EXHIBIT 1.1
Execution Copy
KOS PHARMACEUTICALS, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
--------------------
UNDERWRITING AGREEMENT
November 19, 2003
Xxxxxxx, Xxxxx & Co.,
Banc of America Securities LLC,
XX Xxxxx Securities Corporation,
Deutsche Bank Securities Inc.,
SunTrust Capital Markets, Inc.,
Natexis Bleichroeder Inc.,
Xxxx, Xxxx & Co., Inc.,
c/o Goldman, Sachs & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
Kos Pharmaceuticals, Inc., a Florida corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 3,750,000 shares and, at the election of the Underwriters, up to 650,000
additional shares of Common Stock, par value $.01 per share ("Stock"), of the
Company, and the shareholders of the Company named in Schedule II hereto (the
"Selling Shareholders") propose, subject to the terms and conditions stated
herein and as and to the extent indicated in Schedule II hereto, to sell to the
Underwriters an aggregate of 1,250,000 shares and, at the election of the
Underwriters, up to 100,000 additional shares of Stock. The aggregate of
5,000,000 shares to be sold by the Company and the Selling Shareholders is
herein called the "Firm Shares" and the aggregate of 750,000 additional shares
to be sold by the Company and the Selling Shareholders is herein called the
"Optional Shares". The Firm Shares and the Optional Shares that the Underwriters
elect to purchase pursuant to Section 2 hereof are herein collectively called
the "Shares".
1. (a) The Company represents and warrants to, and agrees
with, each of the Underwriters that:
(i) Two registration statements on Form S-3 (File Nos.
333-68874 and 333-109643) (the "Initial Registration Statements") in
respect of the Shares have been filed with the Securities and Exchange
Commission (the "Commission"); the Initial Registration Statements and
any post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto but including all
documents incorporated by reference in the prospectus contained in the
latest registration statement, to you for each of the other
Underwriters, have been declared effective by the Commission in such
form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended
(the "Act"), which became effective upon filing, no other document with
respect to the Initial
Registration Statements or document incorporated by reference therein
has heretofore been filed, or transmitted for filing, with the
Commission (other than prospectuses filed pursuant to Rule 424(b) under
the Act, each in the form heretofore delivered to you); and no stop
order suspending the effectiveness of the Initial Registration
Statements, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for
that purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in the Initial Registration Statements
or filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act is hereinafter called a
"Preliminary Prospectus"; the various parts of the Initial Registration
Statements and the Rule 462(b) Registration Statement, if any,
including all exhibits thereto and including the documents incorporated
by reference in the prospectus contained in the Initial Registration
Statements at the time such part of the Initial Registration Statements
became effective, each as amended at the time such part of the Initial
Registration Statements became effective or such part of the Rule
462(b) Registration Statement, if any, became or hereafter becomes
effective, are hereinafter collectively called the "Registration
Statement"; the prospectus used in the offer and sale of the Shares, in
the form in which it has most recently been filed, or transmitted for
filing, with the Commission on or prior to the date of this Agreement,
is hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the
date of such Preliminary Prospectus or Prospectus, as the case may be,
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any
annual report of the Company filed pursuant to Section 13(a) or 15(d)
of the Exchange Act after the latter of the effective dates of the
Initial Registration Statements that is incorporated by reference in
the Registration Statement; and any reference to the Prospectus as
amended or supplemented shall be deemed to refer to the Prospectus as
amended or supplemented in relation to the Shares in the form in which
it is filed with the Commission pursuant to Rule 424(b) under the Act
in accordance with Section 5(a) hereof, including any documents
incorporated by reference therein as of the date of such filing);
(ii) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder, and none of such
documents 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; and any further documents
so filed and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become effective
or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an 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; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in
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reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through Xxxxxxx, Xxxxx & Co. expressly
for use in the Prospectus as amended or supplemented;
(iii) The Registration Statement and the Prospectus
conform, and any further amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material respects to
the requirements of the Act and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment
thereto and as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through Xxxxxxx, Sachs & Co. expressly for use therein or by a Selling
Shareholder expressly for use in the preparation of the answers therein
to Item 7 of Form S-3;
(iv) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree that,
individually or in the aggregate, would have a material adverse effect
on the current or future consolidated financial position, shareholders'
equity or results of operations of the Company and its subsidiaries,
taken as a whole ("Material Adverse Effect"), otherwise than as set
forth or contemplated in the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement
and the Prospectus, there has not been any change in the capital stock
(other than upon the issuance or exercise of shares, stock options or
stock purchase rights granted pursuant to the Company's existing stock
option or stock purchase plans) or long-term debt of the Company or any
of its subsidiaries or any material adverse change, or any development
that can reasonably be expected to result in a prospective material
adverse change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, taken as a whole, otherwise than as
set forth or contemplated in the Prospectus;
(v) The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially affect the
value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings 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 materially interfere with the use made and proposed
to be made of such property and buildings by the Company and its
subsidiaries;
(vi) The Company has been duly incorporated and is validly
existing and its status is active as a corporation under the laws of
the State of Florida, with corporate power and authority to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or
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conducts any business so as to require such qualification, except for
failures to be so qualified or in good standing that would not,
individually or in the aggregate, have a Material Adverse Effect; and
each subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation;
(vii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description of the
Stock contained in the Prospectus; and all of the issued shares of
capital stock of each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and
(except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims except as set forth in the Prospectus;
(viii) The unissued Shares to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and fully paid and
non-assessable and will conform to the description of the Stock
contained in the Prospectus as amended or supplemented with respect to
such Shares;
(ix) The issue and sale of the Shares to be sold by the
Company and the compliance by the Company with all of the provisions of
this Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
(A) the Articles of Incorporation or By-laws of the Company, (B) any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject or (C) any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties, except, in the case of clauses (B) and (C), for
breaches, violations or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect or affect the validity,
performance or consummation of this Agreement by the Company; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required
for the issue and sale of the Shares or the consummation by the Company
of the transactions contemplated by this Agreement, except such as have
been obtained under the Act and the Exchange Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required (i) by the National Association of Securities Dealers, Inc.
