shares, the Registration Statement, the Prospectus and other
related matters as the Underwriters may reasonably require, and the Company
shall have furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass on such matters.
E. At the Closing Time, (i) the Registration Statement, any 462(b)
Registration Statement, and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be stated
therein under the 1933 Act and the 1933 Act Regulations and in all material
respects shall conform to the requirements of the 1933 Act and the 1933 Act
Regulations; the Company shall have complied in all material respects with
Rule 430A (if it shall have elected to rely thereon) and neither the
Registration Statement, any
25
462(b) Registration Statement, nor the Prospectus, as they may then be
amended or supplemented, shall contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) no action,
suit or proceeding at law or in equity shall be pending or, to the best of
Company's knowledge, threatened against the Company that would be required
to be set forth in the Prospectus other than as set forth therein and no
proceedings shall be pending or, to the best knowledge of the Company,
threatened against the Company before or by any federal, state or other
commission, board or administrative agency wherein an unfavorable decision,
ruling or finding could materially adversely affect the business, prospects,
assets, results of operations or condition (financial or otherwise) of the
Company, other than as set forth in the Prospectus, (iii) the Company shall
have complied with all agreements and satisfied all conditions on their part
to be performed or satisfied at or prior to the Closing Time, and (iv) the
representations and warranties of the Company set forth in Section 1 shall
be accurate as though expressly made at and as of the Closing Time. At the
Closing Time, you shall have received a certificate executed by the
President and Chief Financial Officer of the Company dated as of the Closing
Time, to such effect and with respect to the following additional matters:
(A) the Registration Statement has become effective under the 1933 Act and
no stop order suspending the effectiveness of the Registration Statement or
preventing or suspending the use of the Prospectus has been issued, and no
proceedings for that purpose have been instituted or are pending or, to the
best of their knowledge, threatened under the 1933 Act; and (B) they have
reviewed the Registration Statement and the Prospectus and, when the
Registration Statement and any 462(b) Registration Statement became
effective and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement, any 462(b) Registration Statement
and the Prospectus and any amendments or supplements thereto contained all
statements and information required to be included therein or necessary to
make the statements therein not misleading and neither the Registration
Statement, any 462(b) Registration Statement, nor the Prospectus nor any
amendment or supplement thereto included any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and, since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented Prospectus that has
not been so set forth. The representations and warranties of the Selling
Shareholder set forth herein shall be accurate as though expressly made at
and as of the Closing Time. At the Closing Time, you shall have received a
certificate executed on behalf of the Selling Shareholder to such effect.
F. You shall have received from each of KPMG Peat Marwick, LLP,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.L.L.C., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. LLP, ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇▇▇ & Company, P.C., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Company, LLP
and ▇. ▇. ▇▇▇▇▇ & Company letters dated, respectively, the date hereof (or,
if the Registration Statement has been declared effective prior to the
execution and delivery of this Agreement, dated such effective date and the
date of this Agreement) and the Closing Time and the Date of Delivery, in
form and substance satisfactory to you, to the effect set forth in Annex I
hereto. In the event that any letter referred to in this subsection sets
forth any changes, decreases or increases in the items specified in
paragraph (iv) of Annex I, it shall
26
be a further condition to the obligations of the Underwriters that (i) such
letter shall be accompanied by a written explanation by the entity to which
such letter relates as to the significance thereof, unless the Underwriters
deem such explanation unnecessary, and (ii) such changes, decreases or
increases do not, in your sole judgment, make it impracticable or
inadvisable to proceed with the purchase, sale and delivery of the Shares as
contemplated by the Registration Statement, as amended as of the date of
such letter.
G. At the Closing Time, you shall have received from each of KPMG Peat
Marwick, LLP, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.L.L.C., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. LLP, ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇▇▇ & Company, P.C., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Company,
LLP and ▇. ▇. ▇▇▇▇▇ & Company a letter, in form and substance satisfactory
to you and dated as of the Closing Time, to the effect that they reaffirm
the statements made in the letter furnished pursuant to subsection (f)
above, except that the specified date referred to shall be a date not more
than five days prior to the Closing Time.
