1
EXHIBIT 1
SOMANETICS CORPORATION
1,800,000 Common Shares
UNDERWRITING AGREEMENT
June [__], 1997
XXXXX XXXXXX & CO., INC.
As Representative of the several
Underwriters
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
SOMANETICS CORPORATION, a Michigan corporation (the "Company"), proposes
to sell an aggregate of 1,800,000 shares (the "Firm Shares") of the Common
Shares, par value $.01 per share (the "Common Shares"), of the Company, to you
and the other underwriters named in Schedule I hereto (collectively, the
"Underwriters"), for whom you are acting as representative (the
"Representative"). The Company also has agreed to grant to you and the other
Underwriters an option (the "Option") to purchase up to an additional 270,000
Common Shares (the "Option Shares") on the terms and for the purposes set forth
in Section l(b) hereto. The Firm Shares and the Option Shares are hereinafter
collectively referred to as the "Shares." The words "you" and "your" refer to
the Representative.
The Company hereby confirms as follows its agreement with the
Representative and the several other Underwriters.
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1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and agreements of the
Company herein contained and subject to all the terms and conditions of this
Agreement, the Company agrees to sell to each Underwriter and each Underwriter,
severally and not jointly, agrees to purchase from the Company at a purchase
price of $[____] per share, the number of Firm Shares set forth opposite the
name of such Underwriter on Schedule I hereto, plus such additional number of
Shares which such Underwriter may become obligated to purchase pursuant to
Sections 1(b) or 10 hereof.
(b) Subject to all the terms and conditions of this Agreement, the Company
grants the Option to the several Underwriters to purchase, severally and not
jointly, the Option Shares at the same price per share as the Underwriters
shall pay for the Firm Shares. The Option may be exercised only to cover
over-allotments in the sale of the Firm Shares by the Underwriters and may be
exercised in whole or in part at any time and from time to time on or before
the 30th day after the date of this Agreement (or on the next business day if
the 30th day is not a business day), upon notice (the "Option Shares Notice")
in writing or by telephone (confirmed in writing) by the Representative to the
Company no later than 5:00 p.m., New York City time, at least two and no more
than five business days before the date specified for closing in the Option
Shares Notice (the "Option Closing Date") setting forth the aggregate number of
Option Shares to be purchased on the Option Closing Date. (As used herein,
"business day" means a day on which the New York Stock Exchange is open for
trading and on which banks in New York are open for business and not permitted
by law or executive order to be closed.) On the Option Closing Date, the
Company will sell to the Underwriters the number of Option Shares set forth in
the Option Shares Notice, and each Underwriter will purchase such percentage of
the Option Shares as is equal to the percentage of Firm Shares that such
Underwriter is purchasing, as adjusted by the Representative in such manner as
it deems advisable to avoid fractional shares.
2. Delivery and Payment.
(a) Delivery of the Firm Shares shall be made to the Representative for
the accounts of the Underwriters at the office of Xxxxx Xxxxxx & Co., Inc., 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, and in exchange therefor
payment of the purchase price shall be made to the Company by wire transfer of
immediately available funds to the Company's account at [________] (the
"Closing"). Such delivery and payment shall be made at 10:00 a.m., New York
time, on the third business day following the date of this Agreement, or at
such other time on such other date as may be agreed upon by the Company and the
Representative (such date is hereinafter referred to as the "Closing Date").
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligations of each
Underwriter hereunder.
(b) To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the
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offices specified above for the Closing at the time and date (which may be the
Closing Date) specified in the Option Shares Notice.
(c) Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representative shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
(d) The cost of original issue tax stamps, if any, in connection with the
issuance, sale and delivery of the Shares by the Company to the respective
Underwriters shall be borne by the Company. The Company will pay and save each
Underwriter and any subsequent holder of the Shares harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
Federal or state stamp and other transfer taxes, if any, which may be payable
or determined to be payable in connection with the issuance, sale or delivery
to such Underwriter of the Shares.
3. Representations and Warranties of the Company. The Company represents,
warrants and covenants to each Underwriter that:
(a) A registration statement on Form S-1 (Registration No. 333-____)
relating to the Shares, including a preliminary prospectus relating to the
Shares and such amendments to such registration statement as may have been
required to the date of this Agreement, has been prepared by the Company under
the provisions of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (collectively referred to as the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") promulgated
thereunder and has been filed with the Commission. The Commission has not
issued any order preventing or suspending the use of the Prospectus (as defined
below) or any Preliminary Prospectus (as defined below) or instituted or, to
the knowledge of the Company, threatened any proceeding for that purpose. The
term "Preliminary Prospectus" as used herein means a preliminary prospectus
relating to the Shares included at any time as part of the foregoing
registration statement or any amendment thereto before it became effective
under the Act and any prospectus filed with the Commission by the Company
pursuant to Rule 424(a) of the Rules and Regulations. Copies of such
registration statement and amendments and of each related Preliminary
Prospectus have been delivered to the Representative. If such registration
statement has not become effective, a further amendment to such registration
statement, including a form of final Preliminary Prospectus, necessary to
permit such registration statement to become effective will be filed promptly
by the Company with the Commission. If such registration statement has become
effective, a final prospectus relating to the Shares containing information
permitted to be omitted at the time of effectiveness by Rule 430A of the Rules
and Regulations will be filed by the Company with the Commission in accordance
with Rule 424(b) of the Rules and Regulations promptly after execution and
delivery of this Agreement. The term "Registration Statement" means the
registration statement at the time such registration statement becomes or
became
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effective (the "Effective Date"), together with any registration statement filed
by the Company pursuant to Rule 462(b) of the Rules and Regulations, including
all financial statements and schedules and all exhibits, documents incorporated
therein by reference and all information contained in any final prospectus filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations or in a
term sheet described in Rule 434 of the Rules and Regulations in accordance with
Section 5 hereof and deemed to be included therein as of the Effective Date by
Rule 430A of the Rules and Regulations. The term "Prospectus" means the
prospectus relating to the Shares as first filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations or, if no such filing is required, the
form of final prospectus relating to the Shares included in the Registration
Statement at the Effective Date. References herein to any document or other
information incorporated by reference in the Registration Statement shall
include documents or other information incorporated by reference in the
Prospectus (or if the Prospectus is not in existence, in the most recent
Preliminary Prospectus). References herein to any Preliminary Prospectus or the
Prospectus shall be deemed to include all documents and information incorporated
by reference therein and shall be deemed to refer to and include any documents
and information filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, and so incorporated by reference, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) On the date that any Preliminary Prospectus was filed with the
Commission, the date the Prospectus is first filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations (if required), at all times
subsequent thereto up to and including the Closing Date and, if later, the
Option Closing Date and when any post-effective amendment to the Registration
Statement becomes effective or any amendment or supplement to the Prospectus is
filed with the Commission, the Registration Statement, each Preliminary
Prospectus and the Prospectus (as amended or as supplemented if the Company
shall have filed with the Commission any amendment or supplement thereto),
including the financial statements included in the Prospectus, did or will
comply in all material respects with all applicable provisions of the Act and
the Rules and Regulations and did or will contain all material statements
required to be stated therein in accordance with the Act and the Rules and
Regulations. On the Effective Date and when any post-effective amendment to
the Registration Statement becomes effective, no part of the Registration
Statement or any such amendment did or will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading. At the
Effective Date, the date the Prospectus or any amendment or supplement to the
Prospectus is filed with the Commission and at the Closing Date and, if later,
the Option Closing Date, the Prospectus did not or will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing representations and warranties in this
Section 3(b) do not apply to any statements or omissions made in reliance on
and in conformity with information furnished in writing to the Company by the
Representative specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. There are no contracts or
other documents required to be filed as exhibits to the Registration Statement
by the Act or the Rules and Regula-
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tions that have not been so filed. The documents which are incorporated by
reference in any Preliminary Prospectus or the Prospectus or from which
information is so incorporated by reference, when they became effective or were
filed with the Commission, as the case may be, complied in all material respects
with the requirements of the Act and the Rules and Regulations or the Exchange
Act and the rules and regulations thereunder, as applicable, and did not, when
such documents were so filed, contain any untrue statement of a material fact or
omit 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, and any documents so filed and incorporated by
reference subsequent to the Effective Date shall, when they are filed with the
Commission, conform in all material respects with the requirements of the Act
and the Rules and Regulations and the Exchange Act and the rules and regulations
thereunder, as applicable.