("NASD"), (ii) under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the Underwriters or
(iii) under the federal or provincial laws of Canada or under the laws
of any foreign jurisdiction in which the Shares may be offered or sold;
(x) Neither the Company nor any of its subsidiaries is
(A) in violation of its Articles of Incorporation (or Certificate of
Incorporation, as appropriate) or By-laws or (B) in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be bound,
except, in the case of clause (B), for such defaults that would not,
individually or in the aggregate, have a Material Adverse Effect;
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(xi) The statements set forth (A) in the Prospectus under
the caption "Description of Securities", insofar as they purport to
constitute a summary of the terms of the Stock, and under the caption
"Plan of Distribution", insofar as they purport to describe the
provisions of the laws and documents referred to therein, and (B) in
the Prospectus as amended or supplemented under the caption
"Underwriting", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate and complete
in all material respects;
(xii) Other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a Material Adverse Effect; and, to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(xiii) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company",
as such term is defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act");
(xiv) Ernst & Young LLP, who have certified certain
financial statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(xv) The Company, its subsidiaries and the products sold
by them are in compliance in all material respects with, and the
Company and its subsidiaries conduct their businesses in conformity in
all material respects with, all applicable federal, state, local and
foreign laws, rules, regulations, standards, guides or orders
administered or issued by any court or governmental agency or body,
including without limitation the U.S. Food and Drug Administration (the
"FDA") and any agency of any foreign government exercising comparable
authority in a jurisdiction in which the Company's products are sold;
except as disclosed in the Prospectus, to the best of the Company's
knowledge no prospective change in any of such laws, rules,
regulations, standards, guides or orders has been adopted which, when
made effective, would have a Material Adverse Effect;
(xvi) (A) Except as disclosed in the Prospectus or as
otherwise would not, individually or in the aggregate, have a Material
Adverse Effect, the Company and its subsidiaries own or have valid,
binding, enforceable licenses or other rights to use any patents,
trademarks, trade names, service marks, service names, copyrights,
trade secrets and other proprietary intellectual property rights
("Intellectual Property") material to the conduct of the business of
the Company and its subsidiaries in the manner presently conducted and
proposed to be conducted, to the best of the Company's knowledge
without any conflict with the rights of others; (B) the information
contained in the Registration Statement and Prospectus concerning
patents issued or licensed to, or patent applications filed on behalf
of, the Company and its subsidiaries is accurate in all material
respects and the Company has no reason to believe that any of the
Intellectual Property is unenforceable or invalid; and (C) except as
disclosed in the Prospectus, neither the Company nor its subsidiaries
has received any notice from any other person of infringement of or
conflict with (and knows of no such infringement of or conflict with)
asserted rights of others with respect to any Intellectual Property or
any trade secrets, proprietary information, inventions, know-how,
processes and procedures owned or used by or licensed to the Company or
its subsidiaries;
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(xvii) The studies, tests and preclinical and clinical
trials conducted by or on behalf of the Company and its subsidiaries
that are described in the Prospectus were and, if still pending, are
being conducted in all material respects in accordance with
experimental protocols, procedures and controls pursuant to, where
applicable, generally accepted professional scientific standards; the
Company is not aware of any studies, tests or trials the results of
which the Company reasonably believes call into question the results of
studies, tests or trials described or referred to in the Prospectus;
and the Company has not received any notices or correspondence from the
FDA or any agency of any foreign government exercising comparable
authority requiring the termination, suspension or material
modification of any studies, tests or preclinical or clinical trials
conducted by or on behalf of the Company;
(xviii) The Company and its subsidiaries have complied at all
times with all applicable Environmental Laws in all material respects;
hold all permits, licenses and approvals under Environmental Laws
material to the conduct of the business of the Company and its
subsidiaries; no property currently or formerly owned or operated by
the Company or its subsidiaries has been contaminated with any
Hazardous Substance which could be expected in any material respect to
require remediation under any Environmental Law; neither the Company
nor any of its subsidiaries is liable in any material respect for any
Hazardous Substance disposal or contamination on any third-party
property; and neither the Company nor any of its subsidiaries has
received any notice, demand, letter, claim or request for information
alleging that the Company or any of its subsidiaries may be in
violation in any material respect of or subject to liability under any
Environmental Law.
For the purposes of this Section, "Environmental Law" shall
mean any law, regulation, order, decree, common law or governmental
requirement relating to: (i) the protection of the environment or
health and safety, (ii) the handling, use, presence, disposal, release
or threatened release of any Hazardous Substance, (iii) noise, odor,
indoor air, employee exposure or wetlands, (iv) the handling, storage,
shipment or production of pharmaceutical or biohazardous substances, or
(v) the safety or quality of, or standards for, pharmaceutical or
biohazardous substances. For the purposes of this Section, "Hazardous
Substance" shall mean any substance that is: listed, classified or
regulated pursuant to any Environmental Law including any petroleum
compounds, asbestos, lead containing products, polychlorinated
biphenyls, black mold, radioactive materials or radon; and
(xix) Except as disclosed in the Prospectus, no person or
entity other than the Selling Shareholders has the right to require
registration of shares of Stock or other securities of the Company
because of the filing or effectiveness of the Initial Registration
Statements or otherwise, except for persons and entities who have
expressly waived such right or who have been given proper notice and
have failed to exercise such right within the time or times required
under the terms and conditions of such right.
