1
Exhibit 1.1
2,300,000 SHARES
GLIATECH INC.
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
June __, 1998
XXXXX & COMPANY
XXXXXX XXXX LLC
VECTOR SECURITIES INTERNATIONAL, INC.
As Representatives of the several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Dear Sirs:
1. INTRODUCTORY. Gliatech Inc., a Delaware 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 2,000,000 shares of Common Stock, $.01 par
value (the "Common Stock") of the Company. The aggregate of 2,000,000
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
300,000 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 Xxxx LLC and Vector Securities
International, 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:
a A registration statement on Form S-3 (File No. 333-52825) 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
(including all documents incorporated by reference therein) have heretofore
been delivered to you, has been carefully prepared by the Company in
conformity with the requirements of the Securities Act and has been filed
with the Commission under the Securities Act; one or more amendments to
such registration statement, including in each case an amended preeffective
prospectus, copies of which amendments (including all documents
incorporated by reference therein), have heretofore been delivered to you,
have been so prepared and filed. 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
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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
Securities Act or (b) the information contained in the abbreviated 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 abbreviated
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.
Any reference herein to any Preeffective Prospectus of the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Form S-3 under the Securities Act, as of the date of
such Preeffective Prospectus or Prospectus, as the case may be, and any
reference to any amendment or supplement to any Preeffective Prospectus or
the Prospectus shall be deemed to refer to and include any documents filed
after such date under the Securities Exchange Act of 1934 (the "Exchange
Act"), and so incorporated by reference.
b 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 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 each of the Closing Dates (as
hereinafter defined), the Registration Statement and the Prospectus and any
amendments or supplements thereto contained and will contain all material
statements and information required to be included therein by the
Securities Act and 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 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 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
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.
c 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,
short-term or long-term debt of the Company and its subsidiaries considered
as a whole.
d 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
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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 selected financial and statistical data set forth in the
Prospectus under the caption "Selected Consolidated Financial Data" and in
the Company's Annual Report on form 10-K for the fiscal year ended December
31, 1997 fairly present, on the basis stated in the Registration Statement
and such Annual Report, the information set forth therein.
e Ernst & Young LLP, who have expressed their opinions on the
audited financial statements and related schedules included in the
Registration Statement and the Prospectus are independent public
accountants as required by the Securities Act and the Rules and
Regulations.
f The Company has, and each of its subsidiaries have, been duly
organized and are validly existing and in good standing as corporations
under the laws of their respective jurisdictions of organization, with
power and authority (corporate and other) to own or lease their properties
and to conduct their businesses as described in the Prospectus; and the
Company is and each of such subsidiaries are duly qualified to do business
and in good standing as foreign corporations in all other jurisdictions
where their ownership or leasing of properties or the conduct of their
businesses requires such qualification, except where the failure to so
qualify would not have a material adverse effect on 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. The Company and its subsidiaries now hold and at
each of the Closing Dates will hold, licenses, consents, certificates,
orders, approvals and permits from all state, United States, foreign and
other governmental or regulatory authorities, including, but not limited
to, the United States Food and Drug Administration (the "FDA") and any
foreign governmental or regulatory authorities performing functions similar
to those performed by the FDA, that are required for the conduct of the
business of the Company and its subsidiaries as such business is currently
conducted as described in the Registration Statement and the Prospectus,
except for such licenses, certificates, orders, approvals and permits the
failure of which to maintain would not have a material adverse effect on
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, all of which are valid and in full
force and effect (and there is no proceeding pending or, to the knowledge
of the Company, threatened which may cause any such license, consent,
certificate, order, approval or permit to be withdrawn, canceled, suspended
or not renewed). All of the descriptions contained in the Registration
Statement and the Prospectus of the legal and governmental proceedings by
or before the FDA or any foreign, state or local government body exercising
comparable authority are accurate in all material respects. The Company and
its subsidiaries are in compliance in all material respects with all
applicable FDA, state and local rules, regulations, guidelines and
policies, including, without limitation, applicable FDA, state and local
rules, regulations and policies relating to good manufacturing practice and
good laboratory practice and any foreign governmental or regulatory
authorities performing functions similar to those performed by the FDA
except for those which, singly or in the aggregate, would not have a
material adverse effect on the condition (financial or otherwise) of
properties, business, management, prospects, net worth or results of
operations of the Company and its subsidiaries considered as a whole. The
Company owns or controls, directly or indirectly, only the following
corporations, associations or other entities: Gliatech R&D, Inc. and GIC,
Inc.
