1
EXHIBIT 1.1
Draft of March 14, 1996
ADVANCED TISSUE SCIENCES, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
March __, 1996
Xxxxxxx, Xxxxx & Co.,
Xxxxxx Xxxxxxx & Co. Incorporated
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Advanced Tissue Sciences, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 3,000,000 shares (the "Firm Shares") and, at the election of the
Underwriters, up to 450,000 additional shares (the "Optional Shares") of Common
Stock, par value $.01 per share ("Stock") of the Company (the Firm Shares and
the Optional Shares that the Underwriters elect to purchase pursuant to Section
2 hereof being collectively called the "Shares").
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-01185)
(the "Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, and, excluding exhibits thereto but including
all documents incorporated by reference in the prospectus contained therein, to
you for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any, increasing
the size of the offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Act"), which became effective upon filing, no other document with respect to
the Initial Registration Statement or document
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incorporated by reference therein has been filed with the Commission subsequent
to the respective dates thereof; and no stop order suspending the effectiveness
of the Initial Registration Statement, any post-effective amendment thereto or
the Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the Commission
(any preliminary prospectus included in the Initial Registration Statement or
filed with the Commission pursuant to Rule 424(a) of the rules and regulations
of the Commission under the Act is hereinafter called a "Preliminary
Prospectus"); the various parts of the Initial Registration Statement and the
Rule 462(b) Registration Statement, if any, including all exhibits thereto and
including (i) the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part
of the Initial Registration Statement at the time it was declared effective; and
(ii) the documents incorporated by reference in the prospectus contained in the
Initial Registration Statement at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, each as amended at the
time such part of the Initial Registration Statement became effective, is
hereinafter collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus"; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of such Preliminary Prospectus or Prospectus, as
the case may be; and any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after the date of such Preliminary Prospectus or Prospectus,
as the case may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment to the
Initial Registration Statement shall be deemed to refer to and include any
annual report of the Company filed pursuant to Section 13(a) or 15(d) of the
Exchange Act after the effective date of the Initial Registration Statement that
is incorporated by reference in the Initial Registration Statement;
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to
the requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use therein;
(c) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not
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misleading; and any further documents so filed and incorporated by reference in
the Prospectus or any further amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by
an Underwriter through Xxxxxxx, Sachs & Co. expressly for use therein;
(d) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto, and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use
therein;
(e) The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than Neomorphics,
Inc., a Delaware corporation, Segenix, Inc., a Delaware corporation and ATS
Orthopedics, Inc., a California corporation ("ATS Orthopedics") (collectively,
the "Subsidiaries"), all of the outstanding capital stock of which is owned of
record and beneficially by the Company, free and clear of all liens,
encumbrances, equities or claims. None of the Subsidiaries conducts any business
operations or has any material assets or liabilities and, except for ATS
Orthopedics, none of the Subsidiaries is party to any agreement. The Company and
the Subsidiaries have been duly incorporated and are validly existing as
corporations in good standing under the laws of the States of Delaware and
California, with power and authority (corporate and other) to own their
properties and conduct their business as described in the Prospectus, and the
Company has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties or conducts any business so as to require
such qualification except in jurisdictions in which the failure to so qualify
would not have a material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the Company and the
Subsidiaries, taken as a whole (a "Material Adverse Effect");
(f) The Company has not sustained since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute nor has the Company or any of its Subsidiaries sustained since
such date any material loss or interference with its business as a result of any
court or governmental action, order or decree,
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otherwise than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has not been any change in the capital stock (other
than stock options, presently outstanding or to be granted, under the Company's
existing stock option plans consistent with prior practice or presently
outstanding warrants or a warrant to be granted to a financial advisor for an
aggregate of 100,000 shares of Common Stock) or long-term debt of the Company in
excess of $15,000 or any material adverse change, or any development involving a
prospective material adverse change in the condition (financial or otherwise),
business, results of operations or prospects of the Company and the
Subsidiaries, taken as a whole, otherwise than as set forth or contemplated in
the Prospectus;
(g) Neither the Company nor the Subsidiaries own any real
property, the Company has good and marketable title to all personal property
owned by it, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company; and any real property and
buildings held under lease by the Company are held by it under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company;
(h) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description of the Stock contained in the
Prospectus or incorporated therein by reference;