(b) Each of the Selling Shareholders severally represents and
warrants to, and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Shareholder of
this Agreement, and for the sale and delivery of the Shares to be sold
by such Selling Shareholder hereunder, have been obtained, except such
as may be required (i) by the NASD, (ii) under state securities or Blue
Sky laws in connection with the purchase or distribution of the Shares
by the Underwriters or (iii) under the federal or provincial laws of
Canada or under the laws of any foreign jurisdiction in which the
Shares may be offered or sold; and such Selling Shareholder has full
right, power and authority to enter
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into this Agreement and to sell, assign, transfer and deliver the
Shares to be sold by such Selling Shareholder hereunder;
(ii) The sale of the Shares to be sold by such Selling
Shareholder hereunder and the compliance by such Selling Shareholder
with all of the provisions of this Agreement and the consummation of
the transactions herein and therein contemplated will not conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder is
bound or to which any of the property or assets of such Selling
Shareholder is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws of such
Selling Shareholder if such Selling Shareholder is a corporation, the
Partnership Agreement of such Selling Shareholder if such Selling
Shareholder is a partnership, or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over such Selling Shareholder or the property of such
Selling Shareholder;
(iii) Such Selling Shareholder has, and immediately prior
to each Time of Delivery (as defined in Section 4 hereof) such Selling
Shareholder will have, good and valid title to the Shares to be sold by
such Selling Shareholder hereunder, free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of such Shares and
payment therefor pursuant hereto, good and valid title to such Shares,
free and clear of all liens, encumbrances, equities or claims, will
pass to the several Underwriters;
(iv) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action in violation of the Exchange
Act or any rules thereunder which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(v) To the extent that any statements or omissions made
in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto are made in reliance
upon and in conformity with written information furnished to the
Company by such Selling Shareholder expressly for use therein, such
Preliminary Prospectus and the Registration Statement did, and the
Prospectus and any further amendments or supplements to the
Registration Statement and the Prospectus, when they become effective
or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder and did not and will not, as
the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(vi) In order to document the Underwriters' compliance
with the reporting and withholding provisions of the Tax Equity and
Fiscal Responsibility Act of 1982 with respect to the transactions
herein contemplated, such Selling Shareholder will deliver to you prior
to or at the First Time of Delivery (as hereinafter defined) 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); and
(vii) The obligations of such Selling Shareholder hereunder
shall not be terminated by operation of law, whether by the death or
incapacity of any individual Selling Shareholder or, in the case of an
estate or trust, by the death or incapacity of any executor or trustee
or the
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termination of such estate or trust, or in the case of a partnership or
corporation, by the dissolution of such partnership or corporation, or
by the occurrence of any other event; and if any individual Selling
Shareholder or any such executor or trustee should die or become
incapacitated, or if any such estate or trust should be terminated, or
if any such partnership or corporation should be dissolved, or if any
other such event should occur, before the delivery of the Shares
hereunder, certificates representing the Shares shall be delivered by
or on behalf of the Selling Shareholders in accordance with the terms
and conditions of this Agreement.
2. Subject to the terms and conditions herein set forth, (a) the
Company and each of the Selling Shareholders agree, severally and not jointly,
to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company and each of the Selling
Shareholders, at a purchase price per share of $41.9932, the number of Firm
Shares (to be adjusted by you so as to eliminate fractional shares) determined
by multiplying the aggregate number of Shares to be sold by the Company and each
of the Selling Shareholders as set forth opposite their respective names in
Schedule II hereto by a fraction, the numerator of which is the aggregate number
of Firm Shares to be purchased by such Underwriter as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the aggregate number of Firm Shares to be purchased by all of the Underwriters
from the Company and all of the Selling Shareholders hereunder and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company and each of the Selling
Shareholders agree, severally and not jointly, to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company and each of the Selling Shareholders, at the purchase
price per share set forth in clause (a) of this Section 2, that portion of the
number of Optional Shares as to which such election shall have been exercised
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying such number of Optional Shares by a fraction the numerator of which
is the maximum number of Optional Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I hereto
and the denominator of which is the maximum number of Optional Shares that all
of the Underwriters are entitled to purchase hereunder.