(c) The Company has no subsidiaries. The Company does not own and, at the
Closing Date and the Option Closing Date, if any, will not own, an interest in
any corporation, joint venture, trust, partnership or other business entity.
The Company has been and, at the Closing Date and Option Closing Date, if any,
will be, duly incorporated and validly existing as a corporation under the laws
of the State of Michigan and is, and at the Closing Date and the Option Closing
Date, if any, will be, in good standing under the laws of the State of
Michigan. The Company has all corporate power and authority necessary to own
its properties and conduct its business as currently being carried on and as
described in the Registration Statement and Prospectus. The Company is, and at
the Closing Date and the Option Closing Date, if any, will be, duly licensed or
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its properties (owned, leased or licensed)
or the nature or conduct of its business or use of its property and assets
makes such licensing or qualification necessary. Complete and correct copies
of the Company's Restated Articles of Incorporation and Bylaws, in each case as
amended, have been delivered to the Representative or its counsel, and no
changes therein will be made subsequent to the date hereof and prior to the
Closing Date or, if later, the Option Closing Date.
(d) The outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable and are not
subject to any preemptive or similar rights, and the holders thereof, are not
subject to personal liability by reason of being such holders. The Firm Shares
to be sold hereunder to the Underwriters, and the Option Shares to be sold
hereunder to the Underwriters in the event the Option is exercised, will be
duly authorized and, when issued and delivered to the Underwriters against
payment therefor as provided by this Agreement, will be validly issued, fully
paid and nonassessable and will not be subject to any preemptive or similar
rights, and the holders thereof will not be subject to personal liability by
reason of being such holders. The Company has, and, upon completion of the
sale of the Shares, will have, an authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus
under the captions "Description of Capital Stock" and "Capitalization" (or,
if the Prospectus is not in existence, in the most recent Preliminary
Prospectus). The description of the securities of the Company in the
Registration Statement and the Prospectus
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under the caption "Description of Capital Stock" (or, if the Prospectus is not
in existence, in the most recent Preliminary Prospectus) is, and at the
Closing Date and, if later, the Option Closing Date, will be, complete and
accurate in all material respects. Except as set forth or contemplated in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, in the most recent Preliminary Prospectus), the Company does not
have outstanding and, at the Closing Date and, if later, the Option Closing
Date, will not have outstanding, any options to purchase, or any rights or
warrants to subscribe for, or any securities or obligations exchangeable or
convertible into, or any contracts or commitments to issue or sell, any shares
of its capital stock or any such options, rights, warrants, obligations,
contracts or commitments. Neither the filing of the Registration Statement nor
the offering or sale of the Shares as contemplated by this Agreement gives rise
to any rights for or relating to the registration of any Common Shares or other
securities of the Company, except such rights as have been disclosed in the
Registration Statement or as have been satisfied, waived or terminated.
(e) The financial statements and the related notes of the Company included
in the Registration Statement and in the Prospectus (or, if the Prospectus is
not in existence, in the most recent Preliminary Prospectus) or incorporated
therein by reference comply in all material respects with the requirements of
the Act and the Rules and Regulations, present fairly the financial condition,
results of operations, shareholders' equity and cash flows of the Company at
the dates and for the periods covered thereby and have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the entire periods involved (except as otherwise
stated therein), subject to year-end adjustments with respect to interim
information consistent with past practice. Deloitte & Touche LLP (the
"Accountants"), who have reported on those of such financial statements and
related notes which are audited, are independent accountants with respect to
the Company as required by the Act and the Rules and Regulations. The selected
financial information and statistical data set forth under the captions
"Prospectus Summary -- Summary Financial Data" and "Selected Financial Data"
in the Prospectus (or, if the Prospectus is not in existence, in the most
recent Preliminary Prospectus) have been prepared on a basis consistent with
the financial statements of the Company.
(f) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance 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 GAAP 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.
(g) Except as set forth or contemplated in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus), subsequent to the respective dates as of which
information is given in the Registration Statement
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and the Prospectus and prior to the Closing Date and, if later, the Option
Closing Date, (i) there has not been, and will not have been, any material
adverse change in the business, properties, prospects, key personnel, condition
(financial or otherwise), net worth or results of operations of the Company,
(ii) the Company has not, and will not have, incurred any material liabilities
or obligations, direct or contingent, or, entered into any material transactions
not in the ordinary course of business other than pursuant to this Agreement,
(iii) the Company has not, and will not have, paid or declared any dividends or
other distributions of any kind on any class of its capital stock, and (iv)
there has not been, and will not have been, any change in the capital stock, or
a material change in the short-term or long-term debt, or any issuance of
options, warrants, convertible securities or other rights to purchase capital
stock of the Company, other than changes in capital stock and issuances of
rights, options and shares pursuant to the Company's 1983 Stock Option Plan,
1991 Incentive Stock Option Plan, 1993 Director Stock Option Plan and the 1997
Stock Option Plan (collectively, the "Option Plans") or this Agreement.
(h) The Company has good and marketable title to all properties and assets
described in the Registration Statement and Prospectus (or, if the Prospectus
is not in existence, in the most recent Preliminary Prospectus), as owned by
it, free and clear of all liens, security interests, restrictions, pledges,
encumbrances, charges, equities, claims, easements, leases and tenancies
(collectively, "Encumbrances") other than those described or referred to in the
Registration Statement and Prospectus (or, if the Prospectus is not in
existence, in the most recent Preliminary Prospectus). The Company has valid,
subsisting and enforceable leases for the properties and assets described in
the Registration Statement and Prospectus (or, if the Prospectus is not in
existence, in the most recent Preliminary Prospectus) as leased by it, free and
clear of all Encumbrances, other than those described or referred to in the
Registration Statement and Prospectus (or, if the Prospectus is not in
existence, in the most recent Preliminary Prospectus). The Company has no
notice of any claim which has been asserted by anyone adverse to the Company's
rights as lessee or sublessee under the respective lease or sublease, or
affecting or questioning the Company's right to the continued possession of the
leased or subleased premises.
(i) Except as described or referred to in the Registration Statement or
Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus), the Company owns or possesses all patents, patent
applications, trademarks, service marks, tradenames, trademark registrations,
service xxxx registrations, copyrights, licenses, inventions, trade secrets and
other intellectual property rights necessary for the conduct of the business of
the Company as currently carried on and as described in the Registration
Statement and Prospectus (or, if the Prospectus is not in existence, in the
most recent Preliminary Prospectus), and except as stated or referred to in the
Registration Statement or Prospectus (or, if the Prospectus is not in
existence, in the most recent Preliminary Prospectus), no name which the
Company uses and no other aspect of the business of the Company will involve or
give rise to any infringement of or license or similar fees for, any patents,
patent applications, trademarks, service marks, tradenames, trademark
registrations, service xxxx registrations, copyrights, licenses, inventions,
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trade secrets or other similar rights of others material to the business or
prospects of the Company, and the Company has not received any notice alleging
any such infringement or fee.
(j) Except as set forth or referred to in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus), there are no actions, suits, arbitrations, claims,
governmental or other proceedings (formal or informal), or investigations
pending or, to the knowledge of the Company, threatened against or, to the
knowledge of the Company, affecting the Company, any of the Company's officers,
directors or shareholders, in its capacity as such, or any of the properties or
assets owned or leased by the Company, before or by any Federal, state,
municipal or foreign court, commission, regulatory body, administrative agency
or other governmental body, including, without limitation, the United States
Food and Drug Administration (the "FDA"), domestic or foreign (collectively, a
"Governmental Body"), which might result in any material adverse change in the
business, properties, prospects, condition (financial or otherwise), net worth
or results of operations of the Company. There are no actions, proceedings or
investigations pending or, to the knowledge of the Company, threatened by the
FDA or any other Governmental Body relating to the safety, efficacy or recall of
any product developed or sold by the Company. The Company is not in violation
of, or in default with respect to, any law, rule or regulation, or any order,
judgment or decree, except as described or referred to in the Prospectus (or if
the Prospectus is not in existence, in the most recent Preliminary Prospectus)
or such as in the aggregate do not now have and can reasonably be expected in
the future not to have a material adverse effect upon the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company; nor is the Company presently required to take any
action under any such order, judgment or decree in order to avoid any such
violation or default.