g The Company's authorized and outstanding capital stock is on the
date hereof, and will be on the Closing Dates, as set forth under the
heading "Capitalization" in the Prospectus; the outstanding shares of
common stock (including the outstanding shares of Stock) of the Company
conform to the description thereof in the Prospectus and have been duly
authorized and validly issued and are fully paid and nonassessable; are
duly designated for quotation on the Nasdaq National Market and have been
issued in compliance with all federal and state securities laws and were
not issued in violation of or subject to any preemptive rights or similar
rights to subscribe for or purchase securities and conform to the
description thereof contained in the Prospectus, if applicable. 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. All outstanding shares of capital stock of
each subsidiary have been duly authorized and validly issued, and are fully
paid and nonassessable and (except for directors' qualifying shares) are
owned directly by the Company free and clear of any liens, encumbrances,
equities or claims.
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h 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.
i Except as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries or affiliates is a party or of which any property of the
Company or any subsidiary or affiliate is subject, which, if determined
adversely to the Company or any such subsidiary or affiliate, might
individually or in the aggregate (i) prevent or adversely affect the
transactions contemplated by this Agreement, (ii) suspend the effectiveness
of the 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 its subsidiaries considered as a whole and there is no valid
basis for any such legal or governmental proceeding; and except as set
forth in the Prospectus, to the best of the Company's knowledge no such
proceedings are threatened or contemplated against the Company or any
subsidiary or affiliate by governmental authorities or others. The Company
is not a party nor subject to the provisions of any material injunction,
judgment, decree or order of any court, regulatory body or other
governmental agency or body.
j The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated (A) will not result in
any violation of the provisions of the certificate of incorporation,
by-laws or other organizational documents of the Company or its subsidiary,
or any law, order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or its subsidiary or any of
its their properties or assets, (B) will not conflict with or result in a
breach or violation of any of the terms or provisions of or constitute a
default under any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of its properties is or may
be bound, the Second Restated Certificate of Incorporation, Amended and
Restated By-laws or other organizational documents of the Company or any of
its subsidiaries, or (C) will not result in any violation of any law,
order, rule, regulation, writ, injunction, judgment or decree of any court
or governmental agency or body to which the Company or any of its
subsidiaries is subject, including, but not limited to, the FDA and any
foreign, state or local governmental or regulatory authorities performing
functions similar to those performed by the FDA.
k No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby, except such as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or under the
Securities Act or the Exchange Act or securities or "Blue Sky" laws of any
jurisdiction in connection with the purchase and distribution of the Stock
by the Underwriters.
l 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), 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 and except that such is
subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws now or hereafter in effect relating to or
limiting creditors' rights, and general principles of equity, whether such
enforceability is considered in a proceeding in equity or at law, and to
the discretion of the court before which any proceeding is brought.
m The Company and its subsidiaries are in all material respects in
compliance with, and conducts their businesses in conformity with, (i) all
applicable federal, state, local and foreign laws, rules and regulations or
any court or governmental agency or body including, but not limited to, the
FDA and any foreign, state, or local governmental or regulatory authorities
performing functions similar to those performed by the FDA and (ii) all
laws, rules and regulations applicable to the import and export of the
Company's and any subsidiary's products; 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. Except as disclosed in the Registration Statement, the
Company and its subsidiaries are in compliance with all applicable
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existing federal, state, local and foreign laws and regulations relating to
the protection of human health or the environment or imposing liability or
requiring standards of conduct concerning any Hazardous Materials
("Environmental Laws"), except for such instances of noncompliance which,
either singly or in the aggregate, would not have a material adverse effect
on 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. The term "Hazardous Material"
means (i) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
(ii) any "hazardous waste" as defined by the Resource Conservation and
Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv)
any polychlorinated biphenyl and (v) any pollutant or contaminant or
hazardous, dangerous or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environment Law."