H. At the Closing Time, counsel for the Underwriters shall have been
furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the
issuance and sale of the Shares as contemplated in this Agreement and the
matters referred to in Section 7(d) and in order to evidence the accuracy
and completeness of any of the representations, warranties or statements of
the Company, the performance of any of the covenants of the Company, or the
fulfillment of any of the conditions herein contained; and all proceedings
taken by the Company at or prior to the Closing Time in connection with the
authorization, issuance and sale of the Shares as contemplated in this
Agreement shall be reasonably satisfactory in form and substance to you and
to counsel for the Underwriters. The Company will furnish you with such
number of conformed copies of such opinions, certificates, letters and
documents as you shall reasonably request.
I. The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to such offering, such terms or the
Underwriters' participation in the same.
J. Since the date of the latest audited financial statements included
in the Prospectus, neither the Company nor any of the Subsidiaries shall
have sustained (i) any loss or interference with their respective businesses
from fire, explosion, flood, hurricane or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as disclosed in or contemplated by
the Prospectus or (ii) any change, or any development involving a
prospective change (including without limitation any change in management or
control of the Company), in or affecting the position (financial or
otherwise), results of operations, net worth or business prospects of the
Company and its subsidiaries, otherwise than as disclosed in or contemplated
by the Prospectus, the effect of which, in either such case, is in your
judgment so material and adverse as to make it impracticable or inadvisable
to proceed with the purchase, sale and
27
delivery of the Shares being delivered at such time as contemplated by the
Registration Statement, as amended as of the date hereof.
K. Subsequent to the date hereof, there shall not have occurred any
of the following: (i) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political
conditions the effect of which on the financial markets of the United States
is such as to make it, in your judgment, impracticable to market the Shares
or enforce contracts for the sale of the Shares, (ii) any suspension or
limitation in trading in any securities of the Company by the Commission or
by the Nasdaq Stock Market, or trading generally on the New York Stock
Exchange or in the over-the-counter market, (iii) any downgrading in the
rating of any of the Company's debt securities or preferred stock by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the 1933 Act), or (iv) a banking moratorium
declared by federal or New York or Tennessee authorities.
L. At the Closing Time, you shall have received satisfactory evidence
that all offers and sales of the Company's capital stock prior to the date
hereof were duly registered or the subject of an available exemption from
the registration requirements of the applicable state securities or blue sky
laws.
The several obligations of the Underwriters to purchase Option Shares
hereunder are subject to the satisfaction on and as of any Date of Delivery for
Option Shares of the conditions set forth in this Section 7, except that, if any
Date of Delivery for Option Shares is other than the Closing Time, the
certificates, opinions and letters referred to in paragraphs (b), (c) and (d)
shall be revised to reflect the sale of Option Shares.
Section 8. Indemnification and Contribution.
--------------------------------
A. The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject under the 1933 Act, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) (i) arise out of or are based upon any breach of any
warranty or covenant of the Company herein contained, (ii) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in (A) any Preliminary Prospectus, the Registration
Statement, any 462(b) Registration Statement or the Prospectus, or any
amendment or supplement thereto, or (B) any application or other document,
or any amendment or supplement thereto, executed by the Company or based
upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares under the securities or blue
sky laws thereof or filed with the Commission or any securities association
or securities exchange (each an "Application"), or (iii) arise out of or are
based upon the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement, any 462(b) Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any Application a
material fact required to be stated
28
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in any Preliminary Prospectus, the Registration Statement, any 462(b)
Registration Statement or the Prospectus, or any such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by any Underwriter expressly for use therein. In
addition to its other obligations under this Section 8(a), the Company
agrees that, as an interim measure during the pendency of any such claim,
action, investigation, inquiry or other proceeding arising out of or based
upon any statement or omission, or any alleged statement or omission,
described in this Section 8(a), it will reimburse the Underwriters on a
monthly basis for all reasonable legal and other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Company's obligation to reimburse the Underwriters for such expenses and the
possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. Any such interim reimbursement payments
that are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the prime rate (or reference rate or
other commercial lending rate for borrowers of the highest credit standing)
published from time to time by The Wall Street Journal (the "Prime Rate")
from the date of such request. This indemnity agreement shall be in addition
to any liabilities that the Company may otherwise have. The Company will
not, without the prior written consent of each Underwriter, settle or
compromise or consent to the entry of any judgment in any pending or
threatened action or claim or related cause of action or portion of such
cause of action in respect of which indemnification may be sought hereunder
(whether or not such Underwriter is a party to such action or claim), unless
such settlement, compromise or consent includes an unconditional release of
such Underwriter from all liability arising out of such action or claim (or
related cause of action or portion thereof).