(k) The Company has, and at the Closing Date and, if later, the Option
Closing Date will have, all governmental licenses, permits, consents, orders,
approvals, franchises, certificates and other authorizations (collectively,
"Licenses") and has made all requisite declarations, notifications and filings
with all Government Bodies, in each case as are necessary to carry on its
business as then currently conducted and own or lease its properties as
contemplated in the Registration Statement and Prospectus (or, if the
Prospectus is not in existence, in the most recent Preliminary Prospectus), and
all such Licenses are, and at the Closing Date and, if later, the Option
Closing Date will be, in full force and effect. The Company has, and at the
Closing Date and, if later, the Option Closing Date will have, complied in all
material respects with all laws, regulations and orders applicable to it or its
business, assets and properties. The Company is not, nor at the Closing Date
and, if later, the Option Closing Date will it be, in violation of its Restated
Articles of Incorporation or Bylaws, in each case as amended, or in default
(nor has any event occurred which, with notice or lapse of time or both, would
constitute a default) in the due performance and observation of any term,
covenant or condition of any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which it is a party or by which its
properties are bound, the violation of which would individually or in the
aggregate
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have a material adverse effect on the business, properties,
prospects, condition (financial or otherwise), net worth or results of
operations of the Company. There are no governmental proceedings or actions
pending or, to the Company's knowledge, threatened for the purpose of
suspending, modifying or revoking any License held by the Company and, to the
knowledge of the Company, no event has occurred that allows, or with notice or
lapse of time or both would allow, any such suspension, modification or
revocation or any material impairment of the Company's rights thereunder.
(l) No consent, approval, authorization or order of, or any filing or
declaration with, any Governmental Body is required for the execution, delivery
or performance of this Agreement or for the consummation of the transactions
contemplated by this Agreement or in connection with the sale of the Shares by
the Company, except such as have been obtained and are in full force and effect
and such as may be required under the Act, the Rules and Regulations, any state
securities or Blue Sky laws or the bylaws and rules of the National Association
of Securities Dealers, Inc. (the "NASD") in connection with the purchase and
distribution by the Underwriters of the Shares to be sold hereby.
(m) The Company has full power (corporate and other) and authority to
enter into this Agreement and to carry out all the terms and provisions hereof
to be carried out by it. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company, and is enforceable against the Company in accordance with the terms
hereof, except as rights to indemnity and contribution may be limited by
Federal or state securities laws or the public policy underlying such laws.
Except as disclosed in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, in the most recent Preliminary Prospectus),
the execution, delivery and the performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation or imposition of any Encumbrance upon any of the properties or assets
of the Company pursuant to the terms or provisions of, or result in a breach or
violation of or conflict with any of the terms or provisions of, or constitute
a default under, or give any other party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under, (i)
the Restated Articles of Incorporation or Bylaws of the Company, in each case
as amended, or (ii) any contract or other agreement to which the Company is a
party or by which it or any of its assets or properties are bound, or (iii) any
judgment, ruling, decree, order, law, statute, rule or regulation of any
Governmental Body applicable to the Company or its business or properties,
assuming compliance with applicable state securities and Blue Sky laws.
(n) No statement, representation, warranty or covenant made by the Company
in this Agreement or made in any certificate or document required by this
Agreement to be delivered to the Representative was or will be, when made,
inaccurate, untrue or incorrect in any material respect. Each certificate
signed by an officer of the Company and delivered to the Representative or
counsel for the Underwriters shall be deemed to be a representation and
warranty by the Company to each Underwriter as to the matters covered thereby.
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(o) Neither the Company nor any of its directors, officers or affiliates
(within the meaning of the Rules and Regulations) has taken, nor will he, she
or it take, directly or indirectly, any action designed, or which might
reasonably be expected in the future, to cause or result in, under the Act or
otherwise, or which has constituted, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Shares
or otherwise.
(p) The Company is not involved in any material labor dispute with its
employees nor is any such dispute threatened or imminent.
(q) Neither the Company nor, to the Company's knowledge, any employee or
agent of the Company has made any payment of funds of the Company or received or
retained any funds of the Company in violation of any law, rule or regulation or
of a character required to be disclosed in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus).
(r) The business, operations and facilities of the Company have been and
are being conducted in compliance in all material respects with all applicable
laws, ordinances, rules, regulations, licenses, permits, approvals, plans,
authorizations or requirements relating to occupational safety and health, or
pollution, or protection of health or the environment (including, without
limitation, those relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants or hazardous or toxic substances,
materials or wastes into ambient air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of chemical substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, gaseous or liquid in nature) of any governmental department, commission,
board, bureau, agency or instrumentality of the United States or any state or
political subdivision thereof, or any foreign jurisdiction, and all applicable
judicial or administrative agency or regulatory decrees, awards, judgments and
orders relating thereto; and the Company has not received any notice from any
Governmental Body or any third party alleging any violation thereof or material
liability thereunder (including, without limitation, liability for costs of
investigating or remediating sites containing hazardous substances and/or
damages to natural resources). The intended use and occupancy of each of the
facilities owned or operated by the Company complies in all material respects
with all applicable codes and zoning laws and regulations, and there is no
pending or, to the Company's knowledge, threatened condemnation, zoning change,
environmental or other proceeding or action that will in any material respect
adversely affect the size of, use of, improvements on, construction on or
access to such facilities.
(s) The Company has filed all foreign, Federal, state and local tax
returns that are required to be filed or has requested extensions thereof and
is not in default in any taxes which were payable pursuant to said returns.
(t) Neither the Company nor any of its directors, officers or employees in
such capacity is subject to any order or directive of, or party to any
agreement with, any regulatory agency having jurisdiction with respect to its
business or operations except as
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disclosed in the Prospectus (or if the Prospectus is not in existence, in the
most recent Preliminary Prospectus).
(u) The Company and each officer and director of the Company have
delivered to the Representative agreements (the "Lockup Agreements") to the
effect that he, she or it will not, for a period of 180 days after the date
hereof, without the prior written consent of the Representative, directly or
indirectly, offer, sell or otherwise dispose (or announce any offer, sale,
grant of any option to purchase or other disposition) of any Common Shares or
securities convertible into, or exercisable or exchangeable for, Common Shares,
except pursuant to this Agreement and except for (i) exercises of options and
warrants to acquire Common Shares, (ii) transfers to the holder's spouse or
lineal descendants or ancestors, natural or adopted (collectively,
"Relatives"), or to an inter vivos trust for the benefit of such holder's
Relatives, (iii) transfers upon the death of such holder pursuant to the laws
of descent and distribution of pursuant to xxxxx, or (iv) gifts,
provided that, in the case of the foregoing clauses (i) through (iv), the
transferor agrees in writing to be bound by the terms of these restrictions.
(v) The Company has not distributed and will not distribute any prospectus
or other offering material in connection with the offering and sale of the
Shares other than any Preliminary Prospectus or the Prospectus or other
materials permitted by the Act or the Rules and Regulations to be distributed
by the Company.
(w) The Common Shares of the Company are quoted on The Nasdaq SmallCap
Market.
(x) The Company is not required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(y) The Company has furnished the Representative with true and complete
copies of its report on Form 10-K for the fiscal year ended November 30, 1996,
its report on Form 10-Q for the fiscal quarter ended February 28, 1997, its
Proxy Statement for use in connection with its 1997 Annual Meeting of
Shareholders and its 1996 Annual Report to Shareholders (the "Current
Reports"), which Current Reports constitute the only documents that the Company
was required to file with the Commission since November 30, 1996. The Company
has also filed all other reports required to be filed with the Commission prior
to November 30, 1996 (such reports, together with the Current Reports are
collectively referred to as the "Commission Reports"). As of their respective
filing dates, the Commission Reports and all other filings made by the Company
under the Act or Exchange Act complied in all material respects with the
requirements of the Act or the Exchange Act, as the case may be, and none of
such filings contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
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12
(z) Since its inception, the Company has not incurred any material
liability resulting from a violation of the provisions of the Act or any state
securities or Blue Sky laws.