(i) The unissued Shares to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus or incorporated therein by
reference;
(j) The Company has full legal right, power and authority to
enter into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding obligation of the Company in accordance with its
terms. The issue and sale of the Shares by the Company and the compliance by the
Company with all of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which the Company or ATS Orthopedics is a party or by
which the Company or ATS Orthopedics is bound or to which any of the property or
assets of the Company or ATS Orthopedics is subject; nor will such action result
in any violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or the Subsidiaries; nor will such action result in any
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or the
Subsidiaries or any of their properties, the violation of which would have a
Material Adverse Effect; and no consent, approval, authorization, order,
registration or
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qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the consummation by the Company
of the transactions contemplated by this Agreement, except the registration
under the Act of the Shares, the approval of the National Association of
Securities Dealers, Inc., the listing of the Shares with the National
Association of Securities Dealers Automated Quotation System National Market,
and such consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters;
(k) Neither the Company nor the Subsidiaries are in violation
of their respective Certificates of Incorporation or By-laws nor is the Company
or ATS Orthopedics in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which the Company or ATS Orthopedics is a party or by which it or any of
their properties may be bound;
(l) The statements set forth in the Prospectus under the
caption "Underwriting", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate, complete and fair;
(m) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or the
Subsidiaries are a party or of which any property of the Company or the
Subsidiaries is the subject which, if determined adversely to the Company or the
Subsidiaries, would have a Material Adverse Effect; and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(n) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(o) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes;
(p) Ernst & Young LLP, who have certified certain consolidated
financial statements of the Company and the Subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(q) The financial statements and schedules of the Company and
the related notes thereto, included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the financial position
of the Company as of the respective dates of such financial statements and
schedules, and the results of operations and changes in financial position of
the Company for the respective periods covered thereby. Such statements,
schedules and related notes have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis and (where
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audited) as certified by the independent accountants named in subsection 1(p).
No other financial statements or schedules are required to be included in the
Registration Statement. The selected financial data set forth in the Prospectus
under the captions "Capitalization" and "Selected Consolidated Financial Data"
fairly present the information set forth therein on the basis stated in
Registration Statement;
(r) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the rules and regulations of the
Commission thereunder which have not been described or filed as required. The
contracts so described in the Prospectus are in full force and effect on the
date hereof; and neither the Company, nor to the best of the Company's
knowledge, any other party is in breach of or default under any of such
contracts, where such breach or default, individually or in the aggregate, would
be material to the Company;
(s) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and the Subsidiaries have sufficient trademarks, trade
names, patent rights, copyrights and licenses and approvals to conduct their
businesses as now conducted; other than as disclosed in the Registration
Statement, the expiration of any trademarks, trade names, patent rights,
copyrights, licenses or approvals would not have a Material Adverse Effect; and
the Company has no knowledge of any material infringement by it or the
Subsidiaries of trademark rights, trade name rights, patent rights, copyrights,
licenses, trade secret or other similar rights of others and, to the best of the
Company's knowledge, there is no claim being made against the Company or the
Subsidiaries regarding trademark, trade name, patent, copyright, license, trade
secret or other infringement which could have a Material Adverse Effect;
(t) Except as otherwise disclosed in the Prospectus, the
Company now holds and at each Time of Delivery (as defined in Section 4 hereof)
will hold, all licenses, certificates, approvals and permits from all state,
United States, foreign and other regulatory authorities, including but not
limited to the United States Food and Drug Administration (the "FDA") and any
foreign regulatory authorities performing functions similar to those performed
by the FDA, that are material to the conduct of the business of the Company (as
such business is currently conducted), except for such licenses, certificates,
approvals and permits the failure of which to hold would not have a Material
Adverse Effect, all of which are valid and in full force and effect (and there
is no proceeding pending or, to the knowledge of the Company, threatened which
may cause any such license, certificate, approval or permit to be withdrawn,
canceled, suspended or not renewed). The Company is not in violation of any law,
order, rule, regulation, writ, injunction or decree of any court or governmental
agency or body, including, but not limited to, the FDA. All of the descriptions
in the Registration Statement and Prospectus of the legal and governmental
proceedings by or before the FDA or any foreign, state or local government body
exercising comparable authority are true, complete and accurate in all material
respects;
(u) The Company and the Subsidiaries have filed on a timely
basis all necessary federal, state and foreign income, franchise and other tax