The Company and the Selling Shareholders, as and to the extent
indicated in Schedule II hereto, hereby grant, severally and not jointly, to the
Underwriters the right to purchase at their election up to 750,000 Optional
Shares, at the purchase price per share set forth in the paragraph above, for
the sole purpose of covering sales of shares in excess of the number of Firm
Shares. Any such election to purchase Optional Shares shall be made initially
with respect to the Optional Shares to be sold by Xxxxxx X. Xxxx ("Xxxx") and
then with respect to the Optional Shares to be sold by the Company. Any such
election to purchase Optional Shares may be exercised only by written notice
from you to the Company and Xxxx, given within a period of 30 calendar days
after the date of this Agreement and setting forth the aggregate number of
Optional Shares to be purchased and the date on which such Optional Shares are
to be delivered, as determined by you but in no event earlier than the First
Time of Delivery (as defined in Section 4 hereof) or, unless you and the Company
and the Selling Shareholders otherwise agree in writing, earlier than two or
later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder,
in definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx, Xxxxx & Co. may request
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upon at least forty-eight hours' prior notice to the Company shall be delivered
by or on behalf of the Company and each of the Selling Shareholders to Xxxxxxx,
Sachs & Co., through the facilities of The Depository Trust Company ("DTC"), for
the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company and each of the Selling
Shareholders, as their interests may appear, to Xxxxxxx, Xxxxx & Co. at least
forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York time, on November 25, 2003 or such other
time and date as Xxxxxxx, Sachs & Co., the Company and the Selling Shareholders
may agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m.,
New York time, on the date specified by Xxxxxxx, Xxxxx & Co. in the written
notice given by Xxxxxxx, Sachs & Co. of the Underwriters' election to purchase
such Optional Shares, or such other time and date as Xxxxxxx, Xxxxx & Co., the
Company and the Selling Shareholders may agree upon in writing. Such time and
date for delivery of the Firm Shares is herein called the "First Time of
Delivery", such time and date for delivery of the Optional Shares, if not the
First Time of Delivery, is herein called the "Second Time of Delivery", and each
such time and date for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(m) hereof, will be delivered at the offices
of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 (the
"Closing Location"), and the Shares will be delivered at the Designated Office,
all at such Time of Delivery. A meeting will be held at the Closing Location at
2:00 p.m., New York City time, on the New York Business Day next preceding such
Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus as amended or supplemented in
relation to the Shares in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such
earlier time as may be required by Rule 424(b) under the Act; to make
no further amendment or any supplement to the Registration Statement or
Prospectus as amended or supplemented prior to the last Time of
Delivery which shall be disapproved by you promptly after reasonable
notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement
has been filed or becomes effective or any supplement to the Prospectus
or any amended Prospectus has been filed and to furnish you with copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Shares; to advise you, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus,
9
of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its reasonable best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with written and electronic copies
of the Prospectus as amended or supplemented in New York City in such
quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus as amended or
supplemented in connection with the offering or sale of the Shares and
if at such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference
in the Prospectus in order to comply with the Act or the Exchange Act,
to notify you and upon your request to file such document and to
prepare and furnish without charge to each Underwriter and to any
dealer in securities as many written and electronic copies as you may
from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter,
to prepare and deliver to such Underwriter as many written and
electronic copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder, any securities of the Company that
are substantially similar to the Shares, including but not limited to
any securities that are convertible into or
10
exchangeable for, or that represent the right to receive, Stock or any
such substantially similar securities (other than pursuant to employee
stock option or stock purchase plans existing on, or upon the
conversion, exercise or exchange of convertible, exercisable or
exchangeable securities outstanding as of, the date of this Agreement),
without your prior written consent;
(f) To furnish to its shareholders, within the time periods
required under applicable law, an annual report (including a balance
sheet and statements of income, shareholders' equity and cash flows of
the Company and its consolidated subsidiaries certified by independent
public accountants) and, within the time periods required under
applicable law, for each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), to make available to its shareholders
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to shareholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished
to its shareholders generally or to the Commission); provided that (1)
you agree to keep such information, to the extent it constitutes
material nonpublic information, confidential in accordance with
Regulation F-D of the Commission and (2) the Company shall not be
obligated to furnish you with such reports, communications or financial
statements that are filed with the Commission electronically via XXXXX
or any successor system;
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the
Prospectus as amended or supplemented under the caption "Use of
Proceeds";
(i) To use its best efforts to list for quotation the Shares on
the National Association of Securities Dealers Automated Quotations
National Market System ("NASDAQ");
(j) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on
the date of this Agreement, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act; and
(k) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if
any, operated by such Underwriter for the purpose of facilitating the
on-line offering of the Shares (the "License"); provided, however, that
the License shall be used solely for the purpose described above and in
a manner reasonably acceptable to the Company, is granted without any
fee and may not be assigned or transferred.
6. The Company and each of the Selling Shareholders covenant and
agree with the several Underwriters that (a) the Company will pay or cause to be
paid the following: (i) the fees, disbursements and expenses of the Company's
counsel and accountants in connection with the
11
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Blue Sky Memorandum, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Shares; (iii) all expenses in
connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey (iv) all fees and
expenses in connection with listing the Shares on the NASDAQ; (v) the cost of
preparing stock certificates; (vi) the cost and charges of any transfer agent or
registrar; and (vii) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section; provided, that the Underwriters agree to reimburse the Company for
up to $250,000 of its costs and expenses relating to investor presentations on
any "road show" undertaken in connection with the marketing of the offering of
