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EXHIBIT 1.1
2,232,028 Shares of Common Stock
SABRATEK CORPORATION
UNDERWRITING AGREEMENT
_____ __, 1997
BEAR, XXXXXXX & CO. INC.
SALOMON BROTHERS INC
XXXXX XXXXXX INC.
XXXXXXXXX & COMPANY, INC.
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
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Dear Sirs:
Sabratek Corporation, a corporation organized and existing under the laws
of Delaware (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several underwriters named in Schedule
I hereto (the "Underwriters") an aggregate of 1,700,000 shares of its common
stock, par value $.01 per share (the "Common Stock") and the stockholders named
in SCHEDULE II hereto (the "Selling Stockholders") propose to sell severally to
the Underwriters an aggregate of 532,028 shares of Common Stock (together
with the 1,700,000 shares of Common Stock to be issued and sold by the Company,
the "Firm Shares"). In addition, for the sole purpose of covering
over-allotments in connection with the sale of the Firm Shares, the Company
grants the Underwriters the option to purchase up to an additional 334,804
shares (the "Additional Shares") of Common Stock. The Firm Shares and any
Additional Shares purchased by the Underwriters are referred to herein as the
"Shares". The Shares are more fully described in the Registration Statement
referred to below.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to, and agrees with, the Underwriters
that:
(a) The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, and may have filed an amendment or
amendments thereto, on Form S-1 (No. 333-________), for the registration of the
Shares under the Securities Act of 1933, as amended (the "Act"). Such
registration statement, including the prospectus, financial statements and
schedules, exhibits and all other documents filed as a part thereof, as amended
at the time of effectiveness of the registration statement, including any
information deemed to be a part thereof as of the time of effectiveness
pursuant to paragraph (b) of Rule 430A or Rule 434 of the Rules and Regulations
of the Commission under the Act (the "Regulations"), is herein called the
"Registration Statement" and the prospectus, in the form first filed with the
Commission pursuant to Rule 424(b) of the Regulations or filed as part of the
Registration Statement at the time of effectiveness if no Rule
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424(b) or Rule 434 filing is required, is herein called the "Prospectus". The
term "preliminary prospectus" as used herein means a preliminary prospectus as
described in Rule 430 of the Regulations.
(b) At the time of the effectiveness of the Registration Statement or the
effectiveness of any post-effective amendment to the Registration Statement,
when the Prospectus is first filed with the Commission pursuant to Rule 424(b)
or Rule 434 of the Regulations, when any supplement to or amendment of the
Prospectus is filed with the Commission, and at the Closing Date and the
Additional Closing Date, if any, (as hereinafter respectively defined), the
Registration Statement and the Prospectus and any amendments thereof and
supplements thereto complied or will comply in all material respects with the
applicable provisions of the Act and the Regulations and does not or will not
contain an untrue statement of a material fact and does not or will not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein (i) in the case of the Registration Statement, not
misleading and (ii) in the case of the Prospectus, in light of the
circumstances under which they were made, not misleading. When any related
preliminary prospectus was first filed with the Commission (whether filed as
part of the registration statement for the registration of the Shares or any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such preliminary prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the Act and
the Regulations and did not contain an untrue statement of a material fact and
did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein in light of the circumstances
under which they were made not misleading. No representation and warranty is
made in this subsection (b), however, with respect to any information contained
in or omitted from the Registration Statement or the Prospectus or any related
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through you as herein stated
expressly for use in connection with the preparation thereof. If Rule 434 is
used, the Company will comply with the requirements of Rule 434.
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(c) KPMG Peat Marwick LLP and Parent, Neffah & Company, who have
certified the financial statements and supporting schedules included in the
Registration Statement relating to the Company and Xxxxx, Inc., a Massachusetts
corporation ("Xxxxx"), respectively, are independent public accountants as
required by the Act and the Regulations.
(d) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as set forth in the
Registration Statement and the Prospectus, there has been no material adverse
change or any development involving a prospective material adverse change in
the business, prospects, properties, operations, condition (financial or other)
or results of operations of the Company, whether or not arising from
transactions in the ordinary course of business, and since the date of the
latest balance sheet presented in the Registration Statement and the
Prospectus, the Company has not incurred or undertaken any liabilities or
obligations, direct or contingent, which are material to the Company, except
for liabilities or obligations which are reflected in the Registration
Statement and the Prospectus.
(e) This Agreement and the transactions contemplated herein have been
duly and validly authorized by the Company and this Agreement has been
duly and validly executed and delivered by the Company.
(f) The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
pursuant to, any agreement, instrument, franchise, license or permit to which
the Company is a party or by which it or its properties or assets may be bound
or (ii) violate or conflict with any provision of the certificate of
incorporation or by-laws of the Company or any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or its
properties or assets. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any court or
any public, governmental or regulatory agency or body having jurisdiction over
the Company or its properties
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or assets is required for the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby,
including the issuance, sale and delivery of the Shares to be issued, sold and
delivered by the Company hereunder, except the registration under the Act of
the Shares and such consents, approvals, authorizations, orders, registrations,
filings, qualifications, licenses and permits as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Shares by the Underwriters.
(g) All of the outstanding shares of Common Stock are duly and validly
authorized and issued, fully paid and nonassessable and were not issued and are
not now in violation of or subject to any preemptive rights (except for any
issuance for which a subsequent waiver of all applicable preemptive rights was
obtained). The Shares, when issued, delivered and sold in accordance with this
Agreement, will be duly and validly issued and outstanding, fully paid and
nonassessable, and will not have been issued in violation of or be subject to
any preemptive rights. The Company has an authorized and outstanding
capitalization, including, without limitation, stock options, warrants, and
convertible debt securities, as set forth in the Registration Statement and the
Prospectus. The Common Stock, the Firm Shares and the Additional Shares
conform to the descriptions thereof contained in the Registration Statement and
the Prospectus.
(h) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation. The Company is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the character or location of
its properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to be so
qualified or in good standing which will not in the aggregate have a material
adverse effect on the Company. The Company has all requisite 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
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adequately disclosed in the Registration Statement and the Prospectus.
