EXHIBIT 1.1
DRAFT
__________ Shares
SCHEIN PHARMACEUTICAL, INC.
Common Stock
UNDERWRITING AGREEMENT
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January __, 1998
XXXXX & COMPANY
BEAR, XXXXXXX & CO., INC.
XXXXX XXXXXX INC.
As Representatives of the several Underwriters
x/x Xxxxx & Xxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introductory. Schein Pharmaceutical, Inc., a Delaware corporation (the
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"Company"), and the selling stockholders named in Schedule B hereto (the
"Selling Stockholders") propose to sell, pursuant to the terms of this
Agreement, to the several underwriters named in Schedule A hereto (the
"Underwriters," or, each, an "Underwriter"), an aggregate of ________
shares of common stock, par value $.01 per share (the "Common Stock") of
the Company. The aggregate of ________ shares so proposed to be sold is
hereinafter referred to as the "Firm Stock". The Company and the Selling
Stockholders listed in Schedule B hereto also propose to sell to the
Underwriters, upon the terms and conditions set forth in Section 3 hereof,
up to an additional ________ shares of Common Stock (the "Optional Stock").
The Firm Stock and the Optional Stock are hereinafter collectively referred
to as the "Stock". Xxxxx & Company ("Cowen"), Bear, Xxxxxxx & Co. Inc. and
Xxxxx Xxxxxx Inc. are acting as representatives of the several Underwriters
and in such capacity are hereinafter referred to as the "Representatives".
2. Representations and Warranties of the Company and the Selling Stockholders.
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(a) The Company represents and warrants to, and agrees with, the several
Underwriters that:
(i) A registration statement on Form S-1 (File No. 33-.) in the form
in which it became or becomes effective and also in such form as it
may be when any post-effective amendment thereto shall become
effective with respect to the Stock, including any pre-effective
prospectuses included as part of the registration statement as
originally filed or as part of any amendment or supplement thereto, or
filed pursuant to Rule 424 under the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder, copies of which have heretofore been
delivered to you, has been carefully prepared by the Company in
conformity with the requirements of the Securities Act and has been
filed with the Commission under the Securities Act. If it is
contemplated, at the time this Agreement is executed, that a post-
effective amendment to the registration statement will be filed and
must be declared effective before the offering of the Stock may
commence, the term "Registration Statement" as used in this Agreement
means the registration statement as amended by said post-effective
amendment. The term "Registration Statement" as used in this
Agreement shall also include any registration statement relating to
the Stock that is filed and declared effective pursuant to Rule 462(b)
under the Securities Act. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the
Registration Statement, or, (A) if the prospectus included in the
Registration Statement omits information in reliance on Rule 430A
under the Securities Act and such information is included in a
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act, the term "Prospectus" as used in this Agreement means
the prospectus in the form included in the Registration Statement as
supplemented by the addition of the Rule 430A information contained in
the prospectus filed with the Commission pursuant to Rule 424(b) and
(B) if prospectuses that meet the requirements of Section 10(a) of the
Securities Act are delivered pursuant to Rule 434 under the Securities
Act, then (i) the term "Prospectus" as used in this Agreement means
the "propectus effective upon completion" (as such term is defined in
Rule 434(g) under the Securities Act) as supplemented by (a) the
addition of Rule 430A information or other information contained in
the form of prospectus delivered pursuant to Rule 434(b)(2) under the
Securities Act or (b) the information contained in the term sheets
described in Rule 434(b)(3) under the Securities Act, and (ii) the
date of such prospectuses shall be deemed to be the date of the term
sheets. The term "Pre-effective Prospectus" as used in this Agreement
means the prospectus subject to completion in the form included in the
Registration Statement at the time of the initial filing of the
Registration Statement with the Commission, and as such prospectus
shall have been amended from time to time prior to the date of the
Prospectus.
(ii) The Commission has not issued or threatened to issue any order
preventing or suspending the use of any Pre-effective Prospectus, and,
at its date of issue, each Pre-effective Prospectus conformed in all
material respects with the requirements of the Securities Act and did
not include any untrue statement of a material fact or omit
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to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; and, when the Registration Statement
becomes effective and at all times subsequent thereto up to and
including each of the Closing Dates (as hereinafter defined), the
Registration Statement and the Prospectus and any amendments or
supplements thereto contained and will contain all material statements
and information required to be included therein by the Securities Act
and conformed and will conform in all material respects to the
requirements of the Securities Act and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto,
included or will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the foregoing representations, warranties and agreements
shall not apply to information contained in or omitted from any Pre-
effective Prospectus or the Registration Statement or the Prospectus
or any such amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of any Underwriter, directly or through you, or by any Selling
Stockholder, specifically for use in the preparation thereof; there is
no franchise, lease, contract, agreement or document or legal or
governmental proceeding required to be described in the Registration
Statement or Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed therein as
required; and all descriptions of any such franchises, leases,
contracts, agreements or documents, of the Company's Certificate of
Incorporation and By-laws, and of laws, rules, regulations, orders,
judgments and decrees contained in the Registration Statement are
accurate and complete descriptions of such documents in all material
respects and fairly present the information required to be shown.
(iii) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as set
forth or contemplated in the Prospectus, neither the Company nor any
of its subsidiaries has incurred any liabilities or obligations,
direct or contingent, nor entered into any transactions not in the
ordinary course of business, and there has not been any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the condition (financial or
otherwise), properties, business, management, prospects, net worth or
results of operations of the Company and its subsidiaries considered
as a whole, or any change in the capital stock, short-term or long-
term debt of the Company and its subsidiaries considered as a whole.
(iv) The consolidated financial statements, together with the related
notes and schedules, set forth in the Prospectus and elsewhere in the
Registration Statement fairly present, on the basis stated in the
Registration Statement, the consolidated financial condition, results
of operations and changes in financial condition of the
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Company and its consolidated subsidiaries at the respective dates or
for the respective periods therein specified. The financial
statements, together with the related notes and schedules, of Marsam
Pharmaceuticals Inc. (a subsidiary of the Company) ("Marsam") set
forth in the Prospectus and elsewhere in the Registration Statement
fairly present, on the basis stated in the Registration Statement, the
financial condition, results of operations and changes in financial
condition of Marsam and its consolidated subsidiary at the respective
dates or for the respective periods therein specified. Such statements
of the Company and Marsam and related notes and schedules have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis except as may be set forth in the
Prospectus. The selected financial and statistical data set forth in
the Prospectus under the captions "Prospectus Summary - Summary
Consolidated Financial Data," "Capitalization," "Dilution," "Selected
Consolidated Financial Information," "Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
"Management - Executive Compensation," "Certain Transactions,"
"Principal and Selling Stockholders" and "Shares Eligible for Future
Sale" fairly present, on the basis stated in the Registration
Statement, the information set forth therein. The unaudited
consolidated interim financial statements included in the Registration
Statement and the Prospectus present fairly the consolidated financial
condition, results of operations and changes in financial condition of
the Company as of the dates or for the periods indicated and have been
prepared on a basis consistent with the respective audited
consolidated financial statements included in the Registration
Statement and the Prospectus.
(v) BDO Xxxxxxx LLP, who have expressed their opinions on the audited
financial statements of the Company included in the Registration
Statement and the Prospectus, are independent public accountants as
required by the Securities Act and the Rules and Regulations. Coopers
& Xxxxxxx, who have expressed their opinions on the audited financial
statements of Marsam included in the Registration Statement and the
Prospectus, are independent public accountants as required by the
Securities Act and the Rules and Regulations.
(vi) The Company and each of its subsidiaries have been duly organized
and are validly existing and in good standing as corporations under
the laws of their respective jurisdictions of organization, with power
and authority (corporate and other) to own or lease their properties
and to conduct their businesses as described in the Prospectus; each
of the Company and its subsidiaries is in possession of and operating
in compliance with all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders required for the
conduct of its business, all of which are valid and in full force and
effect; and the Company is and each of such subsidiaries are duly
qualified to do business and in good standing as foreign corporations
in all other jurisdictions where their ownership or leasing of
properties or the conduct of their businesses requires such
qualification. The Company and each of its subsidiaries have all
requisite power and authority, and all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses and
permits of and from all public regulatory or governmental agencies and
bodies to
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own, lease and operate their properties and conduct their business as
now being conducted and as described in the Registration Statement and
the Prospectus, and no such consent, approval, authorization, order,
registration, qualification, license or permit contains a materially
burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus. The Company owns or controls, directly
or indirectly, the following corporations, associations or other
entities, each of which is wholly-owned by the Company: Danbury
Pharmacal Inc., Steris Laboratories, Inc., Schein Pharmaceutical P.A.,
Inc., Schein Pharmaceutical Service Co., Schein Pharmaceutical
International, Inc., Ranbaxy Schein Pharma L.L.C., Schein Bayer
Pharmaceutical Services, Inc., Marsam Pharmaceuticals Inc. and Schein
Bayer Pharmaceuticals Australia, Ltd.