returns and have paid or made provision for all taxes shown thereon as due,
except where the failure to so file such returns would not have a Material
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Adverse Effect. Neither the Company nor any of the Subsidiaries have any
knowledge of any tax deficiency that has been or might be asserted against the
Company or the Subsidiaries that might have a Material Adverse Effect. All
material tax liabilities are adequately provided for within the financial
statements of the Company;
(v) The Company maintains insurance of the types and in the
amounts which it believes are reasonably adequate for its business, all of which
insurance is in full force and effect;
(w) The human clinical trials conducted by the Company or in
which the Company has participated that are described in the Registration
Statement and Prospectus or the results of which are referred to in the
Registration Statement and Prospectus, and, to the best of the Company's
knowledge, such studies and tests conducted on behalf of the Company, were and,
if still pending, are being conducted in all material respects in accordance
with the protocols, procedures and controls for such clinical studies and tests
of new medical devices or biologic products, as the case may be; the
descriptions of the results of such studies, tests and trials contained in the
Registration Statement and Prospectus are accurate and complete in all material
respects, and the Company has no knowledge of any other trials, studies or
tests, the results of which reasonably call into question the results described
or referred to in the Registration Statement and Prospectus; and the Company has
not received any notices or correspondence from the FDA or any other
governmental agency requiring the termination, suspension or modification of any
clinical trials conducted by, or on behalf of, the Company in which the Company
has participated that are described in the Registration Statement and Prospectus
or the results of which are referred to in the Registration Statement and
Prospectus that would cause the Company to change the descriptions in the
Registration Statement or Prospectus;
(x) The Company: (i) is in material compliance with any and
all applicable foreign, United States, state and local environmental laws,
rules, regulations, treaties, statutes and codes promulgated by any and all
governmental authorities relating to the protection of human health and safety,
the environment or toxic substances or wastes, pollutants or contaminates
("Environmental Laws"); (ii) has received all material permits, licenses or
other approvals required of it under applicable Environmental Laws to conduct
their business as currently conducted; and (iii) is in compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permit
licenses or other approvals would not, individually or in the aggregate, have a
Material Adverse Effect. No action, proceeding, revocation proceeding, writ,
injunction or claim is pending or, to the Company's knowledge, threatened
against the Company relating to the Environmental Laws or to the Company's
activities involving Hazardous Materials. The term "Hazardous Materials" as used
in this Agreement means any material or substance that: (i) is prohibited or
regulated by any environmental law, rule, regulation, order, treaty, statute or
code promulgated by any governmental authority, or any amendment or modification
thereto; or (ii) has been designated or regulated by any governmental authority
as radioactive, toxic, hazardous or otherwise a danger to health, reproduction
or the environment;
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(y) The Company is not or was not engaged in the generation,
use, manufacture, transportation or storage of any Hazardous Materials on any of
the Company's properties or former properties, except where such use,
manufacture, transportation or storage is in material compliance with
Environmental Laws. No Hazardous Materials have been treated or disposed of by
the Company on any of the Company's properties or on properties formerly owned
or leased by the Company during the time of such ownership or lease, except in
compliance with Environmental Laws. No spills, discharges, releases, deposits,
emplacements, leaks or disposal of any Hazardous Materials have occurred on or
under or have emanated from any of the Company's properties or former properties
for which the cost of remediation would have a Material Adverse Effect;
(z) The Company has not at any time during the last five
years, nor has any of its Subsidiaries since acquisition or formation by the
Company, (i) made any unlawful contribution to any candidate for foreign office,
or failed to disclose fully any contribution in violation of law, or (ii) made
any payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof; and
(aa) Neither the Company nor, to its knowledge, any of its
officers, directors or affiliates has taken, and at the Time of Delivery,
neither the Company, nor, to its knowledge, any of its officers, directors or
affiliates will have taken, directly or indirectly, any action that has
constituted, or might reasonably be expected to constitute, the stabilization or
manipulation of the price of sale or resale of the Shares.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $______, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 450,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate number of Optional
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Shares to be purchased and the date on which such Optional Shares are to be
delivered, as determined by you but in no event earlier than the First Time of
Delivery (as defined in Section 4 hereof) or, unless you and the Company
otherwise agree in writing, earlier than two or later than ten business days
after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form (if physical delivery will be used), and in such authorized
denominations and registered in such names (if physical delivery will be used)
as Xxxxxxx, Xxxxx & Co. may request upon at least forty-eight hours' prior
notice to the Company shall be delivered by or on behalf of the Company to
Xxxxxxx, Sachs & Co., for the account of such Underwriter, against payment by or
on behalf of such Underwriter of the purchase price therefor by wire transfer or
certified or official bank check or checks, payable to the order of the Company