n The Company and its subsidiaries have filed all necessary federal,
state, local and foreign income, payroll, franchise and other tax returns
and have paid all taxes shown as due thereon or with respect to any of
their properties, 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.
o No person or entity other than Xx. Xxxxxxx X. Xxxxx 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.
p Neither the Company nor any of its officers, directors or
affiliates 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.
q Except as set forth in the Prospectus and the Registration
Statement under the captions "Risk Factors -- Uncertainties Regarding
Patents and Proprietary Rights" and "Business -- Patents, Proprietary
Technology and Trade Secrets," (i) the Company and each of its subsidiaries
own or possess valid and enforceable licenses or other rights to use all
patents, patent applications, patent rights, inventions, trademarks
(registered or unregistered), trademark applications, tradenames, service
marks, service xxxx applications, copyrights, manufacturing processes,
formulae, trade secrets, know-how, franchises and other material intangible
property and assets (collectively, "Intellectual Property") necessary to
the conduct of their businesses as currently conducted or as proposed to be
conducted as described in the Prospectus and the Registration Statement;
(ii) neither the Company nor any of its subsidiaries has any knowledge that
it lacks or will be unable to obtain or retain any rights or licenses to
use any of the Intellectual Property necessary to conduct the business now
conducted or proposed to be conducted by it as described in the Prospectus
and the Registration Statement; (iii) neither the Company nor any of its
subsidiaries has any knowledge of any third parties who have or will be
able to establish rights to any of the Intellectual Property, except for
the ownership rights of the owners of the Intellectual Property which is
licensed to the Company or its subsidiaries; (iv) to the knowledge of the
Company, there is no infringement by third parties of any of the
Intellectual Property; (v) there is no pending or, to the knowledge of the
Company, threatened action, suit, proceeding or claim by others challenging
the Company's or any of its subsidiary's rights of title or other interest
in or to any Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (vi) there is no
pending or, to the knowledge of the Company, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any
Intellectual Property, and the Company is unaware of any facts which would
form a reasonable basis for any such claim; (vii) there is not pending or,
to the knowledge of the Company, threatened action, suit, proceeding or
claim by others that the Company or any of its subsidiaries or their
products or processes infringe or otherwise violate any patent, trademark,
copyright, trade secret or other proprietary right of others, and the
Company is unaware of any facts which would form a reasonable basis for any
such claim; (viii) to the knowledge of the Company, there is no patent or
patent application which contains claims that interfere with the issued or
pending claims of any of the Intellectual Property; (ix) to the knowledge
of the Company, there are no facts which would bar the grant of a patent
from each of the patent applications within the Intellectual Property; (x)
there is no pending or, to the knowledge of the Company, threatened action,
suit, proceeding or claim by any current or former employee, consultant or
agent of the Company or any of its
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subsidiaries seeking either ownership rights to any invention or
compensation from the Company or any of its subsidiaries for any invention
made by such employee, consultant or agent in the course of his/her
employment with the Company or any subsidiary, nor, to the knowledge of the
Company, can any such action, suit, proceeding or claim, if instituted, be
sustained; and (xi) to the knowledge of the Company, none of the patents
owned or licensed by the Company or any of its subsidiaries are
unenforceable or invalid and there is no act or omission of which the
Company is aware that may render any patent or patent application within
the Intellectual Property unpatentable, unenforceable or invalid. The
Company and each of its subsidiaries have clear title to all of their
patents and patent applications, free and clear of any pledges, liens,
security interests, charges, encumbrances, claims, equitable interests or
restrictions. The Registration Statement and the Prospectus fairly and
accurately describe the Company's and each of its subsidiary's rights with
respect to the Intellectual Property. The Company and each of its
subsidiaries have duly and properly filed or caused to be filed with the
United States Patent and Trademark Office (the "PTO") and applicable
foreign and international patent authorities all patent applications
described or referred to in the Registration Statement and the Prospectus,
and the Company believe that they have complied with the PTO's duty of
candor and disclosure for each of the United States patent applications
described or referred to in the Registration Statement and the Prospectus.