(i) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company is a party or to which any
property of the Company is subject or which is pending or, to the knowledge of
the Company, contemplated against the Company which might result in any
material adverse change or any development involving a material adverse change
in the business, prospects, properties, operations, condition (financial or
other) or, results of operations of the Company or which is required to be
disclosed in the Registration Statement and the Prospectus.
(j) The Company has not taken and will not take, directly or indirectly, any
action designed to cause or result in, or which constitutes or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of the
Shares.
(k) The financial statements, including the notes thereto, and supporting
schedules included in the Registration Statement and the Prospectus present
fairly the financial position of the Company or Xxxxx, as applicable, as of the
dates indicated and the results of its operations for the periods specified;
except as otherwise stated in the Registration Statement, said financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis; and the supporting schedules included
in the Registration Statement present fairly the information required to be
stated therein.
(l) Except as described in the Prospectus, no holder of securities of the
Company has any rights to the registration of securities of the Company because
of the filing of the Registration Statement or otherwise in connection with the
sale of the Shares contemplated hereby.
(m) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" under the Investment Company Act of 1940.
(n) The Company does not own, directly or indirectly, any capital stock,
partnership interests, or similar equity securities of any person or entity.
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(o) The Company owns or has a valid license to use all patents, trademarks,
copyrights, service marks, and applications and registrations therefor, and all
trade names, customer lists, trade secrets, proprietary processes and formulae,
inventions, know-how, and other intellectual property rights necessary for the
Company to conduct its business as now being conducted and as described in the
Registration Statement and the Prospectus. Except as described in the
Prospectus, there is no pending or, to the knowledge of the Company, threatened
claim or litigation against the Company contesting the right to use its
intellectual property rights, asserting the misuse of any thereof, or asserting
the infringement or other violation of any intellectual property rights of any
third party. All inventions and know-how conceived by employees of the Company
and related to the business of the Company were "works for hire," and the
Company owns all right, title, and interest therein.
(p) The Company has been, and currently is, manufacturing, distributing, and
marketing its products in compliance with all applicable federal, state, and
foreign laws, rules and regulations.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
Each Selling Stockholder, for such Selling Stockholder only and not for
any other Selling Stockholder, represents and warrants to, and agrees with, the
several Underwriters that:
(a) Such Selling Stockholder has duly and irrevocably executed and
delivered a custody agreement and power of attorney with respect to the
total number of Shares to be sold by such Selling Stockholder, as set forth in
SCHEDULE II hereto (the "Custody Agreement"), in the form heretofore delivered
to the Representatives, appointing Xxxxxxx Xxxxxx and Xxxxx Skoogland as such
Selling Stockholder's attorneys-in-fact (each an "Attorney-in-Fact"), each with
authority to execute, deliver and perform this Agreement and to take such
actions as may be necessary or desirable to carry out the provisions hereof on
behalf of such Selling Stockholder, and appointing the Company as custodian (in
such capacity, the "Custodian"). Certificates in negotiable form representing,
or duly exercised warrants representing the right to purchase, the Shares to be
sold by such Selling Stockholder hereunder have been deposited
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with the Custodian pursuant to the Custody Agreement for the purpose of
delivery of such Shares pursuant to this Agreement. All authorizations, orders
and consents necessary for the execution and delivery by such Selling
Stockholder of this Agreement and the Custody Agreement have been duly and
validly given, and such Selling Stockholder has full legal right, power and
authority to enter into this Agreement and the Custody Agreement and to sell,
assign, transfer and deliver to the Underwriters the Shares to be sold by such
Selling Stockholder hereunder. Such Selling Stockholder agrees (i) that the
Shares represented by the stock or warrant certificates on deposit with the
Custodian have been delivered to the Custodian for your benefit to the extent
such Selling Stockholder is obligated to deliver such Shares to you pursuant to
this Agreement; (ii) that the arrangements made for such custody and the
appointment of the Attorney-in-Fact are irrevocable to the extent described in
the Custody Agreement; and (iii) that the obligations of such Selling
Stockholder hereunder may not be terminated (except as provided in this
Agreement, the Custody Agreement) by any act of such Selling Stockholder, by
operation of law (whether by the death or incapacity of such Selling
Stockholder), or by the occurrence of any other event. If any individual
Selling Stockholder should die or become incapacitated, or if any other event
should occur, before the delivery of such Shares hereunder, the certificates
for such Shares shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such death, incapacity or other
event had not occurred, regardless of whether or not the Custodian or the
Attorney-in-Fact shall have received notice thereof.
(b) There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, or, to the
Selling Stockholder's knowledge, threatened or in prospect (or any basis
therefor known to the Selling Stockholder) with respect to such Selling
Stockholder or any of their respective business, properties or assets which
would prohibit or delay the sale of Stock or Additional Stock to be sold by the
Selling Stockholder hereunder or materially adversely affect the consummation
of the transactions contemplated hereby. The Selling Stockholder is not in
violation of, or in default with respect to, any law, rule, regulation, order,
judgment or decree which would prohibit or delay the sale of stock to be sold
by the Selling Stockholder hereunder or materially adversely affect the
consummation of the transactions contemplated hereby.
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(c) Such Selling Stockholder has all requisite power and authority to
execute and deliver this Agreement and the Custody Agreement and to perform the
obligations of the Selling Stockholder hereunder and thereunder. All necessary
corporate or other proceedings of such Selling Stockholder have been duly taken
to authorize the execution, delivery and performance of this Agreement and the
Custody Agreement by such Selling Stockholder. This Agreement and the Custody
Agreement have been duly authorized, executed and delivered by such Selling
Stockholder, are the legal, valid and binding obligations of such Selling
Stockholder, and are enforceable as to such Selling Stockholder in accordance
with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally, by general principles of equity
whether such enforceability is considered in a proceeding in law or equity and
by the discretion of the court before which any proceeding therefor may be
brought, and except to the extent that rights to indemnity hereunder may be
limited by federal or state securities laws or the public policy underlying
such laws. No consent, authorization, approval, order, license, certificate or
permit of or from, or declaration or filing with, any federal, state, local or
other governmental authority or any court or other tribunal is required by such
Selling Stockholder for the execution, delivery or performance of this
Agreement (except filings under the Act and such consents as may be required
under "blue sky" or state securities laws identified to the Selling Stockholder
by counsel to the Underwriters, which have been obtained at or prior to the
date of this Agreement) or the Custody Agreement by such Selling Stockholder.