in federal (same-day) funds. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of Xxxxxxx, Xxxxx & Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (the "Designated Office"). The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., New York City
time, on March ___, 1996 or such other time and date as Xxxxxxx, Sachs & Co. and
the Company may agree upon in writing, and, with respect to the Optional Shares,
9:30 a.m., New York time, on the date specified by Xxxxxxx, Xxxxx & Co. in the
written notice given by Xxxxxxx, Sachs & Co. of the Underwriters' election to
purchase such Optional Shares, or such other time and date as Xxxxxxx, Xxxxx &
Co. and the Company may agree upon in writing. Such time and date for delivery
of the Firm Shares is herein called the "First Time of Delivery", such time and
date for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(l) hereof, will be delivered at the offices
of Xxxxxxx, Phleger & Xxxxxxxx LLP, 0000 XxxXxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000 (the "Closing Location"), and the Shares will be
delivered at the Designated Office, all at such Time of Delivery. A meeting will
be held at the Closing Location at 2:00 p.m., New York City time, on the New
York Business Day next preceding such Time of Delivery, at which meeting the
final drafts of the documents to be delivered pursuant to the preceding sentence
will be available for review by the parties hereto. For the purposes of this
Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to close.
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5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus prior to
the last Time of Delivery which shall be disapproved by you promptly after
reasonable notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof; to file
promptly all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for
so long as the delivery of a prospectus is required in connection with the
offering or sale of the Shares; to advise you, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus, of
the suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or suspending any
such qualification, promptly to use its best efforts to obtain the withdrawal of
such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to time,
to furnish the Underwriters with copies of the Prospectus in New York City in
such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or sale of
the Shares and if at such time any event shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act or
the Exchange Act, to notify you and upon your request to file such document and
to prepare and furnish without charge to each Underwriter and to any dealer
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Draft of March 14, 1996
in securities as many copies as you may from time to time reasonably request of
an amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the Shares
at any time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and deliver to
such Underwriter as many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its security holders as
soon as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), an earnings statement of the Company and its subsidiaries (which need
not be audited) complying with Section 11(a) of the Act and the rules and
regulations thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the Prospectus
(the "Lock-Up Period"), not to offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder any securities of the Company that are
substantially similar to the Shares, including but not limited to any securities
that are convertible into or exchangeable for, or that represent the right to
receive, Stock or any such substantially similar securities (other than pursuant
to the exercise of stock options or warrants which are outstanding as of the
date of this Agreement), without the prior written consent of Xxxxxxx Xxxxx &
Co.; provided, however, that the Company may (i) grant stock options under its
stock option plans in effect as of the date of this Agreement in the ordinary
course and consistent with past practice; (ii) grant a warrant to a financial
advisor up to a maximum of 100,000 shares of Common Stock and issue such shares
upon exercise of such warrant and (iii) issue up to $1,000,000 in fair market
value of Common Stock of the Company to a development partner;
(f) To furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flows of the Company and
its consolidated subsidiaries certified by independent public accountants) and,
as soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), consolidated summary financial information of
the Company and its subsidiaries for such quarter in reasonable detail;
(g) During a period of three years from the effective date of
the Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
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(h) To use the net proceeds received by it from the sale of
the Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(i) To use its best efforts to file an additional listing
application to list for quotation the Shares on the National Association of
Securities Dealers Automated Quotations National Market ("NASDAQ");
(j) To use its best efforts to cause all directors and
executive officers of the Company to agree with you that each of such persons
will not offer, sell, contract to sell, grant any option to purchase, make any
short sale or otherwise dispose of any shares of the Stock of the Company,
during the period beginning from the date hereof and continuing to and including
the date 180 days after the date of the Prospectus without the prior written
consent of Xxxxxxx, Xxxxx & Co., and to cause X.X. Xxxxx Investment Banking
Corporation ("X.X. Xxxxx") and Xxxxxx Investments, Inc. ("Kinder Investments")
to likewise agree to such limitations for a 60-day period; and
(k) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
(iv) all fees and expenses in connection with listing the Shares on the NASDAQ;
(v) the filing fees incident to, and the fees and disbursements of counsel for
the Underwriters in connection with, securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of the
Shares; (vi) the cost of preparing stock certificates; (vii) the cost and
charges of any transfer agent or registrar; and (viii) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood, however,
that, except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, stock transfer taxes on resale of any of the Shares by them, and
any advertising expenses connected with any offers they may make.