r 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,
or incorporated by reference as, exhibits to the Company's Annual Report on
Form 10-K as filed with the Commission for the year ended December 31,
1997, and neither the Company nor any of its subsidiaries nor 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.
s The Company is not involved in any labor dispute nor 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, 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 are in compliance in all material respects with all
applicable provisions of ERISA.
t The Company has obtained the written agreement described in
Section 8(j) of this Agreement from each of its officers, directors and
holders of Common Stock listed on Schedule C hereto.
u The Company and its subsidiaries have, and the Company and its
subsidiaries as of the Closing Dates will have, good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned or proposed to be 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 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 each of the Closing
Dates, 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.
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v The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as 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 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.
w 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.
x The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
y 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.
z 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.
aa The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act. The Stock has been applied for quotation on the Nasdaq
National Market. The Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under
the Exchange Act or delisting the Common Stock from the Nasdaq National
Market, nor has the Company received any notification that the Commission
or the Nasdaq National Market is contemplating terminating such
registration or listing.
3. PURCHASE BY, AND SALE AND DELIVERY TO, UNDERWRITERS--CLOSING DATES. The
Company agrees to sell to the Underwriters the Firm Stock, and on the basis
of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, 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 the price per share set forth in the table on the cover page of the
Prospectus under the heading "Proceeds to the Company" (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 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
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designate (solely for the purpose of administrative convenience) and in
such denominations as Cowen may determine, against payment of the aggregate
Purchase Price therefor in immediately available funds (same day funds),
payable to the order of the Company, all at the offices of Xxxxxxx, Xxxxxxx
& Xxxxxxxx LLP, 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. The
time and date of the delivery and closing shall be at 10:00 A.M., New York
Time, on _____________, 1998, in accordance with Rule 15c6-1 of the
Exchange Act. The time and date of such payment and delivery are herein
referred to as the "First Closing Date". The First Closing Date and the
location of delivery of, and the form of payment for, the Firm Stock may
be varied by agreement between the Company and Cowen. The First 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, Xxxxxx Xxxx LLC or Vector Securities
International, Inc., individually and not as Representatives 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 or
Xxxxxx Xxxx LLC or Vector Securities International, Inc. shall not relieve
such Underwriter or Underwriters from any of its or their other obligations
hereunder.
The several Underwriters agree to make a public offering of the Firm Stock
at the 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, up to
an aggregate of 300,000 additional shares of Common Stock. The price per
share to be paid for the 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".) All
purchases of Optional Stock from the Company shall be made on a pro rata
basis. 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, 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 and subject to the terms
and conditions herein set forth, 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 in writing to the
Company 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 transfer in
immediately available funds (same day funds), payable to the order of the
Company all at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 0000
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. The Company shall make the
certificates for the Optional Stock available to the underwriters for
examination no later than
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10:00 A.M., New York Time, on the business day preceding the Option Closing
Date at the offices of Xxxxx & Company, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000. The Option Closing Date and the location of delivery of, and
the form of payment for, the Option Stock may be varied by agreement
between the Company and Cowen. The Option Closing Date may be postponed
pursuant to the provisions of Section 12.
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 of the of the
Rules and Regulations, 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 of the Rules and Regulations, 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 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 and the Company may be
necessary to enable the several Underwriters to continue the
distribution of the Stock and will use its best efforts to cause
the same to become effective as promptly as possible. The Company
will promptly file all reports and any definitive proxy or
information statements required to be filed with the Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the
offering or sale of the Stock.
(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 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 or make an appropriate
filing pursuant to Section 13 or 14 of the Exchange Act 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 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 Dates, a signed copy of the Registration Statement, as
originally filed with the Commission, and all amendments thereto
including all financial statements and exhibits thereto and all
documents theretofore incorporated by reference therein, and will
deliver to the Representatives such number of copies of the
Registration Statement, including such financial statements and
all documents theretofore incorporated by reference therein but
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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 request of the Representatives on the date of the 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 shareholders as
soon as practicable, but not later than fifteen (15) months after
the effective date of the Registration Statement, an earning
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.
