EXHIBIT 1.1
3,500,000 Shares
KOS PHARMACEUTICALS, INC.
Common Stock
UNDERWRITING AGREEMENT
March __, 1997
XXXXX & COMPANY
XXXXXX, READ & CO. INC.
SALOMON BROTHERS INC
As Representatives of the several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. INTRODUCTORY. Kos Pharmaceuticals, Inc., a Florida corporation (the
"Company") proposes to sell, pursuant to the terms of this Agreement, to the
several underwriters named in Schedule A hereto (the "Underwriters," or, each,
an "Underwriter"), an aggregate of 3,500,000 shares of Common Stock, $.01 par
value (the "Common Stock") of the Company. The aggregate of 3,500,000 shares so
proposed to be sold is hereinafter referred to as the "Firm Stock". The Company
also proposes to sell to the Underwriters, upon the terms and conditions set
forth in Section 3 hereof, up to an additional 525,000 shares of Common Stock
(the "Optional Stock"). The Firm Stock and the Optional Stock are hereinafter
collectively referred to as the "Stock". Xxxxx & Company ("Cowen"), Xxxxxx, Read
& Co. Inc. and Salomon Brothers Inc are acting as representatives of the several
Underwriters and in such capacity are hereinafter referred to as the
"Representatives".
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-17991) in
the form in which it became or becomes effective and also in such form
as it may be when any post-effective amendment thereto shall become
effective with respect to the Stock, including any preeffective
prospectuses
included as part of the registration statement as originally filed or
as part of any amendment or supplement thereto, or filed pursuant to
Rule 424 under the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder,
copies of which have heretofore been delivered to you, has been
prepared by the Company in conformity in all material respects with the
requirements of the Securities Act and has been filed with the
Commission under the Securities Act. The term Registration Statement as
used in this Agreement means the registration statement in the form in
which it is declared effective by the Commission. If it is
contemplated, at the time this Agreement is executed, that a
post-effective amendment to the registration statement will be filed
and must be declared effective before the offering of the Stock may
commence, the term "Registration Statement" as used in this Agreement
means the registration statement as amended by said post-effective
amendment. The term "Registration Statement" as used in this Agreement
shall also include any registration statement relating to the Stock
that is filed and declared effective pursuant to Rule 462(b) under the
Securities Act. The term "Prospectus" as used in this Agreement means
the prospectus in the form included in the Registration Statement, or,
(A) if the prospectus included in the Registration Statement omits
information in reliance on Rule 430A under the Securities Act and such
information is included in a prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act, the term "Prospectus"
as used in this Agreement means the prospectus in the form included in
the Registration Statement as supplemented by the addition of the Rule
430A information contained in the prospectus filed with the Commission
pursuant to Rule 424(b) and (B) if prospectuses that meet the
requirements of Section 10(a) of the Securities Act are delivered
pursuant to Rule 434 under the Securities Act, then (i) the term
"Prospectus" as used in this Agreement means the "prospectus subject to
completion" (as such term is defined in Rule 434(g) under the
Securities Act) as supplemented by (a) the addition of Rule 430A
information or other information contained in the form of prospectus
delivered pursuant to Rule 434(b)(2) under the
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Securities Act or (b) the information contained in the term sheets
described in Rule 434(b)(3) under the Securities Act, and (ii) the date
of such prospectuses shall be deemed to be the date of the term sheets.
The term "Preeffective Prospectus" as used in this Agreement means the
prospectus subject to completion in the form included in the
Registration Statement at the time of the initial filing of the
Registration Statement with the Commission, and as such prospectus
shall have been amended from time to time prior to the date of the
Prospectus.
(ii) The Commission has not issued or threatened to issue any
order preventing or suspending the use of any Preeffective Prospectus,
and, at its date of issue, each Preeffective Prospectus conformed in
all material respects with the requirements of the Securities Act and
did not include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; and, when the Registration
Statement becomes effective and at all times subsequent thereto up to
and including the Closing Date (as hereinafter defined), the
Registration Statement and the Prospectus and any amendments or
supplements thereto conformed and will conform in all material respects
to the requirements of the Securities Act and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto,
included or will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the foregoing representations, warranties and agreements
shall not apply to information contained in or omitted from any
Preeffective Prospectus or the Registration Statement or the Prospectus
or any such amendment or supplement thereto in reliance upon, and in
conformity with, written information relating to any Underwriter (or
relating to the distribution) furnished to the Company by or on behalf
of any Underwriter, directly or through you, specifically for use in
the preparation thereof; there is no franchise, lease, contract,
agreement or document required to
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be described in the Registration Statement or Prospectus or to be filed
as an exhibit to the Registration Statement which is not described or
filed therein as required; and all descriptions of any such franchises,
leases, contracts, agreements or documents contained in the
Registration Statement are accurate and complete descriptions of such
documents in all material respects.
(iii) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, and except as
set forth or contemplated in the Prospectus, neither the Company nor
any of its subsidiaries has incurred any liabilities or obligations,
direct or contingent, nor entered into any transactions not in the
ordinary course of business, and there has not been any material
adverse change in the condition (financial or otherwise), properties,
business, management, prospects, net worth or results of operations of
the Company and its subsidiaries considered as a whole, or any change
in the capital stock (except pursuant to the Company's stock option
plans), or a material change in the short-term or long-term debt of the
Company and its subsidiaries considered as a whole.
(iv) The financial statements, together with the related notes
and schedules, set forth in the Prospectus and elsewhere in the
Registration Statement fairly present, on the basis stated in the
Registration Statement, the financial position and the results of
operations and changes in financial position of the Company and its
consolidated subsidiaries at the respective dates or for the respective
periods therein specified. Such statements and related notes and
schedules have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis except as may be
set forth in the Prospectus. The other financial accounting information
and data of the Company set forth in the Prospectus and elsewhere in
the Registration Statement is accurately presented and has been
prepared on a basis consistent with such financial statements and the
books and records of the Company. All financial and statistical
information and data set forth in the Prospectus and elsewhere in the
Registration Statement that was obtained from third party source
materials is,
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in all material respects, an accurate presentation of the information
or data as presented in the source from which it was derived.
(v) Xxxxxx Xxxxxxxx LLP, who have expressed their opinions on
the audited financial statements included in the Registration Statement
and the Prospectus, are independent public accountants as required by
the Securities Act and the Rules and Regulations.
(vi) The Company has and each of its subsidiaries has been duly
organized and is validly existing and in good standing as a corporation
under the laws of its jurisdiction of organization; and the Company is
and each of its subsidiaries is duly qualified to do business and in
good standing as a foreign corporation in all other jurisdictions where
its ownership or leasing of properties or the conduct of its business
requires such qualification. The Company has and each of its
subsidiaries has all requisite corporate power and authority, and all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public regulatory
or governmental agencies and bodies to own, lease and operate its
properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus, and no such
consent, approval, authorization, order, registration, qualification,
license or permit contains a materially burdensome restriction not
adequately disclosed in the Registration Statement and the Prospectus.
Aeropharm Technology, Inc., a Florida corporation, is owned and
controlled by the Company. The Company does not, directly or
indirectly, own or control any other corporation, association or
entity.
