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2,600,000 Shares
QUEST MEDICAL, INC.
Common Stock
UNDERWRITING AGREEMENT
November ___, 1995
VECTOR SECURITIES INTERNATIONAL, INC.
XXXXXXXX XXXXXX REFSNES, INC.
As Representatives of the Several Underwriters
c/o VECTOR SECURITIES INTERNATIONAL, INC.
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Quest Medical, Inc., a Texas corporation (the "Company"), proposes to
issue and sell an aggregate of 1,516,667 shares of its common stock, par value
$0.05 per share, and the persons named in Schedule I hereto (the "Selling
Stockholders") propose to sell an aggregate of 1,083,333 shares of common stock
of the Company (together with the 1,516,667 shares of common stock to be issued
and sold by the Company, the "Initial Securities") to the several Underwriters
named in Schedule II hereto (the "Underwriters") for whom Vector Securities
International, Inc. ("Vector") and Xxxxxxxx Xxxxxx Refsnes, Inc. are acting as
representatives (collectively the "Representatives"). In addition, solely for
the purpose of covering over-allotments, the Company proposes to grant to the
several Underwriters, upon the terms and conditions set forth in Section 2
hereof, an option to purchase up to an additional 390,000 shares of Common
Stock of the Company (the "Option Securities"). The Company and the Selling
Stockholders are hereinafter sometimes referred to as the "Sellers." The
Initial Securities and the Option Securities are hereinafter collectively
referred to as the "Securities." The Company's common stock, par value $0.05
per share, including the Securities, is hereinafter referred to as the "Common
Stock." The Company and the Selling Stockholders wish to confirm as follows
their agreements with you and the other Underwriters on whose behalf you are
acting in connection with the several purchases by the Underwriters of the
Securities:
1. REGISTRATION STATEMENT, PROSPECTUS AND OFFERING MEMORANDUM.
The Company has prepared and filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form SB-2 covering the
registration of the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), including the related preliminary prospectus, or
prospectuses, and either (A) has prepared and filed, prior to the effective
date of such registration statement, an amendment to such registration
statement, including a final prospectus or (B) if the Company has elected to
rely upon Rule 430A ("Rule 430A") of the rules
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and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"), will prepare and file a prospectus, in accordance with the
provisions of Rule 430A and Rule 424(b) ("Rule 424(b)") of the 1933 Act
Regulations, promptly after execution and delivery of this Agreement.
Additionally, if the Company has elected to rely upon Rule 434 ("Rule 434") of
the 1933 Act Regulations, the Company will prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b),
promptly after execution and delivery of this Agreement. The information, if
any, included in such prospectus that was omitted from the prospectus included
in such registration statement at the time it becomes effective but that is
deemed, (i) pursuant to paragraph (b) of Rule 430A, to be part of such
registration statement at the time it becomes effective is referred to herein
as the "Rule 430A Information," and (ii) pursuant to paragraph (d) of Rule 434,
to be part of such registration statement at the time it becomes effective is
referred to herein as the "Rule 434 Information." Each prospectus used before
the time such registration statement becomes effective is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto, at the time it becomes effective and including, if applicable, the
Rule 430A Information or the Rule 434 Information, is herein called the
"Original Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and the Original Registration Statement and any
Rule 462(b) Registration Statement are herein referred to collectively as the
"Registration Statement." The prospectus included in the Original Registration
Statement at the time it becomes effective is herein called the "Prospectus,"
except that, (i) if the final prospectus furnished to the Underwriters after
the execution of this Agreement for use in connection with the offering of the
Securities differs from the prospectus included in the Original Registration
Statement at the time it becomes effective (whether or not such prospectus is
required to be filed pursuant to Rule 424(b)), the term "Prospectus" shall
refer to the final Prospectus first furnished to the Underwriters for such use,
and (ii) if Rule 434 is relied upon, the term "Prospectus" shall refer to the
preliminary prospectus last furnished to the Underwriters in connection with
the offering of the Securities, together with the Term Sheet.
The Company has prepared a confidential offering memorandum (the
"Offering Memorandum") which consists of the Prospectus and a Canadian wrapper
for use by the Underwriters in connection with the private placement of the
Securities in Canada.
2. AGREEMENTS TO SELL AND PURCHASE. Upon the basis of the
representations, warranties and agreements contained herein and subject to all
the terms and conditions set forth herein and to such adjustments as you may
determine to avoid fractional shares, the Company hereby agrees to issue and
sell to each Underwriter and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $_____ per share
(the "purchase price per share"), the number of Initial Securities set forth in
Schedule II opposite the name of such Underwriter under the column "Number of
Initial Securities to be Purchased from the Company" (or such number of Initial
Securities increased as set forth in Section 12 hereof).
Upon the basis of the representations, warranties and agreements
contained herein and subject to all the terms and conditions set forth herein
and to such adjustments as you may determine to avoid fractional shares, each
Selling Stockholder agrees to sell to each Underwriter
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and each Underwriter agrees, severally and not jointly, to purchase from each
Selling Stockholder, at the purchase price per share, that number of Initial
Securities as is equal to the product of (i) the number of Initial Securities
set forth in Schedule I opposite such Selling Stockholder's name multiplied by
(ii) the percentage of Initial Securities that such Underwriter is purchasing
from the Company as set forth in Schedule II (or such number of Initial
Securities increased as set forth in Section 12 hereof).
Upon the basis of the representations, warranties and agreements
contained herein and subject to all the terms and conditions set forth herein,
the Company hereby grants an option (the "over-allotment option") to the
Underwriters to purchase from the Company, at the purchase price per share, up
to an aggregate of 390,000 Option Securities. Option Securities may be
purchased solely for the purpose of covering over-allotments made in connection
with the offering of the Securities. Such option shall expire at 5:00 P.M.,
Chicago time, on the 30th day after the date of this Agreement (or, if such
30th day shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the New York Stock Exchange is open for trading). Such
over-allotment option may be exercised at any time until its expiration, but
only once, upon written, facsimile or telegraphic notice by you to the Company
. Upon any exercise of the over-allotment option, each Underwriter, severally
and not jointly, agrees to purchase from the Company that proportion of the
total number of Option Securities as is equal to the percentage of Initial
Securities that such Underwriter is purchasing from the Company and the Selling
Stockholders (or such number of Initial Securities increased as set forth in
Section 12 hereof), subject to such adjustments as you may determine to avoid
fractional shares.
Certificates in transferable form for the Securities that each of the
Selling Stockholders agrees to sell pursuant to this Agreement have been placed
in custody with F. Xxxxxx Xxxxxxx III (the "Custodian") for delivery under this
Agreement pursuant to a Custodian Agreement and Power of Attorney
(collectively, the "Custodian Agreement") executed by each of the Selling
Stockholders appointing Xxxxxx X. Xxxxxxxx and F. Xxxxxx Xxxxxxx III as agents
and attorneys-in-fact (the "Attorneys-in-Fact"). Each Selling Stockholder
agrees that (i) the Securities represented by the certificates held in custody
pursuant to the Custodian Agreement are subject to the interests of the
Underwriters, the Company and each other Selling Stockholder, (ii) the
arrangements made by the Selling Stockholders for such custody are, except as
specifically provided in the Custodian Agreement, irrevocable and (iii) the
obligations of the Selling Stockholders hereunder and under the Custodian
Agreement shall not be terminated by any act of such Selling Stockholder or by
operation of law, whether by the death or incapacity of any Selling Stockholder
or the occurrence of any other event or, if the Selling Stockholder is not a
natural person, upon any dissolution, winding up, distribution of assets or
other event affecting the legal existence of such Selling Stockholder. If any
Selling Stockholder shall die or be incapacitated or if any other event shall
occur before the delivery of the Securities hereunder or if the Selling
Stockholder is not a natural person and shall dissolve, wind up, distribute
assets or if any other event affecting the legal existence of such Selling
Stockholder shall occur before the delivery of the Securities hereunder,
certificates for the Securities of such Selling Stockholder shall be delivered
to the Underwriters by the Custodian, or any of them, in accordance with the
terms and conditions of this Agreement and the Custodian Agreement as if such
death or incapacity, dissolution, winding up or distribution of assets or other
event had not occurred,
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regardless of whether or not the Custodian or any Underwriter shall have
received notice of such death, incapacity, dissolution, winding up or
distribution of assets or other event. Each Attorney-in-Fact is authorized, on
behalf of each of the Selling Stockholders, to execute this Agreement and any
other documents necessary or desirable in connection with the sale of the
Securities to be sold hereunder by such Selling Stockholder, and the Custodian
is authorized on behalf of each of the Selling Stockholders to make delivery of
the certificates for such Securities. The Custodian and the Attorneys-in-Fact
are authorized to take such other action as may be necessary or desirable in
connection with the transactions contemplated by this Agreement. The Custodian
and each Attorney-in-Fact agree to perform their duties under the Custodian
Agreement.
3. TERMS OF PUBLIC OFFERING. The Sellers have been advised by
you that the Underwriters propose to make a public offering in the United
States and a private placement in Canada of their respective portions of the
Securities as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Securities upon the terms set forth in the Prospectus.