(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) The Company will furnish to its shareholders annual reports
containing financial statements certified by independent public
accountants. During the period of three (3) 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 shareholders 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 shareholders as such, (ii) as soon as they are available,
copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange
(including, without limitation, each proxy statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Report on
Form 8-K or other report filed by the Company with the
Commission, or the NASD or any securities exchange) and (iii)
from time to time such other information concerning the Company
as you may request. 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
shareholders 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 have the Stock
designated for quotation, subject to official notice of issuance,
on the Nasdaq National Market concurrently with the effectiveness
of the Registration Statement.
(i) The Company will maintain a transfer agent and registrar for its
Common Stock.
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(j) Company will not offer, sell, assign, transfer, encumber,
contract to sell, grant an option to purchase (other than
pursuant to the Company's stock option plans) or otherwise
dispose of, other than by operation of law, gifts, pledges or
dispositions by estate representatives, and exercises of options
any shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock (including, without
limitation, Common Stock of the Company which may be deemed to be
beneficially owned by the Company in accordance with the Rules
and Regulations) during the 90 days following the date on which
the price of the Common Stock to be purchased by the Underwriters
is set, other than the Company's sale of Common Stock hereunder
and the Company's issuance of Common Stock upon the exercise of
warrants and stock options which are presently outstanding and
described in the Prospectus.
(k) 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.
(l) 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.
(m) Prior to each of the Closing Dates the Company will furnish to
you, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company and its
subsidiaries for any periods subsequent to the periods covered by
the financial statements appearing in the Registration Statement
and the Prospectus.
(n) Prior to each of the Closing Dates 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 operations,
business, prospects, assets or liabilities of any of them, or the
offering of the Stock, without your prior written consent.
(o) If at any time during the 180 day period after the Registration
Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of
which in your opinion the market price of the Common Stock has
been or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect
set forth above, consult with you in good faith regarding the
necessity of disseminating a press release or other public
statement responding to or commenting on such rumor, publication
or event and, if the Company in its reasonable judgment
determines that such a press release or other public statement is
appropriate, the substance of any press release or other public
statement.
5. PAYMENT OF EXPENSES.
(a) The Company will pay (directly or by reimbursement) all costs,
fees and expenses incurred in connection with expenses incident
to the performance of its obligations under this Agreement and in
connection with the transactions contemplated hereby, including
but not limited to (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 certificates
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(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, the "Agreement Among Underwriters" between the
Representatives and the Underwriters, the Master Selected
Dealers' Agreement, the Underwriters' Questionnaire and the Blue
Sky memoranda (including related fees and expenses of counsel to
the Underwriters) and this Agreement; (viii) all filing fees,
reasonable attorneys' fees and expenses (not to exceed $5,000
without the Company's prior consent, which shall not be
unreasonably withheld) 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 and determination of
its eligibility for investment 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 (including related
fees and expenses of counsel to the Underwriters); and (x) all
other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically
provided for in this Section.
(b) In addition to its other obligations under Section 6(a) hereof,
the Company agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon (i) any statement or
omission or any alleged statement or omission, (ii) any act or
failure to act or any alleged act or failure to act or (iii) any
breach or inaccuracy in its representations and warranties, it
will reimburse each Underwriter on a quarterly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of
the Company's obligation to reimburse each Underwriter for such
expenses and the possibility that such payments might later be
held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement payment
pursuant to Section 6 is so held to have been improper, each
Underwriter shall promptly return it to the Company together with
interest, compounded daily, determined on the basis of the prime
rate (or other commercial lending rate for borrowers of the
highest credit standing) announced from time to timed by The
Chase Manhattan Bank, New York, New York (the "Prime Rate"). Any
such interim reimbursement payments which are not made to an
Underwriter within 30 days as provided below shall bear interest
at the Prime Rate from the due date for such reimbursement. This
expense reimbursement agreement will be in addition to any other
liability which the Company may otherwise have. The request for
reimbursement will be sent to the Company.
