Exhibit 1.1
SFBC INTERNATIONAL, INC.
________ Shares of Common Stock, $0.001 par value per share
PLACEMENT AGENCY AGREEMENT
November __, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
as Placement Agent
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▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sir or Madam:
SFBC International, Inc., a Delaware corporation (the "Company"),
proposes to offer and sell shares of common stock, par value $0.001 per share
(the "Common Stock"), in such aggregate amount as shall result in gross proceeds
to (i) the Company of up to $35,000,000 or such greater amount (the "Company
Securities") as shall be mutually agreed upon by the Company and the Placement
Agent (as hereinafter defined) and (ii) each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (each, a "Selling Stockholder" and together, the "Selling
Stockholders") of up to an aggregate of $___________ or such greater amount as
shall be agreed by and among the Selling Stockholders and the Placement Agent
(the "Selling Stockholder Securities," and collectively with the Company
Securities, the "Securities"), to certain investors (collectively, the
"Investors").
Each of the Company and the Selling Stockholders desires to engage you
as its placement agent (the "Placement Agent") in connection with such offer and
sale. The Securities are more fully described in the Registration Statement (as
hereinafter defined).
Each of the Company and the Selling Stockholders hereby confirms as
follows its respective agreements with the Placement Agent.
1. Agreement to Act as Placement Agent. On the basis of the
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respective representations, warranties and agreements of the Company and the
Selling Stockholders herein contained and subject to all the terms and
conditions of this agreement (the "Agreement"), the Placement Agent agrees to
act as the exclusive placement agent in connection with the issuance and sale,
on a best efforts basis, by the Company and the Selling Stockholders of the
Securities to the Investors. The Company shall pay to the Placement Agent 6.00%
of the proceeds received from the sale of the Securities as set forth on the
cover page of the Prospectus (as hereinafter defined).
2. Delivery and Payment. Concurrently with the execution and
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delivery of this Agreement, the Company, the Selling Stockholders, the Placement
Agent, and Citibank, N.A., as escrow agent (the "Escrow Agent"), shall enter
into an Escrow Agreement substantially in the form of Exhibit A attached hereto
(the "Escrow Agreement"), pursuant to which an escrow account shall be
established, at the Company's expense, for the benefit of the Investors (the
"Escrow Account"). Prior to the Closing Date (defined below), (i) each of the
Investors shall deposit an amount equal to the price per Share, as shown on the
cover page of the Prospectus as hereinafter defined multiplied by the number of
Securities purchased by it in the Escrow Account, and (ii) the Escrow Agent
shall notify the Company, the Selling Stockholders and the Placement Agent in
writing whether the Investors have deposited in the Escrow Account funds in the
amount equal to the proceeds of the sale of all of the Securities offered hereby
(the "Requisite Funds") into the Escrow Account. At 10:00 a.m., New York City
time, on December __, 2001, or at such other time on such other date as may be
agreed upon by the Company, the Selling Stockholders and the Placement Agent but
in no event prior to the date on which the Escrow Agent shall have received all
of the Requisite Funds (such date is hereinafter referred to as the "Closing
Date"), the Escrow Agent shall release the Requisite Funds from the Escrow
Account for collection by the Company, the Selling Stockholders and the
Placement Agent as provided in the Escrow Agreement and the Company and the
Selling Stockholders shall deliver the Securities to the Investors, which
delivery may be made through the facilities of the Depository Trust Company.
The closing (the "Closing") shall take place at the office of Stroock & Stroock
& ▇▇▇▇▇ LLP at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇-▇▇▇▇. All actions
taken at the Closing shall be deemed to have occurred simultaneously.
Certificates evidencing the Securities shall be in definitive form and
shall be registered in such names and in such denominations as the Placement
Agent shall request by written notice to the Company and the Selling
Stockholders. For the purpose of expediting the checking and packaging of
certificates for the Securities, the Company and each of the Selling
Stockholders agree to make such certificates available for inspection at least
24 hours prior to delivery to the Investors.
3. Representations and Warranties of the Company. The Company
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represents and warrants and covenants to, and agrees with, the Placement Agent
that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and may have filed one
or more amendments thereto, on Form S-1 (Registration No. 333-__________)
including in such registration statement and each such amendment a facing sheet,
the information called for by Part I, audited consolidated financial statements
for at least the past three fiscal years and such other periods as may be
appropriate, the information called for by Part II, the undertakings to deliver
certificates, file reports and file post-effective amendments, the required
signatures, consents of experts, exhibits, a related Preliminary Prospectus (as
hereinafter defined) and any other information or documents which are required
for the registration of the Securities under the Securities Act of 1933, as
amended (the "Act"). As used in this Agreement, the term "Registration
Statement" means such registration statement (including any amendments),
including incorporated documents, all exhibits and consolidated financial
statements and schedules thereto, as amended, when it becomes effective (the
"Effective Date"), and shall include information with respect to the Securities,
the offering thereof permitted to be omitted
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from the Registration Statement when it becomes effective pursuant to Rule 430A
of the General Rules and Regulations promulgated under the Act (the
"Regulations"), which information is deemed to be included therein when it
becomes effective as provided by Rule 430A; the term "Preliminary Prospectus"
means each prospectus included in the Registration Statement, or any amendments
thereto, before it becomes effective under the Act and any prospectus filed by
the Company with the consent of the Placement Agent pursuant to Rule 424(a) of
the Regulations; and the term "Prospectus" means the final prospectus included
as part of the Registration Statement, except that if the prospectus relating to
the Securities covered by the Registration Statement in the form first filed on
behalf of the Company with the Commission pursuant to Rule 424(b) of the
Regulations shall differ from such final prospectus, the term "Prospectus" shall
mean the prospectus as filed pursuant to Rule 424(b) from and after the date on
which it shall have first been used.
(b) When the Registration Statement becomes effective, and at all
times subsequent thereto, to and including the Closing Date as defined in
Section 2, and during such longer period as the Prospectus may be required to be
delivered in connection with sales by the Placement Agent or any dealer, and
during such longer period until any post-effective amendment thereto shall
become effective, the Registration Statement (and any post-effective amendment
thereto) and the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment or supplement to the Registration
Statement or the Prospectus) shall contain all statements which are required to
be stated therein in accordance with the Act and the Regulations, shall comply
with the Act and the Regulations, and shall not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and no event shall
have occurred which should have been set forth in an amendment or supplement to
the Registration Statement or the Prospectus which has not then been set forth
in such an amendment or supplement; and no Preliminary Prospectus, as of the
date filed with the Commission, 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; except that no representation or
warranty is made in this Section 3(b) with respect to statements or omissions
made in reliance upon and in conformity with written information furnished to
the Company as contemplated by Section 9 hereof with respect to the Placement
Agent by or on behalf of the Placement Agent expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto. The Company has not distributed any offering
material in connection with the offering or sale of the Securities, other than
the Registration Statement, the Preliminary Prospectus and the Prospectus.
(c) Neither the Commission nor the blue sky or securities authority
of any jurisdiction have issued an order (a "Stop Order") suspending the
effectiveness of the Registration Statement, preventing or suspending the use of
any Preliminary Prospectus, the Prospectus, the Registration Statement, or any
amendment or supplement thereto, refusing to permit the effectiveness of the
Registration Statement, or suspending the registration or qualification of the
Securities, nor has any of such authorities instituted or threatened to
institute any proceedings with respect to a Stop Order.
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(d) Any contract, agreement, instrument, lease, or license required
to be described in the Registration Statement or the Prospectus has been
properly described therein. Any contract, agreement, instrument, lease, or
license required to be filed as an exhibit to the Registration Statement has
been filed with the Commission as an exhibit to or has been incorporated as an
exhibit by reference into the Registration Statement. All such contracts to
which the Company is a party have been duly authorized, executed and delivered
by the Company, constitute valid and binding agreements of the Company, and are
enforceable against the Company in accordance with the terms thereof, subject to
the effect of applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and equitable principles of general applicability.
(e) The Company is, and at the Closing Date shall be, a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware, with full corporate power and authority, and all necessary
material consents, authorizations, approvals, orders, licenses, certificates,
and permits of and from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and other tribunals, to
own, lease, license, and use its properties and assets and to carry on the
business in the manner described in the Prospectus. The Company is, and at the
Closing Date shall be, duly qualified to do business and is in good standing in
every jurisdiction in which its ownership, leasing, licensing, or use of
property and assets or the conduct of its business makes such qualifications
necessary, except in jurisdictions where the failure to qualify shall not have a
material adverse affect on the Company. The Company has no subsidiaries except
as disclosed in the Prospectus. The Company does not own, and at the Closing
Date shall not own, directly or indirectly, any shares of stock or any other
equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other entity
other than short-term United States treasury bills. Complete and correct copies
of the articles or certificate of incorporation and of the bylaws of the Company
and all amendments thereto have been delivered to the Placement Agent, and no
changes therein shall be made subsequent to the date hereof and prior to the
Closing Date. All of the shares of issued capital stock set forth on Schedule
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3(e) as owned by the Company are owned free and clear of any lien, encumbrance,
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claim, security interest, restriction on transfer, shareholders' agreement,
voting trust other defect of title whatsoever.
(f) The authorized capital stock of the Company consists of
20,000,000 shares of Common Stock, of which no more than 4,602,320 shares of
Common Stock are issued and outstanding, including 2,000 shares held as treasury
shares (of which 300,000 shares of Common Stock are held by the Selling
Stockholders), 1,445,834 shares of Common Stock are reserved for issuance upon
the exercise of currently outstanding options and 156,501 shares of Common Stock
are reserved for issuance. Each outstanding share of Common Stock is validly
authorized, or when issued shall be authorized, validly issued, fully paid, and
nonassessable, without any personal liability attaching to the ownership
thereof, and has not been issued and is not owned or held in violation of any
preemptive rights of stockholders. There is no commitment, plan, or arrangement
to issue, and no outstanding option, warrant, or other right calling for the
issuance of, any share of capital stock of the Company or any security or other
instrument which by its terms is convertible into, exercisable for, or
exchangeable for capital stock of the Company, except as set forth above, and as
may be properly described in the Prospectus.