No consent of any party to any written or oral contract, agreement, instrument,
lease or license to which such Selling Stockholder is a party, or to which any
of their respective properties or assets are subject, is required for the
execution, delivery or performance of this Agreement or the Custody Agreement;
and the execution, delivery and performance of this Agreement and the Custody
Agreement will not violate, result in a breach of, conflict with or (with or
without the giving of notice or the passage of time or both) entitle any party
to terminate or call a default under any such contract, agreement, instrument,
lease or license or violate or result in a breach of, any documents or violate,
result in a breach of, or conflict with, any law, rule, regulation, order,
judgment or decree binding on such Selling Stockholder.
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(d) If such Selling Stockholder deposited any warrants under the Custody
Agreement, the Selling Stockholder is the lawful owner of, and has (or upon
such exercise will have) good and marketable title to, such warrants, and such
warrants have been duly exercised and such exercise will be effective on the
Closing Date. The Selling Stockholder is (or upon such exercise will be) the
lawful owner of, and has (or upon such exercise will have) good and marketable
title to, the Shares to be sold by such Selling Stockholder pursuant to this
Agreement, free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements and voting trusts (except those created
by this Agreement and the Custody Agreement), and when delivered in accordance
with this Agreement, the Underwriters will receive good and marketable title to
the Shares, if any, purchased by them, respectively, from such Selling
Stockholder, free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements and voting trusts.
(e) The Selling Stockholder has never taken nor will take, directly or
indirectly, nor will they cause any affiliated purchaser (as defined in the
Regulations) to take, prior to the termination of the underwriting syndicate
contemplated by this Agreement, any action designed to stabilize or manipulate
the price of any security of the Company, or which has caused or resulted in,
or which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company, to
facilitate the sale or resale of the Shares.
(f) All information furnished or to be furnished to the Company by or on
behalf of the Selling Stockholder for use in connection with the preparation
of the Registration Statement and the Prospectus does not and will not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading.
(g) To the best knowledge of the Selling Stockholder, the representations
and warranties of the Company contained in Section 1 hereof are true and
correct; the Selling Stockholder has reviewed and is familiar with the
Registration Statement and the Prospectus and neither the Prospectus nor any
amendments or supplements thereto includes any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the
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circumstances under which they were made, not misleading; the Selling
Stockholder is not prompted to sell the Shares by any information concerning
the Company or any subsidiary of the Company which is not set forth in the
Prospectus.
(h) Neither the Selling Stockholder nor any affiliates of the Selling
Stockholder directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, or has any
other association with (within the meaning of Article I, Section 1(m) of the
By-laws of the National Association of Securities Dealers, Inc. (the "NASD")),
any member firm of the NASD.
(i) Except as may be set forth in the Prospectus, the Selling Stockholder
has not incurred any liability for a fee, commission or other compensation
on account of the employment of a broker or finder in connection with the
transactions contemplated by this Agreement.
3. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties, covenants and
agreements of the Company and the Selling Stockholders herein contained, but
subject to the terms and conditions herein set forth, (i) the Company agrees
to sell to the Underwriters and the Underwriters, severally and not jointly,
agree to purchase from the Company, at a purchase price per share of $[____],
the number of Firm Shares set forth opposite the respective names of the
Underwriters in Schedule I hereto plus any additional number of Shares which
such Underwriter may become obligated to purchase pursuant to the provisions of
Section 9 hereof, and (ii) each Selling Stockholder agrees to sell to the
Underwriters, and the Underwriters, severally and not jointly, agree to
purchase from Selling Stockholders, at a purchase price per share of $[____],
the number of Firm Shares set forth opposite the respective names of such
Selling Stockholders on SCHEDULE II hereto, to be allocated among the
Underwriters pro rata in accordance with the allocation of Firm Shares set
forth on SCHEDULE I, subject, however, to such adjustment as needed to
eliminate fractional shares.
(b) Payment of the purchase price for, and delivery of certificates for, the
Shares shall be made at the office of Bear, Xxxxxxx & Co. Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as shall be agreed
upon
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by you and the Company, at 10:00 A.M. on the third or fourth business day
(as permitted under Rule 15c6-1 under the Exchange Act) (unless postponed in
accordance with the provisions of Section 9 hereof) following the date of the
effectiveness of the Registration Statement (or, if the Company has elected to
rely upon Rule 430A of the Regulations, the third or fourth business day (as
permitted under Rule 15c6-1 under the Exchange Act) after the determination of
the public offering price of the Shares), or such other time not later than ten
business days after such date as shall be agreed upon by you and the Company
(such time and date of payment and delivery being herein called the "Closing
Date"). Payment shall be made to the Company by wire transfer in same day
funds to a bank account specified by the Company at the Company's expense
against delivery to you for the respective accounts of the Underwriters of
certificates for the Shares to be purchased by them. Certificates for the
Shares shall be registered in such name or names and in such authorized
denominations as you may request in writing at least two full business days
prior to the Closing Date. The Company will permit you to examine and package
such certificates for delivery at least one full business day prior to the
Closing Date.
(c) In addition, the Company hereby grants to the Underwriters the option
to purchase up to all or part of the Additional Shares at the same purchase
price per share to be paid by the Underwriters to the Company for the Firm
Shares as set forth in this Section 3, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This option
may be exercised at any time, in whole or in part, on or before the thirtieth
day following the date of the Prospectus, by written notice by you to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised and the date and time, as reasonably
determined by you, when the Additional Shares are to be delivered (such date
and time being herein sometimes referred to as the "Additional Closing Date");
provided, however, that the Additional Closing Date shall not be earlier than
the Closing Date or earlier than the second full business day after the date on
which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). Certificates for the Additional Shares shall be registered
in such name or names and in such authorized denominations as you may request
in writing at least two full business days prior to the Additional Closing
Date. The Company
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will permit you to examine and package such certificates for delivery at least
one full business day prior to the Additional Closing Date.
The number of Additional Shares to be sold to each Underwriter shall be
the number which bears the same ratio to the aggregate number of Additional
Shares being purchased as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto (or such number increased as set forth
in Section 9 hereof) bears to 1,700,000, subject, however, to such adjustments
to eliminate any fractional shares as you in your sole discretion shall make.