the Shares; and (b) such Selling Shareholder will pay or cause to be paid all
costs and expenses incident to the performance of such Selling Shareholder's
obligations hereunder which are not otherwise specifically provided for in this
Section, including (i) any fees and expenses of counsel and accountants for such
Selling Shareholder and (ii) all expenses and taxes incident to the sale and
delivery of the Shares to be sold by such Selling Shareholder to the
Underwriters hereunder. In connection with clause (b)(ii) of the preceding
sentence, Xxxxxxx, Xxxxx & Co. agrees to pay New York State stock transfer tax,
and such Selling Shareholder agrees to reimburse Xxxxxxx, Sachs & Co. for
associated carrying costs if such tax payment is not rebated on the day of
payment and for any portion of such tax payment not rebated. It is understood,
however, that the Company shall bear, and the Selling Shareholders shall not be
required to pay or to reimburse the Company for, the cost of any other matters
not directly relating to the sale and purchase of the Shares pursuant to this
Agreement, and that, except as provided in this Section, and Sections 8 and 11
hereof, the Underwriters will pay all of their own costs and expenses, including
the fees of their counsel, stock transfer taxes on resale of any of the Shares
by them, and any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the
Shares to be delivered at each Time of Delivery, shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company and of the Selling Shareholders herein are, at and as
of such Time of Delivery, true and correct, the condition that the Company and
the Selling Shareholders shall have performed all of its and their obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation
to the Shares shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance
with Section 5(a) hereof; if the Company has elected to rely upon Rule
462(b), the Rule 462(b) Registration Statement shall have become
effective by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
12
(b) Xxxxxxxx & Xxxxxxxx LLP, counsel for the
Underwriters, shall have furnished to you such written opinion or
opinions, dated such Time of Delivery, with respect to such matters as
you may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to
pass upon such matters. In rendering such opinion, Xxxxxxxx & Xxxxxxxx
LLP may rely as to all matters of Florida law upon to the opinion of
Holland & Knight LLP referred to in Section 7(c) hereof;
(c) Holland & Knight LLP, counsel for the Company, shall
have furnished to you their written opinion, dated such Time of
Delivery, in form and substance satisfactory to you, to the effect
that:
(i) The Company has been duly incorporated and
its status is active as a corporation in good standing under
the laws of the State of Florida, with all requisite corporate
authority to own its properties and conduct its business as
described in the Prospectus as amended or supplemented;
(ii) The Company has an authorized capitalization
as set forth in the Prospectus as amended or supplemented, and
all of the issued shares of capital stock of the Company
(including the Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and
are fully paid and non-assessable; and the Shares conform to
the description of the Stock contained in the Prospectus as
amended or supplemented;
(iii) The Company has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in
which it owns or leases properties or conducts any business so
as to require such qualification, except for failures to be so
qualified or in good standing that would not, individually or
in the aggregate, have a Material Adverse Effect (such counsel
being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company,
provided that such counsel shall state that they believe that
both you and they are justified in relying upon such opinions
and certificates);
(iv) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation;
and all of the issued shares of capital stock of each such
subsidiary have been duly and validly authorized and issued,
are fully paid and non-assessable, and (except for directors'
qualifying shares) to the best of such counsel's knowledge,
are beneficially owned by the Company, free and clear of all
liens, encumbrances, equities or claims except as disclosed in
the Prospectus (such counsel being entitled to rely in respect
of the opinion in this clause upon opinions of local counsel
and in respect of matters of fact upon certificates of
officers of the Company or its subsidiaries, provided that
such counsel shall state that they believe that both you and
they are justified in relying upon such opinions and
certificates);
(v) To the best of such counsel's knowledge and
other than as set forth in the Prospectus as amended or
supplemented, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a
party or of which any property of the Company or any of its
subsidiaries is the subject which would, individually or in
the aggregate, reasonably be expected to have a Material
Adverse
13
Effect; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(vi) To the best of such counsel's knowledge and
other than as set forth in the Prospectus as amended or
supplemented, there are no legal or governmental proceedings
pending relating to patents or proprietary information rights
to which the Company is a party or to which any patents or
proprietary information rights of the Company is subject, and
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(vii) This Agreement has been duly authorized,
executed and delivered by the Company;
(viii) The issue and sale of the Shares being
delivered at such Time of Delivery to be sold by the Company
and the compliance by the Company with all of the provisions
of this Agreement and the consummation of the transactions
herein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any material indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument
known to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is 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 Articles of Incorporation or By-laws of the Company or
any United States federal, Florida or New York statute or any
order specifically naming the Company or any rule or
regulation known to such counsel of any court or governmental
agency or body in such jurisdictions and having jurisdiction
over the Company or any of its subsidiaries or any of their
properties;
(ix) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale
of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except the
registration under the Act of the Shares, and such consents,
approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by
the Underwriters;
(x) The statements set forth (A) in the
Prospectus under the caption "Description of Securities",
insofar as they purport to constitute a summary of the terms
of the Stock, and under the caption "Plan of Distribution",
insofar as they purport to describe the provisions of the laws
and documents referred to therein, and (B) in the Prospectus
as amended or supplemented under the caption "Underwriting",
insofar as they purport to describe the provisions of the laws
and documents referred to therein, are accurate and complete
in all material respects;
(xi) The Company is not an "investment company",
as such term is defined in the Investment Company Act;
(xii) The documents incorporated by reference in
the Prospectus or any further amendment or supplement thereto
made by the Company prior to such Time of Delivery (other than
the financial statements and schedules and other financial
data included therein, as to which such counsel need express
no opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all
material
14
respects with the requirements of the Act or the Exchange Act,
as applicable and the rules and regulations of the Commission
thereunder; and
(xiii) We have participated in the preparation of
the Registration Statement and the Prospectus other than the
