1
Draft of February 15, 1996
EXHIBIT 1.1
ADVANCED TISSUE SCIENCES, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
------------
UNDERWRITING AGREEMENT
,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 __________ shares (the "Firm Shares") and, at
the election of the Underwriters, up to __________ 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-__________) (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
2
Draft of February 15, 1996
effective upon filing, no other document with respect to the Initial
Registration Statement or document incorporated by reference therein has
heretofore been filed with the Commission; 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
-2-
3
Draft of February 15, 1996
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 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 and Segenix, Inc., a
__________________ corporation (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. The Company and the
Subsidiaries have been duly incorporated and are validly existing as
corporations in good standing under the laws of [DELAWARE], with power and
authority (corporate and other) to own their properties and conduct their
business as described in the Prospectus, and have been duly qualified as
foreign corporations for the transaction of business and are in good standing
under the laws of each other jurisdiction in which they own or lease properties
or conduct any business so as to require such qualification, or are subject to
no material liability or disability by reason of their failure to be so
qualified in any such jurisdiction;
(f) Neither the Company nor the Subsidiaries have
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 or court or governmental
action, order or decree, 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
-3-
4
Draft of February 15, 1996
the capital stock or long-term debt of the Company or the Subsidiaries or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company or the
Subsidiaries, otherwise than as set forth or contemplated in the Prospectus;
(g) The Company and the Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, 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 the Subsidiaries; and any real property and buildings held
under lease by the Company and the 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 the Subsidiaries;
(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 agreement or instrument to which the Company or either of
the Subsidiaries is a party or by which the Company or the Subsidiaries are
bound or to which any of the property or assets of the Company or the
Subsidiaries 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 or 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; and no consent, approval,
authorization, order, registration or 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 and such
consents, approvals,
-4-
5
Draft of February 15, 1996
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 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 any of the Company
or the Subsidiaries are 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 individually or in the aggregate have a material
adverse effect on the current or future consolidated financial position,
stockholders' equity or results of operations of the Company and the
Subsidiaries; 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, L.L.P., who have certified certain
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
audited) as certified by the independent accountants named in subsection 1(p).
No other financial
-5-
6
Draft of February 15, 1996
statements or schedules are required to be included in the Registration
Statement. The selected financial data set forth in the Prospectus under the
caption "Capitalization" and "Selected 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 in the
Registration Statement by the Act, the Exchange 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 on
the condition (financial or otherwise), business, results of operations or
prospects of the Company or the Subsidiaries; 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 on the condition
(financial or otherwise) business, results of operations or prospects of the
Company and the Subsidiaries, taken as a whole;
(t) Except as otherwise disclosed in the Prospectus, the
Company now holds and at each Time of Delivery 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 on the
Company and the Subsidiaries, 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;
-6-
7
Draft of February 15, 1996
(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. Neither the Company nor either 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 on the Company and
the Subsidiaries taken as a whole. 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 adequate for its business, including, but not limited to, insurance
covering clinical trial liability, product liability and real and personal
property owned or leased against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against, 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 accordance with experimental
protocols, procedures and controls pursuant to accepted professional scientific
standards for the clinical study 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;
(x) The Company and the Subsidiaries: (i) are 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) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their business as currently conducted; and (iii)
are 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 on the Company and the
Subsidiaries. No action, proceeding, revocation proceeding, writ, injunction
or claim is pending or threatened against the Company or the Subsidiaries
relating to the Environmental Laws or to the Company's or Subsidiaries'
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
-7-
8
Draft of February 15, 1996
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;
(y) Neither the Company nor either of the Subsidiaries
are engaged in the generation, use, manufacture, transportation or storage of
any Hazardous Materials on any of the Company's or the Subsidiaries' properties
or former properties, except where such use, manufacture, transportation or
storage is in compliance with Environmental Laws. No Hazardous Materials have
been treated or disposed of on any of the Company's or the Subsidiaries'
properties or on properties formerly owned or leased by the Company or the
Subsidiaries 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 or the Subsidiaries'
properties or former properties for which the cost of remediation would
materially and adversely affect the Company and the Subsidiaries, take as a
whole;
(z) The Company has not at any time during the last five
years, nor has either of the Subsidiaries since the acquisition of the
Subsidiaries 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 of 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
-8-
9
Draft of February 15, 1996
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 __________ 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 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, and in such authorized denominations and
registered in such names 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 certified or official bank check or checks, payable
to the order of the Company in New York Clearing House (next 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
____________, 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(j) hereof, will be
delivered at the offices of Xxxxxxx, Phleger & Xxxxxxxx L.L.P., 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
-9-
10
Draft of February 15, 1996
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.
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
-10-
11
Draft of February 15, 1996
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 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,
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 upon exercise of stock
options, or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of this Agreement), without the prior
written consent of Xxxxxxx, Xxxxx & Co.; provided, however, that the Company
may 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;
(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 five 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
-11-
12
Draft of February 15, 1996
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);
(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 list for quotation the
Shares on the National Association of Securities Dealers Automated Quotations
National Market System ("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 or otherwise dispose of any shares of
the Stock or any securities of the Company that are substantially similar to
the Shares, including but not limited to any securities convertible into,
exchangeable for such shares of Stock, or any such substantially similar
securities, during the period beginning from the date hereof and continuing to
and including the date 180 days after the date of the Prospectus without your
prior written contract, and to cause such additional stockholders and
optionholders of the Company as may be requested by the Underwriters to
likewise agree to such limitations for such 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
-12-
13
Draft of February 15, 1996
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.