Payment for the Additional Shares shall be made by wire transfer in same
day funds to a bank account specified by the Company at the Company's expense,
upon delivery of the certificates for the Additional Shares to you for the
respective accounts of the Underwriters at the offices of Bear, Xxxxxxx & Co.
Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
4. OFFERING.
Upon your authorization of the release of the Firm Shares, the
Underwriters propose to offer the Shares for sale to the public upon the terms
set forth in the Prospectus.
5. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the Underwriters that:
(a) If the Registration Statement has not yet been declared effective
the Company will use its best efforts to cause the Registration Statement
and any amendments thereto to become effective as promptly as possible, and if
Rule 430A is used or the filing of the Prospectus is otherwise required under
Rule 424(b) or Rule 434, the Company will file the Prospectus (properly
completed if Rule 430A has been used) pursuant to Rule 424(b) or Rule 434
within the prescribed time period and will provide evidence satisfactory to you
of such timely filing. If the Company elects to rely on Rule 434, the Company
will prepare and file a term sheet that complies with the requirements of Rule
434.
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The Company will notify you immediately (and, if requested by you, will
confirm such notice in writing) (i) when the Registration Statement and any
amendments thereto become effective, (ii) of any request by the Commission for
any amendment of or supplement to the Registration Statement or the Prospectus
or for any additional information, (iii) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of the initiation, or the threatening, of
any proceedings therefor, (v) of the receipt of any comments from the
Commission, and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time,
the Company will make every reasonable effort to prevent the issuance of any
such stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration
Statement or any amendment of or supplement to the Prospectus (including the
prospectus required to be filed pursuant to Rule 424(b) or Rule 434) that
differs from the prospectus on file at the time of the effectiveness of the
Registration Statement before or after the effective date of the Registration
Statement to which you shall reasonably object in writing after being timely
furnished in advance a copy thereof.
(b) If at any time when a prospectus relating to the Shares is required to
be delivered under the Act any event shall have occurred as a result of which
the Prospectus as then amended or supplemented would, in the judgment of the
Underwriters or the Company include an 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, or if it shall be necessary at any time to amend or
supplement the Prospectus or Registration Statement to comply with the Act or
the Regulations, the Company will notify you promptly and prepare and file with
the Commission an appropriate amendment or supplement (in form and substance
satisfactory to you) which will correct such statement or omission and will use
its best efforts to have any amendment to the Registration Statement declared
effective as soon as possible.
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(c) The Company will promptly deliver to you three signed copies of the
Registration Statement, including exhibits and all amendments thereto, and the
Company will promptly deliver to each of the Underwriters such number of copies
of any preliminary prospectus, the Prospectus, the Registration Statement, and
all amendments of and supplements to such documents, if any, as you may
reasonably request.
(d) The Company will endeavor in good faith, in cooperation with you, at or
prior to the time of effectiveness of the Registration Statement, to qualify
the Shares for offering and sale under the securities laws relating to the
offering or sale of the Shares of such jurisdictions as you may designate and
to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a
general consent to service of process.
(e) The Company will make generally available (within the meaning of Section
11(a) of the Act) to its security holders and to you as soon as practicable,
but not later than 45 days after the end of its fiscal quarter in which the
first anniversary date of the effective date of the Registration Statement
occurs, an earning statement (in form complying with the provisions of Rule 158
of the Regulations) covering a period of at least twelve consecutive months
beginning after the effective date of the Registration Statement.
(f) During the period of 90 days from the date of the Prospectus, the
Company will not, without the prior written consent of Bear, Xxxxxxx & Co.
Inc., issue, sell, pledge, offer or agree to sell, grant any option for the
sale of, or otherwise dispose of (or announce any issuance, sale, pledge,
offer grant of option, or other disposition), directly or indirectly, any
Common Stock (or any securities convertible into, exercisable for or
exchangeable for Common Stock), and the Company will obtain the undertaking of
each of its officers and directors and each holder of capital stock, stock
options, warrants, or convertible debt securities of the Company not to engage
in any of the aforementioned transactions on their own behalf, other than (i)
the Company's sale of Shares hereunder, (ii) the Company's grant of stock
options to employees under the Company's Stock Option Plan, and (iii) the
Company's issuance of Common Stock upon the exercise of outstanding stock
options or warrants.
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(g) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you copies of (i) all
reports to its shareholders; and (ii) all reports, financial statements
and proxy or information statements filed by the Company with the Commission or
any national securities exchange.
(h) The Company will apply the proceeds from the sale of the Shares as set
forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Shares to be
included in the Nasdaq National Market.
(j) The Company will file with the Commission such reports on Form SR as
may be required pursuant to Rule 463 of the Regulations.
6. COVENANTS OF THE SELLING STOCKHOLDERS.
Each Selling Stockholder covenants and agrees that for a period of 90 days
after the date of the Prospectus, such Selling Stockholder will not, without
the prior written consent of Bear, Xxxxxxx & Co. Inc., offer, pledge, sell,
contract to sell, grant any option for the sale of or otherwise dispose (or
announce any offer, pledge, sale, contract of sale, grant of an option to
purchase or other disposition) of, directly or indirectly, any shares of Common
Stock or any security or other instrument which by its terms is convertible
into, exercisable for, or exchangeable for shares of Common Stock, except as
provided in Section 3 and for bona fide gifts provided the donee or recipient
thereof agrees in writing to the terms of this Section 6.