(vii) The Company's authorized and outstanding capital stock is on the
date hereof, and will be on the Closing Date, as set forth under the
heading "Capitalization" in the Prospectus; the outstanding shares of
Common Stock of the Company conform to the description thereof in the
Prospectus and have been duly authorized and validly issued and are
fully paid and nonassessable and have been issued in compliance with
all federal and state securities laws and were not issued in violation
of or, except as disclosed in the Prospectus, subject to any
preemptive rights or similar rights to subscribe for or purchase
securities and conform to the description thereof contained in the
Prospectus. Except as disclosed in and or contemplated by the
Prospectus and the financial statements of the Company and related
notes thereto included in the Prospectus, the Company does not have
outstanding any options or warrants to purchase, or any preemptive
rights or other rights to subscribe for or to purchase any securities
or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations, except for options
granted subsequent to the date of information provided in the
Prospectus pursuant to the Company's employee and stock option plans
as disclosed in the Prospectus. The description of the Company's
stock option and other stock plans or arrangements, and the options or
other rights granted or exercised thereunder, as set forth in the
Prospectus, accurately and fairly presents the information required to
be shown with respect to such plans, arrangements, options and rights.
All outstanding shares of capital stock of each subsidiary have been
duly authorized and validly issued, and are fully paid and
nonassessable and (except for directors' qualifying shares) are owned
directly by the Company or by another wholly owned subsidiary of the
Company free and clear of any liens, encumbrances, equities or claims
or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into shares of capital
stock or ownership interests in any of the Company's subsidiaries are
outstanding.
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(viii) The Stock to be issued and sold by the Company to the
Underwriters hereunder has been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will
be duly and validly issued, fully paid and nonassessable and free of
any preemptive or similar rights and will not be subject to any
restrictions upon voting or transfer other than as described in the
Prospectus. The Stock conforms to the description thereof contained
in the Prospectus, and such description conforms to the rights set
forth in the instruments defining the same.
(ix) Except as set forth in the Prospectus, there are no legal or
governmental actions, suits, proceedings or claims pending to which
the Company or any of its subsidiaries or affiliates is a party or of
which any property of the Company or any subsidiary or affiliate is
subject, which, if determined adversely to the Company or any such
subsidiary or affiliate, might individually or in the aggregate (i)
prevent or adversely affect the transactions contemplated by this
Agreement, (ii) suspend the effectiveness of the Registration
Statement, (iii) prevent or suspend the use of the Pre-effective
Prospectus in any jurisdiction or (iv) result in a material adverse
change in the condition (financial or otherwise), properties,
business, management, prospects, net worth or results of operations of
the Company and its subsidiaries considered as a whole and there is no
valid basis for any such legal or governmental proceeding; and to the
Company's knowledge no such proceedings are threatened or contemplated
against the Company or any subsidiary or affiliate by governmental
authorities or others. The Company is not a party nor subject to the
provisions of any material injunction, judgment, decree or order of
any court, regulatory body or other governmental agency or body. The
description of the Company's litigation under the heading "Legal
Proceedings" and regulatory proceedings under the heading "Risk
Factors--Pending Regulatory Matters" in the Prospectus is true and
correct and complies with the Rules and Regulations.
(x) The statements set forth in the Prospectus under the caption
"Description of Capital Stock," insofar as they purport to constitute
a summary of the terms of the capital stock, or under the captions
"Management," "Certain Transactions," "Principal and Selling
Stockholders" and "Shares Eligible for Future Sale," insofar as they
purport to describe the provisions of the documents referred to
therein, are accurate and complete in all material respects.
(xi) The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of or constitute a default under any indenture, mortgage,
note, deed of trust, loan agreement, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which it or any of its properties is or may be bound, the
Certificate of Incorporation, By-laws or other organizational
documents of the Company or any of
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its subsidiaries, or any law, order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties and do not and will
not result in the creation of any lien or the like against such
properties.
(xii) Neither the Company nor any of its subsidiaries is, or with
notice or lapse of time or both will be, in violation of or in default
under its Certificate of Incorporation or By-laws or other
organizational documents or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, note, deed of trust,
loan agreement, lease or other agreement or instrument to which it is
a party or by which it or any of its properties may be bound.
(xiii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery
and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby, except such as may be
required by the National Association of Securities Dealers, Inc. (the
"NASD") or under the Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act") or the securities or "Blue Sky"
laws of any jurisdiction in connection with the purchase and
distribution of the Stock by the Underwriters.
(xiv) The Company has the full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder
(including to issue, sell and deliver the Stock), and this Agreement
has been duly and validly authorized, executed and delivered by the
Company and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except
to the extent that rights to indemnity and contribution hereunder may
be limited by federal or state securities laws or the public policy
underlying such laws.
(xv) The Company and its subsidiaries are in all material respects in
compliance with, and conduct their businesses in conformity with all
applicable federal, state, local and foreign laws, rules and
regulations or any court or governmental agency or body; to the
knowledge of the Company, otherwise than as set forth in the
Registration Statement and the Prospectus, no prospective change in
any of such federal or state laws, rules or regulations has been
adopted which, when made effective, would have a material adverse
effect on the operations of the Company and its subsidiaries. In the
ordinary course of business, employees of the Company conduct periodic
reviews of the effect of Environmental Laws (as defined below) on the
business operations and properties of the Company and its
subsidiaries, in the ordinary course of which they seek to identify
and evaluate associated costs and liabilities. Except as disclosed in
the Registration Statement, the Company and its subsidiaries are in
compliance with all applicable existing federal, state, local and
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foreign laws and regulations relating to the protection of human
health or the environment or imposing liability or requiring standards
of conduct concerning any Hazardous Materials ("Environmental Laws"),
except for such instances of noncompliance which, either singly or in
the aggregate, would not have a material adverse effect. The term
"Hazardous Material" means (i) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (ii) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act, as amended, (iii) any
petroleum or petroleum product, (iv) any polychlorinated biphenyl and
(v) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material, waste or substance regulated under or within the
meaning of any other Environment Law.
(xvi) The Company and its subsidiaries have filed all necessary
federal, state, local and foreign income, payroll, franchise and other
tax returns and have paid all taxes shown as due thereon or with
respect to any of their properties, and there is no tax deficiency
that has been, or to the knowledge of the Company is likely to be,
asserted against the Company or any of its subsidiaries or any of
their respective properties or assets that would adversely affect the
financial position, business or operations of the Company and its
subsidiaries.
(xvii) Except as disclosed in the Registration Statement and
Prospectus no person or entity has the right to require registration
of shares of Common Stock or other securities of the Company because
of the filing or effectiveness of the Registration Statement or
otherwise, except for persons and entities who have expressly waived
such right or who have been given proper notice and have failed to
exercise such right within the time or times required under the terms
and conditions of such right.
(xviii) Neither the Company nor any of its officers, directors or
affiliates has taken or will take, directly or indirectly, any action
designed or intended to stabilize or manipulate the price of any
security of the Company, or which caused or resulted in, or which
might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the
Company.
(xix) The Company has provided you with all financial statements since
[September 30, 1997] to the date hereof[, including financial
statements for the months of October, November and December of 1997,
that are available to the officers of the Company].
(xx) The Company and its subsidiaries own or possess the right to use
all patents, trademarks (including "INFeD", "Ferrlecit" and "Unipine
XL"), trademark registrations, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets, know-how and rights described in the Prospectus as being
owned by them or any of them or necessary for the conduct of their
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respective businesses, and, except as disclosed in the Prospectus, the
Company is not aware of any claim to the contrary or any challenge by
any other person to the rights of the Company and its subsidiaries
with respect to the foregoing. The Company's business as now
conducted and as proposed to be conducted does not and will not
infringe or conflict with in any material respect patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses or
other intellectual property or franchise right of any person. Except
as described in the Prospectus, no claim has been made against the
Company alleging the infringement by the Company of any patent,
trademark, service xxxx, trade name, copyright, trade secret, license
or other intellectual property right or franchise right of any person.
(xxi) The Company and its subsidiaries have performed all material
obligations required to be performed by them under all contracts
required by Item 601(b)(10) of Regulation S-K under the Securities Act
to be filed as exhibits to the Registration Statement, and neither the
Company nor any of its subsidiaries nor any other party to such
contract is in default under or in breach of any such obligations.
Neither the Company nor any of its subsidiaries has received any
notice of such default or breach.