documents incorporated by reference therein, which we have
reviewed. Although we have not independently verified the
accuracy or completeness of the information in the
Registration Statement and Prospectus except for those
statements referred to in the opinion in subsection (x) of
this Section 7(c), we have participated in conferences with
representatives of the Company, its accountants, and your
counsel, at which the contents of the Registration Statement
and Prospectus were discussed at length. Although information
provided to us by such parties was not independently verified
with third parties or otherwise, no facts have come to our
attention (i) that lead us to believe that the documents
incorporated by reference in the Prospectus or any further
amendment or supplement thereto made by the Company prior to
such Time of Delivery (other than the financial statements and
schedules and other financial data included therein as to
which we express no belief) at the time such documents became
effective or were filed with the Commission 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 (ii) that lead
us to believe that the Registration Statement and the
Prospectus included therein (other than the financial
statements and schedules and other financial data included
therein as to which we express no belief), at the time it
became effective under the Act, 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, in light of the circumstances under which
they were made, not misleading, or that the Prospectus as
amended or supplemented or any further amendment or supplement
thereto made by the Company prior to such Time of Delivery
(other than the financial statements and schedules and other
financial data included therein as to which we express no
belief), as of its date or as of such Time of Delivery,
contained or contains an untrue statement of material fact or
omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
(d) The Company shall have furnished to you a written
opinion or opinions of counsel, dated such Time of Delivery, in form
and substance satisfactory to you, to the effect that (A) certain
statements set forth (1) in the Prospectus as amended or supplemented
under the heading "Business Overview -- Patents and Proprietary Rights"
and (2) in the Prospectus under the headings "Risk Factors -- We are
involved in litigation, the outcome of which could have a significant
effect on our business" and "Risk Factors -- We cannot ensure the
validity or protection of our intellectual property rights or patent
rights", and (B) certain statements incorporated by reference in the
Prospectus from (1) the Company's Annual Report on Form 10-K for the
most recent fiscal year under the headings "Business -- Patents and
Proprietary Rights", "Forward-Looking Information: Certain Cautionary
Statements -- Xxxx Litigation" and "Forward-Looking Information:
Certain Cautionary Statements -- Patents and Trademarks; Interference"
and (2) each of the Company's Quarterly Reports on Form 10-Q filed
after its Annual Report on Form 10-K for the most recent fiscal year
under the headings "Forward-Looking Information: Certain Cautionary
Statements -- Patents and Trademarks; Interference" or "Forward-Looking
Information: Certain Cautionary Statements -- Patents and Trademarks;
Litigation with Xxxx Laboratories, Inc.", in each case, insofar as such
statements summarize
15
legal matters, agreements, documents or proceedings discussed therein,
are accurate and complete;
(e) Xxxxxxxxx & Xxxxxxx, regulatory counsel for the
Company, shall have furnished to you their written opinion, dated such
Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) (A) the statements set forth in the
Prospectus under the heading "Risk Factors--Our business is
subject to extensive government regulation" and (B) the
statements incorporated by reference in the Prospectus from
the Company's Annual Report on Form 10-K for the most recent
fiscal year under the headings "Business--Government
Regulation" and "Forward-Looking Information: Certain
Cautionary Statements--Government Regulation; No Assurances of
Regulatory Approval", in each case, insofar as such statements
summarize legal matters, agreements, documents or proceedings
discussed therein, are accurate, complete and fair; and
(ii) Such counsel has reviewed the Registration
Statement and the Prospectus and any further amendments and
supplements thereto made by the Company prior to such Time of
Delivery, and insofar as they concern matters relating to the
FDA, such counsel has no reason to believe that either the
Registration Statement or the Prospectus as amended or
supplemented or any such further amendment and supplement
thereto contains any untrue statement of a material fact or
omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading;
(f) The respective counsel for each of the Selling
Shareholders shall have furnished to you their written opinion with
respect to each of the Selling Shareholders for whom they are acting as
counsel, dated such Time of Delivery, as applicable, in form and
substance satisfactory to you, to the effect that:
(i) This Agreement has been duly executed and
delivered by or on behalf of such Selling Shareholder; and the
sale of the Shares to be sold by such Selling Shareholder
hereunder and the compliance by such Selling Shareholder with
all of the provisions of this Agreement and the consummation
of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any terms
or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which such
Selling Shareholder is a party or by which such Selling
Shareholder is bound or to which any of the property or assets
of such Selling Shareholder is subject, nor will such action
result in any violation of the provisions of the Certificate
of Incorporation or By-laws of such Selling Shareholder if
such Selling Shareholder is a corporation, the Partnership
Agreement of such Selling Shareholder if such Selling
Shareholder is a partnership or any order, rule or regulation
known to such counsel of any court or governmental agency or
body having jurisdiction over such Selling Shareholder or the
property of the such Selling Shareholder;
(ii) To the best of such counsel's knowledge, no
consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation
of the transactions contemplated by this Agreement in
connection with the Shares to be sold by such Selling
Shareholder hereunder, except which have been duly obtained
and are in full force and effect, such as have been obtained
under the Act and
16
such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of such
Shares by the Underwriters;
(iii) Immediately prior to such Time of Delivery,
based solely on an examination of the certificate representing
the Shares and a certificate of such Selling Shareholder, such
Selling Shareholder had good and valid title to the Shares to
be sold at such Time of Delivery by such Selling Shareholder
under this Agreement, free and clear of all liens,
encumbrances, equities or claims, and full right, corporate,
partnership or limited liability company power and authority
to sell, assign, transfer and deliver the Shares to be sold by
such Selling Shareholder hereunder; and
(iv) Assuming (1) the several Underwriters who
have purchased the Shares to be sold by such Selling
Shareholder purchase such Shares without notice of any adverse
claim (within the meaning of the Uniform Commercial Code of
the State of New York (the "NYUCC")), (2) such Underwriters
make payment therefor as provided herein, (3) such Shares are
delivered to the Underwriters in accordance with the
provisions of this Agreement, and (4) such Underwriters obtain
control of such Shares (within the meaning of Section 8-106 of
the NYUCC), such Underwriters have acquired all of such
Selling Shareholder's rights and interest in the Shares sold
by such Selling Stockholder free and clear of all liens,
encumbrances, equities or claims or any other adverse claim
(within the meaning of Section 8-102(a)(1) of the NYUCC).