(vii) The Company's authorized and outstanding capital stock is
on the date hereof, and will be on the Closing Date, as set forth under
the heading "Capitalization" in the Prospectus; the outstanding shares
of Common Stock of the Company conform to the description thereof in
the Prospectus, have been duly authorized and validly issued and are
fully paid and nonassessable and have been issued in compliance with
all federal and state securities laws and were not issued in violation
of or subject to any
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preemptive rights or similar rights to subscribe for or purchase
securities and conform to the description thereof contained in the
Prospectus. Except as disclosed in and or contemplated by the
Prospectus and the financial statements of the Company and related
notes thereto included in the Prospectus, the Company does not have
outstanding any options or warrants to purchase, or any preemptive
rights or other rights to subscribe for or to purchase any securities
or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations, except for options granted
subsequent to the date of information provided in the Prospectus
pursuant to the Company's employee and stock option plans as disclosed
in the Prospectus. The description of the Company's stock option and
other stock plans or arrangements, and the options or other rights
granted or exercised thereunder, as set forth in the Prospectus,
accurately and fairly presents in all material respects the information
required by the Rules and Regulations to be shown with respect to such
plans, arrangements, options and rights. All outstanding shares of
capital stock of each of the subsidiaries of the Company have been duly
authorized and validly issued, and are fully paid and nonassessable and
are owned directly by the Company free and clear of any liens,
encumbrances, equities or claims.
(viii) The Stock to be issued and sold by the Company to the
Underwriters hereunder has been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will
be duly and validly issued, fully paid and nonassessable and free of
any preemptive or similar rights and will conform to the description
thereof in the Prospectus.
(ix) Except 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
subsidiary is subject, which, if determined adversely to the Company or
any such subsidiary, might individually or in the aggregate (i) prevent
or adversely affect the transactions contemplated by this Agreement,
(ii) suspend the effectiveness of the
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Registration Statement, (iii) prevent or suspend the use of the
Preeffective Prospectus in any jurisdiction or (iv) result in a
material adverse change in the condition (financial or otherwise),
properties, business, management, prospects, net worth or results of
operations of the Company and, to the Company's knowledge, there is no
valid basis for any such legal or governmental proceeding; and to the
best of the Company's knowledge no such proceedings are threatened or
contemplated against the Company or any subsidiary by governmental
authorities or others. The Company is not a party or subject to the
provisions of any material injunction, judgment, decree or order of any
court, regulatory body or other governmental agency or body. The
description of the Company's litigation under the heading
"Business--Legal Proceedings" in the Prospectus is true and correct and
complies with the Rules and Regulations.
(x) Neither the Company nor any subsidiary of the Company is in
violation of its respective articles of incorporation or by-laws or in
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument
material to the conduct of the business of the Company and its
subsidiaries considered as a whole, to which the Company or any of its
subsidiaries or their respective property is bound.
(xi) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated will not
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, note
agreement or other agreement or instrument to which the Company or any
of the subsidiaries is a party or by which it or any of its properties
is or may be bound, the articles of incorporation, by-laws or other
organizational documents of the Company or any of its subsidiaries, or
any law, order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries
or any of their properties or result in the creation of a
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lien on any of the assets of the Company or its subsidiaries.
(xii) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation by the
Company of the transactions contemplated by this Agreement, except such
as may be required by the National Association of Securities Dealers,
Inc. (the "NASD") or under the Securities Act or the securities or
"Blue Sky" laws of any jurisdiction in connection with the purchase and
distribution of the Stock by the Underwriters.
(xiii) The Company has the full corporate power and authority to
enter into this Agreement and to perform its obligations hereunder
(including to issue, sell and deliver the Stock to be sold by it
hereunder), and this Agreement has been duly and validly authorized,
executed and delivered by the Company and is a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws or the public policy underlying such laws.
(xiv) The Company and its subsidiaries are in all material
respects in compliance with, and conduct their businesses in conformity
with, all applicable federal, state, local and foreign laws, rules and
regulations of any court or governmental agency or body; to the
knowledge of the Company, otherwise than as set forth in the
Registration Statement and the Prospectus, no prospective change in any
of such federal or state laws, rules or regulations has been adopted
which, when made effective, would have a material adverse effect on the
operations of the Company and its subsidiaries.
(xv) The Company and each of its subsidiaries (A) are in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (B) have received
all permits, licenses or other
8
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (C) 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 permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would
not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries considered as a whole.
(xvi) The Company and each of its subsidiaries have such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities ("permits"), including, without limitation,
under any applicable Environmental Laws, as are necessary to own, lease
and operate their respective properties and to conduct their businesses
except where such failure to receive required permits would not, singly
or in the aggregate, have a material adverse effect on the Company and
its subsidiaries considered as a whole; the Company and each of its
subsidiaries have fulfilled and performed all of their material
obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of
the rights of the holder of any such permit; and, except as described
in the Prospectus, such permits contain no restrictions that are
materially burdensome to the Company or any of its subsidiaries.
(xvii) The clinical trials and the animal studies conducted by
or on behalf of the Company or in which the Company has participated
that are described in the Prospectus were and, if still pending, are
being conducted in all material respects in accordance with standard
medical and scientific research procedures, and the Company has
operated and currently is in compliance in all material respects with
all applicable FDA rules, regulations and policies.
(xviii) The Company and its subsidiaries have filed all federal,
state, local and foreign income, payroll, franchise and other tax
returns which are required to be filed through
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the date hereof, or has received extensions thereof, and have paid all
taxes shown as due thereon or with respect to any of their properties
to the extent the same are material and have become due, and there is
no tax deficiency that has been, or to the knowledge of the Company is
likely to be, asserted against the Company or any of its subsidiaries
or any of their respective properties or assets that would adversely
affect the financial position, business or operations of the Company
and its subsidiaries.
(xix) Except as described in the Registration Statement, no
person or entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement or otherwise, except for
persons and entities who have expressly waived such right or who have
been given proper notice and have failed to exercise such right within
the time or times required under the terms and conditions of such
right.
(xx) Neither the Company nor any of its officers, directors or
affiliates (as that term is defined in Rule 144, promulgated under the
Securities Act) has taken or will take, directly or indirectly, any
action designed or intended to stabilize or manipulate the price of any
security of the Company, or which caused or resulted in, or which might
in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the
Company.
(xxi) The Company has provided you with all annual, audited
financial statements since June 30, 1992 to the date hereof that are
available to the officers of the Company, and the unaudited financial
statements for the six months ended December 31, 1995 and 1996.
(xxii) Except as otherwise described in the Prospectus, the
Company and its subsidiaries own or possess the right to use (i) all
patents, trademarks, trademark registrations, service marks, service
xxxx registrations, trade names, copyrights, licenses, inventions,
trade secrets and rights described in the Prospectus as being owned by
them and (ii) all other material patents,
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trademarks, trademark registrations, trade names, copyrights, licenses,
inventions and trade secrets employed by them in the operation of their
respective businesses, and, except as described in the Prospectus, the
Company is not aware of any claim to the contrary or any challenge by
any other person to the rights of the Company and its subsidiaries with
respect to the foregoing. To the Company's knowledge, except as
described in the Prospectus, its business as now conducted and as
proposed to be conducted does not and will not infringe or conflict
with in any material respect patents, trademarks, service marks, trade
names, copyrights, trade secrets, licenses or other intellectual
property or franchise right of any person. Except as described in the
Prospectus, no claim has been made against the Company alleging the
infringement by the Company of any patent trademark, service xxxx,
trade name, copyright, trade secret, license in or other intellectual
property right or franchise right of any person.
(xxiii) The License Agreement dated February 7, 1997 by and
between Xxxxxx-Xxxxx Laboratories, Inc. and the Company has been duly
and validly authorized, executed and delivered by the Company and is a
valid and existing contract of the Company.