(xxii) Neither the Company nor any of its subsidiaries is involved in
any labor dispute nor is any such dispute threatened. The Company is
not aware that (A) any executive, key employee or significant group of
employees of the Company or any subsidiary plans to terminate
employment with the Company or any such subsidiary or (B) any such
executive or key employee is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement that
would be violated by the present or proposed business activities of
the Company and its subsidiaries. Neither the Company nor any
subsidiary has or expects to have any liability for any prohibited
transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or
other plan which is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), to which the Company or any
subsidiary makes or ever has made a contribution and in which any
employee of the Company or any subsidiary is or has ever been a
participant. With respect to such plans, the Company and each
subsidiary are in compliance in all material respects with all
applicable provisions of ERISA.
(xxiii) The Company has obtained the written agreement described in
Section 8(l) of this Agreement from each of its officers, directors
and holders of Common Stock listed on Schedule C hereto.
(xxiv) The Company and its subsidiaries have, and the Company and its
subsidiaries as of the Closing Date will have, good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned or proposed
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to be owned by them which is material to the business of the Company
or of its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described the Prospectus
or such as would not have a material adverse effect on the Company and
its subsidiaries considered as a whole; and any real property and
buildings held under lease by the Company and its subsidiaries or
proposed to be held after giving effect to the transactions described
in the Prospectus are, or will be as of each of the Closing Dates,
held by them under valid, subsisting and enforceable leases with such
exceptions as would not have a material adverse effect on the Company
and its subsidiaries considered as a whole, in each case except as
described in or contemplated by the Prospectus.
(xxv) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as are customary in the businesses in which they are
engaged or propose to engage after giving effect to the transactions
described in the Prospectus; and neither the Company nor any
subsidiary of the Company have any reason to believe that it will not
be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue their business at a cost that would
not materially and adversely affect the condition, financial or
otherwise, or the earnings, business or operations of the Company and
its subsidiaries considered as a whole, except as described in or
contemplated by the Prospectus.
(xxvi) Other than as contemplated by this Agreement, there is no
broker, finder or other party that is entitled to receive from the
Company any brokerage or finder's fee or other fee or commission as a
result of any of the transactions contemplated by this Agreement.
(xxvii) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxviii) To the Company's knowledge, neither the Company nor any of
its subsidiaries nor any employee or agent of the Company or any of
its subsidiaries has made any payment of funds of the Company or any
of its subsidiaries or received or retained any funds in violation of
any law, rule or regulation, which payment, receipt or retention of
funds is of a character required to be disclosed in the Prospectus.
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(xxix) Neither the Company nor any of its subsidiaries is or, after
application of the net proceeds of this offering as described under
the caption "Use of Proceeds" in the Prospectus, will become an
"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended. The Company intends to conduct its affairs in a
manner such that it will not become an entity required to register as
an "investment company" subject to regulation under the Investment
Company Act.
(xxx) The Common Stock has been approved for quotation and trading on
the New York Stock Exchange, subject to official notice of issuance.
(xxxi) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company as to the
matters covered thereby.
(b) Each Selling Stockholder represents and warrants to, and agrees with,
the several Underwriters that such Selling Stockholder:
(i) Now has, and on the Closing Date will have, valid and marketable
title to the Stock to be sold by such Selling Stockholder, free and
clear of any lien, claim, security interest or other encumbrance,
including, without limitation, any restriction on transfer, and has
full right, power and authority to enter into this Agreement, the
Power of Attorney and the Custody Agreement (each as hereinafter
defined), and, to the extent such Selling Stockholder is a
corporation, has been duly organized and is validly existing and in
good standing as a corporation under the laws of its jurisdiction of
organization.
(ii) Now has, and on each of the Closing Dates will have, upon
delivery of and payment for each share of Stock hereunder, full right,
power and authority, any approval required by law to sell, transfer,
assign and deliver the Stock being sold by such Selling Stockholder
hereunder, and each of the several Underwriters will acquire valid and
marketable title to all of the Stock being sold to the Underwriters by
such Selling Stockholder, free and clear of any liens, encumbrances,
equities claims, restrictions on transfer or other defects whatsoever.
(iii) For a period of 180 days after the date of this Agreement,
without the consent of Cowen, such Selling Stockholder will not offer
to sell, sell, contract to sell or otherwise dispose of any Stock or
securities convertible into or exchangeable for Stock, including,
without limitation Stock which may be deemed to be beneficially owned
by such Selling Stockholder in accordance with the Rules and
Regulations, except for the Stock being sold hereunder.
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(iv) Has duly executed and delivered a power of attorney, in
substantially the form heretofore delivered by the Representatives
(the "Power of Attorney"), appointing _________, as attorney-in-fact
(the "Attorney-in-fact") with authority to execute and deliver this
Agreement on behalf of such Selling Stockholder, to authorize the
delivery of the shares of Stock to be sold by such Selling Stockholder
hereunder and otherwise to act on behalf of such Selling Stockholder
in connection with the transactions contemplated by this Agreement.
(v) Has duly executed and delivered a custody agreement, in
substantially the form heretofore delivered by the Representatives
(the "Custody Agreement"), with ________ as custodian (the
"Custodian"), pursuant to which certificates in negotiable form for
the shares of Stock to be sold by such Selling Stockholder hereunder
have been placed in custody for delivery under this Agreement.
(vi) Has, by execution and delivery of each of this Agreement, the
Power of Attorney and the Custody Agreement, created valid and binding
obligations of such Selling Stockholder, enforceable against such
Selling Stockholder in accordance with its terms, except to the extent
that rights to indemnity hereunder may be limited by federal or state
securities laws or the public policy underlying such laws.
(vii) The performance of this Agreement, the Custody Agreement and the
Power of Attorney, and the consummation of the transactions
contemplated hereby and thereby will not result in a breach or
violation by such Selling Stockholder of any of the terms or
provisions of, or constitute a default by such Selling Stockholder
under, any indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other agreement
or instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder or any of its properties is bound, or any
judgment of any court or governmental agency or body applicable to
such Selling Stockholder or any of its properties, or to such Selling
Stockholder's knowledge, any statute, decree, order, rule or
regulation of any court or governmental agency or body applicable to
such Selling Stockholder or any of its properties.
Each Selling Stockholder agrees that the shares of Stock represented by the
certificates held in custody under the Custody Agreement are for the
benefit of and coupled with and subject to the interests of the
Underwriters, the other Selling Stockholders and the Company hereunder, and
that the arrangement for such custody and the appointment of the Attorneys-
in-fact are irrevocable; that the obligations of such Selling Stockholder
hereunder shall not be terminated by operation of law, whether by the death
or incapacity, liquidation or distribution of such Selling Stockholder, or
any other event, that if such Selling Stockholder should die or become
incapacitated or is liquidated or dissolved or any other event occurs,
before the delivery of the Stock hereunder, certificates for the Stock to
be sold by such Selling Stockholder shall be delivered on behalf of such
Selling Stockholder in accordance with the terms and conditions of this
Agreement and the Custody Agreement, and
12
action taken by the Attorneys-in-fact or any of them under the Power of
Attorney shall be as valid as if such death, incapacity, liquidation or
dissolution or other event had not occurred, whether or not the Custodian,
the Attorneys-in-fact or any of them shall have notice of such death,
incapacity, liquidation or dissolution or other event.
3. Purchase by, and Sale and Delivery to, Underwriters--Closing Dates. The
------------------------------------------------------------------
Company and the Selling Stockholders agree, severally and not jointly, to
sell to the Underwriters the Firm Stock, with the number of shares to be
sold by the Company and each Selling Stockholder being the number of Stock
set opposite his, her or its name in Schedule B; and on the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Underwriters
agree, severally and not jointly, to purchase the Firm Stock from the
Company and the Selling Stockholders, the number of shares of Firm Stock to
be purchased by each Underwriter being set opposite its name in Schedule A,
subject to adjustment in accordance with Section 12 hereof. The number of
shares of Stock to be purchased by each Underwriter from each Selling
Stockholder hereunder shall bear the same proportion to the total number of
shares of Stock to be purchased by such Underwriter hereunder as the number
of shares of stock being sold by each Selling Stockholder bears to the
total number of shares of Stock being sold by all Selling Stockholders,
subject to adjustment by the Representatives to eliminate fractions.
The purchase price per share to be paid by the Underwriters to the Company
and the Selling Stockholders will be the price per share set forth in the
table on the cover page of the Prospectus under the heading "Proceeds to
the Company" (the "Purchase Price").