4. DELIVERY OF THE SECURITIES AND PAYMENT THEREFOR. Delivery to
the Underwriters of and payment for the Initial Securities shall be made at the
office of ________________________ at 9:00 A.M., Chicago time, on November ___,
1995 (the "Closing Date"). The place of closing for the Initial Securities and
the Closing Date may be varied by agreement among you, the Company and the
Attorneys-in-Fact.
Delivery to the Underwriters of and payment for any Option Securities
to be purchased by the Underwriters shall be made at the aforementioned office
of ________________________ at such time on such date (the "Option Closing
Date"), which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date nor earlier than two nor later than seven
business days after the giving of the notice hereinafter referred to, as shall
be specified in a written notice from you on behalf of the Underwriters to the
Company of the Underwriters' determination to purchase a number, specified in
such notice, of Option Securities. The place of closing for any Option
Securities and the Option Closing Date for such Option Securities may be varied
by agreement between you and the Company.
Certificates for the Initial Securities and for any Option Securities
to be purchased hereunder shall be registered in such names and in such
denominations as you shall request by written notice (it being understood that
a facsimile transmission shall be deemed written notice) prior to 9:30 A.M.,
Chicago time, on the second business day preceding the Closing Date or any
Option Closing Date, as the case may be. Such certificates shall be made
available to you in Chicago, Illinois or New York, New York, as requested by
you in the aforesaid notice, for inspection and packaging not later than 9:30
A.M., Chicago time, or New York City time, as the case may be, on the business
day next preceding the Closing Date or an Option Closing Date, as the case may
be. The certificates and stock powers evidencing the Initial Securities and
any Option Securities to be purchased hereunder shall be delivered to you on
the Closing Date or the applicable Option Closing Date, as the case may be,
against payment of the purchase price therefor by certified or official bank
check or checks payable in New York Clearing House (next
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day) funds to the order of the Company and the Attorneys-in-Fact. It is
understood that each Underwriter has authorized you, for its account, to accept
delivery of, acknowledge receipt of, and make payment of the purchase price
for, the Initial Securities and the Option Securities, if any, which it has
agreed to purchase. Vector, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose check has not been received by the Closing
Date or the applicable Option Closing Date, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.
5. AGREEMENTS OF THE COMPANY. The Company covenants and agrees
with the several Underwriters as follows:
a. The Company will notify the Representatives
immediately, and confirm the notice in writing, (i) of the effectiveness of the
Registration Statement and any amendment thereto, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the suspension of qualification of the Securities for offering or
sale in any jurisdiction or the initiation of any proceedings for such purpose
and (v) during the period when the Prospectus is required to be delivered under
the 1933 Act or Securities Exchange Act of 1934, as amended (the "1934 Act"),
of any change, or any event or occurrence which reasonably could result in such
a change, in the Company's condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company or the happening of any
event, including the filing of any information, documents or reports pursuant
to the 1934 Act, that makes any statement of a material fact made in the
Registration Statement, the Prospectus or the Offering Memorandum (as then
amended or supplemented) untrue or which requires the making of any amendments
of or supplements to the Registration Statement, the Prospectus or the Offering
Memorandum in order to state a material fact required by the 1933 Act or the
1933 Act Regulations to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectus to comply with the 1933 Act, the 1933 Act Regulations or any
other law. The Company shall use its best efforts to prevent the issuance of
any stop order or order suspending the qualification or exemption of the
Securities under any state securities or Blue Sky laws, and, if at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption of the
Securities under any state securities or Blue Sky laws, the Company shall use
its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
b. The Company will give the Underwriters notice of its
intention to prepare or file any amendment to the Registration Statement
(including any post-effective amendment), any Rule 462(b) Registration
Statement, any Term Sheet or any amendment or supplement to the Prospectus
(including any revised prospectus or Term Sheet and preliminary prospectus
which the Company proposes for use by the Underwriters in connection with the
offering of the Securities which differs from the prospectus on file at the
Commission at the time the
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Registration Statement becomes effective, whether or not such revised
prospectus or Term Sheet and preliminary prospectus is required to be filed
pursuant to Rule 424(b)), whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Underwriters with copies of any Rule 462(b)
Registration Statement, Term Sheet, amendment or supplement a reasonable amount
of time prior to such proposed filing or use, as the case may be, and will not
file any such Rule 462(b) Registration Statement, Term Sheet, amendment or
supplement or use any such prospectus to which the Underwriters or counsel for
the Underwriters shall reasonably object.
c. The Company will deliver to the Underwriters as many
signed and conformed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) as the Underwriters may reasonably request.
d. The Company will furnish to each Underwriter, from
time to time during the period when the Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request for the
purposes contemplated by the 1933 Act or the 1934 Act or the respective
applicable rules and regulations of the Commission thereunder. The Company
will furnish to each Underwriter such number of copies of the Offering
Memorandum as such Underwriter may reasonably request for the purpose of
effecting a private placement of the Securities in Canada.
e. If any event shall occur as a result of which it is
necessary, in the opinion of counsel for the Underwriters, to amend or
supplement the Prospectus or the Offering Memorandum in order to make the
Prospectus or Offering Memorandum as applicable not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, the
Company will forthwith amend or supplement the Prospectus or Offering
Memorandum as applicable (in form and substance satisfactory to counsel for the
Underwriters) so that, as so amended or supplemented, the Prospectus or
Offering Memorandum as applicable will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time it
is delivered to a purchaser, not misleading, and the Company will furnish to
the Underwriters a reasonable number of copies of such amendment or supplement.
f. During the period of five years hereafter, the
Company will furnish to you (i) as soon as available, a copy of each report of
the Company mailed to stockholders or filed with the Commission or Nasdaq
National Market ("NASDAQ"); and (ii) from time to time such other information
concerning the Company as you may reasonably request, subject to appropriate
confidentiality and indemnification provisions with respect to any material
nonpublic information so furnished.
g. The Company will endeavor, in cooperation with
counsel to the Underwriters, to qualify the Securities for offering and sale
under the applicable securities or Blue Sky laws of such states and other
jurisdictions of the United States and in the province of Ontario and Quebec as
the Underwriters may designate; provided, however, that the Company
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shall not be obligated to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified, or to execute a general consent to service of
process in any jurisdiction or make any undertaking with respect to the conduct
of its business. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for
such period as you may reasonably request for distribution of the Securities or
as may be required by law.
h. The Company will make generally available to its
security holders as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 of the 1933 Act Regulations) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the "effective date of the Registration
Statement" (as defined in said Rule 158).
i. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus and
the Offering Memorandum under "Use of Proceeds."
j. If, at the time that the Registration Statement
becomes effective, any Rule 430A Information or Rule 434 Information shall have
been omitted therefrom, then immediately following the execution of this
Agreement, the Company will prepare, and file or transmit for filing with the
Commission in accordance with Rule 430A or Rule 434 and Rule 424(b), copies of
a Prospectus or Term Sheet containing such Rule 430A Information and Rule 434
Information, respectively, or, if required by Rule 430A, a post-effective
amendment to the Registration Statement (including an amended Prospectus and
Offering Memorandum), containing such Rule 430A Information.
k. If the Company elects to rely upon Rule 462(b), the
Company shall both file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) and pay the applicable fees in
accordance with Rule 111 of the 1933 Act Regulations by the earlier of (i)
10:00 P.M. Eastern Time on the date hereof and (ii) the time confirmations are
sent or given, as specified by Rule 462(b)(2).
l. The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, will file all
documents required to be filed with the Commission pursuant to Section 13, 14
or 15 of the 1934 Act within the time periods required by the 1934 Act and the
rules and regulations of the Commission under the 1934 Act (the "1934 Act
Regulations").
m. During a period of 120 days from the date of the
Prospectus, the Company will not, without prior written consent of the
Representatives on behalf of the Underwriters, directly or indirectly, sell,
offer to sell, grant any option for the sale of, or otherwise dispose of,
Common Stock or any security convertible into Common Stock (except for Common
Stock issued pursuant to this Agreement or pursuant to reservations,
agreements, conversions or employee or director benefit plans or the exercise
of convertible securities referred to in the Prospectus.
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n. The Company shall not, during the 120 days following
the effective date of the Registration Statement, except with the prior written
consent of the Representatives, file a registration statement covering any of
its shares of capital stock, except that one or more registration statements on
Form S-8 may be filed at any time following the effective date of the
Registration Statement relating to issuances under its employee or director
benefit plans referred to in the Prospectus.
o. The Company has furnished or will furnish to you
"lock-up" letters, in form and substance satisfactory to you, signed by each of
its current officers and directors and each of its stockholders designated by
you.
p. The Company will supply the Underwriters with copies
of all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Securities under the 1933
Act.
q. Prior to the Closing Date, the Company shall furnish
to the Underwriters, 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.
r. Prior to the Closing Date, the Company will issue no
press release or other communications directly or indirectly and hold no press
conference with respect to the Company or any of its subsidiaries, the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of any of them, or the offering of the Securities, without
the prior written consent of the Representatives unless in the judgment of the
Company and its counsel, and after notification to the Representatives, such
press release or communication is required by law.
s. The Company has not taken, nor will it take, directly
or indirectly, any action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Securities.
t. The Company will use its best efforts to maintain the
quotation of the Common Stock on NASDAQ.