In rendering the opinion in paragraph (iii), such counsel may rely upon
a certificate of such Selling Shareholder in respect of matters of fact as to
ownership of, and liens, encumbrances, equities or claims on, the Shares sold by
such Selling Shareholder, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such certificate;
(g) On the date of the Prospectus as amended or
supplemented at a time prior to the execution of this Agreement, at
9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent
to the date of this Agreement and also at each Time of Delivery, Ernst
& Young LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto;
(h)(i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus as
amended prior to the date hereof any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus as amended prior to the date hereof, and
(ii) since the respective dates as of which information is given in the
Prospectus as amended or supplemented there shall not have been any
change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus as amended prior to the date hereof, the
effect of which, in any such case described in clause (i) or (ii), is
in the judgment of Xxxxxxx, Xxxxx & Co. so material and adverse as to
make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus
as first amended or supplemented relating to the Shares;
17
(i) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation
in trading in securities generally on the New York Stock Exchange or on
NASDAQ; (ii) a suspension or material limitation in trading in the
Company's securities on NASDAQ; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York
State authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States; (iv)
the outbreak or escalation of hostilities involving the United States
or the declaration by the United States of a national emergency or war
or (v) the occurrence of any other calamity or crisis or any change in
financial, political or economic conditions in the United States or
elsewhere, if the effect of any such event specified in clause (iv) or
(v) in the judgment of Xxxxxxx, Sachs & Co. makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus as first amended or supplemented
relating to the Shares;
(j) The Shares at such Time of Delivery shall have been
duly listed for quotation on NASDAQ;
(k) The Company has obtained and delivered to the
Underwriters executed copies of an agreement from each of the Selling
Shareholders, Kos Holdings, Inc., Kos Investments, Inc. and each person
listed under the heading "Management" in the Prospectus, in form and
substance satisfactory to you, not to offer, sell, contract to sell or
otherwise dispose of, except as provided hereunder or thereunder, any
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into
or exchangeable for, or that represent the right to receive, Stock or
any such substantially similar securities (other than pursuant to
employee stock option plans existing on, or upon the conversion or
exchange of convertible or exchangeable securities outstanding as of,
the date of this Agreement) during the period beginning from the date
hereof and continuing to and including the date 90 days after the date
of the Prospectus without your prior written consent;
(l) The Company shall have complied with the provisions
of Section 5(c) hereof with respect to the furnishing of prospectuses
on the New York Business Day next succeeding the date of this
Agreement; and
(m) The Company and the Selling Shareholders shall have
furnished or caused to be furnished to you at such Time of Delivery
certificates of officers of the Company and of the Selling
Shareholders, respectively, satisfactory to you as to the accuracy of
the representations and warranties of the Company and the Selling
Shareholders, respectively, herein at and as of such Time of Delivery,
as to the performance by the Company and the Selling Shareholders of
all of their respective obligations hereunder to be performed at or
prior to such Time of Delivery, and as to such other matters as you may
reasonably request, and the Company shall have furnished or caused to
be furnished certificates as to the matters set forth in subsections
(a) and (h) of this Section.
8. (a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement or the Prospectus,
or any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they
18
were made, not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by any Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use
therein;
(b) Each of the Selling Shareholders, severally and not jointly,
will indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Selling Shareholder expressly for use therein; and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that such
Selling Shareholder shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Xxxxxxx, Sachs & Co. expressly for use
therein; and provided further, however, that the liability of such Selling
Shareholder (i) pursuant to this subsection (b) and (ii) arising from any breach
of such Selling Shareholder's representations and warranties set forth in
Section 1(b) hereof, and (iii) pursuant to subsection 8(e), shall not exceed the
gross proceeds received by such Selling Shareholder from the sale of the Shares
sold by such Selling Shareholder hereunder.
(c) Each Underwriter will indemnify and hold harmless the Company
and each Selling Shareholder against any losses, claims, damages or liabilities
to which the Company or such Selling Shareholder may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
19
and in conformity with written information furnished to the Company by such
Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use therein; and will
reimburse the Company and each Selling Shareholder for any legal or other
expenses reasonably incurred by the Company or such Selling Shareholder in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include any
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party. In the event the indemnifying party does not
assume the defense of any action brought against an indemnified party, the
indemnifying party shall not, in connection with any one such action or
proceeding or separate but substantially similar actions or proceedings arising
out of the same general allegations, be liable for the fees and expenses of more
than one separate firm of attorneys at any time for all indemnified persons,
except to the extent that local counsel, in addition to regular counsel, is
required in order to effectively defend against such action or proceeding.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Shareholders on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Shareholders on the one hand
and the Underwriters on the other in connection with the statements, omissions
or failure to give notice which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the
20
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company and the Selling Shareholders 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 as amended or supplemented. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Selling Shareholders on the one hand or the Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, each
of the Selling Shareholders and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (e) were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), (1) no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission and (2) no Selling Shareholder shall be required to contribute any
amount in excess of the gross proceeds from the sale of the Shares sold by such
Selling Shareholder hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Shareholders
under this Section 8 shall be in addition to any liability which the Company and
the respective Selling Shareholders may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company (including any
person who, with his or her consent, is named in the Registration Statement as
about to become a director of the Company) and to each person, if any, who
controls the Company or any Selling Shareholder within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Shares, then the Company and the Selling Shareholders shall
be entitled to a further period of thirty-six hours within which to procure
another party or other parties satisfactory to you to purchase such Shares on
such terms. In the event that, within the respective prescribed periods, you
notify the Company and the Selling Shareholders that you have so arranged for
the purchase of such Shares, or the Company and the Selling Shareholders notify
you that they have so arranged for the purchase of such Shares, you or the
Company and the Selling Shareholders shall have the right to postpone a Time of
Delivery for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other
21
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Shareholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Shareholders shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Shareholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such Time of Delivery,
or if the Company and the Selling Shareholders shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company and the Selling Shareholders to sell
the Optional Shares shall thereupon terminate, without liability on the part of
any non-defaulting Underwriter or the Company or the Selling Shareholders,
except for the expenses to be borne by the Company and the Selling Shareholders
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Selling Shareholders and the
several Underwriters, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company, or any of the Selling Shareholders, or any
officer or director or controlling person of the Company, or any controlling
person of any Selling Shareholder, and shall survive delivery of and payment for
the Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Selling Shareholders shall then be under any
liability whatsoever to the defaulting Underwriter or to any other Underwriter
except, with respect to the non-defaulting Underwriters only, as provided in
Sections 6 and 8 hereof; but, if for any other reason any Shares are not
delivered by or on behalf of the Company and the Selling Shareholders as
provided herein, the Company will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so delivered,
but the Company and the Selling
22
Shareholders shall then be under no further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Sections 6 and 8
hereof.