7. PAYMENT OF EXPENSE.
Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company hereby agrees to pay
all costs and expenses incident to the performance of the obligations of the
Company hereunder, including those in connection with (i) preparing, printing,
duplicating, filing and distributing the Registration Statement, as originally
filed and all amendments thereof (including all exhibits thereto), any
preliminary prospectus, the Prospectus and any amendments or supplements
thereto (including, without limitation, fees and expenses of the Company's
accountants and
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counsel), the underwriting documents (other than the fees and expenses of
X'Xxxxxxxx Graev & Karabell, LLP ("Underwriters' Counsel") for the preparation
of such documents), and all other documents related to the public
offering of the Shares (including those supplied to the Underwriters in
quantities as hereinabove stated), (ii) the issuance, transfer and delivery of
the Shares to the Underwriters, including any transfer or other taxes payable
thereon, (iii) the qualification of the Shares under state or foreign
securities or Blue Sky laws, including the costs of printing and mailing a
preliminary and final "Blue Sky Survey" and the fees of counsel for the
Underwriters and such counsel's disbursements in relation thereto, (iv)
inclusion of the Shares in the Nasdaq National Market, (v) filing fees of the
Commission and the National Association of Securities Dealers, Inc.; (vi) the
cost of printing certificates representing the Shares and (vii) the cost and
charges of any transfer agent or registrar.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
The obligations of the Underwriters to purchase and pay for the Firm
Shares and the Additional Shares, as provided herein, shall be subject to the
accuracy of the representations and warranties of the Company and the Selling
Stockholders herein contained, as of the date hereof and as of the Closing Date
(for purposes of this Section 8 "Closing Date" shall refer to the Closing Date
for the Firm Shares and any Additional Closing Date, if different, for the
Additional Shares), to the absence from any certificates, opinions, written
statements or letters furnished to you or to Underwriters' Counsel pursuant to
this Section 8 of any misstatement or omission, to the performance by the
Company and the Selling Stockholders of its obligations hereunder, and to the
following additional conditions:
(a) The Registration Statement shall have become effective not later than
5:30 P.M., New York time, on the date of this Agreement, or at such later
time and date as shall have been consented to in writing by you; if the Company
shall have elected to rely upon Rule 430A or Rule 434 of the Regulations, the
Prospectus shall have been filed with the Commission in a timely fashion in
accordance with Section 4(a) hereof; and, at or prior to the Closing Date no
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof shall have been issued and no proceedings
therefor shall have been initiated or threatened by the Commission.
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(b) At the Closing Date and the Additional Closing Date, as the case may
be, you shall have received the opinion of Xxxx & Xxxxxxx, counsel for the
Company and the Selling Stockholders, dated the Closing Date, addressed to
the Underwriters and in form and substance satisfactory to Underwriters'
Counsel, to the effect that:
(i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation. The Company is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature or
conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which will not in
the aggregate have a material adverse effect on the Company. The Company
has all requisite corporate authority to own, lease and license its
respective properties and conduct its business as now being conducted and
as described in the Registration Statement and the Prospectus.
(ii) The Company has an authorized and outstanding capital stock,
including, without limitation, stock options, warrants, and convertible
debt securities, as set forth in the Registration Statement and the
Prospectus. All of the outstanding shares of Common Stock are duly and
validly authorized and issued, are fully paid and nonassessable. All
outstanding securities of the Company were not issued in violation of or
subject to any preemptive rights. The Shares to be delivered on the
Closing Date have been duly and validly authorized and, when delivered by
the Company in accordance with this Agreement, will be duly and validly
issued, fully paid and nonassessable and will not have been issued in
violation of or subject to any preemptive rights. The Common Stock, the
Firm Shares and the Additional Shares conform to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(iii) The Shares to be sold under this Agreement to the Underwriters
are duly authorized for inclusion in the Nasdaq National Market.
(iv) This Agreement has been duly and validly authorized, executed
and delivered by the Company.
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(v) To the best of such counsel's knowledge, the Company does not
have any subsidiaries.
(vi) There is no litigation or governmental or other action, suit,
proceeding or investigation before any court or before or by any public,
regulatory or governmental agency or body pending or to the best of such
counsel's knowledge, threatened against, or involving the properties or
business of, the Company which is of a character required to be disclosed
in the Registration Statement and the Prospectus which has not been
properly disclosed therein.
(vii) The execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby by the
Company do not and will not (A) conflict with or result in a breach of
any of the terms and provisions of, or constitute a default (or an event
which with notice or lapse of time, or both, would constitute a default)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to, any
agreement, instrument, franchise, license or permit known to such counsel
to which the Company is a party or by which it or its properties or
assets may be bound or (B) violate or conflict with any provision of the
certificate of incorporation or by-laws of the Company, or, to the best
knowledge of such counsel, any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency
or body having jurisdiction over the Company or any of its properties or
assets. No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any
public, governmental, or regulatory agency or body having jurisdiction
over the Company or any of its properties or assets is required for the
execution, delivery and performance of this Agreement or the consummation
of the transactions contemplated hereby, except for (1) such as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters (as to which
such counsel need express no opinion) and (2) such as have been made or
obtained under the Act.
(viii) The Registration Statement and the Prospectus and any
amendments thereof or supplements thereto (other than the financial
statements and schedules and other financial data included or
incorporated by reference
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therein, as to which no opinion need be rendered) comply as to form in
all material respects with the requirements of the Act and the
Regulations.
(ix) The Registration Statement is effective under the Act, and, to
the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereof has been issued and no proceedings therefor have been
initiated or threatened by the Commission and all filings required by
Rule 424(b) of the Regulations have been made.
(x) Each Selling Stockholder has full power and authority to execute,
deliver and perform this Agreement and the Custody Agreement. All
necessary proceedings of each Selling Stockholder have been duly taken to
authorize the execution, delivery and performance of this Agreement and
the Custody Agreement by such Selling Stockholder. This
Agreement and the Custody Agreement have been duly authorized, executed
and delivered by each Selling Stockholder, are the legal, valid and
binding obligations of such Selling Stockholder, and are enforceable as
to such Selling Stockholder in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally, by general principles of equity whether such
enforceability is considered in a proceeding in law or equity and by the
discretion of the court before which any proceeding therefor may be
brought, and except to the extent that rights to indemnity hereunder may
be limited by federal or state securities laws or the public policy
underlying such laws. No consent, authorization, approval, order,
license, certificate or permit of or from, or declaration or filing with,
any federal, state, local or other governmental authority or any court of
other tribunal is required by each Selling Stockholder for the execution,
delivery or performance of this Agreement (except filings under the Act
and such consents as may be required under "blue sky" or state securities
laws) or the Custody Agreement by such Selling Stockholder. To the
knowledge of such counsel, no consent of any party to any written or oral
contract, agreement, instrument, lease or license to which such Selling
Stockholder is party, or to which any of their respective properties or
assets are subject, is required for
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the execution, delivery or performance of this Agreement (except filings
under the Act and such consents as may be required under "blue sky" or
state securities laws) or the Custody Agreement by such Selling
Stockholder. To the knowledge of such counsel, no consent of any party
to any written or oral contract, agreement, instrument, lease or license
to which such Selling Stockholder is party, or to which any of their
respective properties or assets are subject, is required for the
execution, delivery or performance of this Agreement or the Custody
Agreement; and the execution, delivery and performance of this Agreement
and the Custody Agreement will not violate, result in a breach of,
conflict with or (with or without the giving of notice or the passage of
time or both) entitle any party to terminate or call a default under any
such written or oral contract, agreement, instrument, lease or license or
violate, result in a breach of or contravene any provision of such
Selling Stockholder's organizational documents, if any, or violate,
result in a breach of or conflict with any law, rule, regulation, order,
judgment or decree binding on such Selling Stockholder or to which any of
their respective operations, business, properties or assets are subject.