6. AGREEMENTS OF THE SELLING STOCKHOLDERS. Each of the Selling
Stockholders severally covenants and agrees with the several Underwriters as
follows:
a. Such Selling Stockholder will cooperate to the extent
necessary to cause the Registration Statement or any post-effective amendment
thereto to become effective at the earliest possible time.
b. Such Selling Stockholder will pay all Federal, state
and other taxes, if any, on the transfer or sale of such Securities that are
sold by the Selling Stockholder to the Underwriters. In order to document the
Underwriters' compliance with the reporting and withholding provisions of the
Tax Equity and Fiscal Responsibility Act of 1982 and the Interest and Dividend
Tax Compliance Act of 1983 with respect to the transaction herein contemplated
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each of the Selling Stockholders agrees to deliver to you prior to or at the
Closing Date a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
c. Such Selling Stockholder will do or perform all
things required to be done or performed by such Selling Stockholder prior to
the Closing Date to satisfy all conditions precedent to the delivery of the
Securities pursuant to this Agreement relating to such Selling Stockholder.
d. Such Selling Stockholder will not for a period of 120
days after the date of the Prospectus, without the prior written consent of the
Representatives, on behalf of the Underwriters, directly or indirectly, sell,
offer to sell, grant any option for the sale of, or otherwise dispose of,
Common Stock or any security convertible into Common Stock, except for
Securities sold pursuant to this Agreement.
e. Such Selling Stockholder has not taken, nor will it
take, directly or indirectly, any action designed to, or that might reasonably
be expected to, cause or result in stabilization or manipulation of the price
of the Common Stock to facilitate the sale or resale of the Securities.
f. Such Selling Stockholder promptly will advise you on
behalf of the several Underwriters, and immediately confirm such advice in
writing, (i) of receipt by such Selling Stockholder or by any representative or
agent of such Selling Stockholder, of any communication from the Commission
relating to the Registration Statement or the Prospectus, or any notice or
order of the Commission relating to the Company or such Selling Stockholder in
connection with the transactions contemplated by this Agreement and (ii) of the
occurrence of any event which makes or may make any statement made in the
Registration Statement or the Prospectus untrue or that requires the making of
any change in the Registration Statement or Prospectus in order to make any
such statement, in the light of the circumstances in which it was made, not
misleading or to comply with the 1933 Act, the 1934 Act or any other law.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
a. When the Registration Statement becomes effective,
including at the date of any post-effective amendment, at the date of the
Prospectus, if different, and at the Closing Date and the Option Closing Date,
as the case may be, (i) the Registration Statement complied or will comply in
all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus and any supplements
or amendments thereto will not at the date of the Prospectus, at the date of
any such supplements or amendments, and at the Closing Date and the Option
Closing Date, if any, include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
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Statement or Prospectus relating to any Underwriter made in reliance upon and
in conformity with information furnished to the Company in writing by any
Underwriter, through the Representatives, expressly for use in the Registration
Statement, the Prospectus or the Offering Memorandum. The Company has not
distributed any offering materials in connection with the offering or sale of
the Securities other than the Registration Statement, the preliminary
prospectus, the Prospectus, the Term Sheet, if applicable, or any other
materials, if any, permitted by the 1933 Act or the 1933 Act Regulations.
b. The accountants who certified the financial
statements included in the Registration Statement are independent public
accountants with regard to the Company as required by the 1933 Act and the 1933
Act Regulations.
c. The financial statements included in the Registration
Statement, the Prospectus and the Offering Memorandum present fairly the
financial position of the Company and its consolidated subsidiaries as of the
dates indicated and the results of their operations for the periods specified;
except as otherwise stated in the Registration Statement, said financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis; and no supporting schedules are
required to be included in the Registration Statement. The historical
financial information and statistical data set forth in the Prospectus and the
Offering Memorandum are prepared on an accounting basis consistent with such
financial statements. The pro forma financial information included in the
Prospectus and the Offering Memorandum presents fairly the information shown
therein, has been properly compiled on the pro forma bases described therein,
and, in the opinion of the Company, the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein.
d. Since the respective dates as of which information is
given in the Registration Statement, the Prospectus and the Offering
Memorandum, except as otherwise stated therein, (i) there has been no material
adverse change or any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, (ii) there have been no transactions entered into
by the Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (iii) there has been no dividend
or distribution of any kind declared, paid or made by the Company on any class
of its capital stock. The Company has no material contingent obligations which
are not disclosed in the Registration Statement.
e. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of Texas
with corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus and to enter into and
perform its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not,
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singly or in the aggregate, have a material adverse effect on the condition,
financial or otherwise, or the earnings or business affairs of the Company and
its subsidiaries considered as one enterprise.
f. Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and the Offering Memorandum and is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise; and all of the issued and outstanding capital stock of each such
subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, charge,
encumbrance, claim or equity except as described in the Prospectus and the
Offering Memorandum. There are no outstanding subscriptions, options,
warrants, commitments, convertible or exchangeable securities or other rights
granted by the Company or any subsidiary to acquire any shares of capital stock
of or ownership interests in any subsidiary of the Company and there are no
commitments, plans or arrangements to do so. Except as described in the
Prospectus and the Offering Memorandum, the Company does not own, directly or
indirectly, any shares of stock or any other equity or long-term debt
securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity.
g. The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus under "Capitalization" (except
for subsequent issuances, if any, pursuant to this Agreement or pursuant to
reservations, agreements, employee or director benefit plans or the exercise of
convertible securities referred to in the Prospectus and the Offering
Memorandum); the shares of issued and outstanding capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable and have not been issued in violation of or are not otherwise
subject to any preemptive or other similar rights; the Securities have been
duly authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be
validly issued and fully paid and non-assessable; the certificates evidencing
the Securities upon delivery will be in due and proper form under Texas law;
the authorized capital stock of the Company, including the Securities, conforms
to all statements relating thereto contained in the Prospectus; and the
issuance of the Securities is not subject to preemptive or other similar
rights. There are no outstanding subscriptions, options, warrants, convertible
or exchangeable securities or other rights granted to or by the Company to
purchase shares of Common Stock or other securities of the Company and there
are no commitments, plans or arrangements to issue any shares of Common Stock
or any security convertible into Common Stock, in each case other than as
described in the Prospectus and the Offering Memorandum.
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h. Except as disclosed in the Registration Statement and
except as would not, singly or in the aggregate, reasonably be expected to have
a material adverse effect on the condition, financial or otherwise, or the
earnings and business affairs of the Company and its subsidiaries considered as
one enterprise, (A) the Company and its subsidiaries are each in compliance
with all applicable Environmental Laws, (B) the Company and its subsidiaries
have all permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with the requirements of such
permits authorizations and approvals, (C) there are no pending or, to the best
knowledge of the Company, threatened Environmental Claims against the Company
or any of its subsidiaries and (D) under applicable law, there are no
circumstances known to us with respect to any property or operations of the
Company or its subsidiaries that are reasonably likely to form the basis of an
Environmental Claim against the Company or its subsidiaries.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) Federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigations or proceedings relating in any way to any
Environmental Law.
i. Neither the Company nor any of its subsidiaries is in
violation of its charter or bylaws. Neither the Company nor any of its
subsidiaries is in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust, or other instrument or agreement to
which the Company or any of its subsidiaries is a party or by which it or any
of them may be bound, or to which any of the property or assets of the Company
or any of its subsidiaries is subject except where such defaults will not
result in a material adverse change in the earnings or condition (financial or
otherwise) of the Company and its subsidiaries considered as one enterprise.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated herein and compliance by the Company with its
obligations hereunder: (i) have been duly authorized by all necessary corporate
action; (ii) will not conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement,
deed, trust, note, lease, sublease, voting agreement, voting trust or other
instrument or agreement to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject except
where such conflicts, breaches, defaults or creations or assumptions will not
result in a material adverse change in the earnings or condition (financial or
otherwise) of the Company and its subsidiaries considered as one enterprise,
and (iii) will not result in any violation of the provisions of the
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charter or bylaws of the Company or any applicable statute, law, rule,
regulation, ordinance, decision, directive or order.
j. No labor dispute with the employees of the Company or
any of its subsidiaries exists or, to the best knowledge of the Company, is
threatened; and the Company is not aware of any existing or threatened labor
disturbance by the employees of any of its principal suppliers, manufacturers
or contractors which might, singly or in the aggregate, be expected to result
in any material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
k. There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Company, threatened, against or affecting the Company
or any of its subsidiaries, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which, singly or
in the aggregate, might result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise, or
which, singly or in the aggregate, might materially and adversely affect the
properties or assets thereof or which might materially and adversely affect the
consummation of this Agreement; all pending legal or governmental proceedings
to which the Company or any of its subsidiaries is a party or of which any of
their respective property or assets is the subject which are not described in
the Registration Statement, including ordinary routine litigation incidental to
the business, are, considered in the aggregate, not material; and there are no
contracts or documents of the Company or any of its subsidiaries which are
required to be filed as exhibits to the Registration Statement by the 1933 Act
or by the 1933 Act Regulations which have not been so filed.
l. The Company and its subsidiaries own or are licensed
to use all patents, patent applications, inventions, trademarks, tradenames,
applications for registration of trademarks, service marks, service xxxx
applications, copyrights, know-how, manufacturing processes, formulae, trade
secrets, licenses and rights in any thereof and any other intangible property
and assets which are described in or filed as exhibits to the Registration
Statement or which are material to the businesses of the Company and its
subsidiaries as now conducted and as proposed to be conducted, in each case as
described in the Prospectus and the Offering Memorandum (herein called the
"Proprietary Rights"). The description of the Proprietary Rights is correct in
all material respects and fairly and correctly describes the Company's and its
subsidiaries rights with respect thereto. The Company does not have any
knowledge of, and the Company has not given or received any notice of, any
pending conflicts with or infringement of the rights of others with respect to
any Proprietary Rights or with respect to any license of Proprietary Rights.