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(g) The consolidated financial statements of the Company included in
the Registration Statement and the Prospectus fairly present with respect to the
Company the consolidated financial position, the results of operations, and the
other information purported to be shown therein at the respective dates and for
the respective periods to which they apply. Such consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles, except to the extent that certain footnote disclosures regarding any
stub period may have been omitted in accordance with the applicable rules of the
Commission under the Securities Exchange Act of 1934 (the "Exchange Act"),
consistently applied throughout the periods involved, are materially correct and
complete, and are in accordance with the books and records of the Company. The
accountants whose report on the audited consolidated financial statements is
filed with the Commission as a part of the Registration Statement are, and
during the periods covered by their report(s) included in the Registration
Statement and the Prospectus were, independent certified public accountants with
respect to the Company within the meaning of the Act and the Regulations.
Except as set forth therein, no other financial statements are required by Form
S-1 or otherwise to be included in the Registration Statement or the Prospectus,
audited or unaudited. At no time has there been a material adverse change in
the consolidated financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company from the
latest information set forth in the Registration Statement or the Prospectus,
except as may be properly described in the Prospectus.
(h) The Company is not, nor upon completion of the transactions
contemplated herein shall it be, an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(i) There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, or, to the knowledge
of the Company, threatened, or in prospect with respect to the Company or any of
its operations, businesses, properties, or assets, except as is properly
described in the Prospectus or such as individually or in the aggregate do not
now have and shall not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company. The Company is not
in violation of, or in default with respect to, any law, 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 insofar as can reasonably be
foreseen, is likely to have a material adverse effect upon the operations,
business, properties, or assets of the Company; nor is the Company required to
take any action in order to avoid any such violation or default.
(j) The Company owns no real estate. The Company has good title to
all other properties and assets which the Prospectus indicates are owned by it,
free and clear of all liens, security interests, pledges, charges, encumbrances,
and mortgages except as may be properly described in the Prospectus or such as
in the aggregate do not now have and insofar as can reasonably be foreseen, is
likely to have a material adverse effect upon the operations, business,
properties, or assets of the Company. No real property leased, licensed, or
used by the Company lies in an area which is, or to the knowledge of the Company
shall be, subject to zoning, use, or building code restrictions which would
prohibit, and no state of facts relating to the actions or inaction of another
person or entity or his or its ownership, leasing, licensing, or
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use of any real or personal property exists or shall exist which would prevent,
the continued effective ownership, leasing, licensing, or use of such real
property in the business of the Company as presently conducted or as the
Prospectus indicates it contemplates conducting, except as may be properly
described in the Prospectus or such as in the aggregate do not now have and
shall not in the future have a material adverse effect upon the operations,
business, properties, or assets of the Company.
(k) Neither the Company nor any other party is now, or at the Closing
Date shall be or is expected by the Company to be in violation or breach of, or
in default with respect to complying with, any material provision of any
contract, agreement, instrument, lease, license, indenture, mortgage, deed of
trust, voting trust agreement, loan agreement, bond, debenture, arrangement, or
understanding which is material to the Company, and each such contract,
agreement, instrument, lease, license, indenture, mortgage, deed of trust,
voting trust agreement, loan agreement, bond, debenture, arrangement, and
understanding is in full force and is the legal, valid, and binding obligation
of the parties thereto and is enforceable as to them in accordance with its
terms, except as such may be limited or otherwise affected by bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium, fraudulent
conveyance, equitable subordination, or other similar legal principles now or
hereafter in effect governing or affecting the rights and remedies of debtors
and creditors generally, or general principles of equity, regardless of whether
considered in a proceeding at law or in equity. The Company enjoys peaceful and
undisturbed possession under all leases and licenses under which it is
operating. The Company is not a party to or bound by any contract, agreement,
instrument, lease, license, indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, arrangement, or understanding, or
subject to any charter or other restriction, which has had or may in the future
have a material adverse effect on the financial condition, results of
operations, business, properties, assets, liabilities, or future prospects of
the Company. The Company is not in violation or breach of, or in default with
respect to, any term of its Certificate of Incorporation (or other charter
document) or by-laws.
(l) All patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises, technology,
know-how and other intangible properties and assets (all of the foregoing being
herein called "Intangibles") that the Company owns or has pending, or under
which it is licensed, are in good standing and uncontested. Except as otherwise
disclosed in the Registration Statement, the Intangibles are owned by the
Company, free and clear of all liens, security interests, pledges, and
encumbrances. The Company possesses all rights under any Intangible necessary
to the business of the Company as presently conducted or as the Prospectus
indicates it contemplates conducting (except as may be so designated in the
Prospectus). The Company has not infringed, is not infringing, and has not
received notice of infringement with respect to asserted Intangibles of others.
There is no infringement by others of Intangibles of the Company. There is no
Intangible of others which has had or may in the future have a materially
adverse effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company.
(m) Neither the Company nor any director, officer, agent, employee,
or other person associated with or acting on behalf of the Company has, directly
or indirectly: used any corporate funds for unlawful contributions, gifts,
entertainment, or other unlawful
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expenses relating to political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1999, as amended; or made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment. The Company has not
accepted any material advertising allowances or marketing allowances from
suppliers to the Company and, to the extent any advertising allowance has been
accepted, the Company has provided proper documentation to the supplier with
respect to advertising as to which the advertising allowance has been granted.
(n) The Company has all requisite power and authority to execute and
deliver, and to perform thereunder each of this Agreement and the Escrow
Agreement. All necessary corporate proceedings of the Company have been duly
taken to authorize the execution and delivery, and performance thereunder by the
Company of this Agreement and the Escrow Agreement. This Agreement and the
Escrow Agreement have been duly authorized and validly executed and delivered by
the Company and each is a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject to the
effect of applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and equitable principles of general applicability. No consent,
authorization, approval, order, license, certificate, or permit of or from, or
declaration or filing with, any federal, state, local, or other governmental
authority or any court or other tribunal is required by the Company for the
execution and delivery, or performance thereunder by the Company of this
Agreement or the Escrow Agreement except filings under the Act which have been
or shall be made before the Closing Date, an order of effectiveness of the
Commission, and such consents consisting only of consents under blue sky or
securities laws or the by-laws and rules of the NASD Regulation, Inc. (the
"NASDR") which are required in connection with the transactions contemplated by
this Agreement and which have been obtained at or prior to the date of this
Agreement. No consent of any party to any contract, agreement, instrument,
lease, license, arrangement, or understanding to which the Company is a party,
or to which any of its properties or assets are subject, is required for the
execution or delivery, or performance thereunder of this Agreement or the Escrow
Agreement; and the execution and delivery, and performance thereunder of this
Agreement and the Escrow Agreement shall not violate, result in a breach of,
conflict with, or (with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default under any such
contract, agreement, instrument, lease, license, arrangement, or understanding,
or violate or result in a breach of any term of the Certificate of Incorporation
or by-laws of the Company, or violate, result in a breach of, or conflict with
any law, rule, regulation, order, judgment, or decree binding on the Company or
to which any of its operations, businesses, properties, or assets are subject.
(o) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(p) The Securities, when issued and delivered in accordance with this
Agreement, upon payment of the exercise price therefor, shall be validly issued,
fully paid, and nonassessable, without any personal liability attaching to the
ownership thereof, and shall not be issued in violation of any preemptive rights
of stockholders. The purchasers of Securities shall receive good title to the
Securities purchased. All title to the Securities shall be free and clear of
all liens, security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts.
(q) The Securities conform to all statements relating thereto
contained in the Registration Statement and the Prospectus. The Securities are
currently listed on the Nasdaq National Market (the "NNM").
(r) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as set forth in or contemplated by the Registration Statement and
the Prospectus, (i) there has not been and shall not have been any change in the
capitalization of the Company other than non-material changes in the ordinary
course of business, or any material adverse change in the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of the Company arising for any reason whatsoever, (ii) the Company has not
incurred nor shall it incur any material liabilities or obligations, direct or
contingent, nor has the Company entered into nor shall it enter into any
material transactions other than pursuant to this Agreement, the Registration
Statement and the transactions referred to herein and therein and (iii) the
Company has not and shall not have paid or declared any dividends or other
distributions of any kind on any class of its capital stock.
(s) Neither the Company nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or shall take, directly or
indirectly, prior to the termination of the distribution of securities
contemplated by this Agreement, any action designed to stabilize or manipulate
the price of any security of the Company, or which has caused or resulted in, or
which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company, to
facilitate the sale or resale of the Securities.
(t) Except as contemplated by this Agreement, the Company has not
incurred any liability for a fee, commission, or other compensation on account
of the employment of a broker or finder in connection with the transactions
contemplated by this Agreement.
(u) The Company has obtained from each officer, director and person
who, to its knowledge, beneficially owns 5.00% or more of the shares of the
Company's capital stock or derivative securities convertible into shares of the
Company's capital stock his or her enforceable written agreement that for a
period of 90 days from the Closing Date, he or she shall not, without the
Placement Agent's prior written consent, offer, pledge, sell, contract to sell,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of capital stock or any security or other instrument
which by its terms is convertible into, exercisable for, or exchangeable for
shares of Securities (except that, subject to compliance with applicable
securities laws, any such officer, director or stockholder may transfer his or
her
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stock in a private transaction, provided that any such transferee shall
agree, as a condition to such transfer, to be bound by the restrictions set
forth in this Agreement and further provided that the transferor, except in the
case of the transferor's death or gifts of securities with a fair market value
of $100,000 in the aggregate per transferor, shall continue to be deemed the
beneficial owner of such shares in accordance with Regulation 13d-(3) of the
Exchange Act).
(v) Except as otherwise provided in the Registration Statement or on
Schedule 3(v), no person or entity has the right to require registration of
shares of Securities or other securities of the Company because of the filing or
effectiveness of the Registration Statement.