The Company and the Selling Stockholders will deliver the Firm Stock to the
Representatives for the respective accounts of the several Underwriters (in
the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to the
Company and the Selling Stockholders given at or prior to 12:00 Noon, New
York Time, on the second full business day preceding the First Closing Date
(as defined below) or, if no such direction is received, in the names of
the respective Underwriters or in such other names as Cowen may designate
(solely for the purpose of administrative convenience) and in such
denominations as Cowen may determine, against payment of the aggregate
Purchase Price therefor by certified or official bank check or checks in
immediately available funds (same day funds), payable to the order of the
Company in the case of the Firm Stock being sold by the Company and _______
as Custodian for each Selling Stockholder in the case of the Firm Stock
being sold by such Selling Stockholder, all at the offices of Xxxxx & Wood
LLP, Xxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The time and date
of the delivery and closing shall be at _____ A.M., New York Time, on
_______________, 1998, in accordance with Rule 15c6-1 of the Exchange Act.
The time and date of such payment and delivery are herein referred to as
the "First Closing Date". The First Closing Date and the location of
delivery of, and the form of payment for, the Firm Stock may be varied by
agreement between among the Company, the
13
Selling Stockholders and Cowen. The First Closing Date may be postponed
pursuant to the provisions of Section 12.
The Company and the Selling Stockholders shall make the certificates for
the Stock available to the Representatives for examination on behalf of the
Underwriters not later than 10:00 A.M., New York Time, on the business day
preceding the First Closing Date at the offices of Xxxxx & Company,
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
It is understood that Cowen or Bear, Xxxxxxx & Co. Inc. or Xxxxx Xxxxxx
Inc., individually and not as Representatives of the several Underwriters,
may (but shall not be obligated to) make payment to the Company or to the
Selling Stockholders on behalf of any Underwriter or Underwriters, for the
Stock to be purchased by such Underwriter or Underwriters. Any such payment
by Cowen or Bear, Xxxxxxx & Co. Inc. or Xxxxx Xxxxxx Inc. shall not relieve
such Underwriter or Underwriters from any of its or their other obligations
hereunder.
The several Underwriters agree to make an initial public offering of the
Firm Stock at the initial public offering price as soon after the
effectiveness of the Registration Statement as in their judgment is
advisable. The Representatives shall promptly advise the Company and the
Selling Stockholders of the making of the initial public offering.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus,
the Company and each of the Selling Stockholders hereby grants to the
Underwriters an option to purchase, severally and not jointly, up to the
aggregate number of shares of Optional Stock set forth opposite the
Company's and each such Selling Stockholder's respective names on Schedule
B hereto, for an aggregate of up to ______ shares. The price per share to
be paid for the Optional Stock shall be the Purchase Price. The option
granted hereby may be exercised as to all or any part of the Optional Stock
at any time, and from time to time, not more than thirty (30) days
subsequent to the effective date of this Agreement. No Optional Stock
shall be sold and delivered unless the Firm Stock previously has been, or
simultaneously is, sold and delivered. The right to purchase the Optional
Stock or any portion thereof may be surrendered and terminated at any time
upon notice by the Underwriters to the Company and the Selling
Stockholders.
The option granted hereby may be exercised by the Underwriters by giving
written notice from Cowen to the Company and the Selling Stockholders
setting forth the number of shares of the Optional Stock to be purchased by
them and the date and time for delivery of and payment for the Optional
Stock. Each date and time for delivery of and payment for the Optional
Stock (which may be the First Closing Date, but not earlier) is herein
called the "Option Closing Date" and shall in no event be earlier than two
(2) business days nor later than ten (10) business days after written
notice is given. (The Option Closing Date and the
14
First Closing Date are herein called the "Closing Dates".) [All purchases
of Optional Stock from the Company and the Selling Stockholders shall be
made on a pro rata basis.] Optional Stock shall be purchased for the
account of each Underwriter in the same proportion as the number of shares
of Firm Stock set forth opposite such Underwriter's name in Schedule B
hereto bears to the total number of shares of Firm Stock (subject to
adjustment by the Underwriters to eliminate odd lots). Upon exercise of the
option by the Underwriters, the Company and the Selling Stockholders agree
to sell to the Underwriters the number of shares of Optional Stock set
forth in the written notice of exercise and the Underwriters agree,
severally and not jointly and subject to the terms and conditions herein
set forth, to purchase the number of such shares determined as aforesaid.
The Company and the Selling Stockholders will deliver the Optional Stock to
the Underwriters (in the form of definitive certificates, issued in such
names and in such denominations as the Representatives may direct by notice
in writing to the Company and the Selling Stockholders given at or prior to
12:00 Noon, New York Time, on the second full business day preceding the
Option Closing Date or, if no such direction is received, in the names of
the respective Underwriters or in such other names as Cowen may designate
(solely for the purpose of administrative convenience) and in such
denominations as Cowen may determine, against payment of the aggregate
Purchase Price therefor by certified or official bank check or checks in
Clearing House funds (next day funds), payable to the order of the Company
or to . as Custodian for the Selling Stockholders all at the offices of
Xxxxx & Wood LLP, Xxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The
Company and the Selling Stockholders shall make the certificates for the
Optional Stock available to the Underwriters for examination not later than
10:00 A.M., New York Time, on the business day preceding the Option Closing
Date at the offices of Xxxxx & Company, Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000. The Option Closing Date and the location of delivery of, and
the form of payment for, the Option Stock may be varied by agreement
[between/among] the Company [, the Selling Stockholders] and Cowen. The
Option Closing Date may be postponed pursuant to the provisions of Section
12.
4. Covenants and Agreements of the Company. The Company covenants and agrees
---------------------------------------
with the several Underwriters that:
(a) The Company will (i) if the Company and the Representatives have
determined not to proceed pursuant to Rule 430A of the of the Rules and
Regulations, use its best efforts to cause the Registration Statement to
become effective as soon as practicable after the execution of this
Agreement, (ii) if the Company and the Representatives have determined to
proceed pursuant to Rule 430A of the Rules and Regulations, use its best
efforts to comply with the provisions of and make all requisite filings
with the Commission pursuant to Rule 430A and Rule 424 of the Rules and
Regulations and (iii) if the Company and the Representatives have
determined to deliver Prospectuses pursuant to Rule 434 of the Rules and
Regulations, to use its best efforts to comply with all the applicable
provisions thereof. The Company will advise the Representatives promptly as
to the time at which the
15
Registration Statement becomes effective, will advise the Representatives
promptly of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose, and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible the
lifting thereof, if issued. The Company will advise the Representatives
promptly of the receipt of any comments of the Commission or any request by
the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for additional information and will not at
any time file any amendment to the Registration Statement or supplement to
the Prospectus which shall not previously have been submitted to the
Representatives a reasonable time prior to the proposed filing thereof or
to which the Representatives shall reasonably object in writing or which is
not in compliance with the Securities Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly upon
the request of the Representatives, any amendments or supplements to the
Registration Statement or the Prospectus which in the opinion of the
Representatives may be necessary to enable the several Underwriters to
continue the distribution of the Stock and will use its best efforts to
cause the same to become effective as promptly as possible.
(c) If at any time after the effective date of the Registration Statement
when a prospectus relating to the Stock is required to be delivered under
the Securities Act any event relating to or affecting the Company or any of
its subsidiaries occurs as a result of which the Prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Securities Act, the Company will promptly
notify the Representatives thereof and will prepare an amended or
supplemented prospectus which will correct such statement or omission; and
in case any Underwriter is required to deliver a prospectus relating to the
Stock nine (9) months or more after the effective date of the Registration
Statement, the Company upon the request of the Representatives and at the
expense of such Underwriter will prepare promptly such prospectus or
prospectuses as may be necessary to permit compliance with the requirements
of Section 10(a)(3) of the Securities Act.
(d) The Company will deliver to the Representatives, at or before the
Closing Date, signed copies of the Registration Statement, as originally
filed with the Commission, and all amendments thereto including all
financial statements and exhibits thereto, and will deliver to the
Representatives such number of copies of the Registration Statement,
including such financial statements but without exhibits, and all
amendments thereto, as the Representatives may reasonably request. The
Company will deliver or mail to or upon the order of the Representatives,
from time to time until the effective date of the Registration Statement,
as many copies of the Pre-effective Prospectus as the Representatives may
reasonably request. The Company will deliver or mail to or upon the order
of the Representatives on the date of
16
the initial public offering, and thereafter from time to time during the
period when delivery of a prospectus relating to the Stock is required
under the Securities Act, as many copies of the Prospectus, in final form
or as thereafter amended or supplemented as the Representatives may
reasonably request; provided, however, that the expense of the preparation
and delivery of any prospectus required for use nine (9) months or more
after the effective date of the Registration Statement shall be borne by
the Underwriters required to deliver such prospectus.