(xxiv) The Company and its subsidiaries have performed all
material obligations required to be performed by them under all
contracts required by Item 601 (b)(10) of Regulation S-K under the
Securities Act to be filed as exhibits to the Registration Statement,
and neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any other party to such contract is in default
under or in breach of any such obligations. Neither the Company nor any
of its subsidiaries has received any notice of such default or breach.
(xxv) The Company is not involved in any labor dispute nor, to
the Company's knowledge, is any such dispute threatened. The Company is
not aware that (A) any executive, key employee or significant group of
employees of the Company or any subsidiary plans to terminate
employment with the Company or any such subsidiary or (B) any such
executive or key employee is subject to any noncompete, nondisclosure,
confidentiality,
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employment, consulting or similar agreement that would be violated by
the present or proposed business activities of the Company and its
subsidiaries. Neither the Company nor any subsidiary has or expects to
have any liability for any prohibited transaction or funding deficiency
or any complete or partial withdrawal liability with respect to any
pension, profit sharing or other plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to which
the Company or any subsidiary makes or ever has made a contribution and
in which any employee of the Company or any subsidiary is or has ever
been a participant. With respect to such plans, the Company and each
subsidiary is in compliance in all material respects with all
applicable provisions of ERISA.
(xxvi) The Company has obtained the written agreements described
in Section 3 of this Agreement from each of its officers and directors
and each person listed in Schedule B hereto.
(xxvii) The Company and its subsidiaries have, and the Company
and its subsidiaries as of the Closing Date will have, good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company or of its subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such
as are described in the Prospectus or such as would not have a material
adverse effect on the Company and its subsidiaries considered as a
whole; and any real property and buildings held under lease by the
Company and its subsidiaries or proposed to be held after giving effect
to the transactions described in the Prospectus are, or will be as of
the Closing Date, held by them under valid, subsisting and enforceable
leases with such exceptions as would not have a material adverse effect
on the Company and its subsidiaries considered as a whole in each case
except as described in or contemplated by the Prospectus.
(xxviii) The Company and its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are customary in the businesses in which
they are engaged or propose to
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engage after giving effect to the transactions described in the
Prospectus; and neither the Company nor any subsidiary of the Company
has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue their business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the
earnings, business or operations of the Company and its subsidiaries
considered as a whole, except as described in or contemplated by the
Prospectus.
(xxix) Other than as contemplated by this Agreement, there is no
broker, finder or other party that is entitled to receive from the
Company any brokerage or finder's fee or other fee or commission as a
result of any of the transactions contemplated by this Agreement.
(xxx) The Company has complied with all provisions of Section
517.075 Florida Statutes (Chapter 92-198; Laws of Florida).
(xxxi) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted
only in accordance with management's general or specific authorization;
and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxxii) To the Company's knowledge, neither the Company nor any
of its subsidiaries nor any employee or agent of the Company or any of
its subsidiaries has made any payment of funds of the Company or any of
its subsidiaries or received or retained any funds in violation of any
law, rule or regulation, which payment, receipt or retention of funds
is of a character required to be disclosed in the Prospectus.
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(xxxiii) Neither the Company nor any of its subsidiaries is or,
after application of the net proceeds of this offering as described
under the caption "Use of Proceeds" in the Prospectus, will become 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.
(xxxiv) Each certificate signed by any officer of the Company
and delivered to the Underwriters or counsel for the Underwriters
pursuant to this Agreement shall be deemed to be a representation and
warranty by the Company as to the matters covered thereby.
(xxxv) No executive officer of the Company has received or is
aware of any communication (written or oral) relating to the
termination or modification of any of the agreements described or
referred to in the Prospectus under the caption "Business", the
termination or modification of which would have a material adverse
effect on the Company.
(xxxvi) Except as disclosed in the Prospectus, there are no
business relationships or related party transactions required to be
disclosed therein by Item 404 of Regulation S-K of the Commission.
3. PURCHASE BY, AND SALE AND DELIVERY TO, UNDERWRITERS--CLOSING DATES.
On the basis of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters the Firm Stock; and the Underwriters agree,
severally and not jointly, to purchase the Firm Stock from the Company, the
number of shares of Firm Stock to be purchased by each Underwriter being set
opposite its name in Schedule A, subject to adjustment in accordance with
Section 12 hereof.
The purchase price per share to be paid by the Underwriters to the
Company will be $ _____ per share (the "Purchase Price").
The Company will deliver the Firm Stock to the Representatives for the
respective accounts of the several Underwriters in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the
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Company given at or prior to 12:00 Noon, New York Time, on the second full
business day preceding the First Closing Date (as defined below) or, if no such
direction is received, in the names of the respective Underwriters or in such
other names as Cowen may designate (solely for the purpose of administrative
convenience) and in such denominations as Cowen may determine, against payment
of the aggregate Purchase Price therefor by wire of federal or other immediately
available funds, payable to the order of the Company, all at the offices of
Xxxxx Xxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The time
and date of the delivery and closing shall be at _______ A.M., New York Time, on
________, 1996, in accordance with Rule 15c6-1 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The time and date of such payment and
delivery are herein referred to as the "First Closing Date". The Closing Date
and the location of delivery of, and the form of payment for, the Firm Stock may
be varied by agreement among the Company and Cowen. The Closing Date may be
postponed pursuant to the provisions of Section 12.
The Company shall make the certificates for the Stock available to the
Representatives for examination on behalf of the Underwriters not later than
10:00 A.M., New York Time, on the business day preceding the First Closing Date
at the offices of Xxxxx & Company, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
It is understood that Cowen, individually and not as Representative of
the several Underwriters, may (but shall not be obligated to) make payment to
the Company on behalf of any Underwriter or Underwriters for the Stock to be
purchased by such Underwriter or Underwriters. Any such payment by Cowen shall
not relieve such Underwriter or Underwriters from any of its or their other
obligations hereunder.
The several Underwriters agree to make an initial public offering of
the Firm Stock at the initial public offering price as soon after the
effectiveness of the Registration Statement as in their judgment is advisable.
The Representatives shall promptly advise the Company of the making of the
initial public offering.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, the
Company hereby grants to the Underwriters an option to purchase, severally and
not jointly, up to the aggregate number of 525,000 shares of Optional Stock. The
price per share to be paid for the
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Optional Stock shall be the Purchase Price. The option granted hereby may be
exercised as to all or any part of the Optional Stock at any time, and from time
to time, not more than thirty (30) days subsequent to the effective date of this
Agreement. No Optional Stock shall be sold and delivered unless the Firm Stock
previously has been, or simultaneously is, sold and delivered. The right to
purchase the Optional Stock or any portion thereof may be surrendered and
terminated at any time upon notice by the Underwriters to the Company.
The option granted hereby may be exercised by the Underwriters by
giving written notice from Cowen to the Company setting forth the number of
shares of the Optional Stock to be purchased by them and the date and time for
delivery of and payment for the Optional Stock. Each date and time for delivery
of and payment for the Optional Stock (which may be the First Closing Date, but
not earlier) is herein called the "Option Closing Date" and shall in no event be
earlier than two (2) business days nor later than ten (10) business days after
written notice is given. (The Option Closing Date and the First Closing Date are
herein called the "Closing Dates".) Optional Stock shall be purchased for the
account of each Underwriter in the same proportion as the number of shares of
Firm Stock set forth opposite such Underwriter's name in Schedule A hereto bears
to the total number of shares of Firm Stock (subject to adjustment by the
Underwriters to eliminate odd lots). Upon exercise of the option by the
Underwriters and subject to the terms and conditions herein set forth, the
Company agrees to sell to the Underwriters the number of shares of Optional
Stock set forth in the written notice of exercise and the Underwriters agree,
severally and not jointly, to purchase the number of such shares determined as
aforesaid.