(aa) The Company has made available to the Representative a copy of all
premarket notification ("510(k)") and premarket approval ("PMA") concurrence or
clearance letters received from the FDA and all related documents and
information, including device master files and market studies.
(bb) The Company carries, or is covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of its business and the
value of its properties.
(cc) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any material liability; the Company has not incurred and does not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
4. Representations and Warranties of the Underwriters. Upon your
authorization of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale to the public upon the terms set
forth in the Prospectus. The Representative represents and warrants to the
Company that, assuming compliance by the Company with all relevant provisions
of the Act in connection with the Registration Statement, the Representative
will conduct all offers and sales of the Shares in compliance with the relevant
provisions of the Act and the Rules and Regulations, all applicable state
securities laws and regulations and the bylaws and rules of the NASD. The
Representative represents and warrants to the Company that the Representative
has been authorized by the several Underwriters to enter into this Agreement on
their behalf and to act for them in the manner provided in this Agreement.
5. Agreements of the Company. The Company covenants and agrees with each
of the several Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or thereafter
during such period as the Prospectus is required by law to be delivered in
connection with sales of the Shares by an Underwriter or dealer, file any
amendment or supplement to the Registration Statement or the Prospectus, unless
a copy thereof shall first have been submitted to the Representative and the
Representative shall have consented thereto.
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13
(b) If the Registration Statement is not yet effective, the Company will
use its best efforts to cause the Registration Statement to become effective
not later than the time indicated in Section 7(a) hereof. The Company will
notify the Representative promptly, and will confirm such advice in writing,
(i) when the Registration Statement has become effective (if later than the
date hereof) and when any post-effective amendment thereto becomes effective,
(ii) of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (iii)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or any order suspending the use of any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto or the initiation of any
proceedings for any such purpose or the threat thereof, (iv) of the happening
of any event during the period mentioned in the first sentence of Section 5(f)
that in the reasonable judgment of the Company makes any statement of a
material fact made in the Registration Statement or the Prospectus untrue or
that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements of material fact therein, in light
of the circumstances in which they are made, not misleading and (v)
of receipt by the Company or any representative or attorney of the Company
during the period mentioned in the first sentence of Section 5(f) of any other
communication from the Commission relating to the Company, the Registration
Statement, any Preliminary Prospectus or the Prospectus. The Company will use
its best efforts to prevent the issuance of any order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or any order suspending the use of any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, and, if any such order is
issued, the Company will use its best efforts to obtain the withdrawal of such
order at the earliest possible moment. The Company will prepare the Prospectus
in a form approved by the Representative and will file such Prospectus pursuant
to Rule 424(b) of the Rules and Regulations not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) of the Rules and Regulations. If the Company has
omitted any information from the Registration Statement pursuant to Rule 430A
of the Rules and Regulations, the Company will use its best efforts to comply
with the provisions of and make all requisite filings with the Commission
pursuant to Rule 430A of the Rules and Regulations and to notify the
Representative promptly of all such filings.
(c) If, at any time when a Prospectus relating to the Shares is required
to be delivered under the Act, any event has occurred as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or the Registration Statement, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading,
or if for any other reason it is necessary at any such time to amend or
supplement the Prospectus or the Registration Statement to comply with the Act
or the Rules and Regulations, the Company will promptly notify the
Representative thereof and, in accordance with Section 5(a) hereof, will
prepare and file with the
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14
Commission, at the Company's expense, an amendment to the Registration Statement
or an amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance.
(d) The Company will furnish to the Representative, without charge, two
signed copies of the Registration Statement and of any post-effective amendment
thereto, including financial statements and schedules, and all exhibits
thereto, other than exhibits incorporated by reference, and will furnish to the
Representative, without charge, for transmittal to each of the other
Underwriters, copies of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules but without
exhibits.
(e) The Company will comply with all the provisions of all undertakings
contained in the Registration Statement.
(f) On the Effective Date, and thereafter from time to time for such
period as the Prospectus is required by the Act to be delivered, the
Company will deliver to each of the Underwriters, without charge, as many
copies of the Prospectus or any amendment or supplement thereto as the
Representative may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the several Underwriters
and by all dealers to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and for any period of time thereafter during
which the Prospectus is required by law to be delivered in connection
therewith. If during such period of time any event shall occur which in the
judgment of the Company or counsel to the Underwriters should be set forth in
the Prospectus in order to make any statement of material fact therein, in the
light of the circumstances under which it was made, not misleading, or in the
Registration Statement in order to make any statement of material fact therein
not misleading, or if it is necessary to supplement or amend the Prospectus or
the Registration Statement to comply with law, the Company will, in accordance
with Section 5(a) hereof, forthwith prepare and duly file with the Commission
an appropriate supplement or amendment thereto and will deliver to each of the
Underwriters, without charge, such number of copies thereof as the
Representative may reasonably request.
(g) The Company will (i) take or cause to be taken all such actions and
furnish all such information as the Representative may reasonably request in
order to qualify the Shares for offer and sale under the state securities or
Blue Sky laws of such jurisdictions as the Representative may designate, (ii)
continue such qualifications in effect for as long as may be necessary to
complete the distribution of the Shares but not to exceed one year from the
date of this Agreement and (iii) make such applications, file such documents
and furnish such information as may be required for the purposes set forth in
the foregoing clauses (i) and (ii); provided, that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action which would subject it to general
service of process or to taxation in any jurisdiction where it is not now so
subject.
(h) During the period of five years commencing on the Effective Date, the
Company will furnish to the Representative and each other Underwriter who may
so request
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15
copies of such financial statements and other periodic and special
reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock and will furnish to the
Representative and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
(i) The Company will make generally available to holders of its
securities, as soon as may be practicable, but in no event later than the last
day of the fifteenth full calendar month following the calendar quarter in
which the Effective Date falls, an earnings statement (which need not be
audited but shall be in reasonable detail) for a period of 12 months commencing
after the Effective Date, and satisfying the provisions of Section 11(a) of the
Act (including Rule 158 of the Rules and Regulations).
(j) The Company will not for a period of 180 days after the date hereof,
without the prior written consent of Representative, directly or indirectly,
offer, sell or otherwise dispose (or announce any offer, sale, grant of any
option to purchase or other disposition) of any Common Shares or any securities
convertible into, or exercisable or exchangeable for, Common Shares, except
pursuant to Section 1 hereof and except that the Company may grant options, and
issue shares pursuant to the options granted, under the Company's Option Plans
and the Company may issue shares pursuant to warrants outstanding as of the
date of this Agreement and warrants issued to the Representative.
(k) The Company will not at any time, directly or indirectly, take any
action intended, or which might reasonably be expected, to cause or result in,
or which will constitute, stabilization of the price of the Common Shares to
facilitate the sale or resale of any of the Shares.
(l) The Company shall apply the net proceeds of the sale of the Shares as
set forth in the Prospectus.
(m) The Company shall not invest, or otherwise use, the proceeds received
by the Company from the sale of the Shares to the Underwriters in such a manner
as would require the Company to register as an investment company under the
Investment Company Act.
(n) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company or if required by The Nasdaq Stock
Market, a registrar for its Common Shares.
(o) The Company will timely file all such reports, forms or other
documents as may be required from time to time under the Act, the Rules and
Regulations, the Exchange Act, and the rules and regulations promulgated
thereunder, and all such reports, forms and documents filed will comply in all
material respects as to form and substance with the applicable requirements of
the Act, the Rules and Regulations, the Exchange Act, and the rules and
regulations promulgated thereunder.