(e) The Company will make generally available to its stockholders as soon
as practicable, but not later than fifteen (15) months after the effective
date of the Registration Statement, an earning statement which will be in
reasonable detail (but which need not be audited) and which will comply
with Section 11(a) of the Securities Act, covering a period of at least
twelve (12) months beginning after the "effective date" (as defined in Rule
158 under the Securities Act) of the Registration Statement.
(f) The Company will cooperate with the Representatives to enable the Stock
to be registered or qualified for offering and sale by the Underwriters and
by dealers under the securities laws of such jurisdictions as the
Representatives may designate and at the request of the Representatives
will make such applications and furnish such consents to service of process
or other documents as may be required of it as the issuer of the Stock for
that purpose; provided, however, that the Company shall not be required to
qualify to do business or to file a general consent (other than that
arising out of the offering or sale of the Stock) to service of process in
any such jurisdiction where it is not now so subject. The Company will,
from time to time, prepare and file such statements and reports as are or
may be required of it as the issuer of the Stock to continue such
qualifications in effect for so long a period as the Representatives may
reasonably request for the distribution of the Stock. The Company will
advise the Representatives promptly after the Company becomes aware of the
suspension of the qualifications or registration of (or any such exception
relating to) the Common Stock of the Company for offering, sale or trading
in any jurisdiction or of any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any orders suspending
such qualifications, registration or exception, the Company will, with the
cooperation of the Representatives use its best efforts to obtain the
withdrawal thereof.
(g) The Company will furnish to its stockholders annual reports containing
financial statements certified by independent public accountants and with
quarterly summary financial information in reasonable detail which may be
unaudited. During the period of five (5) years from the date hereof, the
Company will deliver to the Representatives and, upon request, to each of
the Underwriters: (i) as soon as practicable after the end of each fiscal
year, copies of each annual report of the Company containing the balance
sheet of the Company as of the close of such fiscal year and statements of
income, stockholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent public accountants, and each
other report furnished by the Company to its stockholders; (ii) copies
17
of any other reports (financial or other) which the Company shall publish
or otherwise make available to any of its stockholders as such; (iii) as
soon as practicable after the filing thereof, each proxy statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or
other report or financial statement filed by the Company with the
Commission, or the NASD or any securities exchange; and (iv) from time to
time such other information concerning the Company as you may request. So
long as the Company has active subsidiaries, such financial statements will
be on a consolidated basis to the extent the accounts of the Company and
its subsidiaries are consolidated in reports furnished to its stockholders
generally. Separate financial statements shall be furnished for all
subsidiaries whose accounts are not consolidated but which at the time are
significant subsidiaries as defined in the Rules and Regulations.
(h) The Company will use its best efforts to maintain the listing of the
Stock on the New York Stock Exchange.
(i) The Company will maintain a transfer agent and registrar for its Common
Stock.
(j) Prior to filing its quarterly statements on Form 10-Q, the Company will
have its independent auditors perform a limited quarterly review of its
quarterly numbers.
(k) The Company will not offer, sell, assign, transfer, encumber, contract
to sell, grant an option to purchase or otherwise dispose of any shares of
Common Stock or securities convertible into or exercisable or exchangeable
for Common Stock (including, without limitation, Common Stock of the
Company which may be deemed to be beneficially owned by the Company in
accordance with the Rules and Regulations) during the 180 days following
the date on which the price of the Common Stock to be purchased by the
Underwriters is set, other than the Company's sale of Common Stock
hereunder and the Company's issuance of Common Stock upon the exercise of
warrants and stock options which are presently outstanding and described in
the Prospectus.
(l) Prior to filing with the Commission any reports on Form SR pursuant to
Rule 463 of Rules and Regulations, the Company will furnish a copy thereof
to the counsel for the Underwriters and receive and consider its comments
thereon, and will deliver promptly to the Representatives a signed copy of
each report on Form SR filed by it with the Commission.
(m) The Company will apply the net proceeds from the sale of the Stock as
set forth in the description under "Use of Proceeds" in the Prospectus,
which description complies in all respects with the requirements of Item
504 of Regulation S-K.
(n) The Company will supply you with copies of all correspondence to and
from, and all documents issued to and by, the Commission in connection with
the registration of the Stock under the Securities Act.
18
(o) Prior to each of the Closing Dates the Company will furnish to you, as
soon as they have been prepared, copies of any unaudited interim
consolidated financial statements of the Company and its subsidiaries for
any periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(p) Prior to each of the Closing Dates the Company will issue no press
release or other communications directly or indirectly and hold no press
conference with respect to the Company or any of its subsidiaries, the
financial condition, results of operations, business, prospects, assets or
liabilities of any of them, or the offering of the Stock, without your
prior written consent. For a period of twelve (12) months following the
first Closing Date, the Company will use its best efforts to provide to you
copies of each press release or other public communications with respect to
the financial condition, results of operations, business, prospects, assets
or liabilities of the Company at least twenty-four (24) hours prior to the
public issuance thereof or such longer advance period as may reasonably be
practicable.
5. Payment of Expenses. (a) The Company will pay (directly or by
-------------------
reimbursement) all costs, fees and expenses incurred in connection with
expenses incident to the performance of the obligations of the Company and
of the Selling Stockholders under this Agreement and in connection with
the transactions contemplated hereby, including but not limited to (i) all
expenses and taxes incident to the issuance and delivery of the Stock to
the Representatives; (ii) all expenses incident to the registration of the
Stock under the Securities Act; (iii) the costs of preparing stock
certificates (including printing and engraving costs); (iv) all fees and
expenses of the registrar and transfer agent of the Stock; (v) all
necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Stock to the Underwriters; (vi) fees and expenses
of the Company's counsel and the Company's independent accountants; (vii)
all costs and expenses incurred in connection with the preparation,
printing filing, shipping and distribution of the Registration Statement,
each Pre-effective Prospectus and the Prospectus (including all exhibits
and financial statements) and all amendments and supplements provided for
herein, the Selling Stockholders' Powers of Attorney, the Custody
Agreement, the "Agreement Among Underwriters" between the Representatives
and the Underwriters, the Master Selected Dealers' Agreement, the
Underwriters' Questionnaire and the Blue Sky memoranda (including related
fees and expenses of counsel to the Underwriters) and this Agreement;
(viii) all filing fees, attorneys' fees and expenses incurred by the
Company or the Underwriters in connection with exemptions from the
qualifying or registering (or obtaining qualification or registration of)
all or any part of the Stock for offer and sale and determination of its
eligibility for investment under the Blue Sky or other securities laws of
such jurisdictions as the Representatives may designate; (ix) fees and
expenses of counsel to the Underwriters; (x) all fees and expenses paid or
incurred in connection with filings made with the NASD; and (xi) all other
costs and expenses incident to the performance of their obligations
hereunder which are not otherwise specifically provided for in this
Section.
19
(b) Each Selling Stockholder will pay (directly or by reimbursement) all
fees and expenses incident to the performance of such Selling Stockholder's
obligations under this Agreement which are not otherwise specifically
provided for herein, including but not limited to any fees and expenses of
counsel for such Selling Stockholder, such Selling Stockholder's pro rata
share of fees and expenses of the Attorneys-in-fact and the Custodian and
all expenses and taxes incident to the sale and delivery of the Stock to be
sold by such Selling Stockholder to the Underwriters hereunder.
(c) In addition to their other obligations under Section 6(a) hereof, the
Company and each Selling Stockholder jointly and severally agree that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon (i) any statement
or omission or any alleged statement or omission, (ii) any act or failure
to act or any alleged act or failure to act or (iii) any breach or
inaccuracy in their representations and warranties, they will reimburse
each Underwriter on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety and
enforceability of the Company's and each Selling Stockholder's obligation
to reimburse each Underwriter for such expenses and the possibility that
such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, each Underwriter shall promptly
return it to the Company and each Selling Stockholder, as the case may be,
together with interest, compounded daily, determined on the basis of the
prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by _______, New York, New York
(the "Prime Rate"). Any such interim reimbursement payments which are not
made to an Underwriter in a timely manner as provided below shall bear
interest at the Prime Rate from the due date for such reimbursement. This
expense reimbursement agreement will be in addition to any other liability
which the Company or any Selling Stockholder may otherwise have. The
request for reimbursement will be sent to the Company with a copy to each
Selling Stockholder. In the event that the Company fails to make such
reimbursement payment within thirty (30) days of the reimbursement request,
the Representatives shall notify the Selling Stockholders of their
obligation to make such reimbursement payments within fifteen (15) days;
provided, however, that each Selling Stockholder shall be required to
advance at such time only its pro rata portion of the reimbursement
payment. To the extent that any Selling Stockholder fails to pay its pro
rata portion in timely response to the Underwriters' request, the other
Selling Stockholders shall be jointly and severally liable for such
reimbursement payment and each shall render such payment to the
Representatives within fifteen (15) days of written demand therefor by the
Representatives.