The Company will deliver the Optional Stock to the Underwriters in the
form of definitive certificates, issued in such names and in such denominations
as the Representatives may direct by notice given at or prior to 12:00 Noon, New
York Time, on the second full business day preceding the Option Closing Date or,
if no such direction is received, in the names of the respective Underwriters or
in such other names as Cowen may designate (solely for the purpose of
administrative convenience) and in such denominations as Cowen may determine,
against payment of the aggregate Purchase Price therefor by wire of federal or
other immediately available funds, payable to the order of the Company, all at
the offices of Xxxxx Xxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. The Option Closing Date and the location of delivery of, and the form of
payment for, the Optional Stock may be varied by
16
agreement between the Company and Cowen. The Option Closing Date may be
postponed pursuant to the provisions of Section 12.
The Company hereby agrees, and the Company shall, concurrently with the
execution of this Agreement, deliver agreements executed by (i) each of the
directors and officers of the Company and (ii) each person listed in
Schedule B hereto, pursuant to which each such person agrees not (A) directly or
indirectly, to offer, sell, assign, transfer, encumber, pledge, contract to
sell, grant an option to purchase or otherwise dispose of, other than by
operation of law, any Common Stock of the Company or (B) to enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of Common Stock, whether any such transaction
described in clauses (A) or (B) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise for a period of 180 days
after the date of the Prospectus without the prior written consent of Cowen. The
foregoing sentence shall not apply to (a) the Stock to be sold hereunder or (b)
the issuance by the Company of shares of Common Stock upon the exercise of an
option or warrant or the conversion of a security outstanding on the date hereof
of which the Underwriters have been advised in writing or (c) the issuance by
the Company of any option to purchase any shares of Common Stock pursuant to its
Stock Option Plan described in the Prospectus.
4. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company covenants and
agrees with the several Underwriters that:
(a) The Company will (i) if the Company and the Representatives
have determined not to proceed pursuant to Rule 430A, use its best
efforts to cause the Registration Statement to become effective, (ii)
if the Company and the Representatives have determined to proceed
pursuant to Rule 430A, use its best efforts to comply with the
provisions of and make all requisite filings with the Commission
pursuant to Rule 430A and Rule 424 of the Rules and Regulations and
(iii) if the Company and the Representatives have determined to deliver
Prospectuses pursuant to Rule 434 of the Rules and Regulations, to use
its best efforts to comply with all the applicable provisions thereof.
The Company will advise the Representatives promptly as to the time at
which the Registration Statement becomes effective, will advise the
Representatives
17
promptly of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose, and will use its best efforts to
prevent the issuance of any such stop order and to obtain as soon as
possible the lifting thereof, if issued. The Company will advise the
Representatives promptly of the receipt of any comments of the
Commission or any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for
additional information and will not at any time file any amendment to
the Registration Statement or supplement to the Prospectus which shall
not previously have been submitted to the Representatives a reasonable
time prior to the proposed filing thereof or to which the
Representatives shall reasonably object in writing or which is not in
compliance with the Securities Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon the request of the Representatives, any amendments or
supplements to the Registration Statement or the Prospectus which in
the opinion of the Representatives may be necessary to enable the
several Underwriters to continue the distribution of the Stock as
contemplated herein and will use its best efforts to cause the same to
become effective as promptly as possible.
(c) If at any time after the effective date of the Registration
Statement when a prospectus relating to the Stock is required to be
delivered under the Securities Act any event relating to or affecting
the Company or any of its subsidiaries occurs as a result of which the
Prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the
Securities Act, the Company will promptly notify the Representatives
thereof and will prepare an amended or supplemented prospectus which
will correct such statement or omission; and in case any Underwriter is
required to deliver a prospectus relating to the Stock nine (9) months
18
or more after the effective date of the Registration Statement, the
Company upon the request of the Representatives and at the expense of
such Underwriter will prepare promptly such prospectus or prospectuses
as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Securities Act.
(d) The Company will deliver to the Representatives, at or
before the Closing Date, three (3) signed copies of the Registration
Statement, as originally filed with the Commission, and all amendments
thereto including all financial statements and exhibits thereto, and
will deliver to the Representatives such number of copies of the
Registration Statement, including such financial statements but without
exhibits, and all amendments thereto, as the Representatives may
reasonably request. The Company will deliver or mail to or upon the
order of the Representatives, from time to time until the effective
date of the Registration Statement, as many copies of the Preeffective
Prospectus as the Representatives may reasonably request. The Company
will deliver or mail to or upon the order of the Representatives on the
date of the initial public offering, and thereafter from time to time
during the period when delivery of a prospectus relating to the Stock
is required under the Securities Act, as many copies of the Prospectus,
in final form or as thereafter amended or supplemented as the
Representatives may reasonably request; provided, however, that the
expense of the preparation and delivery of any prospectus required for
use nine (9) months or more after the effective date of the
Registration Statement shall be borne by the Underwriters required to
deliver such prospectus.
(e) The Company will make generally available to its
stockholders as soon as practicable, but not later than fifteen (15)
months after the effective date of the Registration Statement, an
earnings statement which will be in reasonable detail (but which need
not be audited) and which will comply with Section 11(a) of the
Securities Act, covering a period of at least twelve (12) months
beginning after the "effective date" (as defined in Rule 158 under the
Securities Act) of the Registration Statement.
19
(f) The Company will cooperate with the Representatives to
enable the Stock to be registered or qualified for offering and sale by
the Underwriters and by dealers under the securities laws of such
jurisdictions as the Representatives may designate and at the request
of the Representatives will make such applications and furnish such
consents to service of process or other documents as may be required of
it as the issuer of the Stock for that purpose; provided, however, that
the Company shall not be required to qualify to do business or to file
a general consent (other than that arising out of the offering or sale
of the Stock) to service of process in any such jurisdiction where it
is not now so subject. The Company will, from time to time, prepare and
file such statements and reports as are or may be required of it as the
issuer of the Stock to continue such qualifications in effect for so
long a period as the Representatives may reasonably request for the
distribution of the Stock. The Company will advise the Representatives
promptly after the Company becomes aware of the suspension of the
qualifications or registration of (or any such exception relating to)
the Common Stock of the Company for offering, sale or trading in any
jurisdiction or of any initiation or threat of any proceeding for any
such purpose, and in the event of the issuance of any orders suspending
such qualifications, registration or exception, the Company will, with
the cooperation of the Representatives, use its best efforts to obtain
the withdrawal thereof.
(g) As and when required by the Rules and Regulations, the
Company will furnish to its stockholders annual reports containing
financial statements certified by independent public accountants.
During the period of five (5) years from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of the
other Underwriters, as soon as they are available, copies of each
annual report of the Company and each other report furnished by the
Company to its stockholders and will deliver to the Representatives,
(i) as soon as they are available, copies of any other reports
(financial or other) which the Company shall publish or otherwise make
available to any of its stockholders as such and (ii) as soon as they
are available, copies of any reports and financial
20
statements furnished to or filed with the Commission or any national
securities exchange or the NASD. So long as the Company has active
subsidiaries, such financial statements will 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.
Separate financial statements shall be furnished for all subsidiaries
whose accounts are not consolidated but which at the time are
significant subsidiaries as defined in the Rules and Regulations.
(h) The Company will use its best efforts to maintain the
inclusion of the Stock on the Nasdaq National Market (or on a national
securities exchange) for a period of five (5) years after the effective
date of the Registration Statement.