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), (xi),
(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 L.L.P., 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;
-13-
14
Draft of February 15, 1996
(e) Xxxxx & Xxxxxxx, special 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, L.L.P. 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(a) (the executed copy of the letter
delivered prior to the execution of this Agreement is attached as Annex V(b)
hereto and a draft of the form of letter to be delivered on the effective date
of any post-effective amendment to the Registration Statement and as of each
Time of Delivery is attached as Annex V(c) hereto);
(g) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the latest audited
financial statements included or incorporated by reference in the Prospectus
any loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as 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 or long-term debt of the Company or any of its subsidiaries
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 Shares to be sold at such Time of Delivery shall
have been duly listed for quotation on NASDAQ;
-14-
15
Draft of February 15, 1996
(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 from such other stockholders or optionholders
of the Company as may be requested by the Underwriters 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
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 (e) 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
-15-
16
Draft of February 15, 1996
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, 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
-16-
17
Draft of February 15, 1996
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. 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 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
-17-
18
Draft of February 15, 1996
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 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 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
-18-
19
Draft of February 15, 1996
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, 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.
-19-
20
Draft of February 15, 1996
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the Representatives plus one
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,
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
-20-
21
Draft of February 15, 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 . . . . . . . . . . . . . . . . . . .
=========== ===========
-21-
22
Draft of February 15, 1996
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 (xi) of this Section 7(c), they have no reason to believe
that, as of its effective date, the 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.
-22-
23
Draft of February 15, 1996
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 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) 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 or is subject to
no material liability or disability by reason of failure to be so qualified in
any such jurisdiction (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 issued shares of
capital stock of each such subsidiary have been duly and validly authorized and
issued, are fully paid and non-assessable, and (except for directors'
qualifying shares) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims (such counsel being
entitled to rely in respect of the opinion in this clause upon opinions of
local counsel 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
and certificates);
(v) The Company and its subsidiaries have good
and marketable title in fee simple to all real property owned by them, 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 its subsidiaries; and 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
-23-
24
Draft of February 15, 1996
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 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 on the current or future consolidated financial position, stockholders'
equity or results of operations of the Company and its subsidiaries; and, to
the best of such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(vii) This 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 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
agreement or instrument known to such counsel to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
is bound or to which any of the property or assets of the Company or any of its
subsidiaries 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 any
statute or any order, rule or regulation known to such counsel of any 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, order,
registration or 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, 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;
(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
-24-
25
Draft of February 15, 1996
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;
(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;
(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 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
(xiv) 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 (xi) of this Section 7(c), they have no reason to believe
that, as of its effective date, the 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,
-25-
26
Draft of February 15, 1996
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.
-26-
27
Draft of February 15, 1996
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;
-27-
28
Draft of February 15, 1996
(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,
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.
-28-
29
Draft of February 15, 1996
ANNEX IV -- FORM OF OPINION OF
XXXXX & XXXXXXX
-29-
30
Draft of February 15, 1996
ANNEX V -- FORM OF COMFORT LETTER
Pursuant to Section 7(d) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(x) 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;
(xi) 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");
(xii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's quarterly
report on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which have been
separately furnished to the Representatives; and on the basis of
specified procedures including inquiries of officials of the Company
who have responsibility for financial and accounting matters regarding
whether the unaudited condensed consolidated financial statements
referred to in paragraph (vi)(A)(i) below comply as to form in the
related in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations, nothing came to their attention that caused
them to believe that the unaudited condensed consolidated financial
statements do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and
the related published rules and regulations;
(xiii) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years
31
Draft of February 15, 1996
included in the Prospectus and included or incorporated by reference
in Item 6 of the Company's Annual Report on Form 10-K for the most
recent fiscal year agrees with the corresponding amounts (after
restatement where applicable) in the audited consolidated financial
statements for such five fiscal years which were included or
incorporated by reference in the Company's Annual Reports on Form 10-K
for such fiscal years;
(xiv) They have compared the information in the Prospectus
under selected captions with the disclosure requirements of Regulation
S-K and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing
procedures that caused them to believe that this information does not
conform in all material respects with the disclosure requirements of
Items 301, 302, 402 and 503(d), respectively, of Regulation S-K;
(xv) 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) (i) the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus and/or included or incorporated by reference in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and
regulations, or (ii) any material modifications should be made
to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus or included in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus, for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial
-2-
32
Draft of February 15, 1996
statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent
fiscal year;
(C) the unaudited financial statements which were
not included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited financial statements included or
incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;
(D) 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 stock
appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case 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 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
(E) 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 revenues or
operating profit or the total or per share amounts of
consolidated net income 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
(xvi) 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 and
other procedures referred to in paragraphs (iii) and (vi) 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 Representatives which are derived from the general
accounting records of the Company and its subsidiaries, which appear
in the Prospectus (excluding
-3-
33
Draft of February 15, 1996
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.
-4-