The indemnity agreement in this Section 8(a) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the 1933
Act to the same extent as such agreement applies to the Underwriters.
B. The Selling Shareholder will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject under the 1933 Act, or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) (i) arise out of or are based upon any breach of
any warranty or covenant of the Selling Shareholder herein contained, (ii)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in (A) any Preliminary Prospectus,
the Registration Statement, any 462(b) Registration Statement or the
29
Prospectus, or any amendment or supplement thereto, in each case to the
extent but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by the Selling
Shareholder expressly for use therein or (B) any Application, or (iii) arise
out of or are based upon the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement, any 462(b) Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
Application a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent but
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by the Selling Shareholder
expressly for use therein, and will reimburse each Underwriter for any legal
or other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Selling Shareholder shall not be liable
in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, any 462(b) Registration Statement,
or the Prospectus, or any such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by any
Underwriter expressly for use therein; provided, further, however, that the
Selling Shareholder shall be liable hereunder in any and all cases in the
aggregate only to the extent of the total net proceeds from the offering
(before deducting expenses) received by the Selling Shareholder from the
Underwriters for the Shares sold by such Selling Shareholder hereunder,
unless any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any 462(b) Registration
Statement or any amendment or supplement thereto, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto or any
Application in reliance upon and in conformity with written information
furnished to the Company by the Selling Shareholder expressly for use
therein, in which case such limitation of the liability of the Selling
Shareholder shall not apply. In addition to their other obligations under
this Section 8(b), the Selling Shareholder agrees that, as an interim
measure during the pendency of any such claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this Section
8(b), the Selling Shareholder will reimburse the Underwriters on a monthly
basis for all reasonable legal and other expenses incurred in connection
with investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Selling
Shareholder's obligation to reimburse the Underwriters for such expenses and
the possibility that such payments might later be held to have been improper
by a court of competent jurisdiction. Any such interim reimbursement
payments that are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the prime rate (or reference rate or
other commercial lending rate for borrowers of the highest credit standing)
published from time to time by The Wall Street Journal (the "Prime Rate")
from the date of such request. This indemnity
30
agreement shall be in addition to any liabilities that the Selling
Shareholder may otherwise have. The Selling Shareholder will not, without
the prior written consent of each Underwriter, settle or compromise or
consent to the entry of any judgment in any pending or threatened action or
claim or related cause of action or portion of such cause of action in
respect of which indemnification may be sought hereunder (whether or not
such Underwriter is a party to such action or claim), unless such
settlement, compromise or consent includes an unconditional release of such
Underwriter from all liability arising out of such action or claim (or
related cause of action or portion thereof).
The indemnity agreement in this Section 8(b) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the 1933
Act to the same extent as such agreement applies to the Underwriters.
C. Each Underwriter, severally but not jointly, will indemnify and
hold harmless the Company and the Selling Shareholder against any losses,
claims, damages or liabilities to which the Company and the Selling
Shareholder may become subject, under the 1933 Act, or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any breach of any warranty or covenant by
such Underwriter herein contained or any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, any 462(b) Registration Statement or the Prospectus,
or any amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter expressly for use therein; and will reimburse the Company and
the Selling Shareholder for any legal or other expenses reasonably incurred
by the Company and the Selling Shareholder in connection with investigating
or defending any such loss, claim, damage, liability or action. In addition
to its other obligations under this Section 8(c), the Underwriters agree
that, as an interim measure during the pendency of any such claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in
this Section 8(c), they will reimburse the Company and the Selling
Shareholder on a monthly basis for all reasonable legal and other expenses
incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability
of their obligation to reimburse the Company or the Selling Shareholder for
such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. Any such interim
reimbursement payments that are not made to the Company or the Selling
Shareholder within 30 days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This
31
indemnity agreement shall be in addition to any liabilities that the
Underwriters may otherwise have. No Underwriter will, without the prior
written consent of the Company, settle or compromise or consent to the entry
of judgment in any pending or threatened action or claim or related cause of
action or portion of such cause of action in respect of which
indemnification may be sought hereunder (whether or not the Company is a
party to such action or claim), unless such settlement, compromise or
consent includes an unconditional release of the Company from all liability
arising out of such action or claim (or related cause of action or portion
thereof).