(i) The Company will maintain a transfer agent and registrar for
its Common Stock.
(j) The Company will not (i) directly or indirectly, offer,
sell, assign, transfer, encumber, pledge, contract to sell, grant an
option to purchase or otherwise dispose of, other than by operation of
law, any shares of Common Stock or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any
such transaction described in clauses (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash
or otherwise during the 180 days following the date on which the price
of the Common Stock to be purchased by the Underwriters is set, other
than (A) the Company's sale of Common Stock hereunder, (B) the issuance
by the Company of shares of Common Stock upon the exercise of an option
or warrant or the conversion of a security outstanding on the date
hereof of which the Underwriters have been advised in writing and (C)
the issuance by the Company of any option to purchase any shares of
Common Stock pursuant to its Stock Option Plan described in the
Prospectus.
(k) Prior to filing with the Commission any reports on Form SR
pursuant to Rule 463 of Rules and Regulations, the Company will furnish
a
21
copy thereof to the counsel for the Underwriters and receive and
consider its comments thereon, and will deliver promptly to the
Representatives a signed copy of each report on Form SR filed by it
with the Commission.
(l) The Company will apply the net proceeds from the sale of the
Stock as set forth in the description under "Use of Proceeds" in the
Prospectus, which description complies in all respects with the
requirements of Item 504 of Regulation S-K.
(m) The Company will supply you with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the
Securities Act.
(n) Prior to the Closing Date the Company will issue no press
release or other communications directly or indirectly and hold no
press conference with respect to the Company or any of its
subsidiaries, the financial condition, results of operation, business,
prospects, assets or liabilities of any of them, or the offering of the
Stock, without your prior written consent. (o) ________ During the
period of five (5) years hereafter, the Company will furnish to the
Representatives and, upon request of the Representatives to each of the
Underwriters, as soon as available, copies of any report or
communication of the Company mailed generally to holders of its Common
Stock.
(p) The Company will use its best efforts to do and perform all
things required or necessary to be done and performed under this
Agreement by the Company prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Firm Stock.
5. PAYMENT OF EXPENSES. (a) The Company will pay (directly or by
reimbursement) the following costs, fees and expenses and all other costs, fees
and expenses incident to the performance of the obligations of the Company under
this Agreement: (i) all expenses and taxes incident to the issuance and delivery
of the Stock to the Representatives; (ii) all expenses incident to the
registration of the Stock under the Securities Act; (iii) the costs of preparing
stock
22
certificates (including printing and engraving costs); (iv) all fees and
expenses of the registrar and transfer agent of the Stock; (v) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Stock to the Underwriters; (vi) fees and expenses of the Company's
counsel and the Company's independent accountants; (vii) all costs and expenses
incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement, each Preeffective Prospectus and the
Prospectus (including all exhibits and financial statements) and all amendments
and supplements provided for herein and the Blue Sky memoranda and this
Agreement; (viii) all filing fees, attorneys' fees and expenses incurred by the
Company or the Underwriters in connection with exemptions from the qualifying or
registering (or obtaining qualification or registration of) all or any part of
the Stock for offer and sale under the Blue Sky or other securities laws of such
jurisdictions as the Representatives may designate; (ix) all fees and expenses
paid or incurred in connection with filings made with the NASD; and (x) all
other costs and expenses incident to the performance of the Company's
obligations hereunder which are not otherwise specifically provided for in this
Section.
6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of the Securities Act and the
respective officers, directors, partners, employees, representatives and agents
of each of such Underwriter (collectively, the "Underwriter Indemnified Parties"
and, each, an "Underwriter Indemnified Party"), against any losses, claims,
damages, liabilities or expenses (including (i) the reasonable cost of
investigating and (ii) defending against any claims therefor and counsel fees
incurred in connection therewith, unless the Company is entitled and elects to
assume the defense as contemplated in this subsection (a) and the Company has
not authorized the Underwriter Indemnified Party to retain additional counsel as
contemplated in this subsection (a)), joint or several, which may be based upon
the Securities Act, or any other statute or at common law, on the ground or
alleged ground that any Preeffective Prospectus, the Registration Statement or
the Prospectus (or any Preeffective Prospectus, the Registration Statement or
the Prospectus as from time to time amended or supplemented) includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, unless
such statement or omission was made in reliance upon,
23
and in conformity with, written information furnished to the Company by any
Underwriter, directly or through the Representatives, specifically for use in
the preparation thereof; provided, that with respect to any untrue statement or
omission or alleged untrue statement or omission made in any Registration
Statement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Underwriter Indemnified Party from whom the person
asserting any such losses, claims, damages or liabilities purchased the shares
of Common Stock concerned to the extent that any such loss, claim, damage or
liability of such Underwriter Indemnified Party results from the fact that a
copy of the Prospectus was not sent or given to such person at or prior to the
written confirmation of the sale of such shares of Common Stock to such person
as required by the Securities Act and if the untrue statement or omission
concerned has been corrected in the Prospectus; provided, however, that in no
case is the Company to be liable with respect to any claims made against any
Underwriter Indemnified Party against whom the action is brought unless such
Underwriter Indemnified Party shall have notified the Company in writing within
a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Underwriter Indemnified Party, but failure to notify the Company of such claim
shall not relieve it from any liability which it may have to any Underwriter
Indemnified Party otherwise than on account of its indemnity agreement contained
in this paragraph. The Company will be entitled to participate at its own
expense in the defense or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but if the Company elects to assume the
defense, such defense shall be conducted by counsel chosen by it. In the event
the Company elects to assume the defense of any such suit and retain such
counsel, any Underwriter Indemnified Parties, defendant or defendants in the
suit, may retain additional counsel but shall bear the fees and expenses of such
counsel unless (i) the Company shall have specifically authorized the retaining
of such counsel or (ii) the parties to such suit include any such Underwriter
Indemnified Parties and the Company and such Underwriter Indemnified Parties at
law or in equity have been advised by counsel to the Underwriters that one or
more legal defenses may be available to it or them which may not be available to
the Company, in which case the Company shall not be entitled to assume the
defense of such suit notwithstanding its obligation to bear the fees and
expenses of such counsel. The Company shall not be liable to indemnify any
person for any settlement of any such claim effected without the Company's
consent. This indemnity agreement is not exclusive and will be in addition to
any liability which the Company might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity to each
Underwriter Indemnified Party.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the
Securities Act (collectively, the "Company Indemnified Parties")
against any losses, claims, damages, liabilities or expenses
(including, unless the Underwriter or Underwriters elect to assume the
defense, the reasonable cost of investigating and defending against any
claims therefor and counsel fees incurred in connection therewith),
joint or several, which arise out of or are based in whole or in part
upon the
24
Securities Act, the Exchange Act or any other federal, state, local or
foreign statute or regulation, or at common law, on the ground or
alleged ground that any Preeffective Prospectus, the Registration
Statement or the Prospectus (or any Preeffective Prospectus, the
Registration Statement or the Prospectus, as from time to time amended
and supplemented) includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, but only insofar
as any such statement or omission was made in reliance upon, and in
conformity with, written information furnished to the Company by such
Underwriter, directly or through the Representatives, specifically for
use in the preparation thereof; provided, however, that in no case is
such Underwriter to be liable with respect to any claims made against
any Company Indemnified Party against whom the action is brought unless
such Company Indemnified Party shall have notified such Underwriter in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon the Company Indemnified Party, but failure to notify such
Underwriter of such claim shall not relieve it from any liability which
it may have to any Company Indemnified Party otherwise than on account
of its indemnity agreement contained in this paragraph. Such
Underwriter shall be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought
to enforce any such liability, but, if such Underwriter elects to
assume the defense, such defense shall be conducted by counsel chosen
by it. In the event that any Underwriter elects to assume the defense
of any such suit and retain such counsel, the Company Indemnified
Parties and any other Underwriter or Underwriters or controlling person
or persons, defendant or defendants in the suit, shall bear the fees
and expenses of any additional counsel retained by them, respectively
unless (i) the Underwriter shall have specifically authorized in
writing the retaining of such counsel or (ii) the parties to such suit
include the Company and the Underwriters and the Company at law or in
equity has been advised by counsel to the Company that one or more
defenses may be available to it which may not be available to the
Underwriters, in which case the Underwriters shall not be entitled to
assume the defense of such suit notwithstanding its obligation to bear
fees and expenses of such counsel. The Underwriter against whom
indemnity may be sought shall not be liable to indemnify any person for
any settlement of any such claim effected without such Underwriter's
consent. This indemnity agreement is not exclusive and will be in
addition to any liability which such Underwriter might otherwise have
and shall not limit any rights or remedies which may otherwise be
available at law or in equity to any Company Indemnified Party.