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7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel for the
Underwriters, shall have furnished to you such opinion or opinions (a draft of
each such opinion is attached as Annex I hereto), dated such Time of Delivery,
with respect to the matters covered in paragraphs (i), (ii), (vii), (xiii) and
(xiv) of Annex II hereto as well as such other related matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) Xxxxxxx, Phleger & Xxxxxxxx LLP, outside corporate counsel
for the Company, shall have furnished to you their written opinion (a draft of
each such opinion is attached as Annex II hereto), dated such Time of Delivery;
(d) Xxxxxx & Xxxxxxx, outside intellectual property counsel
for the Company, shall have furnished to you their written opinion (a draft of
each such opinion is attached as Annex III hereto) dated such Time of Delivery;
(e) Xxxxx & Xxxxxxx, special healthcare regulatory counsel for
the Company, shall have furnished to you their written opinion (a draft of each
such opinion is attached hereto as Annex IV hereto) dated such Time of Delivery;
(f) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the effective
date of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of Delivery,
Ernst & Young, LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to you,
to the effect set forth in Annex V;
(g) (i) The Company shall not have sustained since the date of
the latest audited financial statements included or incorporated by reference in
the Prospectus any loss or interference with
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Draft of March 14, 1996
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute, nor shall the Company or any of
its Subsidiaries have sustained since such date any material loss or
interference with its business as a result of any court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus,
and (ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock (other than
the granting of stock options under the Company's existing stock option plans in
the ordinary course and consistent with past practice, the issuance of shares
upon exercise of such options or outstanding warrants, or the granting to a
financial advisor of a warrant to purchase up to 100,000 shares of Common Stock
or the issuance of shares upon exercise of such warrant) or long-term debt of
the Company in excess of $15,000 or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in Clause (i) or (ii), is in the
judgment of the Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(h) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on NASDAQ; (ii) a
suspension or material limitation in trading in the Company's securities on
NASDAQ; (iii) a general moratorium on commercial banking activities declared by
either Federal or New York or California State authorities; or (iv) the outbreak
or escalation of hostilities involving the United States or the declaration by
the United States of a national emergency or war, if the effect of any such
event specified in this Clause (iv) in the judgment of the Representatives makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus;
(i) The additional listing application for the Shares to be
sold at such Time of Delivery shall have been approved by the NASDAQ Stock
Market;
(j) The Company shall have furnished or caused to be furnished
to you executed copies of an agreement from each executive officer and director
of the Company, and X.X. Xxxxx & Co. and Kinder Investments to the effect set
forth in Section 5(j) hereof, all in a form and in substance satisfactory to
you;
(k) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of this Agreement; and
(l) The Company shall have furnished or caused to be furnished
to you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Delivery, as to the
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Draft of March 14, 1996
performance by the Company of all of its obligations hereunder to be performed
at or prior to such Time of Delivery, as to the matters set forth in subsections
(a) and (g) of this Section and as to such other matters as you may reasonably
request.
8. (a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use
therein.
(b) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Xxxxxxx, Sachs
& Co. expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified,
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Draft of March 14, 1996
to assume the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim.
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Draft of March 14, 1996
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you, which approval shall not be unreasonably withheld, to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that it has so arranged for
the purchase of such Shares, you or the Company shall have the right to postpone
such Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your reasonable opinion may thereby be made necessary.