The indemnity agreement in this Section 8(c) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each
officer and director of the Company and each person, if any, who controls
the Company or the Selling Shareholder within the meaning of the 1933 Act to
the same extent as such agreement applies to the Company and the Selling
Shareholder.
D. Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party
in writing of the commencement thereof; no indemnification provided for in
subsection (a) or (b) shall be available to any party who shall fail to give
notice as provided in this subsection (c) if the party to whom notice was
not given was unaware of the proceeding to which such notice would have
related and was prejudiced by the failure to give such notice, but the
omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability that it may have to any indemnified
party otherwise than under Section 8. In case any such action shall be
brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation, except that if the indemnified party has
been advised by counsel in writing that there are one or more defenses
available to the indemnified party which are different from or additional to
those available to the indemnifying party, then the indemnified party shall
have the right to employ separate counsel and in that event the reasonable
fees and expenses of such separate counsel for the indemnified party shall
be paid by the indemnifying party; provided, however, that if the
indemnifying party is the Company or the Selling Shareholder, the Company or
the Selling Shareholder, as the case may be, shall only be obligated to pay
the reasonable fees and expenses of a single law firm (and any reasonably
necessary local counsel) employed by all of the indemnified parties. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without
32
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
E. It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 8(a), (b) and
(c) hereof, including the amounts of any requested reimbursement payments,
the method of determining such amounts and the basis on which such amounts
shall be apportioned among the indemnifying parties, shall be settled by
arbitration conducted pursuant to the Code of Arbitration Procedure of the
National Association of Securities Dealers, Inc. Any such arbitration must
be commenced by service of a written demand for arbitration or a written
notice of intention to arbitrate, therein electing the arbitration tribunal.
In the event the party demanding arbitration does not make such designation
of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Any such
arbitration will be limited to the operation of the interim reimbursement
provisions contained in Sections 8(a), (b) and (c) hereof and will not
resolve the ultimate propriety or enforceability of the obligation to
indemnify for expenses that is created by the provisions of Sections 8(a),
(b) and (c).
F. In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 8 is
for any reason 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 right of appeal) to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company and the Selling Shareholder, on the one hand and the Underwriters on
the other shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity incurred
by the Company and the Selling Shareholder, and one or more of the
Underwriters, as incurred, in such proportions that (a) the Underwriters are
responsible pro rata for that portion represented by the percentage that the
underwriting discount appearing on the cover page of the Prospectus bears to
the public offering price (before deducting expenses) appearing thereon, and
(b) the Company and the Selling Shareholder are responsible for the balance,
provided, however, that no person guilty of fraudulent misrepresentations
(within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation; provided, further, that if the allocation provided above
is not permitted by applicable law, the Company and the Selling Shareholder,
on the one hand, and the Underwriters on the other shall contribute to the
aggregate losses in such proportion as is appropriate to reflect not only
the relative benefits referred to above but also the relative fault of the
Company and the Selling Shareholder, on the one hand, and the Underwriters
on the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. 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 to state a material fact
relates to information supplied by the Company and the Selling Shareholder,
on the one hand, or by the Underwriters on the other hand and the parties'
relative
33
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Shareholder and
the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 8(f) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 8(f). The
amount paid or payable by a party as a result of the losses, claims, damages
or liabilities referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending such action or claim. Notwithstanding the
provisions of this Section 8(f), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Underwriters'
obligations in this Section 8(f) to contribute are several in proportion to
their respective underwriting obligations and not joint. For purposes of
this Section 8(f), each person, if any, who controls an Underwriter within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company or the Selling Shareholder, within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company or the Selling Shareholder.