(c) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to
herein,
25
then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses (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 Stock. If, however, the allocation
provided by the immediately preceding sentence is not permitted by
applicable law, 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, liabilities or expenses (or actions in
respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters
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 contribution 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. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to
above shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating,
defending, settling or compromising any such claim. Notwithstanding the
provisions of this subsection (c), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price
at which the shares of the Stock underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. The Underwriters' obligations to contribute are several in
26
proportion to their respective underwriting obligations and not joint.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
7. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES ETC. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by them respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter, the Company or any of its officers or directors or
any controlling person, and shall survive delivery of and payment for the Stock.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations
of the several Underwriters hereunder shall be subject to the satisfaction of
each of the following conditions:
(a) All the representations and warranties of the Company shall
be true and correct on the Closing Date with the same force and effect
as if made on and as of the Closing Date.
(b) The Registration Statement shall have become effective and
no stop order suspending the effectiveness thereof shall have been
issued and no proceedings for that purpose shall have been initiated
or, to the knowledge of the Company or the Representatives, shall be
threatened by the Commission, and any request for additional
information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Representatives.
Any filings of the Prospectus, or any supplement thereto, required
pursuant to Rule 424(b) or Rule 434 of the Rules and Regulations, shall
have been made in the manner and within the time period required by
Rule 424(b) and Rule 434 of the Rules and Regulations, as the case may
be.
(c) The Representatives shall have been satisfied that there
shall not have occurred any change, or any development involving a
prospective change, on a consolidated basis, prior to the
27
Closing Date in the condition (financial or otherwise), properties,
business, management, net worth or results of operations of the Company
and its subsidiaries considered as a whole, or any change in the
capital stock, short-term or long-term debt of the Company and its
subsidiaries considered as a whole, such that (i) the Registration
Statement or the Prospectus, or any amendment or supplement thereto,
contains an untrue statement of fact which, in the opinion of the
Representatives, is material, or omits to state a fact which, in the
opinion of the Representatives, is required to be stated therein or is
necessary to make the statements therein not misleading, or (ii) it is
unpracticable in the reasonable judgment of the Representatives to
proceed with the public offering or purchase the Stock as contemplated
hereby.
(d) The Representatives shall be satisfied that no legal or
governmental action, suit or proceeding affecting the Company which is
material and adverse to the Company or which affects or may affect the
Company's ability to perform its respective obligations under this
Agreement shall have been instituted or threatened and there shall have
occurred no material adverse development in any existing such action,
suit or proceeding.
(e) At the time of execution of this Agreement, the
Representatives shall have received from Xxxxxx Xxxxxxxx LLP,
independent certified public accountants, a letter, dated the date
hereof, in form and substance satisfactory to the Underwriters.
(f) The Representatives shall have received from Xxxxxx Xxxxxxxx
LLP, independent certified public accountants, a letter, dated the
Closing Date, to the effect that such accountants reaffirm, as of the
Closing Date, and as though made on the Closing Date, the statements
made in the letter furnished by such accountants pursuant to paragraph
(e) of this Section 8.
(g) The Representatives shall have received from Holland &
Knight, counsel for the Company, an opinion, dated the Closing Date, to
the effect that:
28
(i) the Company has and each of its subsidiaries has been
duly incorporated and is validly existing and in active status
under Florida law, with power and authority (corporate and
other) to own or lease its properties and conduct its business
as described in the Prospectus;
(ii) the Company is and each of its subsidiaries is duly
qualified to do business and in good standing as a foreign
corporation in all other jurisdictions where its ownership or
leasing of properties or the conduct of its business requires
such qualification, except where the failure to so register
would not singly or in the aggregate, have a material adverse
effect on the Company's operations;
(iii) all of the outstanding shares of capital stock of, or
other ownership interests in each subsidiary of the Company have
been duly and validly authorized and issued and are fully paid
and nonassessable, and are owned by the Company, free and clear
of any security interest, claim, lien, encumbrance or adverse
interest of any nature;
(iv) the Company has authorized and outstanding capital
stock as set forth under the heading "Capitalization" in the
Prospectus; the outstanding shares of Common Stock of the
Company conform to the description thereof in the Prospectus
in all material respects; and all of the outstanding shares of
capital stock of the Company have been duly authorized and
validly issued and fully paid and nonassessable and not subject
to any preemptive or similar rights;
(v) the shares of Common Stock to be issued and sold
hereunder have been duly authorized, and when issued and
delivered to the Underwriters against payment therefor as
provided by this Agreement, will have been validly issued and
will be fully paid and nonassessable, and the issuance of such
Common Stock is not subject to any preemptive or similar rights;
29
(vi) this Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of
the Company;
(vii) Based solely on telephonic, verbal confirmation
provided to such counsel by the staff of the Commission, the
Registration Statement has become effective under the Securities
Act, and, to such counsel's knowledge, no stop order suspending
its effectiveness has been issued and no proceedings for the
purpose are pending before or contemplated by the Commission;
(viii) the statements under the captions "Risk Factors",
"Business Collaboration with Fuisz Technologies Ltd.", "Business
- Sponsored Research", "Business Government Regulation",
"Management - Executive Compensation - Confidentiality and
Intellectual Property Agreements", "Management - Executive
Compensation - Employee Agreements", "Management - Employee
Benefit Plans", "Certain Transactions", "Description of Capital
Stock", "Shares Eligible for Future Sale" in the Prospectus and
Items 14 and 15 in the Registration Statement in each case
insofar as such statements constitute summaries of the legal
matters or documents referred to therein, fairly present in all
material respects the information called for with respect to
such legal matters;
(ix) the execution, delivery and performance of this
Agreement by the Company, compliance by the Company with all the
provisions hereof and the consummation of the transactions
contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except such as
may be required by the NASD or under the Securities Act or other
securities or Blue Sky laws) and will not conflict with or
constitute a breach of any of the terms or provisions of, or a
default under, the articles of incorporation or by-laws of the
Company or any of its subsidiaries or, to the best of such
counsel's knowledge, any agreement, indenture or
30
other instrument to which the Company or any of its subsidiaries
or their respective properties are bound, or, to the best of
such counsel's knowledge, violate or conflict with any laws,
administrative regulations or rulings or court decrees
applicable to the Company or any of its subsidiaries or their
respective properties;
(x) such counsel does not know of any legal or governmental
proceeding pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of their respective
property is subject which is required to be described in the
Registration Statement or the Prospectus and is not so
described, or of any contract or other document which is
required to be described in the Registration Statement or the
Prospectus or is required to be filed as an exhibit to the
Registration Statement which is not described or filed as
required;
(xi) neither the Company nor any of its subsidiaries is, nor
will be immediately after receiving the proceeds from the sale
of the Stock, 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;
(xii) such counsel does not know of any holder of any
security of the Company that has any right to require
registration of shares of Common Stock or any other security of
the Company except as described in the Registration Statement;
(xiii) the Registration Statement and the Prospectus and any
amendments or supplements (except for financial statements and
schedules and other financial and statistical data included
therein as to which such counsel does not express any opinion)
thereto comply as to form in all material respects with the
requirements of the Securities Act and the Rules and
Regulations;
31
(xiv) the Company has complied with all provisions of
Section 517.075 of the Florida Statutes (Chapter 92-198; Laws of
Florida);
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the
attention of such counsel which leads it to believe that the
Registration Statement, as of the time it becomes effective under the
Securities Act, 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 the
Prospectus or any amendment or supplement thereto, on the date it was
filed pursuant to Rule 424(b) and the Registration Statement and the
Prospectus, or any amendment or supplement thereto, as of the First
Closing Date, or any Option Closing Date, as the case may be, contains
an untrue statement of material fact or omits 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 are made,
not misleading. With respect to such statement, counsel may state that
their belief is based upon procedures set forth therein, but is without
independent check and verification.