(d) In addition to its other obligations under Section 6(c) hereof, each
Underwriter severally agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged
statement or omission, described in Section 6(c) hereof which
20
relates to information furnished to the Company pursuant to Section 6(c)
hereof, it will reimburse the Company (and, to the extent applicable, each
officer, director, controlling person or Selling Stockholder) on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of
a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director, controlling person or Selling
Stockholder) for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement payment is so held to
have been improper, the Company (and, to the extent applicable, each
officer, director, controlling person or Selling Stockholder) shall
promptly return it to the Underwriters together with interest, compounded
daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within thirty (30)
days of a request for reimbursement shall bear interest at the Prime Rate
from the date of such request. This indemnity agreement will be in addition
to any liability which such Underwriter may otherwise have.
(e) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in paragraph (c) and/or (d) of
this Section 5, including the amounts of any requested reimbursement
payments and the method of determining such amounts, shall be settled by
arbitration conducted under the provisions of the Constitution and Rules of
the Board of Governors of the New York Stock Exchange, Inc. or pursuant to
the Code of Arbitration Procedure of the NASD. Any such arbitration must
be commenced by service of a written demand for arbitration or written
notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the
party responding to said demand or notice is authorized to do so. Such an
arbitration would be limited to the operation of the interim reimbursement
provisions contained in paragraph (c) and/or (d) of this Section 5 and
would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of
Section 6.
6. Indemnification and Contribution. (a) The Company agrees to indemnify and
--------------------------------
hold harmless each Underwriter and each person, if any, who controls such
Underwriter within the meaning of the Securities Act and the respective
officers, directors, partners, employees, representatives and agents of
each of such Underwriter (collectively, the "Underwriter Indemnified
Parties" and, each, an "Underwriter Indemnified Party"), against any
losses, claims, damages, liabilities or expenses (including the reasonable
cost of investigating and defending against any claims therefor and counsel
fees incurred in connection therewith), joint or several, which may be
based upon the Securities Act, or any other statute or at common law, (i)
on the ground or alleged ground that any Pre-effective Prospectus, the
Registration Statement or the Prospectus (or any Pre-effective Prospectus,
the Registration Statement or the Prospectus as from time to time amended
or supplemented) includes or allegedly includes an untrue statement of a
material fact or omits to state a material fact
21
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, unless such statement or omission was made in reliance upon,
and in conformity with, written information furnished to the Company by any
Underwriter, directly or through the Representatives, specifically for use
in the preparation thereof or (ii) for any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Stock or the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim, damage,
liability or expense arising out of or based upon matters covered by clause
(i) above (provided that the Company shall not be liable under this clause
(ii) to the extent that it is determined in a final judgment by a court of
competent jurisdiction that such loss, claim, damage, or liability or
expense resulted directly from any such acts or failures to act undertaken
or omitted to be taken by such Underwriter through its gross negligence or
willful misconduct). The Company will be entitled to participate at its own
expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, but if the Company elects to
assume the defense, such defense shall be conducted by counsel chosen by it
and reasonably acceptable to the Underwriters. In the event the Company
elects to assume the defense of any such suit and retain such counsel, any
Underwriter Indemnified Parties, defendant or defendants in the suit, may
retain additional counsel but shall bear the fees and expenses of such
counsel unless (i) the Company shall have specifically authorized the
retaining of such counsel or (ii) the parties to such suit include any such
Underwriter Indemnified Parties, and the Company and such Underwriter
Indemnified Parties at law or in equity have been advised by counsel to the
Underwriters that one or more legal defenses may be available to it or them
which may not be available to the Company, in which case the Company shall
not be entitled to assume the defense of such suit notwithstanding its
obligation to bear the fees and expenses of such counsel. This indemnity
agreement is not exclusive and will be in addition to any liability which
the Company might otherwise have and shall not limit any rights or remedies
which may otherwise be available at law or in equity to each Underwriter
Indemnified Party.
(b) Each Selling Stockholder agrees to indemnify and hold harmless each
Underwriter Indemnified Party against any losses, claims, damages,
liabilities or expenses (including, unless such Selling Stockholder elects
to assume the defense, the reasonable cost of investigating and defending
against any claims therefor and counsel fees incurred in connection
therewith), joint or several, which may be based upon the Securities Act,
or any other statute or at common law, on the ground or alleged ground that
any Pre-effective Prospectus, the Registration Statement or the Prospectus
(or any Pre-effective Prospectus, the Registration Statement or the
Prospectus, as from time to time amended and supplemented) includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, unless such statement or omission was made in reliance upon,
and in conformity with, written information furnished to the Company by any
Underwriter, directly or through the Representatives, specifically for use
in the preparation thereof. Such Selling Stockholder shall be entitled to
participate at his
22
own expense in the defense, or, if he so elects, to assume the defense of
any suit brought to enforce any such liability, but, if such Selling
Stockholder elects to assume the defense, such defense shall be conducted
by counsel chosen by him. In the event that any Selling Stockholder elects
to assume the defense of any such suit and retain such counsel, the
Underwriter Indemnified Parties, defendant or defendants in the suit, may
retain additional counsel but shall bear the fees and expenses of such
counsel unless (i) such Selling Stockholder shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include such Underwriter Indemnified Parties and such Selling Stockholder
and such Underwriter Indemnified Parties have been advised by counsel that
one or more legal defenses may be available to it or them which may not be
available to such Selling Stockholder, in which case such Selling
Stockholder shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such
counsel. This indemnity agreement is not exclusive and will be in addition
to any liability which such Selling Stockholder might otherwise have and
shall not limit any rights or remedies which may otherwise be available at
law or in equity to each Underwriter Indemnified Party. The Company
and the Selling Stockholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to their
respective amounts of such liability for which they each shall be
responsible.
(c) Each Underwriter severally and not jointly agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Securities Act (collectively, the
"Company Indemnified Parties") and each Selling Stockholder and each
person, if any, who controls a Selling Stockholder within the meaning of
the Securities Act (collectively, the "Stockholder Indemnified Parties"),
against any losses, claims, damages, liabilities or expenses (including,
unless the Underwriter or Underwriters elect to assume the defense, the
reasonable cost of investigating and defending against any claims therefor
and counsel fees incurred in connection therewith), joint or several, which
arise out of or are based in whole or in part upon the Securities Act, the
Exchange Act or any other federal, state, local or foreign statute or
regulation, or at common law, on the ground or alleged ground that any Pre-
effective Prospectus, the Registration Statement or the Prospectus (or any
Pre-effective Prospectus, the Registration Statement or the Prospectus, as
from time to time amended and supplemented) includes an untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances in which they were made, not misleading, but only insofar
as any such statement or omission was made in reliance upon, and in
conformity with, written information furnished to the Company by such
Underwriter, directly or through the Representatives, specifically for use
in the preparation thereof; provided, however, that in no case is such
Underwriter to be liable with respect to any claims made against any
Company Indemnified Party or Stockholder Indemnified Party against whom the
action is brought unless such Company Indemnified Party or Stockholder
Indemnified Party shall have notified such Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim
23
shall have been served upon the Company Indemnified Party or Stockholder
Indemnified Party, but failure to notify such Underwriter of such claim
shall not relieve it from any liability which it may have to any Company
Indemnified Party or Stockholder Indemnified Party otherwise than on
account of its indemnity agreement contained in this paragraph. Such
Underwriter shall be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if such Underwriter elects to assume the
defense, such defense shall be conducted by counsel chosen by it. In the
event that any Underwriter elects to assume the defense of any such suit
and retain such counsel, the Company Indemnified Parties or Stockholder
Indemnified Parties and any other Underwriter or Underwriters or
controlling person or persons, defendant or defendants in the suit, shall
bear the fees and expenses of any additional counsel retained by them,
respectively. The Underwriter against whom indemnity may be sought shall
not be liable to indemnify any person for any settlement of any such claim
effected without such Underwriter's consent. This indemnity agreement is
not exclusive and will be in addition to any liability which such
Underwriter might otherwise have and shall not limit any rights or remedies
which may otherwise be available at law or in equity to any Company
Indemnified Party or Stockholder Indemnified Party.