No action, suit, arbitration, or legal, administrative or other proceeding, or
investigation is pending, or, to the best knowledge of the Company, threatened,
which involves any Proprietary Rights. Neither the Company nor any subsidiary
is subject to any judgment, order, writ, injunction or decree of any court or
any Federal, state, local, foreign or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
any arbitrator, or has entered into or is a party to any contract which
restricts or
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impairs the use of any such Proprietary Rights in a manner which would have a
material adverse effect on the use of any of the Proprietary Rights. To the
best knowledge of the Company, no Proprietary Rights used by the Company or any
of its subsidiaries, and no services or products sold by the Company or any of
its subsidiaries, conflict with or infringe upon any proprietary rights
available to any third party. Neither the Company nor any subsidiary has
received written notice of any pending conflict with or infringement upon such
third party proprietary rights. Neither the Company nor any subsidiary has
entered into consent, indemnification, forbearance to xxx or settlement
agreement with respect to Proprietary Rights other than in the ordinary course
of business. No claims have been asserted by any person with respect to the
validity of the Company's or any of its subsidiaries' ownership or right to use
the Proprietary Rights and, to the best knowledge of the Company, there is no
reasonable basis for any claim to be successful. Nothing has come to their
attention which might reasonably indicate that any of the Proprietary Rights
are invalid or unenforceable and no registration relating thereto has lapsed,
expired or been abandoned or cancelled or is the subject of cancellation or
other adversarial proceedings, and all applications therefore are pending and
are in good standing. The Company and its subsidiaries have complied, in all
material respects, with their respective contractual obligations relating to
the protection of the Proprietary Rights used pursuant to licenses. To the
best knowledge of the Company, no person is infringing on or violating the
Proprietary Rights owned or used by the Company or any of its subsidiaries
except where such infringement or violation would not have a material adverse
effect on the business, affairs, condition (financial or otherwise), or results
of operations of the Company and the subsidiaries considered as one enterprise.
m. No registration, authorization, approval,
qualification or consent of any court or governmental authority or agency is
necessary in connection with the offering, issuance or sale of the Securities
hereunder, except such as may be required under the 1933 Act or the 1933 Act
Regulations, state securities or Blue Sky laws, or foreign securities laws (or
such as may be required by the National Association of Securities Dealers, Inc.
("NASD")).
n. The Company and each of its subsidiaries (i) owns or
possesses and is operating in compliance with the terms, provisions and
conditions of all authorizations, approvals, orders, licenses, registrations,
certificates and permits (collectively, "permits") of and from all governmental
regulatory officials and bodies necessary to conduct their respective
businesses, (ii) has made all necessary filings required under any Federal,
state or foreign law, rule or regulation and (iii) has obtained all necessary
authorizations, consents and approvals (collectively, "approvals") from other
persons or governmental agencies in each case that are necessary to own or
lease its properties and assets and to the conduct of its business, except
where the failure to so own or possess, comply, file or obtain, would not,
singly or in the aggregate, reasonably be expected to have a material adverse
effect on the condition, financial or otherwise, or the earnings or business
affairs of the Company and its subsidiaries considered as one enterprise. As
to the Company and each of its subsidiaries, each such permit is valid and in
full force and effect and there is no proceeding pending or, to the best
knowledge of the Company, threatened (or any basis therefor) that could cause
any such permit, filing or approval to be revoked, withdrawn, canceled,
suspended or not renewed, except where such revocation, withdrawal,
cancellation, suspension or failure to renew would not, singly or in the
aggregate,
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reasonably be expected to have a material adverse effect on the condition,
financial or otherwise, or the earnings or business affairs of the Company and
its subsidiaries considered as one enterprise.
o. This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity and contribution hereunder may be limited by Federal, state or
applicable foreign securities laws or the public policy underlying such laws
and except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, moratorium or other laws affecting creditors rights
generally and by general equitable principles.
p. Except as described in the Prospectus and the
Offering Memorandum, there are no persons with registration or other similar
rights to have any securities registered pursuant to the Registration Statement
or otherwise registered by the Company under the 1933 Act.
q. No order preventing or suspending the use of any
preliminary prospectus has been issued and no proceedings for that purpose are
pending or, to the best knowledge of the Company, threatened by the Commission;
and to the best knowledge of the Company, no order suspending the offering of
the Securities in any jurisdiction designated by the Underwriters pursuant to
Section 5(g) of this Agreement has been issued and no proceedings for that
purpose have been instituted or threatened.
r. Except as described in the Prospectus and the
Offering Memorandum: the Company and each of its subsidiaries have good and
marketable title to their respective properties, free and clear of all material
security interests, mortgages, pledges, liens, charges, encumbrances, claims
and equities of record; the properties of the Company and its subsidiaries are,
in the aggregate, in good repair (reasonable wear and tear excepted), and
suitable for their respective uses; any real properties held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere in any material respect with the conduct of the business of the
Company and its subsidiaries considered as one enterprise.
s. The Company and Neuromed, Inc. 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 cash, funds in bank or other accounts, securities or other similar assets is
permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for inventory is compared
with the existing inventory at reasonable intervals and appropriate action is
taken with respect to any differences.
t. The Company and its subsidiaries have conducted and
are conducting their business in compliance with all applicable Federal, state,
local and foreign statutes, laws, rules,
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regulations, ordinances, codes, decisions, decrees, directives and orders,
including, but not limited to, those administered or promulgated by the FDA and
any foreign regulatory authorities performing functions similar to those
performed by the FDA, except where the failure to do so would not, singly or in
the aggregate, have a material adverse effect on the condition, financial or
otherwise, or on the earnings or business affairs of the Company and its
subsidiaries considered as one enterprise.
u. To the Company's knowledge, none of the Company, any
of its subsidiaries, or any employee or agent of the Company or any subsidiary
has made any payment of funds of the Company or any subsidiary 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.
v. The Company is not now, and after sale of the
Securities to be sold by it hereunder and application of the net proceeds from
such sale as described in the Prospectus and the Offering Memorandum under the
caption "Use of Proceeds" will not be, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
w. All offers and sales of capital stock of the Company
prior to the date hereof were at all relevant times duly registered or exempt
from the registration requirements of the 1933 Act and were duly registered or
subject to an available exemption from the registration requirements of the
applicable state securities or Blue Sky laws.
x. The Company has complied and will comply with all
provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida
statutes, and all regulations promulgated thereunder relating to issuers doing
business with Cuba.
y. The Common Stock is registered pursuant to Section
12(g) of the 1934 Act. The Securities have been duly authorized for quotation
on NASDAQ subject to notice of issuance. The Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the Common Stock under the 1934 Act or delisting the Common Stock from the
NASDAQ, nor has the Company received any notification that the Commission or
NASDAQ is contemplating terminating such registration or listing.
z. Neither the Company nor any of its subsidiaries, nor,
to its knowledge, any of its officers, directors or affiliates has taken, and
at the Closing Date and at any later Option Closing Date, neither the Company
nor any of its subsidiaries nor, to its knowledge, any of its officers,
directors or affiliates will have taken, directly or indirectly, any action
which has constituted, or might reasonably be expected to constitute, the
stabilization or manipulation of the price of sale or resale of the Securities.
aa. The Company and each of the subsidiaries maintain
insurance of the types and in the amounts adequate for its business and
consistent with insurance coverage maintained by similar companies in similar
business, including but not limited to, insurance covering clinical trial
liability, product liability and real and personal property owned or leased
against theft,
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damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect.
ab. The Company and each of its subsidiaries have filed
all material tax returns required to be filed, which returns are true and
correct in all material respects, and neither the Company nor any of its
subsidiaries is in default in the payment of any taxes, including penalties and
interest, assessments, fees and other charges, shown thereon due or otherwise
assessed, other than those being contested in good faith and for which adequate
reserves have been provided or those currently payable without interest which
were payable pursuant to said returns or any assessments with respect thereto.
8. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
Each Selling Stockholder severally represents and warrants to each Underwriter
that:
a. Such Selling Stockholder now has, and on the Closing
Date will have, good and marketable title to the Securities to be sold by such
Selling Stockholder, free and clear of any security interest, mortgage, pledge,
lien, charge, encumbrance, claim or equity, including, without limitation, any
restriction on transfer.
b. Such Selling Stockholder now has, and on the Closing
Date will have, full legal right, power and authorization to sell, assign,
transfer and deliver such Securities in the manner provided in this Agreement,
and upon delivery of and payment for such Securities hereunder, the several
Underwriters will acquire good and marketable title to such Securities free and
clear of any security interest, mortgage, pledge, charge, encumbrance, claim,
equity or adverse claim assuming such Underwriters are purchasers in good faith
who are unaware of any such security interest, mortgage, pledge, loan,
encumbrance, claim, equity or adverse claim.
c. Such Selling Stockholder has all requisite legal
capacity to enter into this Agreement and the Custodian Agreement and to
perform its obligations hereunder and thereunder. This Agreement and the
Custodian Agreement have been duly authorized, executed and delivered by or on
behalf of such Selling Stockholder and are the valid and binding agreements of
such Selling Stockholder enforceable against such Selling Stockholder in
accordance with their terms, except as to rights to indemnity and contribution
thereunder may be limited by Federal or state securities laws or the public
policy underlying such laws and except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, moratorium or other laws
affecting creditors rights generally and by general equitable principles.
d. Neither the sale of the Securities, the execution,
delivery or performance of this Agreement or the Custodian Agreement by or on
behalf of such Selling Stockholder, nor the consummation by or on behalf of
such Selling Stockholder of the transactions contemplated hereby and thereby:
(i) requires any registration, authorization, approval, qualification or
consent of or with any governmental authority, court or person by such Selling
Stockholder (except such as may be required under the 1933 Act or the 1933 Act
Regulations or state securities or Blue Sky laws or foreign securities laws of
various jurisdictions in which the Securities are being distributed or as may
be required by the NASD); or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, any contract,
indenture, mortgage,
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loan agreement, deed, trust, note, lease, sublease, voting agreement, voting
trust or other instrument or agreement to which such Selling Stockholder is a
party or by which such Selling Stockholder is or may be bound, or violates or
will violate any statute, law, rule, regulation, ordinance, code, decision,
directive or order applicable to such Selling Stockholder, or will result in
the creation or imposition of any security interest, mortgage, pledge, charge,
encumbrance, claim or equity upon any property or assets of such Selling
Stockholder pursuant to the terms of any contract, indenture, mortgage, loan
agreement, deed, trust, note, lease, sublease, voting agreement, voting trust
or other instrument or agreement to which such Selling Stockholder is a party
or by which such Selling Stockholder may be bound or to which any of the
property or assets of such Selling Stockholder is subject except where such
conflicts, defaults or breaches will not result in a material adverse effect on
such Selling Stockholder.
e. The Registration Statement, the Prospectus and the
Offering Memorandum insofar as they relate to such Selling Stockholder, do not
and will not contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
f. The representations and warranties of such Selling
Stockholder in the Custodian Agreement are, and on the Closing Date will be,
true and correct.
g. Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to, or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Securities; and such
Selling Stockholder has not distributed and will not distribute any prospectus
or other offering material in connection with the offering and sale of the
Securities other than the preliminary prospectus filed with the Commission or
other materials permitted by the 1933 Act and the 1933 Act Regulations and the
Offering Memorandum.
h. Such Selling Stockholder does not have any knowledge
or any reason to believe that the Registration Statement, the Prospectus or the
Offering Memorandum (or any amendment or supplement thereto) contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
9. INDEMNIFICATION AND CONTRIBUTION.
a. The Company and the Selling Stockholders, jointly and
severally, agree to indemnify and hold harmless (i) each Underwriter and (ii)
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act (any of the persons referred to in this clause (ii) being
hereinafter referred to as a "controlling person") and (iii) the respective
directors, officers, partners and employees of any of the Underwriters or any
controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Person") to the fullest extent
lawful, from and against any and all losses, claims, damages, liabilities and
expenses whatsoever (including, without limitation, all reasonable costs of
pursuing, investigating and defending any claim, suit or action or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the
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reasonable fees and expenses of counsel to any Indemnified Person), directly or
indirectly, caused by, related to, based upon or arising out of or in
connection with any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereto,
including the Rule 430A Information and Rule 434 Information, if applicable, or
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading or
caused by, related to, based upon, arising out of or in connection with any
untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Prospectus or the Offering Memorandum (or any
amendment or supplement to any of them) or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to such Underwriter furnished in writing to the Company by or on
behalf of any Underwriter through you expressly for use in connection
therewith.
b. If any action, suit or proceeding shall be brought
against any Indemnified Person in respect of which indemnity may be sought
against the Company or any Selling Stockholder, such Indemnified Person shall
promptly notify the parties against whom indemnification is being sought (the
"indemnifying parties"), and such indemnifying parties shall assume the defense
thereof, including the employment of counsel and payment of all reasonable fees
and expenses. Such Indemnified Person shall have the right to employ separate
counsel in any such action, suit or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying parties
have failed to assume the defense and employ counsel or (iii) the named parties
to any such action, suit, investigation or proceeding (including any impleaded
parties) include both such Indemnified Person and the indemnifying parties and
representation of such Indemnified Person and any indemnifying party by the
same counsel would, in the reasonable judgment of the indemnified person, be
inappropriate due to actual or potential differing interests between them (in
which case the indemnifying party shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such Indemnified
Person). It is understood, however, that the indemnifying parties shall, in
connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel reasonably acceptable to the
Company for such purposes) at any time for all such Indemnified Persons not
having actual or potential differing interests with you or among themselves,
which firm shall be designated in writing by Vector, and that all such fees and
expenses shall be reimbursed as they are incurred. The indemnifying parties
shall not be liable for any settlement of any such action, suit or proceeding
effected without their written consent, which consent shall not be unreasonably
withheld, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the
indemnifying parties agree to indemnify and hold harmless any Indemnified
Person, to the extent provided in the preceding paragraph,
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from and against any loss, claim, damage, liability or expense by reason of
such settlement or judgment.
c. Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement, any person who controls the Company within the
meaning of Section 15 of the 1933 Act and the Selling Stockholders, to the same
extent as the foregoing indemnity from the Company and the Selling Stockholders
to each Underwriter, but only with respect to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter through
the Representatives expressly for use in the Registration Statement, the
Prospectus, the Offering Memorandum or any preliminary prospectus, or any
amendment or supplement thereto. If any action, suit, investigation or
proceeding shall be brought against the Company, any of its directors, any such
officer, any such controlling person or any Selling Stockholder based on the
Registration Statement, the Prospectus, the Offering Memorandum or any
preliminary prospectus, or any amendment or supplement thereto, and in respect
of which indemnity may be sought against any Underwriter pursuant to this
paragraph (c), such Underwriter shall have the rights and duties given to the
Company and the Selling Stockholders by paragraph (b) above, and the Company,
its directors, any such officer, any such controlling person, and the Selling
Stockholders, shall have the rights and duties given to the Indemnified Persons
by paragraph (b) above.
d. If the indemnification provided for in this Section 9
is unavailable to or insufficient to hold harmless an Indemnified Person under
paragraphs (a) or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party, in
lieu of indemnifying such Indemnified Person, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages, liabilities or expenses (i) 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 hand from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or judicial determination, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand, 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 hand 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 or, if Rule 434 is used,
the corresponding location on the Term Sheet. The relative fault of the
Company and the Selling Stockholders on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or the Selling Stockholders on the one hand or by the Underwriters
on the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The indemnity and contribution obligations of the Company and the
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Selling Stockholder set forth herein shall be in addition to any liability or
obligation the Company or the Selling Stockholders may otherwise have to any
Indemnified Person.
e. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by a pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an Indemnified Person as a result of the losses, claims, damages,
liabilities and expenses referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such Indemnified Person in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 9, no Underwriter
(or any of its related Indemnified Persons) shall be required to contribute
(whether pursuant to subsection (a) or (c) or otherwise) any amount in excess
of the underwriting discounts and commissions applicable to the Securities
underwritten by such Underwriter. Notwithstanding the provisions of the
Section 9, no Selling Stockholders shall be required to contribute (whether
pursuant to subsection (a) or (c) or otherwise) any amount in excess of the net
proceeds received by such Selling Stockholder from the sale of the Securities
contemplated hereby. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 9 are several
in proportion to the respective numbers of Securities set forth opposite their
names in Schedule II hereto (or such numbers of Securities increased as set
forth in Section 12 hereof) and not joint.
f. No indemnifying party shall, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such action, suit or proceeding.
g. Any losses, claims, damages, liabilities or expenses
for which an Indemnified Person is entitled to indemnification or contribution
under this Section 9 shall be paid by the indemnifying party to the Indemnified
Person as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of the Company and the Selling Stockholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Indemnified
Person, the Company, its directors or officers or the Selling Stockholders, any
director, officer or partner of a Selling Stockholder or any person controlling
the Company or any Selling Stockholder, (ii) acceptance of any Securities and
payment therefor hereunder and (iii) any termination of this Agreement.
h. The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel during
the negotiations
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regarding the provisions hereof, including without limitation the provisions of
this Section 9 and are fully informed regarding said provisions. They further
acknowledge that the provisions of this Section 9 fairly allocate the risks in
light of the ability of the parties to investigate the Company and its business
in order to assure that adequate disclosure is made in the Registration
Statement and Prospectus as required by the 1933 Act and the 1934 Act and in
the Offering Memorandum under applicable foreign securities laws.
10. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Initial Securities hereunder
are subject to the following conditions:
a. The Original Registration Statement shall have become
effective not later than 5:30 P.M. on the date hereof, or with the consent of
the Representatives, at a later time and date, and if the Company has elected
to rely upon Rule 462(b), the Rule 462(b) Registration Statement shall have
become effective not later than the earlier of (i) 9:00 P.M. Chicago time on
the date hereof and (ii) the time confirmations are sent or given, as specified
by Rule 462(b)(2), or, with respect to the Rule 462(b) Registration Statement,
at such later time and date as may be approved by Vector; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by
the Commission. If the Company has elected to rely upon Rule 430A, Rule 430A
Information previously omitted from the effective Registration Statement
pursuant to Rule 430A shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) within the prescribed time period and the Company shall
have provided evidence satisfactory to the Underwriters of such timely filing,
or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A. If the Company has elected to rely upon Rule 434, a Term Sheet
shall have been transmitted to the Commission for filing pursuant to Rule
424(b) within the prescribed time period.
b. The Underwriters shall have received:
(i) The favorable opinion, dated as of the
Closing Date, of Xxxxxx & Xxxx, L.L.P., counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
A. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Texas.
B. The Company has all requisite corporate
power and corporate authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus and to enter into and perform its obligations under this Agreement.
C. To their knowledge, the Company is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which the ownership or leasing of property or the
conduct of its business or other activities requires such qualification except
where the failure to be so qualified would not have a material adverse effect
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on the business, condition (financial or otherwise) or results of operations of
the Company and its subsidiaries considered as one enterprise.
D. To their knowledge, the authorized issued
and outstanding capital stock of the Company is as set forth in the Prospectus
under "Capitalization" (except for subsequent issuances, if any, pursuant to
reservations, agreements, employee benefit plans or the exercise of convertible
securities referred to in the Prospectus), the shares of issued and outstanding
capital stock of the Company, including the Common Stock, have been duly
authorized and validly issued and are fully paid and non-assessable and have
not been issued in violation of or are not otherwise subject to any preemptive
rights or other similar rights.
E. The Securities to be issued by the
Company have been duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement against payment of the consideration set forth
herein, will be validly issued and fully paid and non-assessable; and the
issuance of the Securities is not subject to preemptive or, to their knowledge,
other similar rights.
F. Neuromed, Inc. ("Neuromed") is the only
significant subsidiary of the Company required to be listed on Exhibit 21 of
the Registration Statement pursuant to Item 601 of Regulation S-K under the
1934 Act. Neuromed has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power and corporate authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement and, to their knowledge, is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which the ownership or leasing of property or the conduct of
its business or other activities requires such qualification except where the
failure to be so qualified would not have a material adverse effect on the
business, condition (financial or otherwise) or results of operations of the
Company and its subsidiaries considered as one enterprise; to their knowledge,
all of the issued and outstanding capital stock of Neuromed has been duly
authorized and validly issued, is fully paid and non-assessable and is owned by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity except as
disclosed in the Prospectus.
G. To their knowledge, except as described
in the Prospectus, there are no outstanding options, warrants or other rights
granted to or by the Company to purchase shares of Common Stock or other
securities of the Company and there are no commitments, plans or arrangements
to issue any shares of Common Stock or other securities.
H. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal, valid, binding
and enforceable agreement of the Company except as rights to indemnity and
contribution hereunder may be limited by Federal, applicable state or
applicable foreign securities laws or the public policy underlying such laws
and except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, fradulent transfer, moratorium or other laws affecting
creditors rights generally and by general equitable principles.
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I. The Registration Statement is effective
under the 1933 Act and, to their knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act
nor have proceedings therefor been initiated or threatened by the Commission.
J. At the time the Registration Statement
became effective and at the Closing Date, the Registration Statement (other
than the financial statements and other financial and statistical information
included therein, as to which no opinion need be rendered) complied as to form
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
K. The form of certificate used to evidence
each of the Securities is in due and proper form and complies with all
applicable statutory requirements.
L. To their knowledge, there are no legal or
governmental proceedings pending or threatened which are required to be
disclosed in the Registration Statement other than those disclosed therein; to
their knowledge, the Company is not party or subject to provisions of any
injunction, judgment, order or decree of any court, regulatory body,
administrative agency or other governmental body or agency the effect of which
could be material and adverse to the business, condition (financial or
otherwise), or results of operations of the Company and its subsidiaries
considered as one enterprise.
M. The information in the Prospectus under
"Business - Legal Proceedings," "Management - Benefit Plans and Other
Arrangements," "Management - Indemnification and Limitation of Liability," and
"Description of Capital Stock," to the extent that it constitutes matters of
law, summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by them and is correct in all material respects
and fairly and correctly presents the information called for with respect
thereto.
N. To their knowledge, there are no
contracts, indentures, mortgages, loan agreements, deeds, trusts, notes,
leases, subleases, voting trusts, voting agreements or other instruments or
agreements required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed as exhibits thereto; the descriptions thereof or
references thereto are correct; and to their knowledge, no default by the
Company exists in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any material contract, indenture,
mortgage, loan agreement, deed, trust, note, lease, sublease, voting trust,
voting agreement or other instrument or agreement of the Company or any of its
subsidiaries.
O. No authorization, approval, consent or
order of any court or governmental authority or agency is required in
connection with the offering, issuance or sale of the Securities to the
Underwriters, except such as may be required under the 1933 Act or the 1933 Act
Regulations, state securities or Blue Sky laws, foreign securities laws or such
as may be required by the NASD; and the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein and
compliance by the Company with its obligations hereunder will not conflict with
or constitute a breach of, or default under, or
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result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its subsidiaries pursuant to,
any material contract, indenture, mortgage, loan agreement, note, deed, trust,
lease, sublease, voting trust, voting agreement or other instrument or
agreement to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or assets
of the Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the charter or bylaws of the
Company, or any applicable statute, law, rule, regulation, ordinance, code,
decision, directive or order.
P. Except as described in the Prospectus, to
their knowledge, there are no persons with registration or other similar rights
to have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933 Act.
Q. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
R. The issuance of 833,333 shares of capital
stock on March 31, 1995 in connection with the acquisition of Neuromed, Inc.
and the issuance of an additional 200,000 shares of capital stock in connection
with such transaction were duly registered or exempt from the registration
requirements of the 1933 Act. To their knowledge, during the three years
immediately prior to the date hereof there were no other issuances of capital
stock other than stock issued pursuant to the Company's 1979 Stock Option Plan,
1987 Stock Option Plan, 1995 Stock Option Plan, the Directors Stock Option
Plan, the Company's quality education and training program and pursuant to a 3%
stock dividend paid on May 23, 1994 to holders of record on May 6, 1994.
S. To their knowledge, the Company and its
subsidiaries are in compliance with, and conduct their respective businesses in
conformity with, all applicable laws and regulations relating to the operation
of its business as described in the Registration Statement, except to the
extent that any failure so to comply or conform would not have a material
adverse effect upon the business, condition (financial or otherwise) or results
of operations of the Company and its subsidiaries considered as one enterprise.
T. The Registration Statement has become
effective under the 1933 Act; any required filing of the Prospectus, and any
supplements thereto or the Term Sheet, pursuant to Rule 424(b) and if
applicable, Rule 434, has been made in the manner and within the time period
required; and to their knowledge, no stop order suspending the effectiveness of
the Registration Statement or any part thereof has been issued and no
proceedings therefor have been instituted or are pending or contemplated under
the 1933 Act.
(ii) The favorable opinion, dated as of the
Closing Date, of Ross, Clapp, Korn & Xxxxxxxxxx, L.L.P., special patent counsel
for the Company, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
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A. To their knowledge, there are no legal or
governmental proceedings pending or threatened relating to patents, patent
rights, trade secrets, trademarks, service marks, or other proprietary
information or materials which are required to be disclosed in the Registration
Statement other than those disclosed therein, and all pending legal or
governmental proceedings relating to such matters to which the Company or any
subsidiary is a party or to which any of their property is subject which are
not described in the Registration Statement, considered in the aggregate, will
not have a material adverse effect on the business, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries
considered as one enterprise.
B. The information in the Prospectus under
"Risk Factors -- Dependence on Patents and Proprietary Rights" and "Business --
Patents, Trademarks and Proprietary Rights," to the extent that it constitutes
matters of law, summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by them and is correct in all material respects
and fairly and correctly presents the information called for with respect
thereto.
C. To the best of their knowledge and
information, there are no contracts, instruments or agreements relating to
patents, patent rights, trade secrets, trademarks, service marks or other
proprietary information or materials required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other than those
described or referred to therein or filed as exhibits thereto; the descriptions
thereof or references thereto are correct; to the best of their knowledge and
information, no default exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any such
contracts, instruments or agreements.
D. To the best of their knowledge and
information, the Company is not infringing or otherwise violating any patents,
patent rights, trade secrets, trademarks, service marks, or other proprietary
information or materials, of others, and to the best of their knowledge and
information, there are no infringements by others of any of the Company's
patents, trade secrets, trademarks, service marks, or other proprietary
information or materials which in their judgment could affect materially the
use thereof by the Company.