In rendering such opinion such counsel may assume that the laws
of the State of New York governing this Agreement are the same as the
laws of the State of Florida.
(h) The Representatives shall have received from Xxxxx Xxxx &
Xxxxxxxx, counsel for the Underwriters, their opinion dated the Closing
Date with respect to the incorporation of the Company, the validity of
the Stock, the Registration Statement and the Prospectus and such other
related matters as it may reasonably request, and the Company shall
have furnished to such counsel such documents as they may request for
the purpose of enabling them to pass upon such matters.
(i) The Representatives shall have received on the Closing Date an
opinion of Holland
32
& Knight, patent counsel for the Company, dated the Closing Date, to
the effect that:
(i) the statements in the Prospectus under the headings
"Risk Factors- Patents and Trademarks; Interference" and in the
first, second, third and fifth paragraphs under "Business-
Patents and Proprietary Rights" constitute an accurate summary
of the matters referred to therein and fairly present the
information called for with respect to such matters;
(ii) other than as disclosed in the Prospectus, to the best
of such counsel's knowledge, there are no legal or governmental
proceedings pending relating to patents or proprietary
information rights to which the Company is a party or to which
any patents or proprietary information rights of the Company is
subject, and no such proceedings are threatened or contemplated
by governmental authorities or others;
(iii) based on the information brought to such counsel's
attention by the Company with respect to the Company's
investigation, if any, of the published literature and patent
references relating to the inventions claimed in its patent
application, Serial No. 08-368,378 (the "Application"), such
counsel disclosed all references known to it to the Patent and
Trademark Office in accordance with 37 C.F.R. Section 1.56; to
the best of such counsel's knowledge, all information submitted
to the U.S. Patent and Trademark Office in the Application, and
in connection with the prosecution of the Application, was
accurate; neither such counsel nor to the best of its knowledge,
the Company, made any misrepresentation or concealed any
material information from the Patent and Trademark Office in the
Application, or in connection with the prosecution of such
applications in violation of 37 C.F.R. Section 1.56;
(iv) other than as disclosed in the Prospectus, such counsel
is unaware of any basis for a finding that the Company does not
33
have clear title or valid license rights to the patents or
patent applications referenced in the Prospectus, and such
counsel has not identified any basis for a finding of
unenforceability or invalidity of any patents or proprietary
information rights of the Company; and
(v) other than as disclosed in the Prospectus and based upon
a review of the third party rights made known to such counsel
and discussions with Company scientific personnel, such counsel
is not aware of any valid United States or foreign patent that
is or would be infringed by the activities of the Company in the
manufacture, use or sale of Niaspan, as described in the
Prospectus.
(j) The Representatives shall have received an opinion of Xxxxxx
& Xxxxxx, patent counsel for the Underwriters, dated the Closing Date,
to the effect that the Underwriters will reasonably rely on the opinion
delivered to the Underwriters pursuant to paragraph (i) above.
(k) The Representatives shall have received a certificate, dated
the Closing Date, signed by Xxxxxx X. Xxxx, in his capacity as the
President and Chief Executive Officer, to the effect that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the best of the
knowledge of the signers, no proceedings for that purpose have
been instituted or are pending or contemplated under the
Securities Act;
(ii) Neither any Preeffective Prospectus, as of its date,
nor the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, as of the time when the
Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate,
included any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or
necessary to make the statements therein,
34
in light of the circumstances under which they were made, not
misleading;
(iii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, and except as set forth or contemplated in the
Prospectus, neither the Company nor any of its subsidiaries has
incurred any material liabilities or obligations, direct or
contingent, nor entered into any material transactions not in
the ordinary course of business and there has not been any
material adverse change in the condition (financial or
otherwise), properties, business, management, prospects, net
worth or results of operations of the Company and its
subsidiaries considered as a whole, or any change in the capital
stock, short-term or long-term debt of the Company and its
subsidiaries considered as a whole;
(iv) The representations and warranties of the Company in
this Agreement are true and correct at and as of the Closing
Date, and the Company has complied with all the agreements and
performed or satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date; and
(v) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and
except as disclosed in or contemplated by the Prospectus, (i)
there has not been any material adverse change or a development
involving a material adverse change in the condition (financial
or otherwise), properties, business, management, prospects, net
worth or results of operations of the Company and its
subsidiaries considered as a whole; (ii) the business and
operations conducted by the Company and its subsidiaries have
not sustained a loss by strike, fire, flood, accident or other
calamity (whether or not insured) of such a character as to
interfere materially with the conduct of the business and
operations of the Company and its subsidiaries considered as a
whole; (iii) no legal or governmental action, suit or
35
proceeding is pending or threatened against the Company which is
material to the Company, whether or not arising from
transactions in the ordinary course of business, or which may
materially and adversely affect the transactions contemplated by
this Agreement; (iv) since such dates and except as so
disclosed, the Company has not incurred any material liability
or obligation, direct, contingent or indirect, made any change
in its capital stock (except pursuant to its stock plans), made
any material change in its short-term or funded debt or
repurchased or otherwise acquired any of the Company's capital
stock; and (v) the Company has not declared or paid any
dividend, or made any other distribution, upon its outstanding
capital stock payable to stockholders of record on a date prior
to the Closing Date.
(l) The Company shall have furnished to the Representatives such
additional certificates as the Representatives may have reasonably
requested as to the accuracy, at and as of the Closing Date, of the
representations and warranties made herein by it and as to compliance
at and as of the Closing Date by it with its covenants and agreements
herein contained and other provisions hereof to be satisfied at or
prior to the Closing Date, and as to satisfaction of the other
conditions to the obligations of the Underwriters hereunder.
(m) The Company shall have delivered to the Representatives the
agreements specified in Section 3 hereof.
The several obligations of the Underwriters to purchase any Optional
Stock hereunder are subject to delivery to the Representatives on the Option
Closing Date of such documents as the Representatives may reasonably request
with respect to the good standing of the Company, the due authorization and
issuance of such Optional Stock and other matters related to the issuance of
such Optional Stock.