(xi) To the knowledge of such counsel, there is no litigation,
arbitration, claim, governmental or other proceeding (formal or
informal), or investigation pending, threatened or in prospect (or any
basis therefor) with respect to each Selling Stockholder or any of their
respective properties or assets which would prohibit or delay the sale of
Shares to be sold by such Selling Stockholder or materially adversely
affect the consummation of the transactions contemplated hereby.
(xii) To the knowledge of such counsel, immediately prior to the
Closing Date (or the Additional Closing Date, as the case may be), each
Selling Stockholder had good and valid title to the Shares to be sold
at such date by such Selling Stockholder under this Agreement, free and
clear of all liens, encumbrances, security interests or claims (except
those created by this Agreement and the Custody Agreement), and has full
right, power and authority to sell, assign, transfer and deliver the
Shares to be sold by such Selling Stockholder hereunder.
(xiii) Good and marketable title to such Shares, free and clear of all
liens, encumbrances, security
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interests or claims, has been transferred to each of the several
Underwriters who have purchased such Shares in good faith and without
notice of any such lien, encumbrance, security interest or claim or any
other adverse claim within the meaning of the Uniform Commercial Code (as
in effect in the State of Illinois).
(xiv) To the knowledge of such counsel, no person or entity has the
right to require registration of shares of Common Stock or other
securities of the Company because the filing or effectiveness of the
Registration Statement or otherwise in connection with the sale of the
Shares contemplated hereby.
(xv) In addition, such opinion shall also contain a statement that
such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants for the Company and the Underwriters at which the contents
and the Prospectus and related matters were discussed and, no facts have
come to the attention of such counsel which would lead such counsel to
believe that either the Registration Statement at the time it became
effective (including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule
430A(b) or Rule 434, if applicable), or any amendment thereof made prior
to the Closing Date as of the date of such amendment, contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus as of its date (or any amendment
thereof or supplement thereto made prior to the Closing Date as of the
date of such amendment or supplement) and as of the Closing Date
contained or contains an untrue statement of a material fact or omitted
or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need express no belief or opinion with respect to the financial
statements and schedules and other financial data included or
incorporated by reference therein).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are
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admitted, to the extent such counsel deems proper and to the extent specified
in such opinion, if at all, upon an opinion or opinions (in form and
substance reasonably satisfactory to Underwriters' Counsel) of other counsel
reasonably acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and certificates or other
written statements of officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company and its subsidiaries, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel. The opinion of such
counsel for the Company shall state that the opinion of any such other counsel
is in form satisfactory to such counsel and, in their opinion, you and they are
justified in relying thereon.
(c) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be satisfactory
in form and substance to you and to Underwriters' Counsel, and the
Underwriters shall have received from said Underwriters' Counsel a favorable
opinion, dated as of the Closing Date with respect to the issuance and sale of
the Shares, the Registration Statement and the Prospectus and such other
related matters as you may reasonably require, and the Company and the Selling
Stockholders shall have furnished to Underwriters' Counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(d) At the Closing Date you shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of the Company, dated the
Closing Date to the effect that (i) the condition set forth in subsection (a)
of this Section 6 has been satisfied, (ii) as of the date hereof and as of the
Closing Date the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of the Closing Date the obligations of
the Company to be performed hereunder on or prior thereto have been duly
performed and (iv) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, the Company has not
sustained any material loss or interference with its business or properties
from fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or any
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development involving a material adverse change, in the business prospects,
properties, operations, condition (financial or otherwise), or results of
operations of the Company, except in each case as described in or contemplated
by the Prospectus.
(e) At the Closing Date, each Selling Stockholder (or the
attorney-in-fact on behalf of such Selling Stockholder) shall have
furnished to you a certificate dated the Closing Date signed by, or on behalf
of, such Selling Stockholder (or the attorney-in-fact) stating that the
representations, warranties and agreements of such Selling Stockholder
contained herein are timely and correct as of the Closing Date and that such
Selling Stockholder has complied with all agreements contained herein to be
performed by such Selling Stockholder at or prior to the Closing Date.