E. They have no knowledge of any facts which
would preclude the Company from having valid license rights or clear title to
the patents referenced in the Prospectus. They have no knowledge that the
Company lacks or will be unable to obtain any rights or licenses to use all
patents and other material intellectual property and assets necessary to
conduct the business now conducted or proposed to be conducted by the Company
as described in the Prospectus, except as described in the Prospectus. They
are unaware of any facts which form a basis for a finding of unenforceability
or invalidity of any of the Company's patents and other material intangible
property and assets.
F. Subject to any disclosure to the contrary
in the Prospectus, they are not aware of any material fact with respect to the
patent applications of the Company presently on file that (i) would preclude
the issuance of patents with respect to such applications
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or (ii) would lead them to conclude that such patents, when issued, would not
be valid and enforceable in accordance with applicable regulations.
(iii) The favorable opinion, dated as of the
Closing Date, of XxXxxxx & Xxxxx, special regulatory counsel for the Company,
in form and substance satisfactory to counsel for the Underwriters, to the
effect that the information in the Prospectus under "Risk Factors -- Government
Regulation; Uncertainty of Obtaining Regulatory Clearance," "Risk Factors --
Cost Pressures on Medical Technology; Third Party Reimbursement," "Business --
Government Regulation," "Business -- Third Party Reimbursement and Cost
Containment" to the extent that it constitutes matters of law relating to the
Federal Food, Drug and Commerce Act, and Federal law and regulations relating
to third party reimbursement are accurate and complete statements or summaries
of the law and fairly and correctly presents the information called for with
respect thereto.
(iv) The favorable opinion, dated as of the
Closing Date, of Xxxxxx & Xxxx, L.L.P., counsel for the Selling Stockholders in
form and substance satisfactory to counsel for the Underwriters, to the effect
that:
A. This Agreement has been duly executed and
delivered on behalf of each Selling Stockholder by the Attorneys-in-Fact, or
any of them. The Custodian Agreement has been duly executed and delivered by
each Selling Stockholder. This Agreement and the Custodian Agreement
constitute legal, valid, binding and enforceable agreements or instruments of
each of the Selling Stockholders except as rights to indemnity and contribution
thereunder or hereunder may be limited by Federal, state or applicable foreign
securities laws or the public policy underlying such laws and except as
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
moratorium or other laws affecting creditors rights generally and by general
equitable principles.
B. To their knowledge, each Selling
Stockholder has all legal capacity required to sell, transfer and deliver the
Securities to be offered by such Selling Stockholder pursuant to this
Agreement.
C. The Securities to be sold by the Selling
Stockholders have been duly authorized and are validly issued, fully paid and
non-assessable. By delivery of a certificate or certificates representing the
Securities to be offered by a Selling Stockholder pursuant to this Agreement,
and upon the receipt of payment therefor as contemplated herein, such Selling
Stockholder will transfer to the Underwriters who have purchased such
Securities good and marketable title to such Securities, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim, equity or
adverse claim, assuming such Underwriters are purchasers in good faith who are
unaware of any such security interest, mortgage, pledge, loan, encumbrance,
claim, equity or adverse claim.
(v) The favorable opinion, dated as of the
Closing Date, of Venture Law Group, A Professional Corporation, counsel for the
Underwriters with respect to the issuance and sale of the Securities, the
Registration Statement and the Prospectus and such other related matters as the
Underwriters shall reasonably request.
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(vi) In giving their opinions required by
subsections (b)(i), (b)(iv) and (b)(v), respectively, of this Section 10,
Xxxxxx & Xxxx, L.L.P. and Venture Law Group, A Professional Corporation, shall
each additionally state that nothing has come to their attention that leads
them to believe that the Registration Statement (except for financial
statements, notes thereto and other financial information and statistical data
included therein, as to which counsel need make no statement), at the time it
became effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or the Offering
Memorandum (except for financial statements, notes thereto and other financial
information and statistical data included therein, as to which counsel need
make no statement), as of their respective dates (unless the term "Prospectus"
refers to a prospectus which has been provided to the Underwriters by the
Company for use in connection with the offering of the Securities which differs
from the Prospectus on file at the Commission at the time the Registration
Statement becomes effective, in which case at the time it is first provided to
the Underwriters for such use) or at the Closing Date or the Option Closing
Date, as the case may be, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(vii) In giving their opinion required by
subsection (b)(ii) of this Section 10, Ross, Clapp, Korn & Xxxxxxxxxx, L.L.C.
shall additionally state that nothing has come to their attention that leads
them to believe that the Registration Statement (except for financial
statements, notes thereto and other financial information and statistical data
included therein, as to which counsel need make no statement) under "Risk
Factors -- Dependence on Patents and Proprietary Rights" and "Business --
Patents, Trademarks and Proprietary Rights," at the time it became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus or the Offering Memorandum (except for
financial statements, notes thereto and other financial information and
statistical data included therein, as to which counsel need make no statement),
as of their respective dates (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriters by the Company for use
in connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective, in which case at the time it is first provided to the
Underwriters for such use) or at the Closing Date or the Option Closing Date,
as the case may be, included or includes an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(viii) In giving their opinion required by
subsection (b)(iii) of this Section 10, XxXxxxx & Xxxxx shall additionally
state that nothing has come to their attention that leads them to believe that
the Registration Statement (except for financial statements, notes thereto and
other financial information and statistical data included therein, as to which
counsel need make no statement) under "Risk Factors -- Government Regulation;
Uncertainty of Obtaining Regulatory Clearance," "Risk Factors -- Cost Pressures
on Medical Technology; Third Party Reimbursement," "Business -- Government
Regulation," and "Business -- Third Party Reimbursement and Cost Containment,"
at the time it became effective, contained an
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untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or the Offering Memorandum (except for
financial statements, notes thereto and other financial information and
statistical data included therein, as to which counsel need make no statement),
as of their respective dates (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriters by the Company for use
in connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective, in which case at the time it is first provided to the
Underwriters for such use) or at the Closing Date or the Option Closing Date,
as the case may be, included or includes an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
c. (i) There shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Registration Statement, the Prospectus and the Offering Memorandum, any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, (ii) the representations and warranties of the
Company in Section 7 hereof shall be true and correct with the same force and
effect as though expressly made at and as of the Closing Date, except to the
extent that any such representation or warranty relates to a specific date,
(iii) the Company shall have complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Date, (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been initiated or threatened by the Commission and (v)
the Representatives shall have received a certificate, dated the Closing Date
and signed by the President or any Vice President and the chief financial or
accounting officer of the Company to the effect set forth in clauses (i), (ii),
(iii) and (iv) above.
d. At the time of the execution of this Agreement, the
Underwriters shall have received from Ernst & Young L.L.P. a letter dated such
date, in form and substance satisfactory to the Underwriters, to the effect
that (i) they are independent public accountants with respect to the Company
and its subsidiaries within the meaning of the 1933 Act and the 1933 Act
Regulations, (ii) it is their opinion that the financial statements included in
the Registration Statement and covered by their opinions therein comply as to
form in all material respects with the applicable accounting requirements of
the 1933 Act and the 1933 Act Regulations, (iii) based upon limited procedures
set forth in detail in such letter, and except as specifically indicated in
such letter, nothing has come to their attention which causes them to believe
that (A) the unaudited financial statements and supporting schedules of the
Company and its subsidiaries included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations or are not presented
in conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included
in the Registration Statement or (B) at a specified date not more than five
days prior to the date of this Agreement, there has been any change in the
capital stock of the Company or any increase
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in the consolidated long-term debt of the Company and its subsidiaries or any
decrease in consolidated net current assets or stockholders equity as compared
with the amounts shown in the June 30, 1995 balance sheet included in the
Registration Statement or, during the period from June 30, 1995 to a specified
date not more than five days prior to the date of this Agreement, there were
any decreases, as compared with the corresponding period in the preceding year,
in consolidated revenues, net income or net income per share of the Company and
its subsidiaries, except in all instances for changes, increases or decreases
which the Registration Statement and the Prospectus disclose have occurred or
may occur, (iv) they do not express any opinion on the pro forma financial
information included in the Registration Statement or on the pro forma
adjustments applied to the historical amounts included in the pro forma
information; however, for purposes of such letter they have: (A) read the pro
forma information; (B) made inquiries of certain officials of the Company who
have responsibility for financial and accounting matters about the basis for
their determination of the pro forma adjustments and whether the pro forma
information above complies in form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X; and (C) proved the
arithmetic accuracy of the application of the pro forma adjustments to the
historical amounts in the pro forma information; and on the basis of such
procedures, and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that the
pro forma information included in the Registration Statement does not comply in
form in all material respects with the applicable requirements of Rule 11-02 of
Regulation S-X and that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of the statement; and (v)
in addition to the examination referred to in their opinions and the limited
procedures referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are included in the
Registration Statement, the Prospectus and the Offering Memorandum and which
are specified by the Underwriters, and have found such amounts, percentages and
financial information to be in agreement with or able to be derived from the
relevant audited annual or unaudited interim consolidated financial statements,
or accounting, financial and other records or analyses prepared from such
records of the Company and its subsidiaries identified in such letter.
e. The Underwriters shall have received from Ernst &
Young L.L.P. a letter, dated as of the Closing Date, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection (d)
of this Section, except that the specified date referred to shall be a date not
more than five days prior to the Closing Date.
f. The Securities shall have been approved for quotation
on NASDAQ subject to notice of issuance.
g. The representations and warranties of each Selling
Stockholder in Section 8 shall be true and correct in all material respects
with the same force and effect as though expressly made at and as of the
Closing Date, except to the extent that any such representation or warranty
relates to a specific date; and each Selling Stockholder shall have complied in
all material respects with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to the Closing Date. The
Representatives shall have received a
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certificate, dated as of the Closing Date and signed by each Selling
Stockholder, to the effect set forth in this subsection g.
h. In the event that the Underwriters exercise their
option provided in Section 2 hereof to purchase all or any portion of the
Option Securities, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Company
hereunder shall be true and correct as of the relevant Option Closing Date and,
at the relevant Option Closing Date, the Underwriters shall have received:
(1) A certificate, dated such Option Closing Date,
of the President or any Vice President of the Company and of the chief
financial or accounting officer of the Company confirming that the certificate
delivered at the Closing Date pursuant to Section 10(c) hereof remains true and
correct as of such Option Closing Date.