Section 9. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. The representations, warranties, indemnities, agreements and other
--------
statements of the Company and the Selling Shareholder or their respective
officers set forth in or made pursuant to this Agreement will remain operative
and in full force and effect regardless of any investigation made by or on
behalf of the Company, the Selling Shareholder or any Underwriter or controlling
person, and with respect to an Underwriter or the Company will survive delivery
of and payment for the Shares or termination of this Agreement.
Section 10. Effective Date of Agreement and Termination.
-------------------------------------------
A. This Agreement shall become effective immediately as to Sections 6
and 8 and, as to all other provisions, (i) if at the time of execution of
this Agreement the Registration Statement has not become effective, at 10:00
a.m., on the first full business day following the effectiveness of the
Registration Statement, or (ii) if at the time of execution of this
Agreement the Registration Statement has been declared effective, at 10:00
a.m. on the first full business day following the date of execution of this
Agreement; but this Agreement shall nevertheless become effective at such
earlier time after the Registration Statement becomes effective as you may
determine on and by notice to the Company or by release of any of the Shares
for sale to the public. For the purposes of this Section 10, the Shares
shall be deemed to have been so released upon the release of publication of
any newspaper advertisement relating to the Shares or upon the release by
you of telegrams (i) advising the Underwriters that the Shares are
34
released for public offering, or (ii) offering the Shares for sale to
securities dealers, whichever may occur first. By giving notice before the
time this Agreement becomes effective, you, as representative of the several
Underwriters, or the Company, may prevent this Agreement from becoming
effective, without liability of any party to any other party, except that
the Company shall remain obligated to pay costs and expenses to the extent
provided in Section 6 hereof.
B. This Agreement may be terminated with respect to the Firm Shares
or the Option Shares in your sole discretion by notice to the Company given
prior to the Closing Time or the Date of Delivery, as the case may be, in
the event that (i) any condition to the obligations of the Underwriters set
forth in Section 7 hereof has not been satisfied or (ii) the Company or the
Selling Shareholder shall have failed, refused or been unable to deliver the
Shares or to perform all obligations and satisfy all conditions on their
respective parts to be performed or satisfied hereunder at or prior to such
Closing Time or Date of Delivery, as applicable, other than by reason of a
default by any of the Underwriters. If this Agreement is terminated
pursuant to this Section 10(b), the Company and the Selling Shareholder, pro
rata in accordance with the number of Shares proposed to be sold by each
hereunder will reimburse the Underwriters severally upon demand for all out-
of-pocket expenses (including fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale
of the Shares.
C. If this Agreement is terminated pursuant to this Section 10, such
termination shall be without liability of any party to any other party,
except to the extent provided in this Section 10. Notwithstanding any such
termination, the provisions of Section 8 shall remain in effect.
Section 11. Default by One or More of the Underwriters. If one or more
------------------------------------------
of the Underwriters shall fail at the Closing Time to purchase the Shares that
it or they are obligated to purchase pursuant to this Agreement (the "Defaulted
Securities"), you shall have the right, within 36 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 set forth in
this Agreement; if, however, you have not completed such arrangements within
such 36-hour period, then:
A. If the aggregate number of Firm Shares which are Defaulted
Securities does not exceed 10% of the aggregate number of Firm Shares to be
purchased pursuant to this Agreement, the non-defaulting Underwriters shall
be obligated to purchase the full amount thereof in the proportions that
their respective underwriting obligation proportions bear to the
underwriting obligations of all non-defaulting Underwriters, and
B. If the aggregate number of Firm Shares which are Defaulted
Securities exceeds 10% of the aggregate number of Firm Shares to be
purchased pursuant to this Agreement, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
35
No action taken pursuant to this Section 11 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default that does not result in a termination of
this Agreement, either you or the Company shall have the right to postpone the
Closing Time 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, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus that
may thereby be made necessary. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 11.