12. In all dealings hereunder, you shall act on behalf of each of
the Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made or
given by Xxxxxxx, Xxxxx & Co.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to Xxxxxxx, Sachs & Co. at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Registration Department; if to any Selling Shareholder or
to the Company shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Company set forth in the Registration
Statement, Attention: Secretary; provided, however, that any notice to an
Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Underwriter at its address set forth in
its Underwriters' Questionnaire or telex constituting such Questionnaire, which
address will be supplied to the Company or the Selling Shareholders by you on
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Shareholders and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company, any Selling Shareholder or
any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used
herein, the term "business day" shall mean any day when the Commission's office
in Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
17. The Company and the Selling Shareholders are authorized,
subject to applicable law, to disclose any and all aspects of this potential
transaction that are necessary to support any U.S. federal income tax benefits
expected to be claimed with respect to such transaction, and all materials of
any kind (including tax opinions and other tax analyses) related to those
benefits, without the Underwriters imposing any limitation of any kind.
23
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the Underwriters plus one for
each counsel, if any counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and each of the Selling Shareholders. It is understood that your acceptance of
this letter on behalf of each of the Underwriters is pursuant to the authority
set forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company and the Selling Shareholders for examination, upon
request, but without warranty on your part as to the authority of the signers
thereof.
Very truly yours,
Kos Pharmaceuticals, Inc.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: President
Xxxxxx Point Holdings, LP
By: Cubs Management LLC, as general partner
By: /s/ Xxxx Xxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
Xxxxxx X. Xxxx
By: /s/ Xxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxx X. Xxxx
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
Banc of America Securities LLC
Deutsche Bank Securities Inc.
XX Xxxxx Securities Corporation
SunTrust Capital Markets, Inc.
By:/s/ Xxxxxxx, Xxxxx & Co.
-----------------------------
(Xxxxxxx, Sachs & Co.)
On behalf of each of the Underwriters
SCHEDULE I
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
-------------------------------------------------------------------- --------------- -------------------
Xxxxxxx, Xxxxx & Co................................................. 1,872,000 280,800
Banc of America Securities LLC...................................... 1,392,000 208,800
XX Xxxxx Securities Corporation..................................... 720,000 108,000
Deutsche Bank Securities Inc. ...................................... 480,000 72,000
SunTrust Capital Markets, Inc....................................... 336,000 50,400
Natexis Bleichroeder Inc............................................ 100,000 15,000
Xxxx, Xxxx & Co., Inc............................................... 100,000 15,000
---------- --------
Total...................................................... 5,000,000 750,000
========== ========
SCHEDULE II
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF SOLD IF
FIRM SHARES MAXIMUM OPTION
TO BE SOLD EXERCISED
-------------- ------------------
The Company......................................... 3,750,000 650,000
The Selling Shareholders:.....................
Xxxxxx Point Holdings, LP............. 1,250,000 0
Xxxxxx X. Xxxx........................ 0 100,000
--------- -------
Total...................................... 5,000,000 750,000
========= =======
ANNEX I
Pursuant to Section 7(g) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants
with respect to the Company and its subsidiaries within the meaning of
the Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been separately furnished to the representatives of the Underwriters
(the "Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's Quarterly
Reports on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives; and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether
the unaudited condensed consolidated financial statements referred to
in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations, nothing
came to their attention that caused them to believe that the unaudited
condensed consolidated financial statements do not comply as to form in
all material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years included
in the Prospectus and included or incorporated by reference in Item 6
of the Company's Annual Report on Form 10-K for the most recent fiscal
year agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus
under selected captions with the disclosure requirements of Regulation
S-K and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing procedures
that caused them to believe that this information does not conform in
all material respects with the disclosure requirements of Items 301,
302, 402 and 503(d), respectively, of Regulation S-K;
I-1
(vi) On the basis of limited procedures, not constituting
an examination in accordance with generally accepted auditing
standards, consisting of a reading of the unaudited financial
statements and other information referred to below, a reading of the
latest available interim financial statements of the Company and its
subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, inquiries of
officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that
caused them to believe that:
(A) (i) the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus and/or included or incorporated by reference in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and
regulations, or (ii) any material modifications should be made
to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus or included in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus, for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data
and balance sheet items included in the Prospectus do not
agree with the corresponding items in the unaudited
consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were
not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited
consolidated financial statements included or incorporated by
reference in the Company's Annual Report on Form 10-K for the
most recent fiscal year;
(C) the unaudited financial statements which
were not included in the Prospectus but from which were
derived the unaudited condensed financial statements referred
to in clause (A) and any unaudited income statement data and
balance sheet items included in the Prospectus and referred to
in clause (B) were not determined on a basis substantially
consistent with the basis for the audited financial statements
included or incorporated by reference in the Company's Annual
Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated
condensed financial statements included or incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Act and the published rules and regulations thereunder
or the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements;
(E) as of a specified date not more than five
days prior to the date of such letter, there have been any
changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case which
were outstanding on the date of the latest balance sheet
included or incorporated by reference in the Prospectus) or
any increase in the consolidated long-term debt of the Company
and its subsidiaries, or any decreases in consolidated net
current assets or shareholders' equity or other items
specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as
compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus,
except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(F) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in clause (E)
there were any decreases in consolidated net revenues or
operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with the
comparable period of the preceding year and with any other
period of corresponding length specified by the
Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and
the limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information
specified by the Representatives which are derived from the general
accounting records of the Company and its subsidiaries, which appear in
the Prospectus (excluding documents incorporated by reference), or in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Representatives or in documents incorporated by
reference in the Prospectus specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and
have found them to be in agreement.
All references in this Annex I to the Prospectus shall be
deemed to refer to the Prospectus (including the documents incorporated
by reference therein) as defined in the Underwriting Agreement as of
the date of the letter delivered on the date of the Underwriting
Agreement for purposes of such letter and to the Prospectus as amended
or supplemented (including the documents incorporated by reference
therein) in relation to the applicable Shares for purposes of the
letter delivered at each Time of Delivery for such Shares.