(d) If the indemnification provided for in this Section 6 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, damages, liabilities or
expenses (or actions in respect thereof) referred to herein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
the Selling Stockholders on the one hand and the Underwriters on the other
from the offering of the Stock. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company and
the Selling Stockholders on the one hand and the Underwriters on the other
in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholders or
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and
24
equitable if contribution were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities
or expenses (or actions in respect thereof) referred to above shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating, defending, settling or
compromising any such claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the shares of the
Stock underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. The Underwriters' obligations to
contribute are several in proportion to their respective underwriting
obligations and not joint. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
7. Survival of Indemnities, Representations, Warranties, etc. The respective
----------------------------------------------------------
indemnities, covenants, agreements, representations, warranties and other
statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter,
the Selling Stockholders, the Company or any of its officers or directors
or any controlling person, and shall survive delivery of and payment for
the Stock.
8. Conditions of Underwriters' Obligations. The respective obligations of the
---------------------------------------
several Underwriters hereunder shall be subject to the accuracy, at and
(except as otherwise stated herein) as of the date hereof and at and as of
each of the Closing Dates, of the representations and warranties made
herein by the Company and the Selling Stockholders, to compliance at and as
of each of the Closing Dates by the Company and the Selling Stockholders
with their covenants and agreements herein contained and other provisions
hereof to be satisfied at or prior to each of the Closing Dates, and to the
following additional conditions:
(a) The Registration Statement shall have become effective and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge
of the Company or the Representatives, shall be threatened by the
Commission, and any request for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus
or otherwise) shall have been complied with to the reasonable satisfaction
of the Representatives. Any filings of the Prospectus, or any supplement
thereto, required pursuant to Rule 424(b) or Rule 434 of the Rules and
Regulations, shall have been made in the manner and within the time period
required by Rule 424(b) and Rule 434 of the Rules and Regulations, as the
case may be.
25
(b) The Representatives shall have been satisfied that there shall not have
occurred any change, on a consolidated basis, prior to each of the Closing
Dates in the condition (financial or otherwise), properties, business,
management, prospects, net worth or results of operations of the Company
and its subsidiaries considered as a whole, or any change in the capital
stock, short-term or long-term debt of the Company and its subsidiaries
considered as a whole, such that (i) the Registration Statement or the
Prospectus, or any amendment or supplement thereto, contains an untrue
statement of fact which, in the opinion of the Representatives, is
material, or omits to state a fact which, in the opinion of the
Representatives, is required to be stated therein or is necessary to make
the statements therein not misleading, or (ii) it is unpracticable in the
reasonable judgment of the Representatives to proceed with the public
offering or purchase the Stock as contemplated hereby.
(c) The Representatives shall be satisfied that no legal or governmental
action, suit or proceeding affecting the Company which is material and
adverse to the Company or which affects or may affect the Company's or the
Selling Stockholders' ability to perform their respective obligations under
this Agreement shall have been instituted or threatened and there shall
have occurred no material adverse development in any existing such action,
suit or proceeding.
(d) At the time of execution of this Agreement, the Representatives shall
have received from BDO Xxxxxxx LLP, independent certified public
accountants, a letter, dated the date hereof, in form and substance
satisfactory to the Underwriters.
(e) The Representatives shall have received from BDO Xxxxxxx LLP,
independent certified public accountants, letters, dated each the Closing
Dates, to the effect that such accountants reaffirm, as of each of the
Closing Dates, and as though made on each of the Closing Dates, the
statements made in the letter furnished by such accountants pursuant to
paragraph (d) of this Section 8.
(f) The Representatives shall have received from Proskauer Rose LLP,
counsel for the Company, opinions, dated each of the Closing Dates, to the
effect set forth in Exhibit I hereto.
(g) The Representatives shall have received from ______, counsel for the
Selling Stockholders, an opinion dated each of the Closing Dates to the
effect set forth in Exhibit ___ hereto.
(h) The Representatives shall have received from Xxxxx & Xxxx llp, counsel
for the Underwriters, their opinions dated each of the Closing Dates with
respect to the incorporation of the Company, the validity of the Stock, the
Registration Statement and the Prospectus and such other related matters as
it may reasonably request, and the Company and the Selling Stockholders
shall have furnished to such counsel such documents as they may request for
the purpose of enabling them to pass upon such matters.
26
(i) The Representatives shall have received a certificates, dated each of
the Closing Dates, of the chief executive officer or the President and the
chief financial or accounting officer of the Company to the effect that:
(i) No stop order suspending the effectiveness of the Registration
Statement has been issued, and, to the best of the knowledge of the
signers, no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act;
(ii) Neither any Pre-effective Prospectus, as of its date, nor the
Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, as of the time when the Registration Statement
became effective and at all times subsequent thereto up to the
delivery of such certificate, included any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(iii) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as
set forth or contemplated in the Prospectus, neither the Company nor
any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, nor entered into any material
transactions not in the ordinary course of business and there has not
been any material adverse change in the condition (financial or
otherwise), properties, business, management, prospects, net worth or
results of operations of the Company and its subsidiaries considered
as a whole, or any change in the capital stock, short-term or long-
term debt of the Company and its subsidiaries considered as a whole;
(iv) The representations and warranties of the Company in this
Agreement are true and correct at and as of each of the Closing Dates,
and the Company has complied with all the agreements and performed or
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Dates; and
(v) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as disclosed in
or contemplated by the Prospectus, (i) there has not been any material
adverse change or a development involving a material adverse change in
the condition (financial or otherwise), properties, business,
management, prospects, net worth or results of operations of the
Company and its subsidiaries considered as a whole; (ii) the business
and operations conducted by the Company and its subsidiaries have not
sustained a loss by strike, fire, flood, accident or other calamity
(whether or not insured) of such a character as to interfere
materially with the conduct of the business and operations of the
Company and its subsidiaries considered as a whole; (iii) no legal or
governmental action, suit or proceeding is pending or threatened
against the Company which is material to the Company, whether or not
arising from transactions in the ordinary
27
course of business, or which may materially and adversely affect the
transactions contemplated by this Agreement; (iv) since such dates and
except as so disclosed, the Company has not incurred any material
liability or obligation, direct, contingent or indirect, made any
change in its capital stock (except pursuant to its stock plans), made
any material change in its short-term or funded debt or repurchased or
otherwise acquired any of the Company's capital stock; and (v) the
Company has not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to
stockholders of record on a date prior to the Closing Date.
(j) The Representatives shall have received a certificate or certificates,
dated each of the Closing Dates, of each of the Selling Stockholders to the
effect that as of each of the Closing Dates the representations and
warranties in this Agreement are true and correct as if made on and as of
each of the Closing Dates, and that it has performed all its obligations
and satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Dates.
(k) The Company and each of the Selling Stockholders shall have furnished
to the Representatives such additional certificates as the Representatives
may have reasonably requested as to the accuracy, at and as of each of the
Closing Dates, of the representations and warranties made herein by them
and as to compliance at and as of each of the Closing Dates by them with
their covenants and agreements herein contained and other provisions hereof
to be satisfied at or prior to each of the Closing Dates, and as to
satisfaction of the other conditions to the obligations of the Underwriters
hereunder.
(l) Cowen shall have received the written agreements, substantially in the
form of Exhibit II hereto, of the officers, directors and holders of
Common Stock listed in Schedule C that each will not offer, sell, assign,
transfer, encumber, contract to sell, grant an option to purchase or
otherwise dispose of any shares of Common Stock (including, without
limitation, Common Stock which may be deemed to be beneficially owned by
such officer, director or holder in accordance with the Rules and
Regulations) during the 180 days following the date of the final
Prospectus, except for the Stock being sold hereunder by the Selling
Stockholders.
(m) The New York Stock Exchange shall have approved the stock for listing,
subject only to official notice of issuance.
28
All opinions, certificates, letters and other documents will be in compliance
with the provisions hereunder only if they are satisfactory in form and
substance to the Representatives. The Company will furnish to the
Representatives conformed copies of such opinions, certificates, letters and
other documents as the Representatives shall reasonably request. If any of the
conditions hereinabove provided for in this Section shall not have been
satisfied when and as required by this Agreement, this Agreement may be
terminated by the Representatives by notifying the Company of such termination
in writing or by telegram at or prior to each of the Closing Dates, but Cowen,
on behalf of the Representatives, shall be entitled to waive any of such
conditions.
9. Effective Date. This Agreement shall become effective immediately as to
--------------
Sections 5, 6, 7, 9, 10, 11, 13, 14, 15, 16 and 17 and, as to all other
provisions, at 11:00 a.m. New York City time on the first full business day
following the effectiveness of the Registration Statement or at such
earlier time after the Registration Statement becomes effective as the
Representatives may determine on and by notice to the Company or by release
of any of the Stock for sale to the public. For the purposes of this
Section 9, the Stock shall be deemed to have been so released upon the
release for publication of any newspaper advertisement relating to the
Stock or upon the release by you of telegrams (i) advising Underwriters
that the shares of Stock are released for public offering or (ii) offering
the Stock for sale to securities dealers, whichever may occur first.