(w) No unregistered securities of the Company, of an affiliate of the
Company or of a predecessor of the Company have been sold within three years
prior to the date hereof, except as described in the Registration Statement.
(x) The Company has filed all federal and state tax returns which are
required to be filed by it and has paid all taxes shown on such returns and all
assessments received by it to the extent such taxes have become due. All taxes
with respect to which the Company is obligated have been paid or adequate
accruals have been set up to cover any such unpaid taxes.
(y) As defined by Section 3(y)(v) below and except as set forth in
the Registration Statement:
(i) The Company has obtained all material permits, licenses and
other authorizations which are required under the Food and
Drug Laws and Medical Laws for the Company's business and
its ownership, use and operation of each location operated
or leased by the Company (the "Property"), all such
permits, licenses and authorizations are in effect, no
appeal nor any other action is pending to revoke any such
permit, license or authorization, and the Company is in
material compliance with all terms and conditions of all
such material permits, licenses and authorizations.
(ii) To the best of its knowledge, the Company and the Property
are in material compliance with all Environmental Laws
including, without limitation, all restrictions,
conditions, standards, limitations, prohibitions,
requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any
regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
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(iii) The Company has not, and to the best knowledge of the
Company's executive officers, no other person has,
released, placed, stored, buried, dumped or otherwise
improperly disposed of any Medical Wastes, Hazardous
Substances, Oils, Pollutants or Contaminants or any other
wastes produced by, or resulting from, any business,
commercial, or industrial activities, operations, or
processes, at, on, beneath, or adjacent to the Property or
any property formerly owned, operated or leased by the
Company except for inventories of such substances to be
used, and wastes generated therefrom, in the ordinary
course of business of the Company (which inventories and
wastes, if any, were and are stored or disposed of in
accordance with applicable laws and regulations and in a
manner such that, to the knowledge of the Company and its
executive officers, there has been no release of any such
substances into the environment).
(iv) Except as provided to the Placement Agent, there exists no
written or tangible report, synopsis or summary of any
asbestos, toxic waste or Hazardous Substances, Oils,
Pollutants or Contaminants investigation made with respect
to all or any portion of the assets of the Company
(whether or not prepared by experts and whether or not in
the possession of the executive officers of the Company).
(v) Unless otherwise noted, the foregoing definitions are used herein as
defined herein:
(1) Environmental Laws means all federal, state and local laws,
regulations, rules and ordinances relating to pollution or
protection of the environment, including, without limitation,
laws relating to Releases or threatened Releases of Hazardous
Substances, Oils, Pollutants or Contaminants into the indoor or
outdoor environment (including, without limitation, ambient air,
surface water, groundwater, land, surface and subsurface strata)
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport or
handling of Hazardous Substances, Oils, Pollutants or
Contaminants.
(2) Food and Drug Laws means the applicable provisions and of the
Federal Food, Drug and Cosmetic Act, as amended, 21 USC (S)301 et
seq., and (S)355 et seq., and the rules and regulations
promulgated thereunder, as well as all state and local laws,
regulations, rules and ordinances relating thereto.
(3) Hazardous Substances, Oils, Pollutants or Contaminants means all
substances defined as such in the National Oil and Hazardous
Substances
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Pollutant Contingency Plan, 40 C.F.R. (S)300.6, or defined as
such under any Environmental Law.
(4) Medical Laws means all federal, state and local laws,
regulations, rules and ordinances relating to providing medical
treatment, testing, and patient care, including without
limitation, any medical licensing required for the Company to
conduct its business.
(5) Medical Waste means all substances as defined in 42 U.S.C.
(S)6903(40) including without limitation "any solid waste which
is generated in the diagnosis, treatment, or immunization of
human beings or animals, in research pertaining thereto, or in
the production or testing of biologicals," and all substances
defined as "hazardous waste" in (S)6903(5) which means "a solid
waste, or combination of solid wastes, which because of its
quantity, concentration, or physical, chemical, or infectious
characteristics may:
(A) cause or significantly contribute to an increase in
mortality or an increase in serious irreversible, or
incapacitating reversible, illness; or
(B) pose a substantial present or potential hazard to human
health or the environment when improperly treated, stored,
transported or disposed of, or otherwise managed."
(6) Release means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environmental
(including, without limitation, ambient air, surface water,
groundwater, and surface or subsurface strata) or into or out of
any property, including the movement of Hazardous Substances,
Oils, Pollutants or Contaminants through or in the air, soil,
surface water, groundwater or any property.
(z) Any pro forma financial or other information and related
notes included in the Registration Statement, each Preliminary Prospectus and
the Prospectus comply (or, if the Prospectus has not been filed with the
Commission, as to the Prospectus, shall comply) in all material respects with
the requirements of the Act and the rules and regulations of the Commission
thereunder and present fairly the pro forma information shown, as of the dates
and for the periods covered by such pro forma information. Such pro forma
information, including any related notes and schedules, has been prepared on a
basis consistent with the historical financial statements and other historical
information, as applicable, included in the Registration Statement, the
Preliminary Prospectus and the Prospectus, except for the pro forma adjustments
specified therein, and give effect to assumptions made on a reasonable basis to
give effect to historical and, if applicable, proposed transactions described in
the Registration Statement, each Preliminary Prospectus and the Prospectus. All
of the above representations and warranties shall survive the performance or
termination of this Agreement.
11
(aa) The Company maintains insurance of the types and in the
amounts that the Company reasonably believes is adequate for its business,
including, but not limited to, insurance covering all real and personal property
owned or leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against by similarly situated
companies, all of which insurance is in full force and effect.
(bb) No statement, representation or warranty made by the
Company in this Agreement or made in any certificate or document required by
this Agreement or the Escrow Agreement to be delivered to the Placement Agent,
the Investors or the Escrow Agent was or shall be, when made, inaccurate, untrue
or incorrect in any material respect.
4. Representations and Warranties of the Selling Stockholders. Each
----------------------------------------------------------
of the Selling Stockholders understands, covenants and agrees with the Placement
Agent as follows:
(a) Such Selling Stockholder has full power and authority
(corporate, partnership or other, as applicable) to enter into this Agreement
and to sell, assign, transfer and deliver to the Placement Agent the Securities
to be sold by such Selling Stockholder hereunder in accordance with the terms of
this Agreement. This Agreement has been duly executed and delivered by or on
behalf of such Selling Stockholder.
(b) Such Selling Stockholder is the lawful owner of the Selling
Stockholder Securities to be sold by such Selling Stockholder hereunder and upon
sale and delivery of, and payment for, such Selling Stockholder Securities, as
provided herein, such Selling Stockholder shall convey and the Investors shall
acquire good, valid and marketable title to such Selling Stockholder Securities,
free and clear of any security interests, liens, encumbrances, equities, claims
or other defects.
(c) Such Selling Stockholder has not taken and shall not take,
directly or indirectly, any action which was designed to cause or result, or
which might be reasonably expected to cause or result, in the stabilization or
manipulation of the price of any security of the Company in order to facilitate
the sale or resale of the Common Stock.
(d) Such Selling Stockholder has not, directly or indirectly,
since the filing of the Registration Statement (A) sold, bid for, purchased,
attempted to induce any person to purchase, or paid anyone any compensation for
soliciting purchases of, the Securities or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company (except for the sale of Selling Stockholder Securities by the
Selling Stockholders under this Agreement).
(e) To the extent that any statements or omissions are made in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder specifically
for use therein, such Preliminary Prospectus, when filed with the Commission,
did conform, and the Registration Statement and the Prospectus and any
amendments or supplements thereto, when they become or became effective or are
filed with the Commission, as the case may be, shall conform, in all material
respects to the requirements of the Act and the Regulations and did not and
shall not include
12
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. In addition, such Selling Stockholder has reviewed the Prospectus
and the Registration Statement, and the information regarding such Selling
Stockholder set forth therein under the caption "Principal and Selling
Stockholders" is complete and accurate.
(f) The sale of the Selling Stockholder Securities by such
Selling Stockholder pursuant hereto is not prompted by any adverse information
concerning the Company or any of its subsidiaries that is not set forth in the
Registration Statement or the Prospectus.
(g) The sale of Selling Stockholder Securities pursuant to this
Agreement, the compliance by such Selling Stockholder with the other provisions
of this Agreement and the Escrow Agreement and the consummation of the other
transactions herein contemplated do not (i) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except such as has been obtained, such as may be required under state
securities or blue sky laws and, if the Registration Statement is not effective
under the Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the Act, the Exchange Act
or the rules and regulations of the NASDR, or (ii) conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, any material indenture, mortgage, deed of trust, lease or other
agreement or instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder or any of such Selling Stockholder's properties are
bound, or, in the case of a Selling Stockholder that is a corporation, the
charter documents or by-laws of such Selling Stockholder, or any statute or any
judgment, decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to such Selling Stockholder.
(h) There are no outstanding options, warrants, rights or other
agreements or arrangements requiring such Selling Stockholder at any time to
transfer any Common Stock to be sold hereunder by it.
(i) There is not pending or, to the knowledge of such Selling
Stockholder, threatened against such Selling Stockholder any action, suit,
arbitration, claim, governmental or other proceeding or investigation (domestic
or foreign, formal or informal) which (A) questions the validity of this
Agreement or of any action taken or to be taken by it pursuant to or in
connection with this Agreement or (B) is required to be disclosed in the
Registration Statement which is not so disclosed.
(j) Without taking any action to independently verify the
Company's representations and warranties made in this Agreement, and without
assuming responsibility for the accuracy, completeness or fairness of such
representations and warranties, such Selling Stockholder has no reason to
believe that the representations and warranties of the Company contained in this
Agreement are not true and correct in all material respects.
(k) On the Closing Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
sale and transfer of the
13
Selling Stockholder Securities hereunder shall have been fully paid or provided
for by such Selling Stockholder and all laws imposing such taxes shall have been
fully complied with.