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16
6. Expenses. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Representative, all costs and expenses incident to
the performance of its obligations under this Agreement and the transactions
contemplated by this Agreement, including, but not limited to, costs and
expenses of or relating to (i) the preparation, printing and filing of the
Registration Statement and exhibits thereto, each Preliminary Prospectus, the
Prospectus, any amendment or supplement to the Registration Statement or the
Prospectus, (ii) the preparation and delivery of certificates representing the
Shares, (iii) the printing of this Agreement, the Agreement among Underwriters,
any Dealer Agreements and any Underwriters' Questionnaire, (iv) furnishing
(including costs of shipping and mailing) such copies of the Registration
Statement, the Prospectus and any Preliminary Prospectus, and all amendments and
supplements thereto, as may be requested for use in connection with the offering
and sale of the Shares by the Underwriters or by dealers to whom Shares may be
sold, (v) the quotation of the Shares on The Nasdaq Stock Market, (vi) any
filings required to be made by the Underwriters with the NASD, (vii) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions designated pursuant to Section
5(g) hereof, including the reasonable fees, disbursements and other charges of
counsel to the Underwriters in connection therewith, and the preparation and
printing of preliminary, supplemental and final Blue Sky memoranda, (viii)
counsel and accountants to the Company and (ix) the transfer agent, and any
registrar, for the Shares. Whether or not the transactions contemplated by this
Agreement are consummated or if this Agreement shall be terminated by the
Company pursuant to any provisions hereof, the Company will reimburse the
Representative for all of its accountable out-of-pocket fees and expenses
including, among other things, its travel and travel-related expenses and its
counsel fees and expenses, incurred by it in connection herewith, up to an
aggregate amount of $250,000.
7. Conditions to the Obligations of the Underwriters. The obligations of
each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become effective
shall be received by the Representative not later than 4:00 p.m., New York
time, on the date of this Agreement or at such later date and time as shall be
consented to in writing by the Representative and all filings required prior to
such effectiveness by Rule 424 and Rule 430A of the Rules and Regulations shall
have been made.
(b) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall be
ending or threatened by the Commission, (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or
registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect, and no proceeding for such purpose shall be
pending before or threatened or contemplated by the authorities of any such
jurisdiction, (iii) any request for additional information on the part of the
staff of the Commission or any such authorities shall have been complied with
to the satisfaction of the staff of the Commission or such authorities and (iv)
after the date hereof no amendment or supplement to the Registration Statement
or the
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17
Prospectus shall have been filed unless a copy thereof was first
submitted to the Representative and the Representative consented thereto, and
the Representative shall have received certificates, dated the Closing
Date and the Option Closing Date, if any, and signed on behalf of the Company
by the Chief Executive Officer of the Company and the Chief Financial Officer
of the Company (who may, as to proceedings threatened, rely upon the best of
their information and belief), to the effect of the foregoing clauses (i), (ii)
and (iii).
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company, whether or not arising from transactions in the
ordinary course of business, and (ii) the Company shall not have sustained any
material loss or interference with its business, assets or properties from
fire, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration Statement
and the Prospectus, if in the judgment of the Representative any such
development makes it impracticable or inadvisable to consummate the sale and
delivery of the Shares by the Underwriters at the public offering price.
(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted against the Company or any of its officers,
directors or shareholders in their capacities as such, or any of its assets or
properties, before or by any Governmental Body in which litigation or
proceeding an unfavorable ruling, decision or finding would materially and
adversely affect the general affairs, business, properties, prospects,
condition (financial or otherwise), net worth or results of operations of the
Company.
(e) Each of the representations and warranties of the Company contained
herein shall be true and correct in all material respects at the date hereof,
at the Closing Date and, with respect to the Option Shares, if any, at the
Option Closing Date, as if made on such date, and all covenants and agreements
herein contained to be performed on the part of the Company and all conditions
herein contained to be fulfilled or complied with by the Company at or prior to
the Closing Date and, with respect to the Option Shares, if any, at or prior to
the Option Closing Date, shall have been fully performed, fulfilled or complied
with in all material respects.
(f) The Representative shall have received an opinion, dated the Closing
Date and the Option Closing Date, as applicable, from Xxxxxxxx Xxxxxx Xxxxxxxx
and Xxxx, Detroit, Michigan, counsel for the Company, to the following effect:
(i) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Michigan;
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18
(ii) The description of the Common Shares under the caption
"Description of Capital Stock" in the Prospectus, to the extent that it
constitutes statements of law or legal conclusions, conforms in all material
respects to the terms thereof contained in the Company's Restated Articles of
Incorporation, as amended (the "Articles"). The authorized capital stock of the
Company is as set forth in the Prospectus under the caption "Capitalization".
All of the issued and outstanding Common Shares have been, and the Shares, when
issued, delivered and paid for by the Underwriters in accordance with the terms
of this Agreement, will be, duly authorized, validly issued, fully paid and
nonassessable and will not be subject to any preemptive or similar right arising
under the Michigan Business Corporation Act, as amended, the Company's Articles
or Bylaws, or any agreement listed as an Exhibit to the Registration
Statement. To such counsel's actual knowledge, neither the filing of the
Registration Statement nor the offering or sale of the Shares pursuant to this
Agreement gives rise to any rights for the registration of any Common Shares or
other securities of the Company pursuant to any of the agreements listed as
Exhibits to the Registration Statement, except as disclosed in the
Registration Statement, or such rights as have been satisfied, waived or
terminated;
(iii) Based solely on such counsel's review of the minutes of the
meetings of the Company shareholders and board of directors and committees of
the board of directors and the Certificate (as defined below), except as
described in the Registration Statement and Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence to purchase or
acquire from the Company any shares of capital stock of the Company;
(iv) The Registration Statement has become effective under the Act;
assuming that the Prospectus was first used on [____], 1997 and was filed with
the Commission on [____], 1997, any required filing of the Prospectus pursuant
to Rule 424(b) of the Rules and Regulations has been made in the manner and
within the time period required by Rule 424(b) of the Rules and Regulations;
and, to such counsel's actual knowledge, (i) no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto has been
issued under the Act, and (ii) no proceedings for that purpose have been
instituted, are pending or, are threatened by the Commission under the Act;
(v) The Registration Statement and, if any, each amendment thereto
and the Prospectus and, if any, each amendment and supplement thereto (except
the financial statements, schedules and other financial data contained therein,
as to which such counsel need not express any opinion), complied as to form in
all material respects with the requirements of the Act and Rules and
Regulations;
(vi) The descriptions contained and summarized in the Registration
Statement, or incorporated therein by reference, and the Prospectus of statutes,
legal and governmental proceedings, contracts and other documents, insofar as
such descriptions relate to matters of law, fairly present in all material
respects the information required by the Act and the Rules and Regulations and
provide a materially accurate summary of such statutes, legal and governmental
proceedings, contracts and other documents;
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19
(vii) To such counsel's actual knowledge, there are no contracts or
documents which are required by the Act to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement which are not so described or filed;
(viii) Based solely on a certificate of officers of the Company (the
"Certificate") and the results of an inquiry circulated to the partners of such
counsel's firm (the "Inquiry"), such counsel confirms to you that, to such
counsel's actual knowledge, there is not pending or threatened against the
Company any action, suit, arbitration, claim, governmental or other proceeding
(informal or formal) or investigation before or by any Governmental Body which
is required to be disclosed in the Registration Statement or the Prospectus
which is not so disclosed therein;
(ix) The Company has the corporate power and authority to execute,
deliver and comply with its obligations under this Agreement and to consummate
the transactions provided for herein; and execution, delivery and performance by
the Company of this Agreement have been duly authorized by all requisite
corporate action on behalf of the Company, and such counsel shall confirm to you
that this Agreement has been executed and delivered on behalf of the Company by
a duly authorized officer of the Company.