Section 12. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. (with
a copy sent in the same manner to King & Spalding, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇ III); notices to the Company
shall be directed to it at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. Fair (with a copy sent in the same manner to Baker,
Donelson, Bearman & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇ ▇. Good) and notices to the Selling Shareholder shall be
directed to it at ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇.
Section 13. Parties. This Agreement is made solely for the benefit of
-------
and is binding upon the Underwriters, the Company and the Selling Shareholder,
and to the extent provided in Section 8, any person controlling the Company, the
Selling Shareholder or any of the Underwriters, the officers and directors of
the Company, and their respective executors, administrators, successors and
assigns and subject to the provisions of Section 8, no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser, as such purchaser,
from any of the several Underwriters of the Shares.
All of the obligations of the Underwriters hereunder are several and not
joint.
Section 14. Governing Law and Time. This Agreement shall be governed by
----------------------
the laws of the State of Tennessee. Specified time of the day refers to United
States Eastern Time. Time shall be of the essence of this Agreement.
Section 15. Counterparts. This Agreement may be executed in one or more
------------
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
36
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, and upon the acceptance
hereof by ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc., on behalf of each of the Underwriters,
this instrument will become a binding agreement among the Company and the
several Underwriters in accordance with its terms. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in the Master Agreement among Underwriters, a copy of
which shall be submitted to the Company for examination, upon request, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
MASTER GRAPHICS, INC.
By:
--------------------------------
Name:
Title:
SIRROM FUNDING CORPORATION
By:
---------------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first written above:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, INC.
By:
---------------------------------
(Authorized Representative)
On behalf of each of the Underwriters
37
SCHEDULE A
Number of
Firm Shares
to be Purchased
---------------
Underwriter
-----------
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
---------------
SunTrust Equitable Securities Corporation
---------------
TOTAL
===============
ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement,
(i) each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. LLP, ▇▇▇▇▇▇ & Company, P.C., ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and Company, LLP, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.L.L.C. and ▇. ▇. ▇▇▇▇▇ &
Company shall furnish letters to the Underwriters to the effect that:
(A) they are independent public accountants with respect to the
entity or entities, for which they have prepared financial statements
included in the Prospectus and the Registration Statements and its
consolidated subsidiaries within the meaning the 1933 Act and the
applicable published rules and regulations thereunder; and
(B) in their opinion, the consolidated financial statements and
schedules audited by them and included in the Prospectus, the
Registration Statement and any 462(b) Registration Statement comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the related published rules and
regulations thereunder; and
(C) In addition to the audit referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraph
(E) below, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Underwriters included in the
Registration Statement and the Prospectus, or which appear in Part II
of, or in exhibits and schedules to, the Registration Statement
specified by the Underwriters, and have compared certain of such
amounts, percentages and financial information with the accounting
records of the entity or entities, for which they have prepared
financial statements included in the Prospectus and the Registration
Statement and have found them to be in agreement.
(ii) ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, P.C. shall furnish letters to the
Underwriters to the affect that:
(A) they are independent public accountants with respect to the
entity or entities, for which they have prepared financial statements
included in the Prospectus and the Registration Statements and its
consolidated subsidiaries within the meaning the 1933 Act and the
applicable published rules and regulations thereunder;
(B) in their opinion, the consolidated financial statements and
schedules audited by them and included in the Prospectus, the
Registration Statement and any 462(b) Registration Statement comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the related published rules and
regulations thereunder;
(C) In addition to the audit referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraph
(E) below, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Underwriters included in the
Registration Statement and the Prospectus, or which appear in Part II
of, or in exhibits and schedules to, the Registration Statement
specified by the Underwriters, and have compared certain of such
amounts, percentages and financial information with the accounting
records of the entity or entities, for which they have prepared
financial statements included in the Prospectus and the Registration
Statement and have found them to be in agreement; and
(D) the financial statements as of and for the nine month periods
ended March 31, 1997 and 1998 were reviewed by them in accordance with
the standards established by the American Institute of Certified
Public Accountants and based upon their review they are not aware of
any material modifications that should be made to such financial
statements for them to be in conformity with generally accepted
accounting principles, and such financial statements comply as to form
in all material respects with the applicable accounting requirements
of the 1933 Act and the applicable rules and regulations thereunder.