5. Agreements of the Company. The Company understands, covenants
-------------------------
and agrees with the Placement Agent as follows:
(a) The Company shall not, either prior to the Effective Date or
thereafter during such period as the Prospectus would be required by law to be
delivered in connection with sales of the Securities by an underwriter or
dealer, file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Placement Agent within a reasonable period of time prior to the filing thereof
and the Placement Agent shall not have objected thereto in good faith.
(b) The Company shall use its best efforts to cause the
Registration Statement to become effective, and shall notify the Placement Agent
promptly, and shall confirm such advice in writing, (1) when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective, (2) of any request by the securities or other governmental
authority (including, without limitation, the Commission) of any jurisdiction
for amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (3) of the issuance by any securities or other
governmental authority (including, without limitation, the Commission) of any
jurisdiction of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose or the threat
thereof, (4) of the happening of any event during the period mentioned in
Section 6(a) that in the judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue or that requires the making of
any changes in the Registration Statement or the Prospectus in order to make the
statements therein, in light of the circumstances in which they are made, not
misleading and (5) of receipt by the Company or any agent or attorney of the
Company of any other communication from the securities or other governmental
authority (including, without limitation, the Commission) of any jurisdiction
relating to any of the Registration Statement, any Preliminary Prospectus or the
Prospectus. If at any time any securities or other governmental authority
(including, without limitation, the Commission) of any jurisdiction shall issue
any order suspending the effectiveness of the Registration Statement, the
Company shall make every reasonable effort to obtain the withdrawal of such
order at the earliest possible moment. If the Company has omitted any
information from the Registration Statement, pursuant to Rule 430A, it shall use
its best efforts to comply with the provisions of and make all requisite filings
with the Commission pursuant to said Rule 430A and to notify the Placement Agent
promptly of all such filings.
(c) If, at any time when a Prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result of which
the Prospectus, as then amended or supplemented, would, in the judgment of
counsel to the Company or counsel to the Placement Agent, include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or the Registration Statement, as then amended
or supplemented, would, in the judgment of counsel to the Company or counsel to
the Placement Agent, include any untrue statement of a material fact
14
necessary to make the statements therein not misleading, or if for any other
reason it is necessary, in the judgment of counsel to the Company or counsel to
the Placement Agent, at any time to amend or supplement the Prospectus or the
Registration Statement to comply with the Act or the Rules and Regulations, the
Company shall promptly notify the Placement Agent and, subject to Section 6(a)
hereof, shall promptly prepare and file with the Commission, at the Company's
expense, an amendment to the Registration Statement or an amendment or
supplement to the Prospectus that corrects such statement or omission or effects
such compliance and shall deliver to the Placement Agent, without charge, such
number of copies thereof as the Placement Agent may reasonably request. The
Company consents to the use of the Prospectus or any amendment or supplement
thereto by the Placement Agent.
(d) The Company shall furnish to the Placement Agent and its
counsel, without charge, (i) one signed copy of the registration statement
described in Section 3(a) hereof and each pre-effective amendment thereto,
including financial statements and schedules, and all exhibits thereto and (ii)
so long as a prospectus relating to the Securities is required to be delivered
under the Act, as many copies of each Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto as the Placement Agent may reasonably
request.
(e) The Company shall comply with all the undertakings contained
in the Registration Statement.
(f) Prior to the sale of the Securities to the Investors, the
Company shall cooperate with the Placement Agent and its counsel in connection
with the registration or qualification of the Securities for offer and sale
under the state securities or blue sky laws of such jurisdictions as the
Placement Agent may request; provided, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject.
(g) The Company shall make generally available to holders of its
securities, as soon as may be practicable, but in no event later than the last
day of the fifteenth full calendar month following the calendar quarter in which
the Effective Date falls, a consolidated earnings statement (which need not be
audited but shall be in reasonable detail) for a period of 12 months ended
commencing after the Effective Date, and satisfying the provisions of Section
11(a) of the Act (including Rule 158 of the Rules and Regulations).
(h) The Company shall not at any time, directly or indirectly,
take any action intended, or which might reasonably be expected, to cause or
result in, or which shall constitute, stabilization of the price of the
Securities to facilitate the sale or resale of any of the Securities.
(i) The Company shall apply the net proceeds from the offering
and sale of the Securities in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
15
(j) The Placement Agent may not, without the Placement Agent's
prior consent, be quoted or referred to in any document, release or
communication prepared, issued or transmitted by the Company, including any
entity controlled by, or under common control with, the Company and any
director, officer, employee or agent thereof.
(k) Following the Closing, the Placement Agent shall have the
right to place usual and customary advertisements in financial and other
newspapers and journals, at its own expense, describing its services to the
Company.
6. Agreements of the Selling Stockholders. Each of the Selling
--------------------------------------
Stockholders understands, covenants and agrees with the Placement Agent as
follows:
(a) Such Selling Stockholder consents to the use of the
Prospectus and any amendment or supplement thereto by the Placement Agent and
all dealers to whom the Securities may be sold, both in connection with the
offering or sale of the Securities and for such period of time thereafter as the
Prospectus is required by law to be delivered in connection therewith.
(b) Such Selling Stockholder shall not at any time, directly or
indirectly, take any action intended, or which might reasonably be expected, to
cause or result in, or which shall constitute, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of any
of the Securities.
(c) Such Selling Stockholder shall not at any time, directly or
indirectly (A) sell, bid for, purchase, or pay anyone any compensation for
soliciting purchases of, the Securities or (B) pay or agree to pay to any person
any compensation for soliciting another to purchase any other securities of the
Company (except for the sale of Selling Stockholder Securities by the Selling
Stockholders under this Agreement).
(d) During the period of 90 days from the Closing Date, such
Selling Stockholder shall not, without the prior written consent of the
Placement Agent, on behalf of the Placement Agent, directly or indirectly,
issue, offer, sell, pledge, offer to sell, contract to sell or grant any option
to purchase, or otherwise sell or dispose (or announce any issuance, offer,
sale, pledge, offer of sale, contract of sale or grant of an option to purchase
or other sale or disposition) of, any shares of Common Stock or other capital
stock of the Company (or any securities convertible into, or exchangeable or
exercisable for, any shares of Common Stock or other capital stock of the
Company).
(e) In order to document the Placement Agent's compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein contemplated,
such Selling Stockholder shall deliver to the Company and the Placement Agent
prior to or at the Closing Date 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).
(f) As soon as any Selling Stockholder is advised thereof, such
Selling Stockholder shall advise the Company and the Placement Agent (and
immediately confirm such advice in writing), (A) of receipt by such Selling
Stockholder, or by any
16
representative or agent of such Selling Stockholder, of any communication from
the Commission relating to the Registration Statement, the Prospectus or any
Preliminary Prospectus, or any notice or order of the Commission relating to the
Company or such Selling Stockholder in connection with the transactions
contemplated by this Agreement and (B) of the happening of any event which makes
or may make any statement made in the Registration Statement, the Prospectus or
any Preliminary Prospectus relating to such Selling Stockholder untrue or that
requires the making of any changes in the Registration Statement, the Prospectus
or any Preliminary Prospectus, as the case may be, in order to make the
statements therein not misleading.
7. Expenses. Whether or not the transactions contemplated by this
--------
Agreement are consummated or this Agreement is terminated, the Company shall pay
all costs and expenses incident to the performance of the obligations of the
Company under this Agreement, including but not limited to costs and expenses of
or relating to (1) the preparation, printing and filing of the Registration
Statement (including each pre- and post-effective amendment thereto) and
exhibits thereto, each Preliminary Prospectus, the Prospectus and any amendment
or supplement to the Prospectus, including all fees, disbursements and other
charges of counsel to the Company, (2) the preparation and delivery of
certificates representing the Securities, (3) furnishing (including costs of
shipping and mailing) such copies of the Registration Statement (including all
pre- and post-effective amendments thereto), the Prospectus and any Preliminary
Prospectus, and all amendments and supplements to the Prospectus, as may be
requested for use in connection with the direct placement of the Securities, (4)
the listing of the Securities on the NMS, (5) any filings required to be made by
the Placement Agent with the NASDR, and the fees, disbursements and other
charges of counsel for the Placement Agent in connection therewith, (6) the
registration or qualification of the Securities for offer and sale under the
securities or blue sky laws of such jurisdictions designated pursuant to Section
6(f), including the reasonable fees and disbursements of counsel to the
Placement Agent in connection therewith and the preparation and printing of
preliminary, supplemental and final blue sky memoranda, (7) fees, disbursements
and other charges of counsel to the Company and (8) the fees of the Escrow
Agent. The Company shall promptly reimburse the Placement Agent, on a fully
accountable basis, for all travel, legal and other out-of-pocket expenses
incurred in connection with the engagement hereunder, except as provided above.
8. Conditions of the Obligations of the Placement Agent. The
----------------------------------------------------
obligations of the Placement Agent hereunder are subject to the following
conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Placement Agent not later than 5:00 p.m., New
York City time, on the date of this Agreement or at such later date and time as
shall be consented to in writing by the Placement Agent and all filings required
by Rule 424 of the Rules and Regulations and Rule 430A shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceedings for that
purpose shall be pending or threatened by any securities or other governmental
authority (including, without limitation, the Commission), (ii) no order
suspending the effectiveness of the Registration Statement or the
17
qualification or registration of the Securities under the securities or blue sky
laws of any jurisdiction shall be in effect and no proceeding for such purpose
shall be pending before or threatened or contemplated by any securities or other
governmental authority (including, without limitation, the Commission), (iii)
any request for additional information on the part of the staff of any
securities or other governmental authority (including, without limitation, the
Commission) shall have been complied with to the satisfaction of the staff of
the Commission or such authorities and (iv) after the date hereof no amendment
or supplement to the Registration Statement or the Prospectus shall have been
filed unless a copy thereof was first submitted to the Placement Agent and the
Placement Agent did not object thereto in good faith, and the Placement Agent
shall have received certificates of the Company, dated the Closing Date and
signed by the President and Chief Executive Officer or the Chairman of the Board
of Directors of the Company, and the Chief Financial Officer of the Company, to
the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) there shall not have been
a material adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company, whether or not arising from transactions in the
ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus and (ii) the
Company shall not have sustained any material loss or interference with its
business or properties from fire, explosion, flood or other casualty, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree, which is not set forth in the
Registration Statement and the Prospectus, if in the judgment of the Placement
Agent any such development makes it impracticable or inadvisable to consummate
the sale and delivery of the Securities to Investors at the public offering
price.