(x) Under Michigan conflict of laws principles, the stated choice of
New York law to govern this Agreement will be honored by the courts of the State
of Michigan and this Agreement will be construed in accordance with, and will be
treated as being governed by, the law of the State of New York. However, if
this Agreement were stated to be governed by and construed in accordance with
the law of the State of Michigan, or if a Michigan court were to apply the law
of the State of Michigan to this Agreement, this Agreement would constitute a
valid and binding obligation of the Company and, except for the contribution and
indemnification provisions hereof, as to which such counsel need not express any
opinion, is enforceable against the Company in accordance with the terms hereof,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect relating to or affecting
creditors rights generally or by general principles of equity relating to the
availability of remedies;
(xi) The execution and delivery of this Agreement by the Company, the
Company's compliance with the terms of the Agreement and its consummation of the
transactions contemplated herein (i) do not result in the creation or imposition
of any Encumbrance upon any property or assets of the Company pursuant to the
terms or provisions of, or constitute a breach or, or default under, any
material contract or other material agreement included as an Exhibit to the
Registration Statement, and (ii) do not violate (A) the Articles or Bylaws of
the Company, (B) any laws which are known to such counsel to be applicable to
the Company where such violation would reasonably be expected to have a material
adverse effect on the validity, performance or enforceability of any of the
terms of this Agreement applicable to the Company or relating to the rights and
remedies of the Underwriters and the Representatives, of (C) based solely on the
Certificate and the Inquiry, any of the Company's existing obligations
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20
under any judgment, decree or order of any arbitrator or Governmental Body
naming the Company; no consent, approval, authorization or order of, or filing
with, any Governmental Body is legally required for the execution, delivery and
performance of this Agreement by the Company or for the consummation of the
transactions contemplated hereby, except such as may be required under the Act
and the Rules and Regulations, such as may be required by the bylaws
and rules of the NASD in connection with the purchase and distribution by the
Underwriters of the Shares and such as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution by the
Underwriters of the Shares;
(xii) The Company is not in any breach or violation of any of the
terms or provisions of, or in default under (nor has an event occurred which
with notice or lapse of time or both would constitute a default or acceleration
under), the terms of its Restated Articles of Incorporation or Bylaws, in
each case as amended;
(xiii) To such counsel's actual knowledge, the Company is not an
"investment company" as such term is defined in the Investment Company Act.
In addition, such counsel shall state that, such counsel participated in
the preparation of the Registration Statement and the Prospectus and nothing
has come to such counsel's attention that causes such counsel to believe that
the Registration Statement as of the Effective Date and as of the date of
such opinion contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
as of the date thereof and as of the date of such opinion, contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need not make any statement
with respect to the financial statements, schedules and other financial data
included in the Registration Statement or the Prospectus).
In rendering any such opinion, such counsel may (i) state that such counsel
expresses no opinion as to the laws of any jurisdiction other than the laws of
the State of Michigan and the Federal laws of the United States and expresses no
opinion concerning the FD&C Act or related rules and regulations or any
intellectual property law and (ii) may rely, as to matters of fact on
certificates of responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (f) shall include any amendment or supplement thereto at the date of
such opinion.
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21
(g) The Representative shall have received an opinion, dated the Closing
Date and the Option Closing Date, as applicable, from Xxxxx & Xxxxxxx,
Washington, D.C., special FDA counsel for the Company, to the following effect:
(i) The statements set forth in the Prospectus under the captions
"Risk Factors -- Government Regulation" and "Business -- Government Regulation"
(the "FDA Portion"), insofar as such statements purport to summarize applicable
provisions of the Federal Food, Drug and Cosmetics Act (the "FD&C Act") and the
regulations promulgated thereunder, are accurate summaries in all material
respects of the provisions purported to be summarized under such captions, of
any legal matters, documents and proceedings referred to therein and relating to
the FD&C Act, the regulation by the FDA of the business, products and operations
of the Company, and the Company's compliance therewith;
(ii) The Company has filed with the FDA for, and received approval or
clearance of, all applications, licenses, consents, registrations and permits
(collectively, "Regulatory Authorizations") necessary to conduct its business
and operations as described in the Registration Statement and the Prospectus,
and the Company is in compliance with all such Regulatory Authorizations and all
applicable FDA rules, regulations, guidelines and policies, including, without
limitation, applicable FDA rules, regulations, guidelines and policies relating
to the development, testing, manufacture, labeling, storage, record keeping,
reporting or marketing of the Company's products; and
(iii) There are no FDA enforcement actions or proceedings pending or,
to such counsel's knowledge, threatened, against the Company.
In addition such counsel shall state that, such counsel participated
in the preparation of the Registration Statement and the Prospectus and
nothing has come to such counsel's attention that causes such counsel
to believe that the FDA Portion as of the Effective Date and as of the date of
such opinion contained or contains any untrue statement of material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus as of the
date thereof and as of the date of such opinion, contained or contains any
untrue statement of material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may (i) state that such counsel
expresses no opinion as to the laws of any jurisdiction other than the Federal
laws of the United States and (ii) may rely, as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible officers of the
Company and public officials and, as to matters involving the application of
laws of any other jurisdiction than the United States.
References to the Registration Statement and the Prospectus in this
paragraph (g) shall include any amendment or supplement thereto at the date of
such opinion.
(h) The Representative shall have received an opinion, dated the Closing
Date and the Option Closing Date, as applicable, from Price, Heneveld, Xxxxxx,
XxXxxx & Xxxxxx, Grand Rapids, Michigan, special counsel for the Company, to the
following effect:
(i) The statements set forth in the Registration Statement and the
Prospectus under the captions "Risk Factors -- Proprietary Rights; Risk of
Infringement" and "Business -- Proprietary Information" (the "Intellectual
Property Portion") are accurate summaries in all material respects of the
provisions purported to be summarized under such captions, of any legal matters,
documents and proceedings referred to therein;
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22
(ii) The Company is recorded in the records of the United States
Patent and Trademark Office and in each appropriate foreign patent office as the
sole owner or assignee of record of each of the issued patents noted on an
appendix to such opinion (the "Patents") and each of the patent applications
noted on such appendix (the "Patent Applications"). To the knowledge of such
counsel, there are no asserted or unasserted claims of any person relating to
the scope or ownership of the Patents or Patent Applications, and there is no
material defects of form in the preparation or filing of the Patent Applications
and the applications which led to the Patents and, unless otherwise noted on
such appendix, none of the Patent Applications are finally rejected;
(iii) There is no fact or circumstance known to such counsel that
would form a basis for the belief that any of the Patents are either invalid or
unenforceable;
(iv) There is no charge of infringement, or other fact or
circumstance known to such counsel, that would form the basis for the belief
that any of the Company's products infringe any patent, copyright, trademark,
trade secret or other intellectual property rights of any third party; and
(v) There are no actions or proceedings pending or, to such counsel's
knowledge, threatened, against the Company relating to the Patents, the Patent
Applications, or the Company's copyrights, trademarks, trade secrets or other
intellectual property rights.
In rendering any such opinion, such counsel may (i) state that such
counsel expresses no opinion as to the laws of any jurisdiction other than the
Federal laws of the United States and (ii) may rely, as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers
of the Company and public officials and, as to matters involving the
application of laws of any other jurisdiction than the United States.
References to the Registration Statement and the Prospectus in this
paragraph (h) shall include any amendment or supplement thereto at the date of
such opinion.
(i) The Representative shall have received an opinion, dated the Closing
Date and the Option Closing Date, as applicable, from Piper & Marbury L.L.P.,
counsel to the Underwriters, which opinion shall be satisfactory in all
respects to the Representative.
(j) Concurrently with the execution and delivery of this Agreement, or, if
the Company elects to rely on Rule 430A of the Rules and Regulations, on the
date of the Prospectus, the Accountants shall have furnished to the
Representative a letter, dated the date of its delivery (the "Original
Letter"), addressed to the Representative and in form and substance
satisfactory to the Representative, to the effect that:
(i) They are independent certified public accountants with respect to
the Company within the meaning of the Act, the Rules and Regulations, the
Exchange Act and the rules and regulations thereunder;
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23
(ii) In their opinion, the audited financial statements and schedules
examined by them and included in the Registration Statement, or incorporated
therein by reference, and in the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act, the Rules and
Regulations, the Exchange Act and the rules and regulations promulgated
thereunder;
(iii) On the basis of a reading of the latest available interim
unaudited financial statements of the Company, carrying out certain specified
procedures (which do not constitute an audit made in accordance with generally
accepted auditing standards) that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph (iii), a
reading of the minute books of the shareholders, the board of directors and any
committees thereof of the Company and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters, nothing
came to their attention that caused them to believe that at a specific date not
more than five business days prior to the date of such letter, there were any
changes in the shares of capital stock or long-term indebtedness of the Company,
in each case compared with amounts shown on the February 28, 1997 balance sheet
included in the Registration Statement and the Prospectus, or for the period
from March 1, 1997 to such specified date there were any decreases, as compared
with the corresponding period of the preceding fiscal year, in net revenues,
except in all instances for changes, decreases or increases set forth in such
letter or as set forth in or contemplated in the Prospectus; and
(iv) They have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting records of
the Company and are included in its Annual Report on Form 10-K for the fiscal
year ended November 30, 1996 and have compared such amounts, percentages and
financial information with such records of the Company and with information
derived from such records and have found them to be in agreement, excluding any
questions of legal interpretation.