(c) In addition to its other obligations under Section 6(b) hereof,
each Underwriter severally agrees that, as an interim measure
during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in
Section 6(b) hereof which relates to information furnished to the
Company, it will reimburse the Company (and, to the extent
applicable, each officer, director, or controlling person) on a
quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Underwriters' obligation to
reimburse the Company (and, to the extent applicable, each
officer, director, or controlling person) for such expenses and
the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent
that any such interim reimbursement payment is so held to have
been improper, the Company (and, to the extent applicable, each
officer, director, or controlling person) shall promptly return
it to the Underwriters together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within
thirty (30) days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This
indemnity agreement will be in addition to any liability which
such Underwriter may otherwise have.
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(d) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in paragraph (b)
and/or (c) of this Section 5, including the amounts of any
requested reimbursement payments and the method of determining
such amounts, shall be settled by arbitration conducted under the
provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the
Code of Arbitration Procedure of the NASD. Any such arbitration
must be commenced by service of a written demand for arbitration
or written notice of intention to arbitrate, therein electing the
arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to
said demand or notice is authorized to do so. Such an arbitration
would be limited to the operation of the interim reimbursement
provisions contained in paragraph (b) and/or (c) of this Section
5 and would not resolve the ultimate propriety or enforceability
of the obligation to reimburse expenses which is created by the
provisions of 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 the reasonable cost
of investigating and defending against any claims therefor and
counsel fees incurred in connection therewith), joint or several,
which may be based upon the Securities Act, or any other statute
or at common law, (i) 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 or allegedly 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 under which they were
made, not misleading, unless such statement or omission was made
in reliance upon, 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 or (ii) for any act or failure to act or any alleged act
or failure to act by any Underwriter in connection with, or
relating in any manner to, the Stock or the offering contemplated
hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or expense arising out of or based
upon matters covered by clause (i) above (provided that the
Company shall not be liable under this clause (ii) to the extent
that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, or liability or
expense resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through its
gross negligence or willful misconduct); provided, that with
respect to any untrue statement or omission or alleged untrue
statement or omission made in any Preeffective Prospectus, 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 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 excluding documents incorporated by reference
therein was not sent or given to such person at or prior to the
written confirmation of the sale of such shares of Stock to such
person as required by the Securities Act and if the untrue
statement or omission concerned has been corrected in the
Prospectus. 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 and reasonably acceptable to
the Underwriters. 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
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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, provided that the
Company shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm. 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 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. 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, 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
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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 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 accuracy, at and
(except as otherwise stated herein) as of the date hereof and at and as of
each of the Closing Dates, of the representations and warranties made
herein by the Company, to compliance at and as of each of the Closing Dates
by the Company with its covenants and agreements herein contained and other
provisions hereof to be satisfied at or prior to each of the Closing Dates,
and to the following additional conditions:
(a) 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.
(b) The Representatives shall have been satisfied that there shall
not have occurred any change, on a consolidated basis, prior to
each of the Closing Dates 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, such that (i) the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, contains an untrue statement of fact which,
in the reasonable opinion of the Representatives, is material, or
omits to state a fact which, in the reasonable 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.
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(c) 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 their 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.
(d) At the time of execution of this Agreement, the Representatives
shall have received from Ernst & Young LLP, independent certified
public accountants, a letter, dated the date hereof, in form and
substance satisfactory to the Underwriters.
(e) The Representatives shall have received from Ernst & Young LLP,
independent certified public accountants, letters, dated each of
the Closing Dates, to the effect that such accountants reaffirm,
as of each of the Closing Dates, and as though made on each of
the Closing Dates, the statements made in the letter furnished by
such accountants pursuant to paragraph (d) of this Section 8.