All opinions, certificates, letters and other documents will be in
compliance with the provisions hereunder only if they are satisfactory in form
and substance to the Representatives. The Company will furnish to the
Representatives conformed copies of such opinions,
36
certificates, letters and other documents as the Representatives shall
reasonably request. If any of the conditions hereinabove provided for in this
Section shall not have been satisfied when and as required by this Agreement,
this Agreement may be terminated by the Representatives by notifying the Company
of such termination in writing or by telegram at or prior to the Closing Date,
but Xxxxx shall be entitled to waive any of such conditions.
9. EFFECTIVE DATE. This Agreement shall become effective immediately as
to Sections 5, 6, 7, 9, 10, 11, 13, 14, 15, 16, 17 and 18 and, as to all other
provisions, at 11:00 a.m. New York City time on the first full business day
following the effectiveness of the Registration Statement or at such earlier
time after the Registration Statement becomes effective as the Representatives
may determine on and by notice to the Company or by release of any of the Stock
for sale to the public. For the purposes of this Section 9, the Stock shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Stock or upon the release by you of
telegrams (i) advising Underwriters that the shares of Stock are released for
public offering or (ii) offering the Stock for sale to securities dealers,
whichever may occur first.
10. TERMINATION. This Agreement (except for the provisions of Section
5) may be terminated by the Company at any time before it becomes effective in
accordance with Section 9 by notice to the Representatives and may be terminated
by the Representatives at any time before it becomes effective in accordance
with Section 9 by notice to the Company. In the event of any termination of this
Agreement under this or any other provision of this Agreement, there shall be no
liability of any party to this Agreement to any other party, other than as
provided in Sections 5, 6 and 11 and other than as provided in Section 12 as to
the liability of defaulting Underwriters.
This Agreement may be terminated after it becomes effective by the
Representatives by notice to the Company (i) if at or prior to the Closing Date
trading in securities on any of the New York Stock Exchange, American Stock
Exchange or the Nasdaq National Market shall have been suspended or minimum or
maximum prices shall have been established on any such exchange or market, or a
banking moratorium shall have been declared by New York or United States
authorities; (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market; (iii) if at or
prior to the Closing Date there shall have been (A) an outbreak or escalation of
37
hostilities between the United States and any foreign power or of any other
insurrection or armed conflict involving the United States or (B) any change in
financial markets or any calamity or crisis which, in the judgment of the
Representatives, makes it impractical or inadvisable to offer or sell the Stock
on the terms contemplated by the Prospectus; (iv) if there shall have been any
development or prospective development involving particularly the business or
properties or securities of the Company or any of its subsidiaries or the
transactions contemplated by this Agreement, which, in the judgment of the
Representatives, makes it impracticable or inadvisable to offer or deliver the
Stock on the terms contemplated by the Prospectus; (v) if there shall be any
litigation or proceeding, pending or threatened, which, in the judgment of the
Representatives, makes it impracticable or inadvisable to offer or deliver the
Stock on the terms contemplated by the Prospectus; or (vi) if there shall have
occurred any of the events specified in the immediately preceding clauses
(i)-(v) together with any other such event that makes it, in the judgment of the
Representatives, impractical or inadvisable to offer or deliver the Stock on the
terms contemplated by the Prospectus.
11. REIMBURSEMENT OF UNDERWRITERS. Notwithstanding any other provisions
hereof, if this Agreement shall not become effective by reason of any election
of the Company pursuant to the first paragraph of Section 10 or shall be
terminated by the Representatives by reason of any failure or refusal on the
part of the Company to comply with the terms or to fulfill any of the conditions
of this Agreement, the Company will bear and pay the expenses specified in
Section 5 hereof and, in addition to the obligations of the Company pursuant to
Section 6 hereof, the Company will reimburse the reasonable out-of-pocket
expenses of the several Underwriters (including reasonable fees and
disbursements of counsel for the Underwriters) incurred in connection with this
Agreement and the proposed purchase of the Stock, and promptly upon demand the
Company will pay such amounts to you as Representatives.
12. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters
shall default in its or their obligations to purchase shares of Stock hereunder
and the aggregate number of shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed ten percent (10%) of
the total number of shares underwritten, the other Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder, to
purchase the shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase.
38
If any Underwriter or Underwriters shall so default and the aggregate number of
shares with respect to which such default or defaults occur is more than ten
percent (10%) of the total number of shares underwritten and arrangements
satisfactory to the Representatives and the Company for the purchase of such
shares by other persons are not made within forty-eight (48) hours after such
default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 12, (i) the Company
shall have the right to postpone the Closing Date for a period of not more than
five (5) full business days in order that the Company may 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
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (ii) the respective
numbers of shares to be purchased by the remaining Underwriters or substituted
Underwriters shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Nothing herein contained shall relieve any
defaulting Underwriter of its liability to the Company or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 12 shall be without liability on the part of
any non-defaulting Underwriter or the Company, except for expenses to be paid or
reimbursed pursuant to Section 5 and except for the provisions of Section 6.
13. [THIS SECTION INTENTIONALLY LEFT BLANK]
14. NOTICES. All communications hereunder shall be in writing and, if
sent to the Underwriters shall be mailed, delivered or telegraphed and confirmed
to you, as their Representatives, c/o Cowen & Company at Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 except that notices given to an Underwriter pursuant to
Section 6 hereof shall be sent to such Underwriter at the address furnished by
the Representatives or, if sent to the Company, shall be mailed, delivered or
telegraphed and confirmed to Kos Pharmaceuticals, 0000 Xxxxx Xxxxxxxx Xxxxx,
Xxxxx 0000, Xxxxx, Xxxxxxx 00000, copy to: Holland & Knight, Xxx Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000, Attn: Xxxxxx Xxxxxxx,
Esq.
15. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters,
39
the Company and their respective successors and legal representatives. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person other than the persons mentioned in the preceding sentence any
legal or equitable right, remedy or claim under or in respect of this Agreement,
or any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person; except that the
representations, warranties, covenants, agreements and indemnities of the
Company contained in this Agreement shall also be for the benefit of the person
or persons, if any, who control any Underwriter or Underwriters within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and the indemnities of the several Underwriters shall also be for the benefit of
each director of the Company, each of its officers who has signed the
Registration Statement and the person or persons, if any, who control the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act.
16. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
17. AUTHORITY OF THE REPRESENTATIVES. In connection with this
Agreement, you will act for and on behalf of the several Underwriters.
18. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
19. GENERAL. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This
40
Agreement may be amended or modified, and the observance of any term of this
Agreement may be waived, only by a writing signed by the Company.
20. COUNTERPARTS. This Agreement may be signed in two (2) or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
KOS PHARMACEUTICALS, INC.
By:_______________________
Name:
Title:
Accepted and delivered in
as of the
date first above written.
XXXXX & COMPANY
XXXXXX, READ & CO. INC.
SALOMON BROTHERS INC
Acting on their own behalf and as Representatives of the several Underwriters
referred to in the foregoing Agreement.
By: Cowen Incorporated,
its general partner
By:_____________________
Title:
41
SCHEDULE A
NAME NUMBER NUMBER OF
OF FIRM OPTIONAL
SHARES SHARES
TO BE TO BE
PURCHASED PURCHASED
--------- ---------
Xxxxx & Company............................
Xxxxxx, Read & Co. Inc.....................
Salomon Brothers Inc.......................
---------- ---------
Total...............................................
========== =========
SCHEDULE B
REQUIRED LOCK-UPS
Xxxxxxx Xxxxxxx
Kos Holdings, Inc.
Kos Investments, Inc.