(2) The favorable opinion of counsel for the
Company, in form and substance satisfactory to counsel for the Underwriters,
dated such Option Closing Date, relating to the Option Securities to be
purchased on such Option Closing Date and otherwise to the same effect as the
opinion required by Sections 10(b)(i), 10(b)(ii), 10(b)(iii), 10(b)(vi),
10(b)(vii) and 10(b)(viii) hereof.
(3) The favorable opinion of Venture Law Group, A
Professional Corporation, counsel for the Underwriters, dated such Option
Closing Date, relating to the Option Securities to be purchased on such Option
Closing Date and otherwise to the same effect as the opinion required by
Sections 10(b)(v) and 10(b)(vi) hereof.
(4) A letter from Ernst & Young, L.L.P. in form and
substance satisfactory to the Underwriters and dated such Option Closing Date,
substantially the same in form and substance as the letter furnished to the
Underwriters pursuant to Section 10(e) hereof, except that the "specified date"
in the letter furnished pursuant to this Section 10(h)(4) shall be a date not
more than five days prior to such Option Closing Date.
i. Counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in order to evidence the accuracy of
any of the representations or warranties or the fulfillment of any of the
conditions herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Underwriters and counsel for
the Underwriters.
Any certificate or document signed by any officer of the
Company or any Attorney-in-Fact or any Selling Stockholder and delivered to
you, as Representatives of the Underwriters, or to counsel for the
Underwriters, shall be deemed a representation and warranty by the Company, the
Selling Stockholders or the particular Selling Stockholder, as the case may be,
to each Underwriter as to the statements made therein.
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11. EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it and
the Selling Stockholders of their respective obligations hereunder: (i) the
preparation, printing or reproduction, and filing with the Commission of the
Registration Statement (including financial statements and exhibits thereto),
each preliminary prospectus, the Prospectus, the Offering Memorandum and each
amendment or supplement to any of them; (ii) the printing (or reproduction) and
delivery (including postage, air freight and charges for counting and
packaging) of such copies of the Registration Statement, each preliminary
prospectus, the Prospectus, the Offering Memorandum and all amendments or
supplements to any of them as may be reasonably requested for use in connection
with the offering and sale of the Securities; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Securities,
including any stamp taxes in connection with the original issuance and sale of
the Securities; (iv) the printing (or reproduction) and delivery of this
Agreement, the preliminary and supplemental Blue Sky Memoranda and all other
agreements or documents printed (or reproduced) and delivered in connection
with the original issuance and sale of the Securities; (v) any filings under
the 1934 Act and the quotation of the Securities on NASDAQ; (vi) the
registration or qualification of the Securities for offer and sale under the
securities or Blue Sky laws of the several states and the provinces of Canada
as provided in Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental Blue
Sky Memoranda and such registration and qualification and the preparation,
printing or reproduction and delivery of the Offering Memorandum, regulatory
filings and fees payable in Canada); (vii) the filing fees incident to securing
any required review by the NASD; and (vii) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company and the Selling Stockholders.
If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 12 or pursuant to clauses (ii), (iii), (iv) and (v)
of Section 13 hereof) or if this Agreement shall be terminated by the
Underwriters because of any failure or refusal on the part of the Company or
any of the Selling Stockholders to comply, in any material respect, with the
terms or fulfill, in any material respect, any of the conditions of this
Agreement, the Company agrees to reimburse the Representatives for all
reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel for the Underwriters) incurred by you in connection herewith.
12. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by or on behalf of the
parties hereto; or (ii) if, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the
Securities may commence, when notification of the effectiveness of the
Registration Statement or such post-effective amendment has been released by
the Commission. Until such time as this Agreement shall have become effective,
it may be terminated by the Company, by notifying you, or by you, as
Representatives of the several Underwriters, by notifying the Company and the
Selling Stockholders.
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If one or more of the Underwriters shall fail on the Closing Date to purchase
the Initial Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth; if, however, the Representatives
shall not have completed such arrangements within such 24-hour period, then:
a. if the number of Defaulted Securities does not exceed
10% of the number of Initial Securities, the non-defaulting Underwriters shall
be obligated to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
b. if the number of Defaulted Securities exceeds 10% of
the number of Initial Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone the Closing Date for a period not exceeding seven
days in order to effect any required changes in the Registration Statement,
Prospectus or Offering Memorandum or in any other documents or arrangements.
As used herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 12.
Any notice under this Section 12 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
13. TERMINATION OF AGREEMENT. The Underwriters may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Date or Option Closing Date, as the case may be, (i) if there has been, since
the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
or any development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, (ii)
if there has occurred any change in the financial markets in the United States
or elsewhere or any outbreak of hostilities or escalation thereof or other
calamity or crisis the effect of which is such as to make it, in your
reasonable judgment, impracticable or inadvisable to market the Securities or
to enforce contracts for the sale of the Securities, (iii) if trading in the
Common Stock has been suspended by the Commission, or if trading generally on
the American Stock Exchange, the New York Stock Exchange or in the
over-the-counter markets has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by such exchange or markets or by order of the Commission or any
other governmental authority, or if a banking moratorium has been
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declared by either Federal, New York, Texas or Illinois authorities, (iv) the
enactment, publication, decree or other promulgation of any Federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your judgment materially and adversely affects or may materially or
adversely affect the business or operations of the Company and its subsidiaries
or (v) the taking of any action by any Federal, state or local government or
agency in respect of its monetary or fiscal affairs which in your judgment has
a material adverse effect on the securities markets in the United States, and
would in your judgment make it impracticable or inadvisable to market the
Securities or to enforce any contract for the sale thereof.
Notice of such termination may be given by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
14. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set
forth in the last paragraph on the cover page, the stabilization legend on the
inside front cover page, and the statements under the caption "Underwriting" in
any preliminary prospectus and in the Prospectus and the Offering Memorandum
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 7(a) and 9 hereof.
15. MISCELLANEOUS. Except as otherwise provided in Sections 5, 12
and 13 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company or the Selling
Stockholders at the office of the Company at, Quest Medical, Inc., Xxx
Xxxxxxxxx Xxxxxxx, Xxxxx, Xxxxx 00000, Attention: Xxxxxx X. Xxxxxxxx, Chairman;
or (ii) if to you, as Representatives of the several Underwriters, care of
Vector Securities International, Inc., 0000 Xxxx Xxxx Xxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxx 00000, Attention: D. Xxxxxxxx Xxxxxxxxx.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, the other
persons referred to in Section 9 hereof and the Selling Stockholders and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Underwriter of any of the
Securities in his status as such purchaser.
16. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the laws of the State of Illinois
applicable to contracts made and to be performed within the State of Illinois.
17. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and other persons referred to in Section 9, and no other
person will have any right or obligation hereunder.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
QUEST MEDICAL, INC.
By_______________________________________
President and Chief Executive Officer
XXXXXXX X. XXXXXX
By_______________________________________
Attorney-in-Fact
XXXX XXXXXX
By_______________________________________
Attorney-in-Fact
XXXX X. XXXX
By_______________________________________
Attorney-in-Fact
Confirmed as of the date first above mentioned
on behalf of themselves and the other several
Underwriters named in Schedule II hereto.
VECTOR SECURITIES INTERNATIONAL, INC.
XXXXXXXX XXXXXX REFSNES, INC.
As Representatives of the Several Underwriters
By VECTOR SECURITIES INTERNATIONAL, INC.
By_______________________________________
Vice President
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SCHEDULE I
QUEST MEDICAL, INC.
Number of
Selling Stockholders Initial Securities
-------------------- ------------------
Xxxxxxx X. Xxxxxx . . . . . . . . . . . . . . . . . . . . . . 989,333
Xxxx Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . 44,000
Xxxx X. Xxxx . . . . . . . . . . . . . . . . . . . . . . . . 50,000
--------------
Total . . . . . . 1,083,333
--------------
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SCHEDULE I
QUEST MEDICAL, INC.
Number of
Underwriters Initial Securities
------------ ------------------
Vector Securities International, Inc. . . . . . . . . . . . .
Xxxxxxxx Xxxxxx Refsnes, Inc. . . . . . . . . . . . . . . . .
--------------
Total . . . . . . 2,600,000
--------------
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