(iii) KPMG Peat Marwick, LLP shall furnish letters to the
Underwriters to the effect that:
(A) they are independent public accountants with respect to the
entity or entities, for which they have prepared financial statements
included in the Prospectus and the Registration Statements and its
consolidated subsidiaries within the meaning the 1933 Act and the
applicable published rules and regulations thereunder; and
(B) in their opinion, the consolidated financial statements and
schedules audited by them and included in the Prospectus, the
Registration Statement and any 462(b) Registration Statement comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the related published rules and
regulations thereunder;
(C) In addition to the audit referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraph
(E) below, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Underwriters included in the
2
Registration Statement and the Prospectus, or which appear in Part II
of, or in exhibits and schedules to, the Registration Statement
specified by the Underwriters, and have compared certain of such
amounts, percentages and financial information with the accounting
records of the entity or entities, for which they have prepared
financial statements included in the Prospectus and the Registration
Statement and have found them to be in agreement.
(D) the balance sheet as of March 31, 1998 and the related
statements of operations and cash flows for the three month periods
ended March 31, 1997 and 1998 were reviewed by them in accordance with
the standards established by the American Institute of Certified
Public Accountants and based upon their review they are not aware of
any material modifications that should be made to such financial
statements for them to be in conformity with generally accepted
accounting principles, and such financial statements comply as to form
in all material respects with the applicable accounting requirements
of the 1933 Act and the applicable rules and regulations thereunder;
and
(E) on the basis of limited procedures, not constituting an audit
in accordance with generally accepted auditing standards, consisting
of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements, of the entity or entities, for which
they have audited financial statements included in the Prospectus and
the Registration Statements and such entity's consolidated
subsidiaries, inspection of the minute books of such entity and its
consolidated subsidiaries since the date of the latest audited
financial statements included in the Prospectus, inquiries of
officials of such entity and its consolidated subsidiaries responsible
for financial accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(1) the unaudited consolidated condensed financial
statements of such entity and its consolidated subsidiaries
included in the Registration Statement and the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the related published
rules and regulations thereunder or are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements included in the Registration Statement and
the Prospectus;
(2) as of a specified date not more than 5 days prior to the
date of such letter, there were any changes in the capital stock
(other than the issuance of capital stock upon exercise of
options which were outstanding on the date of the latest balance
sheet included in the Prospectus) or any increase in the long-
term debt or short-term debt of the Company and its
3
subsidiaries, or any decreases in net current assets or net
assets or other items specified by the Underwriters, or any
increases in any items specified by the Underwriters, in each
case as compared with amounts shown in the latest balance sheet
included in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(3) for the period from the date of the latest financial
statements included in the Prospectus to the specified date
referred to in Clause (B) there were any decreases in revenue or
operating income or the total or per share amounts of net income
or other items specified by the Underwriters, or any increases in
any items specified by the Underwriters, in each case as compared
with the comparable period of the preceding year and with any
other period of corresponding length specified by the
Underwriters, except in each case for increases or decreases
which the Prospectus discloses have occurred or may occur which
are described in such letter; and
(F) In addition to the audit referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraph
(E) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Underwriters included in the
Registration Statement and the Prospectus, or which appear in Part II
of, or in exhibits and schedules to, the Registration Statement
specified by the Underwriters, and have compared certain of such
amounts, percentages and financial information with the accounting
records of the entity or entities, for which they have prepared
financial statements included in the Prospectus and the Registration
Statement and have found them to be in agreement.
(G) on the basis of a reading of the unaudited pro forma
consolidated condensed financial statements included in the
Registration Statement and the Prospectus, carrying out certain
specified procedures that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph
(vi), inquiries of certain officials of the Company and the acquired
companies, if appropriate, who have responsibility for financial and
accounting matters and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
the unaudited pro forma condensed consolidated financial statements,
nothing came to their attention that caused them to believe that the
unaudited pro forma condensed consolidated financial statements do not
comply as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the
pro forma adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
4
References to the Registration Statement and the Prospectus in this
Annex I shall include any amendment or supplement thereto at the date of
such letter.
5