The term "Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had originally
been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-eleventh of the aggregate
number of all the Shares to be purchased at such Time of Delivery, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the number of shares which such Underwriter agreed to purchase
hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters
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Draft of March 14, 1996
for which such arrangements have not been made; but nothing herein shall relieve
a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-eleventh of the aggregate number of
all the Shares to be purchased at such Time of Delivery, or if the Company shall
not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company to
sell the Optional Shares) shall thereupon terminate, without liability on the
part of any non-defaulting Underwriter or the Company, except for the expenses
to be borne by the Company and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any Shares
are not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but the Company shall then be
under no further liability to any Underwriter except as provided in Sections 6
and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Sachs &
Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail to the
address of the Company set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire,
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Draft of March 14, 1996
or telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Shares from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
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If the foregoing is in accordance with your understanding, please sign
and return to us one copy for the Company and each of the Representatives plus
one copy for each counsel counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement between each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
ADVANCED TISSUE SCIENCES, INC.
By
----------------------------
Xxxxxx X. Xxxxxxxxx,
Chairman of the Board and
Chief Executive Officer
Accepted as of the date hereof:
Xxxxxxx, Sachs & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
By:
--------------------------
(Xxxxxxx, Sachs & Co.)
On behalf of each of the Underwriters
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Draft of March 14, 1996
SCHEDULE I
NUMBER OF
OPTIONAL-SHARES-TO
TOTAL NUMBER OF BE PURCHASED IF
FIRM-SHARES-TO-BE MAXIMUM-OPTION
UNDERWRITER PURCHASED EXERCISED
----------------------------------------------------------------------------------
Xxxxxxx, Xxxxx & Co.......................
Xxxxxx Xxxxxxx & Co. Incorporated.........
--------- -------
Total................... 3,000,000 450,000
========= =======
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ANNEX I -- FORM OF LEGAL OPINION OF
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of Delaware,
with power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the Shares have been duly and validly
authorized and issued and are fully paid and non-assessable; and the Shares
conform to the description of the Stock contained in the Prospectus or
incorporated by reference therein;
(iii) This Agreement has been duly authorized,
executed and delivered by the Company;
(iv) The statements set forth in the Prospectus under
the caption "Underwriting", insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate, complete and fair;
(v) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion), when they
became effective or were filed with the Commission, as the case may be, complied
as to form in all material respects with the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder; and they have no reason to believe that any of such documents, when
such documents became effective or were so filed, as the case may be, contained,
in the case of a registration statement which became effective under the Act, an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or, in the case of other documents which were filed under the Exchange Act with
the Commission, an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such documents were so filed,
not misleading; and
(vi) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) comply as to form in
all material respects with the requirements of the Act and the rules and
regulations thereunder; although they do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to in the
opinion in subsection (iv) above, they have no reason to believe that, as of its
effective date, the
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Registration Statement or any further amendment thereto made by the Company
prior to such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus or any further amendment or
supplement thereto made by the Company prior to such Time of Delivery (other
than the financial statements and related schedules therein, as to which such
counsel need express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading or that, as of such Time of Delivery, either the Registration
Statement or the Prospectus or any further amendment or supplement thereto made
by the Company prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel need express
no opinion) contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and they do not know
of any amendment to the Registration Statement required to be filed or of any
contracts or other documents of a character required to be filed as an exhibit
to the Registration Statement or required to be incorporated by reference into
the Prospectus or required to be described in the Registration Statement or the
Prospectus which are not filed or incorporated by reference or described as
required.
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ANNEX II -- FORM OF OPINION OF
XXXXXXX, PHLEGER & XXXXXXXX L.L.P.