10. Termination. This Agreement (except for the provisions of Section 5) may
-----------
be terminated by the Company at any time before it becomes effective in
accordance with Section 9 by notice to the Representatives and may be
terminated by the Representatives at any time before it becomes effective
in accordance with Section 9 by notice to the Company. In the event of any
termination of this Agreement under this or any other provision of this
Agreement, there shall be no liability of any party to this Agreement to
any other party, other than as provided in Sections 5, 6 and 11 and other
than as provided in Section 12 as to the liability of defaulting
Underwriters.
This Agreement may be terminated after it becomes effective by the
Representatives by notice to the Company (i) if at or prior to the First
Closing Date trading in securities on any of the New York Stock Exchange,
American Stock Exchange, Nasdaq National Market System, Chicago Board of
Options Exchange, Chicago Mercantile Exchange or Chicago Board of Trade
shall have been suspended or minimum or maximum prices shall have been
established on any such exchange or market, or a banking moratorium shall
have been declared by New York or United States authorities; (ii) trading
of any securities of the Company shall have been suspended on any exchange
or in any over-the-counter market; (iii) if at or prior to the First
Closing Date there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power or of any other
insurrection or armed conflict involving the United States or (B) any
change in financial markets or any calamity or crisis which, in the
judgment of the Representatives, makes it impractical or inadvisable to
offer or sell the Stock on the terms contemplated by the Prospectus; (iv)
if
29
there shall have been any development or prospective development involving
particularly the business or properties or securities of the Company or any
of its subsidiaries or the transactions contemplated by this Agreement,
which, in the judgment of the Representatives, makes it impracticable or
inadvisable to offer or deliver the Stock on the terms contemplated by the
Prospectus; (v) if there shall be any litigation or proceeding, pending or
threatened, which, in the judgment of the Representatives, makes it
impracticable or inadvisable to offer or deliver the on the terms
contemplated by the Prospectus; or (vi) if there shall have occurred any of
the events specified in the immediately preceding clauses (i) - (v)
together with any other such event that makes it, in the judgment of the
Representatives, impractical or inadvisable to offer or deliver the Stock
on the terms contemplated by the Prospectus.
11. Reimbursement of Underwriters. Notwithstanding any other provisions
-----------------------------
hereof, if this Agreement shall not become effective by reason of any
election of the Company or the Selling Stockholders pursuant to the first
paragraph of Section 10 or shall be terminated by the Representatives under
Section 8 or Section 10, the Company will bear and pay the expenses
specified in Section 5 hereof and, in addition to their obligations
pursuant to Section 6 hereof, the Company will reimburse the reasonable
out-of-pocket expenses of the several Underwriters (including reasonable
fees and disbursements of counsel for the Underwriters) incurred in
connection with this Agreement and the proposed purchase of the Stock, and
promptly upon demand the Company will pay such amounts to you as
Representatives.
12. Substitution of Underwriters. If any Underwriter or Underwriters shall
----------------------------
default in its or their obligations to purchase shares of Stock hereunder
and the aggregate number of shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed ten percent
(10%) of the total number of shares underwritten, the other Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase. If any Underwriter or
Underwriters shall so default and the aggregate number of shares with
respect to which such default or defaults occur is more than ten percent
(10%) of the total number of shares underwritten and arrangements
satisfactory to the Representatives and the Company for the purchase of
such shares by other persons are not made within forty-eight (48) hours
after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a
defaulting Underwriter or Underwriters as provided in this Section 12, (i)
the Company and the Selling Stockholders shall have the right to postpone
the Closing Dates for a period of not more than five (5) full business days
in order that the Company and the Selling Stockholders may effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company
agrees promptly to file any amendments to the Registration Statement or
supplements to the Prospectus which may thereby be made necessary, and (ii)
the respective numbers of shares to be purchased by the remaining
30
Underwriters or substituted Underwriters shall be taken as the basis of
their underwriting obligation for all purposes of this Agreement. Nothing
herein contained shall relieve any defaulting Underwriter of its liability
to the Company, the Selling Stockholders or the other Underwriters for
damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 12 shall be without liability on the
part of any non-defaulting Underwriter, the Selling Stockholders or the
Company, except for expenses to be paid or reimbursed pursuant to Section 5
and except for the provisions of Section 6.
13. Notices. All communications hereunder shall be in writing and, if sent to
-------
the Underwriters shall be mailed, delivered or telegraphed and confirmed to
you, as their Representatives c/o Cowen & Company at Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 except that notices given to an Underwriter pursuant
to Section 6 hereof shall be sent to such Underwriter at the address
furnished by the Representatives or, if sent to the Company, shall be
mailed, delivered or telegraphed and confirmed c/o Schein Pharmaceutical,
Inc., 000 Xxxxxx Xxxxx, Xxxxxxx Xxxx, Xxx Xxxxxx 00000.
14. Successors. This Agreement shall inure to the benefit of and be binding
----------
upon the several Underwriters, the Company and the Selling Stockholders and
their respective successors and legal representatives. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give
any person other than the persons mentioned in the preceding sentence any
legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person; except that the representations, warranties, covenants, agreements
and indemnities of the Company and the Selling Stockholders contained in
this Agreement shall also be for the benefit of the person or persons, if
any, who control any Underwriter or Underwriters within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the
indemnities of the several Underwriters shall also be for the benefit of
each director of the Company, each of its officers who has signed the
Registration Statement and the person or persons, if any, who control the
Company or any Selling Stockholders within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
15. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of New York.
16. Authority of the Representatives. In connection with this Agreement, you
--------------------------------
will act for and on behalf of the several Underwriters, and any action
taken under this Agreement by Cowen, as Representative, will be binding on
all the Underwriters; and any action taken under this Agreement by any of
the Attorneys-in-fact will be binding on all the Selling Stockholders.
17. Partial Unenforceability. The invalidity or unenforceability of any
------------------------
Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other
31
Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and
only such minor changes) as are necessary to make it valid and enforceable.
18. General. This Agreement constitutes the entire agreement of the parties to
-------
this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. In this Agreement, the masculine,
feminine and neuter genders and the singular and the plural include one
another. The section headings in this Agreement are for the convenience of
the parties only and will not affect the construction or interpretation of
this Agreement. This Agreement may be amended or modified, and the
observance of any term of this Agreement may be waived, only by a writing
signed by the Company, the Selling Stockholders and the Representatives.
19. Counterparts. This Agreement may be signed in two (2) or more
------------
counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
Any person executing and delivering this Agreement as Attorney-in-fact for
the Selling Stockholders represents by so doing that he has been duly
appointed as Attorney-in-fact by such Selling Stockholder pursuant to a
validly existing and binding Power of Attorney which authorizes such
Attorney-in-fact to take such action.
32
If the foregoing correctly sets forth our understanding, please indicate your
acceptance thereof in the space provided below for that purpose, whereupon this
letter and your acceptance shall constitute a binding agreement between us.
Very truly yours,
SCHEIN PHARMACEUTICAL, INC.
By:____________________________
President
SELLING STOCKHOLDERS LISTED
IN SCHEDULE B
By: Attorney-in-fact
By:______________________________
Attorney-in-fact
Acting on his own behalf and on
behalf of the Selling Stockholders listed
in Schedule B.
33
Accepted and delivered in
New York, New York as of
the date first above written.
XXXXX & COMPANY
BEAR, XXXXXXX & CO., INC.
XXXXX XXXXXX INC.
Acting on their own behalf
and as Representatives of several
Underwriters referred to in the
foregoing Agreement.
By: XXXXX & COMPANY
By: Cowen Incorporated,
its general partner
By: ______________________________
Xxxx X. Xxxxxx
Managing Director - Syndicate
34
SCHEDULE A
Name Number of Shares of Number of Shares of
---- Firm Stock to be Optional Stock to
Purchased be Purchased
----------- -------------
Xxxxx & Company .........................
Bear, Xxxxxxx & Co., Inc.................
Xxxxx Xxxxxx Inc.........................
--------- ----------
Total
========= ==========
35
SCHEDULE B
Number of Shares Number of Shares
of Firm Stock of Optional Stock
to be Sold to be Sold
----------------- -----------------
Xxxxx Pharmaceutical, Inc. ...........
---------- ----------
========== ==========
36
SCHEDULE C
[Persons Providing Lock-up Agreements
Pursuant to Section 8(l)]
[TO COME]
Form of Opinion of Issuer's Counsel Exhibit I
[TO COME]
38
Form of Opinion of Selling Stockholders' Counsel Exhibit II
[TO COME]
39
Form of Lock-Up Agreement Exhibit III
[TO COME]
40