(f) At the time this Agreement is executed and at the Closing Date,
you shall have received a letter, from KPMG Peat Marwick LLP, independent
public accountants for the Company, dated, respectively, as of the date of this
Agreement and as of the Closing Date addressed to the Underwriters and in form
and substance satisfactory to you, to the effect that: (i) they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the Regulations and stating that the answer to Item 10 of the
Registration Statement is correct insofar as it relates to them; (ii) stating
that, in their opinion, the financial statements and schedules of the Company
included in the Registration Statement and the Prospectus and covered by their
opinion therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the applicable published rules and
regulations of the Commission thereunder; (iii) on the basis of procedures
consisting of a reading of the latest available unaudited interim financial
statements of the Company, a reading of the minutes of meetings and consents of
the shareholders and board of directors of the Company and the committees of
such board subsequent to December 31, 1996, inquiries of officers and other
employees of the Company who have responsibility for financial and accounting
matters of the Company with respect to transactions and events subsequent to
December 31, 1996 and other specified procedures and inquiries to a date not
more than five days prior to the date of such letter, nothing has come to their
attention that would cause them to believe that: (A) the unaudited financial
statements and schedules of the Company presented in the Registration Statement
and the Prospectus do not comply as to form in all material respects with the
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applicable accounting requirements of the Act and the applicable published
rules and regulations of the Commission thereunder or that such unaudited
financial statements are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements included in the Registration Statement
and the Prospectus; (B) with respect to the period subsequent to December 31,
1996, there were, as of the date of the most recent available monthly financial
statements of the Company and its subsidiaries, if any, and as of a specified
date not more than five days prior to the date of such letter, any changes in
the capital stock or long-term indebtedness of the Company or any decrease in
the net current assets or stockholders' equity of the Company, in each case as
compared with the amounts shown in the most recent balance sheet presented in
the Registration Statement and the Prospectus, except for changes or decreases
which the Registration Statement and the Prospectus disclose have occurred or
may occur or which are set forth in such letter, (C) the pro forma adjustments
to certain financial statements of the Company presented in the Registration
Statement and the Prospectus have not been properly applied to the historical
amounts reflected in those statements; (D) that during the period from January
1, 1997, to the date of the most recent available monthly financial statements
of the Company, if any, and to a specified date not more than five days prior
to the date of such letter, there was any decrease, as compared with the
corresponding period in the prior fiscal year, in total revenues, or total or
per share net income, except for decreases which the Registration Statement and
the Prospectus disclose have occurred or may occur or which are set forth in
such letter; and (iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, and other financial
information pertaining to the Company and its subsidiaries set forth in the
Registration Statement and the Prospectus, which have been specified by you
prior to the date of this Agreement, to the extent that such amounts, numbers,
percentages, and information may be derived from the general accounting and
financial records of the Company or from schedules furnished by the
Company, and excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of specified readings,
inquiries, and other appropriate procedures specified by you set forth in such
letter, and found them to be in agreement.
(g) Prior to the Closing Date the Company and the Selling Stockholders
shall have furnished to you such further
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information, certificates and documents as you may reasonably request.
(h) You shall have received from each person who is a director or
officer of the Company and those holders of capital stock, stock options,
warrants, or convertible debt securities of the Company identified by Bear,
Xxxxxxx & Co. Inc. an agreement to the effect that such person will not,
directly or indirectly, without your prior written consent, offer, sell, offer
or agree to sell, grant any option to purchase or otherwise dispose (or
announce any offer, sale, grant of an option to purchase or other disposition)
of any shares of Common Stock (or any securities convertible into, exercisable
for or exchangeable or exercisable for shares of Common Stock) for a period of
90 days after the date of the Prospectus.
(i) The NASD, upon review of the public offering of the Shares, shall
not have objected to the Underwriters' participation in such offering.
If any of the conditions specified in this Section 8 shall not have been
fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 8 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Shares may be
cancelled by you at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company in writing, or by
telephone, telex or telegraph, confirmed in writing.
9. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), against any and all losses, liabilities,
claims, damages and expenses whatsoever as incurred (including but not limited
to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any
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claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the Shares, as originally filed or any amendment thereof, or
any related preliminary prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company will not be liable in any such case to the extent but
only to the extent that any such loss, liability, claim, damage or expense
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter through you expressly for use therein. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have including under this Agreement.
(b) Each Selling Stockholder agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that any such
loss, liability, claim,
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damage or expense arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information relating to such
Selling Stockholder furnished to the Company by such Selling Stockholder
expressly for use therein. This indemnity agreement will be in addition to any
liability which such Selling Stockholder may otherwise have including under
this Agreement.
(c) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each Selling Stockholder, each of the
directors of the Company, each of the officers of the Company who shall have
signed the Registration Statement, and each other person, if any, who controls
the Company or any Selling Stockholder within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, against any losses, liabilities,
claims, damages and expenses whatsoever as incurred (including but not limited
to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), jointly or several, to which they or any of them
may become subject under the Act, the Exchange Act or otherwise, insofar as
such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the Shares, as originally filed or any amendment thereof, or
any related preliminary prospectus or the Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Underwriter through you expressly for use
therein; provided, however, that in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder. This indemnity will be in
addition to any liability which any Underwriter may otherwise have including
under this Agreement. The Company and the Selling Stockholders acknowledge
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that the statements set forth in the last paragraph of the cover page, in the
bold legends at the bottom of page 2, and in the [fifth, eighth, and tenth]
paragraphs under the caption "Underwriting" in the Prospectus constitute the
only information furnished in writing by or on behalf of any Underwriter
expressly for use in the registration statement relating to the Shares as
originally filed or in any amendment thereof, any related preliminary
prospectus or the Prospectus or in any amendment thereof or supplement thereto,
as the case may be.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 9). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice from
such indemnified party, to assume the defense thereof with counsel satisfactory
to such indemnified party. Notwithstanding the foregoing, the indemnified party
or parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in
connection with the defense of such action, (ii) the indemnifying parties shall
not have employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall
not be liable for any settlement of any claim or action effected without its
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written consent; provided, however, that such consent was not unreasonably
withheld.
10. CONTRIBUTION.
In order to provide for contribution in circumstances in which the
indemnification provided for in Section 9 is for any reason held to be
unavailable from any indemnifying party or is insufficient to hold harmless a
party indemnified thereunder, the Company, the Selling Stockholders and the
Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company or any
Selling Stockholder any contribution received by the Company or any Selling
Stockholder from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company) as
incurred to which the Company, the Selling Stockholders and one or more of the
Underwriters may be subject, in such proportions as is appropriate to reflect
the relative benefits received by the Company, the Selling Stockholders and the
Underwriters from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 9(d)
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company, the
Selling Stockholders and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Selling Stockholders and the Underwriters
shall be deemed to be in the same proportion as (x) the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Stockholders and (y) the
underwriting discounts and commissions received by the Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company or any Selling Stockholder and
of the Underwriters
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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, any Selling Stockholder or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Stockholders and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 10 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. Notwithstanding the provisions of this
Section 8, (i) in no case shall any Underwriter be liable or responsible for
any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder, and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding the provisions of this Section 8
and the preceding sentence, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. For purposes of this Section 10, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and
each director of the Company, shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 10, and
each person, if any, who controls any Selling Stockholder within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same
rights to contribution as such Selling Stockholder. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
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contribution may be sought from any obligation it or they may have under this
Section 10 or otherwise. No party shall be liable for contribution with
respect to any action or claim settled without its consent; provided, however,
that such consent was not unreasonably withheld.
11. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, the Firm Shares or Additional Shares with respect to
which the default relates shall be purchased by the non-defaulting Underwriters
in proportion to the respective proportions which the numbers of Firm Shares
set forth opposite their respective names in Schedule I hereto bear to the
aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters.
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, you may in your
discretion arrange for yourself or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within 5 calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as
provided in this Section 11, this Agreement or, in the case of a default with
respect to the Additional Shares, the obligations of the Underwriters to
purchase and of the Company and the Selling Stockholders to sell the Additional
Shares shall thereupon terminate, without liability on the part of the Company
or the Selling Stockholders with respect thereto (except in each case as
provided in Sections 7, 9(a) and 10 hereof) or the Underwriters, but nothing in
this Agreement shall relieve a defaulting Underwriter or Underwriters of its or
their liability, if any, to the other Underwriters, the Company and the Selling
Stockholders for damages occasioned by its or their default hereunder.
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(c) In the event that the Firm Shares or Additional Shares to which
the default relates are to be purchased by the non-defaulting Underwriters,
or are to be purchased by another party or parties as aforesaid, you, the
Company or the Selling Stockholders shall have the right to postpone the
Closing Date or Additional Closing Date, as the case may be for a period, not
exceeding five business days, in order to effect whatever changes may thereby
be made necessary in the Registration Statement or the Prospectus or in any
other documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 11 with like effect as if it had
originally been a party to this Agreement with respect to such Firm Shares and
Additional Shares.
12. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS.
All representations and warranties, covenants and agreements of the
Underwriters, the Company and the Selling Stockholders contained in this
Agreement, including the agreements contained in Section 7, the indemnity
agreements contained in Section 9 and the contribution agreements contained in
Section 10, shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any Underwriter or any controlling
person thereof, by or on behalf of the Company, any of its officers and
directors or any controlling person thereof, or by or on behalf of any Selling
Stockholders, and shall survive delivery of and payment for the Shares to and
by the Underwriters. The representations contained in Sections 1 and 2 and the
agreements contained in Sections 7, 9, 10 and 13(d) hereof shall survive the
termination of this Agreement, including termination pursuant to Section 11 or
13 hereof.
13. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective, upon the later of when (i)
you and the Company shall have received notification of the effectiveness of
the Registration Statement or (ii) the execution of this Agreement. If either
the initial public offering price or the purchase price per Share has not been
agreed upon prior to 5:00 P.M., New York time, on the fifth
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full business day after the Registration Statement shall have become
effective, this Agreement shall thereupon terminate without liability to the
Company or the Underwriters except as herein expressly provided. Until
this Agreement becomes effective as aforesaid, it may be terminated by the
Company by notifying you or by you notifying the Company. Notwithstanding the
foregoing, the provisions of this Section 13 and of Sections 1, 7, 9 and 10
hereof shall at all times be in full force and effect.
(b) You shall have the right to terminate this Agreement at any time
prior to the Closing Date, or terminate the obligations of the
Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if (A) any domestic or
international event or act or occurrence has materially disrupted, or in your
opinion will in the immediate future materially disrupt, the market for the
Company's securities or securities in general; or (B) if trading on the New
York or American Stock Exchanges shall have been suspended, or minimum or
maximum prices for trading shall have been fixed, or maximum ranges for prices
for securities shall have been required, on the New York or American Stock
Exchanges by the New York or American Stock Exchanges or by order of the
Commission or any other governmental authority having jurisdiction; or (C) if a
banking moratorium has been declared by a state or federal authority or if any
new restriction materially adversely affecting the distribution of the Firm
Shares or the Additional Shares, as the case may be, shall have become
effective; or (D) (i) if the United States becomes engaged in hostilities or
there is an escalation of hostilities involving the United States or there is a
declaration of a national emergency or war by the United States or (ii) if
there shall have been such change in political, financial or economic
conditions if the effect of any such event in (i) or (ii) as in your reasonable
judgment makes it impracticable or inadvisable to proceed with the offering,
sale and delivery of the Firm Shares or the Additional Shares, as the case may
be, on the terms contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 13 shall be by
telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 13(a)
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hereof or (ii) Section 11(b) or 13(b) hereof), or if the sale of the Shares
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth herein is not satisfied or because of any
refusal, inability or failure on the part of the Company or any Selling
Stockholder to perform any agreement herein or comply with any provision
hereof, the Company and the Selling Stockholders will, subject to demand by
you, reimburse the Underwriters for all out-of-pocket expenses (including the
fees and expenses of their counsel), incurred by the Underwriters in connection
herewith.
14. NOTICE.
All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and, if sent to any Underwriter, shall be
mailed, delivered, or telexed or telegraphed and confirmed in writing, to such
Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, X.X.
00000, Attention: Xxxxx X. XxXxxxxx, Xxxx Xxxxxxx, and Xxxxxx X. Xxxxx; if
sent to the Company or any Selling Stockholder, shall be mailed, delivered, or
telegraphed and confirmed in writing to the Company, 0000 Xxxx Xxxxxx Xxxxxx,
Xxxxx, XX 00000, Attention: K. Xxxx Xxxxx.
15. PARTIES.
This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriters, the Company and the Selling Stockholders and
the controlling persons, directors, officers, employees and agents referred to
in Sections 9 and 10, and their respective successors and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provision
herein contained. The term "successors and assigns" shall not include a
purchaser, in its capacity as such, of Shares from any of the Underwriters.
16. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
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If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
SABRATEK CORPORATION
By:___________________________
SELLING STOCKHOLDERS
By:___________________________
As Attorney-in-Fact for the
Stockholders named in
SCHEDULE II hereto
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
SALOMON BROTHERS INC
XXXXX XXXXXX INC.
XXXXXXXXX & COMPANY, INC.
By: _________________________
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
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SCHEDULE I
NUMBER OF FIRM SHARES
NAME OF UNDERWRITER TO BE PURCHASED
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SCHEDULE II
NAME OF SELLING STOCKHOLDER NUMBER OF FIRM SHARES
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