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with full corporate power and authority to own its properties and
to conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the Shares have been duly and validly
authorized and issued and are fully paid and non-assessable; and the Shares
conform to the description of the Stock contained in the Prospectus or
incorporated by reference therein;
(iii) To such counsel's knowledge, the Company has
been duly qualified to do business and is in good standing under the laws of
each other jurisdiction where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the failure to
so qualify does not have a material adverse effect on the business, condition
(financial or otherwise) or results of operations of the Company (a "Material
Adverse Effect") (such counsel being entitled to rely in respect of the opinion
in this clause upon opinions of local counsel and in respect of matters of fact
upon certificates of officers of the Company, provided that such counsel shall
state that they believe that both you and they are justified in relying upon
such opinions and certificates);
(iv) Each Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation; and all of the outstanding shares of
capital stock of each such Subsidiary have been duly authorized and validly
issued, are fully paid and non-assessable, and are owned beneficially by the
Company, to the best of our knowledge, free and clear of all liens,
encumbrances, equities or claims;
(v) Neither the Company nor its Subsidiaries own any
real property. Any real property and buildings held under lease by the Company
and its subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its subsidiaries (in giving the opinion in this clause, such counsel may
state that no examination of record titles for the purpose of such opinion has
been made, and that they are relying upon a general review of the titles of the
Company and its subsidiaries, upon opinions of local counsel and abstracts,
reports and policies of title companies rendered or issued at or subsequent to
the time of acquisition of such property by the Company or its subsidiaries,
upon opinions of counsel to the lessors of such property and, in respect to
matters of fact, upon certificates of officers of the Company or its
subsidiaries, provided that such counsel shall state that they believe that both
you and they are justified in relying upon such opinions, abstracts, reports,
policies and certificates);
(vi) To the best of such counsel's knowledge and
other than as set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its
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Draft of March 14, 1996
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or any
of its Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(vii) The Agreement has been duly authorized,
executed and delivered by the Company;
(viii) The issue and sale of the Shares being
delivered at such Time of Delivery by the Company and the compliance by the
Company with all of the provisions of the Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or ATS Orthopedics is a party or by which the
Company or ATS Orthopedics is bound or to which any of the property or assets of
the Company is subject, and which is filed as an exhibit under Item 10 of
Regulation S-K in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the Company or any
federal, Delaware GCL or California state statute or any federal, Delaware GCL
or California state order, rule or regulation known to such counsel of any
federal, Delaware GCL or California state court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
properties;
(ix) No consent, approval, authorization, or any
other order of, or registration or qualification with any such court or
governmental agency or body is required on the part of the Company for the issue
and sale of the Shares or the consummation by the Company of the transactions
contemplated by the Agreement, except the registration under the Act of the
Shares, and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters
and the clearance of such offering with the NASD;
(x) Neither the Company nor any of its Subsidiaries
is in violation of its Certificate of Incorporation or By-laws or in default in
the performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound, and which is filed as an exhibit under Item
10 of Regulation S-K in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995;
(xi) The statements set forth in the Prospectus under
the caption "Underwriting," insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate, complete and fair;
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Draft of March 14, 1996
(xii) The Company is not an "investment company" or
an entity "controlled" by an "investment company", as such terms are defined in
the Investment Company Act;
(xiii) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) comply as to form in
all material respects with the requirements of the Act and the rules and
regulations thereunder; and
(xiv) To the best of such counsel's knowledge, there
are no agreements, contacts, indentures, lease or other instruments, that are
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement that are not described,
filed or incorporated by reference as required.
In addition to rendering legal advice and assistance to the Company in
the course of the preparation of the Registration Statement and the Prospectus,
involving, among other things, discussions and inquiries concerning various
legal matters and the review of certain corporate records, documents and
proceedings, such counsel also participated in conferences with certain officers
and other representatives of the Company, including its independent auditors and
with you and your counsel at which the contents of the Registration Statement,
the Prospectus and related matters were discussed and have generally reviewed
and discussed with such persons the content of the Incorporated Documents. Such
counsel has not, however, except with respect to matters expressly covered above
by this opinion, independently checked or verified the accuracy, completeness or
fairness of the information contained in the Registration Statement, the
Prospectus and the Incorporated Documents.
Such counsel may state, however, that based upon such counsel's
participation as described in the preceding paragraph, (i) such counsel believes
that the Registration Statement and the Prospectus comply as to form in all
material respects with the requirements of the Act; and each of the Incorporated
Documents complies as to form in all material respects with the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder; and (ii) such counsel has no reason to believe that the
Registration Statement at the time the Registration Statement became effective,
the Prospectus, as of its date and as of the date hereof, or the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995, on the
date it was filed and as of the date hereof, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
Such counsel was not called upon to express, and does not express, any
view, opinion or belief as to the financial statements and the notes thereto and
the schedules and other financial data derived therefrom included in the
Registration Statement or the Prospectus or any Incorporated Document.