In the event that the letter referred to above set forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (A) such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement, as amended as of the date
hereof.
At the Closing Date and, as to the Option Shares, if any, the Option
Closing Date, the Accountants shall have furnished to the Representative a
letter, dated the date of its delivery, which shall confirm, on the basis of a
review in accordance with the procedures set forth in the Original Letter, that
nothing has come to their attention during the period from the date of the
Original Letter referred to in the prior sentence to a date (specified in such
letter) not more than five days prior to the Closing Date or the Option Closing
Date, as the case may be, which would
- 23 -
24
require any change in the Original Letter if it were required to be dated and
delivered at the Closing Date or the Option Closing Date, as the case may be.
(k) At the Closing Date and, as to the Option Shares, if any, the Option
Closing Date, there shall be furnished to the Representative an
accurate certificate, dated the date of its delivery, signed on behalf of the
Company by each of the Chief Executive Officer and the Chief Financial Officer
of the Company, in form and substance satisfactory to the Representative, to
the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus and (A) as of the date of such
certificate, (x) neither the Registration Statement, nor any amendment or
supplement thereto, if any, contains any 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 not misleading and (y) neither the
Prospectus, nor any amendment or supplement thereto, if any, contains any 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, and (B) since the
Effective Date, no event has occurred as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect;
(ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the time
such certificate is delivered, true and correct in all material respects; each
of the covenants required herein to be performed by the Company on or
prior to the date of such certificate has been duly, timely and fully performed
in all material respects and each condition herein required to be complied with
by the Company on or prior to the delivery of such certificate has been duly,
timely and fully complied with in all material respects.
(iii) The Registration Statement has become effective and no stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto and no order directed at any document
incorporated by reference in the Registration Statement or any amendment thereto
or the Prospectus has been issued, and no proceedings for that purpose have been
instituted or, to the Company's knowledge, are threatened or contemplated by the
Commission.
(l) The Shares shall have been qualified for sale in such states as the
Representative may reasonably designate and each such qualification shall be in
full force and effect and not subject to any stop order or other proceeding on
the Closing Date and the Option Closing Date, if any.
(m) The Representative shall have received at or prior to the Closing Date
from Piper & Marbury L.L.P. a memorandum or summary, in form and substance
satisfactory to the Representative, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the state securities
or Blue Sky laws of such jurisdictions as the Representative may reasonably
have designated to the Company.
- 24 -
25
(n) The Company shall have filed a Nasdaq SmallCap Market Notification
Form for the listing of the Firm Shares and Option Shares and shall not have
received any notice of delisting of any Common Shares.
(o) The Lockup Agreements shall be in full force and effect.
(p) The Company shall have furnished to the Representative such
certificates, letters and other documents, in addition to those specifically
mentioned herein, as the Representative may have reasonably requested as to the
accuracy and completeness at the Closing Date and the Option Closing Date, if
any, of any statement in the Registration Statement or the Prospectus, as to
the accuracy at the Closing Date and the Option Closing Date, if any, of the
representations and warranties of the Company, as to the performance by the
Company of its obligations hereunder or as to the fulfillment of the conditions
concurrent and precedent to the obligations hereunder of the Underwriters.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you. The Company will furnish you with such conformed copies of
such opinions, certificates, letters and other documents as you shall
reasonably request.
If any of the conditions hereinabove provided for in this Section 7 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representative by notifying the Company of such termination in writing at or
prior to the Closing Date or the Option Closing Date, as the case may be.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person,
if any, who controls such Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages or liabilities, joint or several (and actions in respect
thereof), to which they, or any of them, may become subject under the Act or
other Federal or state law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any breach of representation or warranty made
by the Company in Section 3 of this Agreement, (ii) any untrue statement or
alleged untrue statement of any material fact contained in (A) any Preliminary
Prospectus, the Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus or (B) any
application or other document, or any amendment or supplement thereto, executed
by the Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify the Shares under the
securities or Blue Sky laws thereof or filed with the Commission, the NASD or
any securities association or securities exchange (each, an "Application"), or
(iii) the omission or alleged omission to state in any Preliminary Prospectus,
the Registration
- 25 -
26
Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus or any Application a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse, as incurred, each Underwriter and each such other person for any
legal or other expenses reasonably incurred by such Underwriter or such other
person in connection with investigating, defending or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of an untrue
statement or omission or alleged untrue statement or omission in any of such
documents made or omitted to be made in reliance upon and in conformity with
information furnished by such Underwriter in writing to the Company by the
Representative on behalf of any Underwriter expressly for inclusion therein;
provided, further, that such indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or any such other
person) from whom the person asserting any such loss, claim, damage, liability
or action purchased Shares which are the subject thereof to the extent that any
such loss, claim, damage or liability (i) results from the fact that such
Underwriter failed to send or give a copy of the Prospectus (as amended or
supplemented) to such person at or prior to the confirmation of the sale of such
Shares to such person in any case where such delivery is required by the Act and
(ii) arises out of or is based upon an untrue statement or omission of a
material fact contained in such Preliminary Prospectus that was corrected in the
Prospectus (or any amendment or supplement thereto), unless such failure to
deliver the Prospectus (as amended or supplemented) was the result of
noncompliance by the Company with Section 5(f) hereof. This indemnity agreement
will be in addition to any liability that the Company might otherwise have. The
Company will not, without the prior written consent of each Underwriter, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not such Underwriter or any person who
controls such Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act is a party to each claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional release
of each Underwriter and each such other person from all liability arising out of
such claim, action, suit or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify and hold
harmless the Company, the directors, officers, employees and agents of the
Company and each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, against any and all
losses, claims, damages or liabilities, joint or several (and actions in respect
thereof), to which they, or any of them, may become subject under the Act or
other Federal or state law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or any Application, or (ii) the
omission or the alleged omission to state in the Registration Statement, any
Preliminary Prospectus or the Prospectus or any amendment or supplement to the
- 26 -
27
Registration Statement or the Prospectus, or any Application, a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made or omitted to be made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representative expressly for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company and each such other
person in connection with investigating, defending or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or any action in respect thereof. The Company acknowledges that, for all
purposes under this Agreement, the statements set forth under the heading
"Underwriting" and the information set forth in the last paragraph on the front
cover page and the last two paragraphs on the inside front cover of any
Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing to the Company by the Representative on behalf of the
Underwriters expressly for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that each Underwriter might otherwise have. No
Underwriter will, without the prior written consent of the Company, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not the Company or any person who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act is a party to each claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Company and each such other person from all liability arising out of such
claim, action, suit or proceeding.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party or parties
under this Section 8, notify such indemnifying party or parties of the
commencement thereof; but the omission so to notify the indemnifying party or
parties will not relieve it or them from any liability which it or they may
have to any indemnified party under the foregoing provisions of this Section 8
or otherwise unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. If any
such action is brought against an indemnified party, the indemnifying party or
parties against which a claim is made will be entitled to participate therein
and, to the extent that it or they may wish, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party
and the indemnifying party or parties and the indemnified party shall have
reasonably concluded that there may be one or more legal defenses available to
it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party or parties, the indemnifying party or
parties shall not have the right to direct the defense of such action on behalf
of such indemnified party or parties and such indemnified party or parties
shall have the right to select separate counsel to defend such action on behalf
of such indemnified party or parties. After notice from the indemnifying party
or parties to such indemnified party of
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28
its or their election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party or parties will not be liable to such indemnified party under this Section
8 for any legal or other expenses other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
or parties shall not be liable for the expenses of more than one separate
counsel (in addition to local counsel) in any one action or separate but
substantially similar actions in the same jurisdiction arising out of the same
general allegations or circumstances, designated by the Representative in the
case of paragraph (a) of this Section 8, representing the indemnified parties
under such paragraph (a) who are parties to such action or actions), or (ii) the
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party or parties. After
such notice from the indemnifying party or parties to such indemnified party,
the indemnifying party or parties will not be liable for the costs and expenses
of any settlement of such action effected by such indemnified party without the
consent of the indemnifying party or parties, unless such indemnified party
waived its rights under this Section 8 in which case the indemnified party may
effect such a settlement without such consent.