(d) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against any Selling Stockholder, the
Company or any of its officers or directors in their capacities as such, before
or by any Federal, state or local court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, which
litigation or proceeding is reasonably expected by management to materially and
adversely affect the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company.
(e) Each of the representations and warranties of the Company
and each of the Selling Stockholders contained herein shall be true and correct
in all material respects at the Closing Date, as if made on such date, and all
covenants and agreements herein contained to be performed on the part of the
Company and each of the Selling Stockholders, and all conditions herein
contained to be fulfilled or complied with by the Company and each of the
Selling Stockholders at or prior to the Closing Date shall have been duly
performed, fulfilled or complied with in all material respects.
(f) The Placement Agent shall have received an opinion, dated
the Closing Date (or such other date as may be set forth in a representation or
warranty), of
18
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, P.A. as counsel to the Company, in form and substance reasonably
satisfactory to the Placement Agent.
(g) The Placement Agent shall have received an opinion, dated
the Closing Date (or such other date as may be set forth in a representation or
warranty), of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, P.A., as counsel to the Selling Stockholders, in
form and substance reasonably satisfactory to the Placement Agent.
(h) Concurrently with the execution and delivery of this
Agreement, or, if the Company elects to rely on Rule 430A, on the date of the
Prospectus, the Company's accountants (the "Accountants") shall have furnished
to the Placement Agent a letter, dated the date of its delivery (the "Comfort
Letter"), addressed to the Placement Agent and in form and substance
satisfactory to the Placement Agent, confirming that (i) they are independent
public accountants with respect to the Company within the meaning of the Act and
the Rules and Regulations; (ii) in their opinion, the financial statements and
any supplementary financial information included in the Registration Statement
and examined by them comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and Regulations;
(iii) on the basis of procedures, not constituting an examination in accordance
with generally accepted auditing standards, set forth in detail in the Comfort
Letter, a reading of the latest available interim financial statements of the
Company, inspections of the minute books of the Company since the latest audited
financial statements included in the Prospectus, inquiries of officials of the
Company responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in the Comfort Letter to a date not
more than five days prior to the date of the Comfort Letter, nothing came to
their attention that caused them to believe that: (A) as of a specified date not
more than five days prior to the date of the Comfort Letter, there have been any
changes in the capital stock of the Company or any increase in the long-term
debt of the Company, or any decreases in net current assets or net assets or
other items specified by the Placement Agent, or any increases in any items
specified by the Placement Agent, 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 the Comfort Letter; and (B) for the period
from the date of the latest financial statements included in the Prospectus to
the specified date referred to in Clause (A), there were any decreases in
revenues or the total or per share amounts of net income or other items
specified by the Placement Agent, or any increases in any items specified by the
Placement Agent, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length specified by
the Placement Agent, except in each case for decreases or increases which the
Prospectus discloses have occurred or may occur or which are described in the
Comfort Letter; and (iv) in addition to the examination referred to in their
reports included in the Prospectus and the procedures referred to in clause
(iii) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Placement Agent, which are derived from the general
accounting, financial or other records of the Company, as the case may be, which
appear in the Prospectus or in Part II of, or in exhibits or schedules to, the
Registration Statement, and have compared such amounts, percentages and
financial information with such accounting, financial and other records and have
found them to be in agreement. At the Closing Date, the Accountants shall
19
have furnished to the Placement Agent a letter, dated the date of its delivery,
which shall confirm, on the basis of a review in accordance with the procedures
set forth in the Comfort Letter, that nothing has come to their attention during
the period from the date of the Comfort Letter referred to in the prior sentence
to a date (specified in the Bring-Down Letter) not more than five days prior to
the Closing Date which would require any change in the Comfort Letter if it were
required to be dated and delivered at the Closing Date.
(i) At the Closing Date, there shall be furnished to the
Placement Agent a certificate, dated the date of its delivery, signed by each of
the Chief Executive Officer and the Chief Financial Officer of the Company, in
form and substance satisfactory to the Placement Agent to the effect that to
each of such person's knowledge:
(1) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus and (A) as of the date
of such certificate, (x) the Registration Statement does not
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 and (y) the
Prospectus does not 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, in
light of the circumstances under which they were made, not
misleading and (B) since the Effective Date no event has occurred
as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein not untrue or
misleading in any material respect.
(2) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are,
at the time such certificate is delivered, true and correct in
all material respects.
(3) Each of the covenants required herein to be performed by the
Company on or prior to the date of such certificate has been
duly, timely and fully performed and each condition herein
required to be complied with by the Company on or prior to the
delivery of such certificate has been duly, timely and fully
complied with.
(4) No stop order suspending the effectiveness of the Registration
Statement or of any part thereof has been issued and no
proceedings for that purpose have been instituted or are
contemplated by the Commission.
(5) Subsequent to the date of the most recent financial statements in
the Prospectus, there has been no material adverse change in the
financial position or results of operations of the Company,
except as set forth in or contemplated by the Prospectus.
(j) The Securities shall be qualified for sale in such states as
the Placement Agent may reasonably request, each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing
Date; provided that in no event
20
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
taxation or general service of process in any jurisdiction where it is not now
so subject.
(k) The Company shall have furnished to the Placement Agent such
certificates, in addition to those specifically mentioned herein, as the
Placement Agent may have reasonably requested as to the accuracy and
completeness at the Closing Date of any statement in the Registration Statement
or the Prospectus, as to the accuracy at the Closing Date of the representations
and warranties of the Company as to the performance by the Company of its
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to the obligations hereunder of the Placement Agent.
(l) The Placement Agent shall have received the letters referred
to in Section 3 hereof substantially in the form of Attachments A and B.
9. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless the
Placement Agent, together with their respective officers, directors,
shareholders, employees and agents, and each person, if any, who controls the
Placement Agent and any of its affiliates within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act (all of the foregoing are referred to
collectively as "Indemnified Parties" and individually as an "Indemnified
Party"), from and against any and all losses, suits, actions, judgments,
penalties, fines, costs, expenses, damages, liabilities or claims of any kind or
nature, whether joint or several, (including, without limitation, any
investigative, legal or any other expenses as they are reasonably incurred by an
Indemnified Party in connection with, and any amount paid in settlement of, the
preparation for or defense of any action, claim or proceeding asserted, whether
or not resulting in any liability) (all of the foregoing being collectively
defined as the "Indemnified Claims") to which such Indemnified Party may become
subject or liable or which may be incurred by or assessed against any
Indemnified Party under any statute, common law, contract or otherwise, relating
to or arising out of any of: (i) any actions or omissions of the Company or
anyone acting on the Company's behalf, including its employees, officers,
advisors, directors and agents, (ii) the Agreement or the services to be
performed pursuant to the Agreement, (iii) any securities, tax, corporate or
other filings of the Company, (iv) any transactions referred to in the Agreement
or any transactions arising out of the transactions contemplated by the
Agreement, (v) any untrue statement or alleged untrue statement made by the
Company in Section 3 of this Agreement, (vi) any untrue statement or alleged
untrue statement of any material fact contained in (A) any Preliminary
Prospectus, the Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus and (B) any
application or other document, or any amendment or supplement thereto, executed
by the Company based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Securities under the
securities or Blue Sky laws thereof or filed with the Commission or any
securities association or securities exchange (each, an "Application") or (vii)
the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any supplement to the Registration
Statement or the Prospectus or any Application a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they
21
were made, not misleading; provided, however, that the Company will not be
-------- -------
liable to the extent that such loss, claim, liability, expense or damage arises
from the sale of the Securities in the public offering to any person and is
based solely on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to the
Placement Agent furnished in writing to the Company by the Placement Agent
expressly for inclusion in the Registration Statement, any Preliminary
Prospectus or the Prospectus; and provided further, that such indemnity with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Placement Agent (or any person controlling such Placement Agent) from whom the
person asserting any such loss, claim, damage, liability or action purchased
Securities which are the subject thereof to the extent that any such loss,
claim, damage or liability (A) results from the fact that such Placement Agent
failed to send or give a copy of the Prospectus (as amended or supplemented) to
such person at or prior to the confirmation of the sale of such Securities to
such person in any case where such delivery is required by the Act and (B)
arises out of or is based upon an untrue statement or omission of a material
fact contained in such Preliminary Prospectus that was corrected in the
Prospectus (or any amendment or supplement thereto), unless such failure to
deliver the Prospectus (as amended or supplemented) was the result of
noncompliance by the Company with Section 5(d); provided, further, that the
-------- -------
Company shall not be liable to an Indemnified Party in any such case solely to
the extent that any such Indemnified Claim is found, in a final, unappealable
judgment by a court of competent jurisdiction, to have resulted solely and
exclusively and as a direct and proximate cause from said Indemnified Party's
willful misconduct or gross negligence in the performance of their duties on
behalf of the Placement Agent. This indemnity provision will be in addition to
any liability which the Company may otherwise have. The Company will not,
without the prior written consent of the Placement Agent (which will not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
Placement Agent or any person who controls such Placement Agent within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to
each claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of the Placement Agent and each such
controlling person from all liability arising out of such claim, action, suit or
proceeding. Promptly after receipt by an Indemnified Party of notice of the
occurrence of an Indemnified Claim, or any claim or the commencement of any
action or proceeding in respect of which indemnity may be sought against the
Company, such Indemnified Party will notify the Company in writing of the
commencement thereof or of such Indemnified Claim, and the Company shall
immediately assume the full defense thereof (including the employment of counsel
satisfactory to the Indemnified Party and the payment of the fees and out-of-
pocket expenses of such counsel). Notwithstanding the preceding sentence, the
Indemnified Party will be entitled to employ its own counsel in such
circumstance if the Indemnified Party is advised in a written opinion of counsel
that a conflict of interest exists which makes representation by counsel chosen
by the Company not advisable. In such event, the Company will pay the reasonable
fees and disbursements of such separate counsel.