(f) The Representatives shall have received the opinions (i) Xxxxx,
Day, Xxxxxx & Xxxxx, counsel for the Company, (ii) Xxxxxx &
Xxxxxxx LLP, patent counsel to the Company, (iii) Dressler,
Goldsmith, Xxxxxxxx & Xxxx, Ltd., patent counsel to the Company,
and (iv) Xxxxx and Xxxxxxx L.L.P., FDA regulatory counsel to the
Company, and (v) Xxxx X. Xxxxxxxxxxx, European regulatory counsel
to the Company, dated as of each of the Closing Dates, in the
forms attached hereto on Exhibit I, Exhibit II, Exhibit III,
Exhibit IV and Exhibit V, respectively, addressed to the
Underwriters and with reproduced copies of signed counterparts
thereof for each of the Representatives.
(g) The Representatives shall have received from Xxxxxxx, Xxxxxxx &
Xxxxxxxx LLP, counsel for the Underwriters, their opinions dated
each of the Closing Dates 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 reasonably request for
the purpose of enabling them to pass upon such matters.
(h) The Representatives shall have received a certificates, dated
each of the Closing Dates, of the chief executive officer or the
President and the chief financial or accounting officer of the
Company 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, 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;
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(iv) The representations and warranties of the Company in this
Agreement are true and correct at and as of each of the
Closing Dates, 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 Dates; 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
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.
(i) 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 each of the
Closing Dates, of the representations and warranties made herein
by it and as to compliance at and as of each of the Closing Dates
by it with its covenants and agreements herein contained and
other provisions hereof to be satisfied at or prior to each of
the Closing Dates, and as to satisfaction of the other conditions
to the obligations of the Underwriters hereunder.
(j) Xxxxx shall have received the written agreements, substantially
in the form of Exhibit VI hereto, of the officers, directors and
holders of Common Stock listed in Schedule B that each will not
offer, sell, assign, transfer, encumber, contract to sell, grant
an option to purchase or otherwise dispose of, other than by
operation of law, gifts, pledges or dispositions by estate
representatives, any shares of Common Stock (including, without
limitation, Common Stock which may be deemed to be beneficially
owned by such officer, director or holder in accordance with the
Rules and Regulations) during the 90 days following the date of
the final Prospectus.
(k) The Nasdaq National Market shall have approved the Stock for
designation of quotation, subject only to official notice of
issuance.
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, 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 each of the Closing
Dates, but Xxxxx, on behalf of the Representatives, 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 and 17 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 and the Company may mutually 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
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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. 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 by the Representatives by notice to the
Company (i) if at or prior to the First Closing Date trading in securities
on any of the New York Stock Exchange, or Nasdaq National Market System
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 First
Closing Date there shall have been (A) an outbreak or escalation of
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 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
reasonable 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 under Section 8, the Company will bear
and pay the expenses specified in Section 5 hereof and, in addition to its
obligations 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. 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 Dates 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
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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. 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, with a copy to Xxxxxxx, Phleger &
Xxxxxxxx LLP, 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxxxx X. Xxxxx, Esq., or, if sent to the Company, shall be
mailed, delivered or telegraphed and confirmed c/o Gliatech Inc., 00000
Xxxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxxx 00000, Attention: Chief Financial
Officer, with a copy to Xxxxx, Day, Xxxxxx & Xxxxx, 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxx 00000, Attention: Xxxxxx X. Xxxxxxx, Esq.
14. SUCCESSORS. This Agreement shall inure to the benefit of and be binding
upon the several Underwriters, 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.
15. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to its
conflict of laws rules.
16. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement, you
will act for and on behalf of the several Underwriters, and any action
taken under this Agreement by Cowen, as Representative, will be binding on
all the Underwriters.
17. 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.
18. 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 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 and the Representatives.
19. 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.
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Very truly yours,
GLIATECH INC.
By:
--------------------------------
Xxxxxx X. Xxxxxxxxxx, Ph.D.,
President
Accepted and delivered in
New York, New York, as of
the date first above written.
XXXXX & COMPANY
XXXXXX XXXX LLC
VECTOR SECURITIES INTERNATIONAL , INC.
Acting on their own behalf
and as Representatives of several
Underwriters referred to in the
foregoing Agreement.
By: XXXXX & COMPANY
By: Cowen Incorporated,
its general partner
By:
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Xxxx X. Xxxxxx
Managing Director - Syndicate