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ANNEX III -- FORM OF OPINION OF
XXXXXX & XXXXXXX
(i) Xxxxxx & Xxxxxxx represents the Company with respect to
intellectual property matters relating to the Company's in vitro culturing
technique for human tissues on a biocompatible framework, including the
Company's three-dimensional living stromal tissue; three-dimensional dermal
tissue and full thickness skin; laboratory kits utilizing such tissue cultures
for screening drugs, cosmetics, etc.; and implantation and transplantation into
humans of such in vitro cultures, including patents, trade secrets and
trademarks;
(ii) Xxxxxx & Xxxxxxx is familiar with the technology and
processes used by the Company in its business and the manner in which they are
used, and has read the portions of the Registration Statement and the Prospectus
entitled "Business -- Patents and Proprietary Rights", "Business-Proprietary
Core Technology", and "Risk Factors -- Patents and Protection of Proprietary
Technology", and other portions thereof which reference intellectual property
matters (the "Intellectual Property Portion");
(iii) The Intellectual Property Portion contains accurate
descriptions of the patent applications owned by the Company (the
"Applications"), and patents issued to it, as well as the patent applications
and patents licensed to it;
(iv) Xxxxxx & Xxxxxxx has reviewed the Company's issued
patents and Applications, which issued patents and Applications are described in
the Intellectual Property Portion, and based upon such review, a review of the
prior art references known to counsel, and discussions with Company scientific
personnel, Xxxxxx & Xxxxxxx is not aware of any prior art reference which would
affect the validity of any of the Company's issued patents, or patentability of
the Company's Applications;
(v) The Applications have been properly prepared and filed on
behalf of the Company, and are being diligently pursued by the Company; each of
the patents and Applications is assigned to the Company; to Xxxxxx & Xxxxxxx'
knowledge, no other entity or individual has any right or claim in any of the
Applications or any patent sought to be issued therefrom;
(vi) Xxxxxx & Xxxxxxx is aware of no pending judicial
proceedings relating to patents or proprietary information to which the Company
is a party, or of which any patents or proprietary information of the Company is
subject, and no such judicial proceedings are threatened by governmental
authorities or others;
(vii) Xxxxxx & Xxxxxxx is aware of no valid United States or
foreign patent that is or would be infringed by the manufacture, use or sale of
products currently being commercialized by the Company, and the Company owns or
possesses sufficient licenses or other rights to use all patents,
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trademarks, trade names, trade secrets, technology and know-how (the
"Proprietary Rights") believed by it to be necessary in the conduct of the
business now being conducted by the Company, as described in the Prospectus;
(viii) Xxxxxx & Xxxxxxx is not aware of any pending or
threatened action, suit, proceeding or claim by others that the Company is
infringing or otherwise violating any Proprietary Rights of others and we they
not aware of any claim of rights of third parties to any of the Proprietary
Rights of the Company; and Xxxxxx & Xxxxxxx is not aware of any pending or
threatened action, suit, proceeding or claim by others challenging the validity
or scope of the Company's Proprietary Rights; and
(ix) Xxxxxx & Xxxxxxx has no reason to believe that the
information contained in the Intellectual Property Portion of the Registration
Statement or the Prospectus, at the time it became effective, contained 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, or that, at the Time of Delivery, the information contained in the
Intellectual Property Portion of the Registration Statement or the Prospectus,
or any amendment or supplement to the Intellectual Property Portion of the
Registration Statement or the Prospectus, contains 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.
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Draft of March 14, 1996
ANNEX IV -- FORM OF OPINION OF
XXXXX & XXXXXXX
(i) The statements under the captions "Risk
Factors--Government Regulation" and Business--Government Regulation," insofar as
such statements purport to summarize applicable provisions of the Federal Food,
Drug and Cosmetic Act and the regulations promulgated thereunder, are accurate
summaries in all material respects of the provisions purported to be summarized
under such captions in the Prospectus.
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ANNEX V -- FORM OF COMFORT LETTER
Pursuant to Section 7(f) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been separately furnished to the representatives of the Underwriters
(the "Representatives");
(iii) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and warrants in each
case unless otherwise specified which were outstanding on the
date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the
consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with
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Draft of March 14, 1996
amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus, except in each
case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(B) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause (E)
there were any decreases in consolidated net loss or other
items specified by the Representatives, or any increases in
any items specified by the Representatives, in each case as
compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(iv) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and
the limited procedures, inspection of minute books, inquiries of
officials of the Company who have responsibility for financial and
accounting matters, and other procedures made in accordance with
standards established by the American Institute of Certified Public
Accountants, 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 Representatives which are
derived from the general accounting records of the Company and its
subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference) or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the
Representatives or in documents incorporated by reference in the
Prospectus specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found
them to be in agreement.
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