(b) If for any reason (other than as specifically provided
herein) the indemnity for an Indemnified Claim as provided by Section 9(a) of
this Agreement is unavailable to an Indemnified Party or insufficient to fully
hold any Indemnified Party harmless, then the Company shall contribute to the
amount paid or payable by such
22
Indemnified Party as a result of such Indemnified Claim in such proportion as is
appropriate to reflect the relative benefits received by and fault of the
Company on the one hand, and the relative benefits received by and fault of the
Indemnified Party on the other hand, as well as any relevant equitable
considerations. Notwithstanding any provisions herein to the contrary, the
aggregate contribution of all of the Indemnified Parties for all Indemnified
Claims shall not exceed the amount of fees actually received by the Placement
Agent pursuant to the Agreement. It is hereby further agreed that the relative
fault of the Company on the one hand and an Indemnified Party on the other hand
with respect to the transactions shall be determined by reference to, among
other things, whether any untrue or alleged untrue statement of a material fact
or incorrect opinion or conclusion or the omission or alleged omission to state
a material fact related to information supplied by the Company on the one hand
or by the Indemnified Party on the other hand, as well as the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement, opinion, conclusion or omission. No Indemnified Party shall have
any liability to the Company or any other person in connection with the services
rendered pursuant to this Agreement except for any liability for losses, claims,
damages or liabilities finally judicially determined to have resulted solely and
exclusively from actions taken or omitted to be taken as a direct result of such
Indemnified Party's gross negligence or willful misconduct. The indemnity,
contribution and expense reimbursement agreements and obligations set forth
herein shall be in addition to any other rights, remedies or indemnification
which any Indemnified Party may have or be entitled to at common law or
otherwise, and shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any Indemnified Party. In addition,
the Company shall offer such indemnification and expense advance and
reimbursement as it may be permitted to offer or extend pursuant to its Bylaws,
Charter, Articles of Incorporation, or insurance. The Company further agrees
that the indemnification and expense advance and reimbursement obligations set
forth herein, shall apply whether or not the Placement Agent or any other
Indemnified Party is a formal party in any such Indemnified Claim. The Company
will not be permitted to settle any Indemnified Claim without the prior consent
of the Placement Agent or any Indemnified Party involved therein if any
admission of wrong doing, negligence or improper activity of any kind of the
Placement Agent or such Indemnified Party is a part of such settlement. The
Company shall not, without the prior written consent of an Indemnified Party,
effect any settlement of any pending or threatened action, suit or proceeding in
respect of which an Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such action, suit or
proceeding.
(c) Each of the Selling Stockholders agrees, severally and not
jointly, to indemnify and hold harmless the Placement Agent, together with their
respective officers, directors, shareholders, employees and agents, and each
person, if any, who controls the Placement Agent and any of its affiliates
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
(all of the foregoing are referred to collectively as the "Placement Agent
Indemnified Parties" and individually as a "Placement Agent Indemnified Party"),
from and against any and all losses, suits, actions, judgments, penalties,
fines, costs, expenses, damages, liabilities or claims of any kind or nature,
whether joint or several, (including, without limitation, any investigative,
legal or any other expenses as they are reasonably incurred by a Placement Agent
Indemnified Party in connection with, and any
23
amount paid in settlement of, the preparation for or defense of any action,
claim or proceeding asserted, whether or not resulting in any liability) (all of
the foregoing being collectively defined as the "Placement Agent Indemnified
Claims") to which such Placement Agent Indemnified Party may become subject or
liable or which may be incurred by or assessed against any Placement Agent
Indemnified Party under any statute, common law, contract or otherwise, relating
to or arising out of any of: (i) any failure to comply with the agreements of
the Selling Stockholder contained in the Agreement, (ii) the inaccuracy of any
representation or warranty made by the Selling Stockholder in the Agreement,
(iii) any transactions referred to in the Agreement or any transactions arising
out of the transactions contemplated by the Agreement, or (iv) any untrue
statement or alleged untrue statement made by the Selling Stockholder in Section
3 of this Agreement; provided, however, that the Selling Stockholder shall not
-------- -------
be liable to a Placement Agent Indemnified Party in any such case solely to the
extent that any such Placement Agent Indemnified Claim is found, in a final,
unappealable judgment by a court of competent jurisdiction, to have resulted
solely and exclusively and as a direct and proximate cause from said Placement
Agent Indemnified Party's willful misconduct or gross negligence in the
performance of their duties on behalf of the Placement Agent. This indemnity
agreement will be in addition to any liability which the Selling Stockholder may
otherwise have. The Selling Stockholder will not, without the prior written
consent of the Placement Agent Indemnified Party (which will not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Placement Agent
Indemnified Party or any person who controls such Placement Agent Indemnified
Party within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act is a party to each claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Placement Agent Indemnified Party and each such controlling person from all
liability arising out of such claim, action, suit or proceeding. Promptly after
receipt by a Placement Agent Indemnified Party of notice of the occurrence of a
Placement Agent Indemnified Claim, or any claim or the commencement of any
action or proceeding in respect of which indemnity may be sought against the
Selling Stockholder, such Placement Agent Indemnified Party will notify the
Selling Stockholder in writing of the commencement thereof or of such Placement
Agent Indemnified Claim, and the Selling Stockholder shall immediately assume
the full defense thereof (including the employment of counsel satisfactory to
the Placement Agent Indemnified Party and the payment of the fees and out-of-
pocket expenses of such counsel). Notwithstanding the preceding sentence, the
Placement Agent Indemnified Party will be entitled to employ its own counsel in
such circumstance if the Placement Agent Indemnified Party is advised in a
written opinion of counsel that a conflict of interest exists which makes
representation by counsel chosen by the Selling Stockholder not advisable. In
such event, the Selling Stockholder will pay the reasonable fees and
disbursements of such separate counsel.
(d) If for any reason (other than as specifically provided
herein) the indemnity for a Placement Agent Indemnified Claim as provided by
Section 9(c) of this Agreement is unavailable to a Placement Agent Indemnified
Party or insufficient to fully hold any Placement Agent Indemnified Party
harmless, then the Selling Stockholder shall contribute to the amount paid or
payable by such Placement Agent Indemnified Party as a result of such Placement
Agent Indemnified Claim in such proportion as is appropriate to reflect the
relative benefits received by and fault of the Selling Stockholder on the one
hand, and the relative
24
benefits received by and fault of the Placement Agent Indemnified Party on the
other hand, as well as any relevant equitable considerations. Notwithstanding
any provisions herein to the contrary, the aggregate contribution of all of the
Placement Agent Indemnified Parties for all Placement Agent Indemnified Claims
shall not exceed the amount of fees actually received by the Placement Agent
pursuant to the Agreement. It is hereby further agreed that the relative fault
of the Selling Stockholder on the one hand and a Placement Agent Indemnified
Party on the other hand with respect to the transactions shall be determined by
reference to, among other things, whether any untrue or alleged untrue statement
of a material fact or incorrect opinion or conclusion or the omission or alleged
omission to state a material fact concerning the Selling Stockholder related to
information supplied by the Selling Stockholder on the one hand or by the
Placement Agent Indemnified Party on the other hand, as well as the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement, opinion, conclusion or omission. No Placement Agent
Indemnified Party shall have any liability to the Selling Stockholder or any
other person in connection with the services rendered pursuant to this Agreement
except for any liability for losses, claims, damages or liabilities finally
judicially determined to have resulted solely and exclusively from actions taken
or omitted to be taken as a direct result of such Placement Agent Indemnified
Party's gross negligence or willful misconduct. The indemnity, contribution and
expense reimbursement agreements and obligations set forth herein shall be in
addition to any other rights, remedies or indemnification which any Placement
Agent Indemnified Party may have or be entitled to at common law or otherwise,
and shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Placement Agent Indemnified Party. The
Selling Stockholder further agrees that the indemnification and expense advance
and reimbursement obligations set forth herein, shall apply whether or not the
Placement Agent or any other Placement Agent Indemnified Party is a formal party
in any such Placement Agent Indemnified Claim. The Selling Stockholder will not
be permitted to settle any Placement Agent Indemnified Claim without the prior
consent of the Placement Agent or any Placement Agent Indemnified Party involved
therein if any admission of wrong doing, negligence or improper activity of any
kind of the Placement Agent or such Placement Agent Indemnified Party is a part
of such settlement. The Selling Stockholder shall not, without the prior written
consent of a Placement Agent Indemnified Party, effect any settlement of any
pending or threatened action, suit or proceeding in respect of which a Placement
Agent Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Placement Agent Indemnified Party, unless such
settlement includes an unconditional release of such Placement Agent Indemnified
Party from all liability on claims that are the subject matter of such action,
suit or proceeding.