(d) If the indemnification provided for in the foregoing paragraphs of this
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under paragraph (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties, on the one
hand, and the indemnified party, on the other, from the offering of the Shares
or (ii) if, but only if, the allocation provided by the foregoing clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand, and the
indemnified party, on the other, in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Underwriters, on the other, shall be deemed to be in the same
proportion as the total proceeds from the offering of the Shares (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. Relative fault shall be
determined by reference to 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 Representative on behalf
of the Underwriters, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation (even if the Underwriters were treated
- 28 -
29
as one entity for such purpose) or by any other method of allocation which does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities (or actions in respect thereof) referred to above
in this Section 8(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter exceeds the amount of any
damages that such Underwriter has otherwise been required to pay in respect of
the same or any substantially similar claim. Notwithstanding the provisions of
this Section 8(d), the Company shall not be required to contribute any amount in
excess of the amount by which the total proceeds received by it from the sale of
the Shares under this Agreement, before deducting expenses, exceeds the
aggregate amount of any damages that the Company has otherwise been required to
pay in respect of the same or any substantially similar claim. No person found
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) will be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to contribute
as provided in this Section 8(d) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 8(d), each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act will have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, will have the same rights to contribution as the
Company, subject in each case to the provisions of this Section 8(d). Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made under this Section 8(d), notify any such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation(s) it or they may have hereunder or otherwise than under this
Section 8(d), or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may otherwise have.
No party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
9. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time prior to the Closing Date (or, with
respect to the Option Shares, if any, on or prior to the Option Closing Date),
by notice to the Company from the Representative, without liability on the part
of any Underwriter to the Company, if, prior to delivery and payment for the
Firm Shares (or the Option Shares, if any, as the case may be), (i) the Company
shall have failed, refused or been unable, at or prior to such Closing Date, to
perform all obligations on its part to be performed hereunder, (ii) any of the
representations or warranties of the Company are not accurate in any respect,
(iii) since the respective dates as of which information is given in the
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30
Registration Statement and the Prospectus, there shall have occurred any
material adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operation, whether or not arising in the ordinary course of business; (iv)
trading in the Common Shares or securities generally shall have been suspended
by the Commission or by The Nasdaq Stock Market, (v) minimum or maximum prices
shall have been established for the Common Shares or securities generally on
either The Nasdaq Stock Market or the New York Stock Exchange, or additional
material governmental restrictions, not in force on the date of this Agreement,
shall have been imposed upon trading in securities generally by any such market
or exchange or by order of the Commission or any court or other governmental
authority, (vi) a general banking moratorium shall have been declared by the
United States or New York State authorities, (vii) there shall have been
enacted, published, decreed or otherwise promulgated any statute, regulation,
rule or order of any court or other Governmental Body which in the opinion of
the Representative materially and adversely affects or may materially and
adversely affect the business or operations of the Company or (viii) any
material adverse change in the financial or securities markets in the United
States or any outbreak or material escalation of hostilities or declaration by
the United States of a national emergency or war or other calamity or crisis
shall have occurred, the effect of any of which is such as to make it, in the
sole judgment of the Representative, impracticable or inadvisable to market the
Shares on the terms and in the manner contemplated by the Prospectus. This
Agreement may also be terminated as provided in Sections 7 and 10 of this
Agreement. Any termination pursuant to this Section 9 shall be without
liability of any party to any other party except as provided in Sections 6 and
8 hereof.
10. Default of Underwriters. If one or more Underwriters default in their
obligations to purchase Firm Shares or Option Shares hereunder and the aggregate
number of such Shares that such defaulting Underwriter or Underwriters agreed
but failed to purchase is ten percent (10%) or less of the aggregate number of
Firm Shares or Option Shares, as the case may be, to be purchased by all of the
Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representative for the purchase of such Shares
by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representative), but if no such arrangements are
made by the Closing Date or the related Option Closing Date, as the case may be,
the other Underwriters shall be obligated severally in proportion to their
respective commitments hereunder to purchase the Firm Shares or Option Shares
that such defaulting Underwriter or Underwriters agreed but failed to purchase.
If one or more Underwriters so default with respect to an aggregate number of
Shares that is more than ten percent (10%) of the aggregate number of Firm
Shares or Option Shares, as the case may be, to be purchased by all of the
Underwriters at such time hereunder, and if arrangements satisfactory to the
Representative are not made within 48 hours after such default for the purchase
by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representative) of the Shares with respect to which
such default occurs, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company other than as provided in
Section 11 hereof. In the event of any default by one or more Underwriters as
described in this Section 10, the Representative shall have the right to
postpone the Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 2 hereof
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31
for not more than seven (7) business days in order that any necessary changes
may be made in the arrangements or documents for the purchase and delivery of
the Firm Shares or Option Shares, as the case may be. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
11. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company and the
several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the
Company, any of its officers or directors, any Underwriter or any controlling
person referred to in Section 8 hereof and (ii) delivery of and payment for the
Shares. The respective agreements, covenants, indemnities and other statements
set forth in Sections 6 and 8 hereof shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement.
12. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 0000 Xxxx
Xxxxx Xxxx, Xxxx, Xxxxxxxx 00000-0000, Attention: Chief Executive Officer,
Telephone: (000) 000-0000 and Facsimile: (000) 000-0000, with a copy to Xxxxxxxx
Xxxxxx Xxxxxxxx and Xxxx, 0000 Xxxxx Xxxxxxxx Xxxxxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxxxx, Esq., Telephone: (000) 000-0000 and Facsimile:
(000) 000-0000 or (b) if to the Underwriters, to the Representative at the
offices of Xxxxx Xxxxxx & Co., Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000 Attention: Xx. X. Xxxxx Xxxxxx, Telephone: (000) 000-0000 and
Facsimile: (000) 000-0000, with a copy to Piper & Marbury L.L.P., 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Xxxxxxx Xxxxxxxxxx,
Esq., Telephone: (000) 000-0000 and Facsimile: (000) 000-0000. Any such notice
shall be effective only upon receipt. Any notice under Section 8 or 9 hereof
may be made by telephone or facsimile but if so made shall be subsequently
confirmed in writing.
13. Successors. This Agreement shall inure to the benefit of and shall be
binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any other person 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 (i) the indemnities of the Company contained in Section 8 of this
Agreement shall also be for the benefit of any person or persons who control
any Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act and (ii) the indemnities of the Underwriters contained in
Section 8 of this Agreement shall also be for the benefit of the directors of
the Company, the officers of the Company who have signed the Registration
Statement and any person or persons who control the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Shares from any Underwriter shall be deemed a successor because of such
purchase.
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32
This Agreement shall not be assignable by any party hereto without the prior
written consent of the other parties.
14. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
15. Submission to Jurisdiction. The Company hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of the Supreme Court of the State of New York sitting
in New York County (including its Appellate Division), and of any other
appellate court in the State of New York, for the purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Company irrevocably waives, to the fullest extent
permitted by applicable law, any objection that it may now or hereafter have to
the laying of venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among
the Company and the several Underwriters.
Very truly yours,
SOMANETICS CORPORATION
By:_______________________________
Name: Xxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
Confirmed as of the date first
above mentioned:
XXXXX XXXXXX & CO., INC.
By:_________________________________
Name: A. Xxxxx Xxxxxx
Title: Chairman
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33
Acting on its behalf and
as the Representative of
the other several Underwriters
named in Schedule I hereof.
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34
SCHEDULE I
UNDERWRITERS
Aggregate
Number of
Shares to
be
Purchased
---------
[To Be Supplied]
Total . . . . . . . . 1,800,000
=========
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