(e) The Placement Agent agrees to indemnify and hold harmless
each of the Company and the Selling Stockholders, together with their respective
officers, directors, shareholders, employees and agents, and each person, if
any, who controls the Company and any of its affiliates and the Selling
Stockholders within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act (all of the foregoing are referred to collectively as "Selling
Indemnified Parties" and individually as an "Selling Indemnified Party"), from
and against any and all losses, suits, actions, judgments, penalties, fines,
costs, expenses, damages, liabilities or claims of any kind or nature, whether
joint or several, (including, without limitation, any investigative, legal or
any other expenses as they are reasonably incurred by an Selling Indemnified
Party in connection with, and any amount paid in settlement of, the
25
preparation for or defense of any action, claim or proceeding asserted, whether
or not resulting in any liability) (all of the foregoing being collectively
defined as the "Selling Indemnified Claims") to which such Selling Indemnified
Party may become subject or liable or which may be incurred by or assessed
against any Selling Indemnified Party under any statute, common law, contract or
otherwise, relating to or arising out of any of: (i) any failure to comply with
the agreements of the Placement Agent contained in the Agreement, (b) the
inaccuracy of any representation or warranty made by the Placement Agent in the
Agreement, (c) any transactions referred to in the Agreement or any transactions
arising out of the transactions contemplated by the Agreement, or (iv) any
untrue statement or alleged untrue statement made by the Placement Agent in
Section 3 of this Agreement; provided, however, that the Placement Agent shall
-------- -------
not be liable to a Selling Indemnified Party in any such case solely to the
extent that any such Selling Indemnified Claim is found, in a final,
unappealable judgment by a court of competent jurisdiction, to have resulted
solely and exclusively and as a direct and proximate cause from said Selling
Indemnified Party's willful misconduct or gross negligence in the performance of
their duties on behalf of the Company or the Selling Stockholders. This
indemnity agreement will be in addition to any liability which the Placement
Agent may otherwise have. The Placement Agent will not, without the prior
written consent of the Selling Indemnified Party (which will not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Selling Indemnified
Party or any person who controls such Selling Indemnified Party within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to
each claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of the Selling Indemnified Party and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding. Promptly after receipt by a Selling Indemnified
Party of notice of the occurrence of a Selling Indemnified Claim, or any claim
or the commencement of any action or proceeding in respect of which indemnity
may be sought against the Placement Agent, such Selling Indemnified Party will
notify the Placement Agent in writing of the commencement thereof or of such
Selling Indemnified Claim, and the Placement Agent shall immediately assume the
full defense thereof (including the employment of counsel satisfactory to the
Selling Indemnified Party and the payment of the fees and out-of-pocket expenses
of such counsel). Notwithstanding the preceding sentence, the Selling
Indemnified Party will be entitled to employ its own counsel in such
circumstance if the Selling Indemnified Party is advised in a written opinion of
counsel that a conflict of interest exists which makes representation by counsel
chosen by the Placement Agent not advisable. In such event, the Placement Agent
will pay the reasonable fees and disbursements of such separate counsel. The
Company and the Selling Shareholders acknowledge that, for all purposes under
this Agreement, the statements set forth under the heading "Plan of
Distribution" in any Preliminary Prospectus and the Prospectus constitute the
only information relating to the Placement Agent furnished in writing to the
Company by the Placement Agent expressly for inclusion in the Registration
Statement, any Preliminary Prospectus or the Prospectus.
(f) If for any reason (other than as specifically provided
herein) the foregoing indemnity for a Selling Indemnified Claim as provided by
Section 9(e) of this Agreement is unavailable to a Selling Indemnified Party or
insufficient to fully hold any Selling Indemnified Party harmless, then the
Placement Agent shall contribute to the amount paid or payable by such Selling
Indemnified Party as a result of such Selling Indemnified Claim in
26
such proportion as is appropriate to reflect the relative benefits received by
and fault of the Placement Agent on the one hand, and the relative benefits
received by and fault of the Selling Indemnified Party on the other hand, as
well as any relevant equitable considerations. Notwithstanding any provisions
herein to the contrary, the aggregate contribution of all of the Selling
Indemnified Parties for all Selling Indemnified Claims shall not exceed the
amount of fees actually received by the Company or the Selling Stockholders
pursuant to the Agreement. It is hereby further agreed that the relative fault
of the Placement Agent on the one hand and a Selling Indemnified Party on the
other hand with respect to the transactions shall be determined by reference to,
among other things, whether any untrue or alleged untrue statement of a material
fact or incorrect opinion or conclusion or the omission or alleged omission to
state a material fact concerning the Placement Agent related to information
supplied by the Placement Agent on the one hand or by the Selling Indemnified
Party on the other hand, as well as the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement,
opinion, conclusion or omission. No Selling Indemnified Party shall have any
liability to the Placement Agent or any other person in connection with the
services rendered pursuant to this Agreement except for any liability for
losses, claims, damages or liabilities finally judicially determined to have
resulted solely and exclusively from actions taken or omitted to be taken as a
direct result of such Selling Indemnified Party's gross negligence or willful
misconduct. The indemnity, contribution and expense reimbursement agreements and
obligations set forth herein shall be in addition to any other rights, remedies
or indemnification which any Selling Indemnified Party may have or be entitled
to at common law or otherwise, and shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Selling
Indemnified Party. The Placement Agent further agrees that the indemnification
and expense advance and reimbursement obligations set forth herein, shall apply
whether or not the Placement Agent or any other Selling Indemnified Party is a
formal party in any such Selling Indemnified Claim. The Placement Agent will not
be permitted to settle any Selling Indemnified Claim without the prior consent
of each of the Company and the Selling Stockholder or any Selling Indemnified
Party involved therein if any admission of wrong doing, negligence or improper
activity of any kind of each of the Company or the Selling Stockholder or such
Selling Indemnified Party is a part of such settlement. The Placement Agent
shall not, without the prior written consent of a Selling Indemnified Party,
effect any settlement of any pending or threatened action, suit or proceeding in
respect of which a Selling Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Selling Indemnified Party,
unless such settlement includes an unconditional release of such Selling
Indemnified Party from all liability on claims that are the subject matter of
such action, suit or proceeding.
(g) Any party that proposes to assert the right to be
indemnified under this Section 9 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 9, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve it from any liability that it may have to any indemnified party
under the foregoing provisions of this Section 9 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defenses
by the indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the extent that
27
it elects by delivering written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the indemnified party,
jointly with any other indemnifying party similarly notified, to assume the
defense of the action, with counsel reasonably satisfactory to the indemnified
party, and after notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party will not be liable to
the indemnified party for any legal or other expenses except as provided below
and except for the reasonable costs of investigation subsequently incurred by
the indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advice of counsel) that a conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party that would prevent the counsel
selected by the indemnifying party from representing the indemnified party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (3) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. The
Company will not, without the prior written consent of the Placement Agent
(which consent will not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification has been sought hereunder
(whether or not the Placement Agent or any person who controls the Placement
Agent within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Placement Agent and each such controlling person from all liability arising out
of such claim, action, suit or proceeding. An indemnifying party will not be
liable for any settlement of any action or claim effected without its written
consent (which consent will not be unreasonably withheld).
10. Termination.
-----------
(a) The obligations of the Placement Agent under this Agreement
may be terminated at any time prior to the Closing Date, by notice to the
Company and the Selling Stockholders from the Placement Agent, without liability
on the part of the Placement Agent to the Company or the Selling Stockholders
if, prior to delivery and payment for the Securities, in the sole judgment of
the Placement Agent: (i) trading in the Securities shall have been suspended by
the Commission or by the NNM, (ii) trading in securities generally on the NNM
shall have been suspended or limited or minimum or maximum prices shall have
been generally established on any of such exchanges, or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in
28
securities generally by any of such exchanges or by order of the Commission or
any court or other governmental authority, (iii) a general banking moratorium
shall have been declared by Federal or New York State authorities, or (iv) any
material adverse change in the financial or securities markets in the United
States or any outbreak or material escalation of hostilities or declaration by
the United States of a national emergency or war or other calamity or crisis
shall have occurred, the effect of any of which is such as to make it, in the
sole judgment of the Placement Agent, impracticable or inadvisable to market the
Securities on the terms and in the manner contemplated by the Prospectus.
(b) The obligations of the parties under this Agreement shall be
automatically terminated if notice is given to the Escrow Agent prior to the
close of business on the date scheduled for receipt of the Requisite Funds (as
defined in the Escrow Agreement), that the Requisite Funds have not been
deposited by the Investors into the Escrow Account by the close of business on
the Closing Date.
(c) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to Section 10(b), or if the sale of
the Securities provided for herein is not consummated because any condition to
the obligations of the Placement Agent set forth herein is not satisfied or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof, the Company
will, subject to demand by you, reimburse you for all out-of-pocket expenses
incurred in connection herewith.
(d) Any termination pursuant to Section 10(a) above shall not
affect the compensation, reimbursement, Right of First Refusal or
indemnification provisions set forth herein, all of which will remain in full
force and effect.
11. Right of First Refusal.
----------------------
(a) For a period of 18 months from the date hereof, the Company
grants the Placement Agent the right (provided the financing contemplated in
this Agreement is completed) to provide investment banking services to the
Company on an exclusive basis in all matters for which investment banking
services are sought by the Company (such right, the "Right of First Refusal");
provided, however, that the Placement Agent has consented to the Company's
-------- -------
engagement of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC pursuant to that certain letter
agreement, dated October 24, 2001. For these purposes, investment banking
services shall include, without limitation, (i) acting as lead manager for any
underwritten public offering; (ii) acting as exclusive placement agent or
financial advisor in connection with any private offering the Common Stock; and
(iii) acting as financial advisor in connection with any sale or other transfer
by the Company, directly or indirectly, of a majority or controlling portion of
its or their capital stock or assets to another entity, any purchase or other
transfer by another entity, directly or indirectly, of a majority or controlling
portion of the capital stock or assets of the Company, and any merger or
consolidation of the Company with another entity. The Placement Agent shall
notify the Company of its intention to exercise the Right of First Refusal
within 15 business days following notice in writing by the Company. Any decision
by the Placement Agent to act in any such capacity shall be contained in
separate agreements, which agreements would contain, among other matters,
provisions for customary fees for transactions
29
of similar size and nature, as may be mutually agreed upon, and indemnification
of the Placement Agent and its affiliates and shall be subject to general market
conditions. If the Placement Agent declines to exercise the Right of First
Refusal, the Company shall have the right to retain any other person or persons
to provide such services on terms and conditions which are not materially more
favorable to such other person or persons than the terms declined by the
Placement Agent.
(b) If within 18 months after the termination of the Placement
Agent's engagement hereunder, shares of Securities are sold by the Company
through a placement to investors previously identified and/or contacted by the
Placement Agent in its capacity as placement agent hereunder, then the Company
shall pay the Placement Agent, at the time of each such sale, an amount equal to
6.00% of the gross proceeds to the Company from each such sale.
(c) The Company hereby agrees that for a period of 18 months
from the date hereof, it shall not, except for the granting of options under the
Company's Second Amended and Restated Stock Option Plan, as it may be amended in
the future, and the exercise of outstanding options and warrants (i) offer any
Securities for sale to, or solicit any offers to buy from, any person or
persons, whether directly or indirectly, other than through the Placement Agent
or (ii) engage in any discussions with any person other than representatives of
the Placement Agent for the purpose of engaging, or considering the engagement
of, such person as a finder or broker in connection with the sale by the Company
of the Securities to potential investors in the United States of America or
overseas. Each Selling Stockholder following expiration of agreements with HD
▇▇▇▇▇ & Co., Inc. agrees that he or she shall not (i) offer any Selling
Stockholder Securities for sale to, or solicit any offers to buy from, any
person or persons, whether directly or indirectly, other than through the
Placement Agent or (ii) engage in any discussions with any person other than
representatives of the Placement Agent for the purpose of engaging, or
considering the engagement of, such person as a finder or broker in connection
with the sale by it of the Selling Stockholder Securities to potential investors
in the United States of America or overseas.
(d) The Company hereby agrees that it shall not issue any equity
securities for a period of 90 days from the Closing Date without the prior
written consent of the Placement Agent, other than (i) securities issued
pursuant to contractual obligations of the Company in effect as of the date of
this Agreement and disclosed to the Placement Agent or its counsel prior to the
effective date of the Registration Statement; (ii) securities issued on a pro
rata basis to all holders of a class of outstanding equity securities of the
Company; and (iii) equity securities issued pursuant to employee benefit or
purchase plans in effect as of the date of this Agreement.
12. Waiver of Jury Trial. All claims arising out of the
--------------------
interpretation, application or enforcement of this Agreement, including, without
limitation, any breach hereof, shall be settled by final and binding arbitration
in New York, New York in accordance with the commercial rules then prevailing of
the American Arbitration Association by a panel of three (3) arbitrators
appointed by the American Arbitration Association. In any such arbitration
proceeding, the parties agree to provide all discovery required by the
arbitrators. The decision of the arbitrators shall be binding on each of the
Company, the Selling Stockholders and the
30
Placement Agent, and may be entered and enforced in any court of competent
jurisdiction by either party. The arbitration shall be pursued and brought to
conclusion as rapidly as is possible. EACH OF THE COMPANY, THE PLACEMENT AGENT
AND EACH SELLING STOCKHOLDER WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
RELATED TO OR ARISING OUT OF THE ENGAGEMENT OF THE PLACEMENT AGENT PURSUANT TO,
OR THE PERFORMANCE BY THE PLACEMENT AGENT OF, THE SERVICES CONTEMPLATED BY THIS
AGREEMENT.
13. Notices. Notice given pursuant to any of the provisions of this
-------
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, SFBC
International, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy
to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, P.A., 1645 Palm Beach ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Telecopy: (561)
478-1817; or (b) if to the Placement Agent, at the office of ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Vice President, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, with a
copy sent to the office of Stroock & Stroock & ▇▇▇▇▇ LLP at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Telecopy: (212)
806-6006. Any such notice shall be effective only upon receipt. Any notice
under Section 10 of this Agreement may be made by facsimile or telephone, but if
so made shall be subsequently confirmed in writing.
14. Survival. The respective representations, warranties,
--------
agreements, covenants, indemnities and other statements of the Company, the
Selling Stockholders and the Placement Agent set forth in this Agreement or made
by or on behalf of them, respectively, pursuant to this Agreement shall remain
in full force and effect, regardless of (i) any investigation made by or on
behalf of the Company, any of its officers or directors, the Selling
Stockholders, the Placement Agent or any controlling person referred to in
Section 10 hereof and (ii) delivery of and payment for the Securities. The
respective agreements, covenants, indemnities and other statements set forth in
Sections 6 and 10 hereof shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement.
15. Successors. This Agreement shall inure to the benefit of and
----------
shall be binding upon the Placement Agent, the Company and the Selling
Stockholders and each of their respective successors and assigns, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that (i) the indemnification and contribution contained in Section 10 of this
Agreement shall also be for the benefit of the directors, officers, employees
and agents of the Placement Agent and any person or persons who control the
Placement Agent within the meaning of Section 15 of the Act or the Section 20 of
the Exchange Act, and (ii) the indemnification and contribution contained in
Section 10 of this Agreement shall also be for the benefit of the directors of
the Company and the officers of the Company who have signed the Registration
Statement and any person or persons who
31
control the Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act. No Investor shall be deemed a successor because of such
purchase.
16. Applicable Law. The validity and interpretations of this
--------------
Agreement, and the terms and conditions set forth herein, shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to any provisions relating to conflicts of laws.
17. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18. Entire Agreement. This Agreement constitutes the entire
----------------
understanding between the parties hereto as to the matters covered hereby and
supersedes all prior understandings, written or oral, relating to such subject
matter.
Please confirm that the foregoing correctly sets forth the agreement
between the Company, the Selling Stockholders and the Placement Agent.
Very truly yours,
SFBC INTERNATIONAL, INC.
By ___________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
SELLING STOCKHOLDERS:
______________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
______________________________________
▇▇▇▇ ▇▇▇▇▇▇▇, M.D.
______________________________________
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Confirmed as of the date first
above mentioned:
PLACEMENT AGENT:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES,INC.
By ___________________________________
32
______________________________________
Name:
Title:
33
EXHIBIT A
ESCROW AGREEMENT
EXHIBIT B
LOCK UP LETTERS (see Attachments A and B following the Exhibits attached hereto)
ATTACHMENT A
November __, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
as Placement Agent
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned is a shareholder of SFBC International, Inc. (the
"Company") and wishes to facilitate the offering (the "Offering") of Common
Stock of the Company ("Common Stock") pursuant to a Registration Statement on
Form SB-2 (the "Registration Statement") to be transmitted for filing with the
Securities and Exchange Commission on or about __________, 2001.
In consideration of the foregoing, and in order to induce you to act
as placement agent in the Offering, the undersigned hereby irrevocably agrees
that it shall not, directly or indirectly, sell, offer, contract to sell,
transfer the economic risk of ownership in, make any short sale, pledge or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exchangeable or exercisable for or any other rights to purchase or
acquire Common Stock, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc., for a period of 90 days from the effective date of the
Registration Statement.
Notwithstanding the foregoing, if the undersigned is an individual, he
or she may transfer any shares of Common Stock or securities convertible into or
exchangeable or exercisable for the Company's Common Stock either during his or
her lifetime or on death by shall or intestacy to his or her immediate family or
to a trust the beneficiaries of which are exclusively the undersigned and/or a
member or members of his or her immediate family; provided, however, that prior
to any such transfer each transferee shall execute an agreement, satisfactory to
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc., pursuant to which each transferee shall agree
to receive and hold such shares of Common Stock, or securities convertible into
or exchangeable or exercisable for the Common Stock, subject to the provisions
hereof, and there shall be no further transfer except in accordance with the
provisions hereof. For the purposes of this paragraph, "immediate family" shall
mean spouse, lineal descendant, father, mother, brother or sister of the
transferor.
The undersigned hereby waives any right of the undersigned to sell
shares of Common Stock or any other security issued by the Company pursuant to
the Registration Statement, and acknowledges and agrees that for a period of 90
days from the effective date of the Registration Statement the undersigned has
no right to require the Company to register under the Securities Act of 1933, as
amended, such Common Stock or other securities issued by the Company and
beneficially owned by the undersigned.
[PLACEMENT AGENT]
November __. 2001
Page 2
The undersigned understands that the agreements of the undersigned are
irrevocable and shall be binding upon the undersigned's heirs, legal Placement
Agents, successors and assigns. The undersigned agrees and consents to the
entry of stop transfer instructions with the Company's transfer agent against
the transfer of Common Stock or other securities of the Company held by the
undersigned except in compliance with this agreement.
Very truly yours,
Dated: November ___, 2001
________________________
Signature
________________________
Name
ATTACHMENT B
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
as Placement Agent
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to a Placement Agency Agreement (the "Placement
Agency Agreement"), which shall be executed between SFBC International, Inc., a
Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. (the
"Placement Agent").
In consideration of the Placement Agency Agreement, the undersigned
hereby agrees not to, without the prior written consent of the Placement Agent,
offer, sell or otherwise dispose of any shares, directly or indirectly, of the
Company's Common Stock, par value $.001 per share (the "Common Stock"), owned by
the undersigned for a period of 90 days after the date of the Placement Agency
Agreement except that, subject to compliance with applicable securities laws,
the undersigned may transfer his or her stock in a private transaction, provided
that any such transferee shall agree, as a condition to such transfer, to be
bound by the restrictions set forth in the Placement Agent Agreement and further
provided that the transferor's death or gifts of securities with a fair market
value of $100,000 in the aggregate per transferor, shall continue to be deemed
the beneficial owner of such shares in accordance with Regulation 13d-(3) of the
Securities Exchange Act of 1934.
It is understood that, if the Company notifies you that it does not
intend to proceed with the issuance and sale of Common Stock (as defined in the
Placement Agency Agreement) pursuant to the Placement Agency Agreement, if the
Placement Agency Agreement does not become effective, or if the Placement Agency
Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Common
Stock, the undersigned shall be released from his obligations under this letter
agreement.
Dated: November __, 2001
Very truly yours,
SFBC INTERNATIONAL, INC.
Name:____________________
Title:___________________
SCHEDULE 3(e)
Placement Agency Agreement
by and among
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.,
and
SFBC International, Inc. and the Selling Stockholders
Dated as of November ___, 2001
Shares of Issued Capital Stock