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EXHIBIT 1.1
THORATEC LABORATORIES CORPORATION
2,000,000 SHARES OF COMMON STOCK, NO PAR VALUE
PLACEMENT AGENCY AGREEMENT
October __, 1997
Vector Securities International, Inc.
Cruttenden ▇▇▇▇, Incorporated
c/o Vector Securities International, Inc.
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Dear Sir or Madam:
Thoratec Laboratories Corporation, a California corporation (the
"Company"), proposes to issue and sell 1,500,000 shares (the "Shares") of common
stock, no par value (the "Common Stock"), and Sulzer Intermedics, Inc. (the
"Selling Shareholder") proposes to sell up to 500,000 shares of Common Stock
(the "Selling Shareholder Shares") to certain investors (collectively, the
"Investors"). The Company and the Selling Shareholder desire to engage you as
placement agents (the "Placement Agents") in connection with such issuance and
sale. The Common Stock is more fully described in the Registration Statement (as
hereinafter defined).
The Company and the Selling Shareholder hereby confirm their
respective agreements with the Placement Agents as follows:
1. Agreement to Act as Placement Agents.
a. On the basis of the respective representations, warranties
and agreements of the Company and the Selling Shareholder herein contained and
subject to all the terms and conditions of this Agreement, the Placement Agents
agree to act as the Company's exclusive placement agents in connection with the
issuance and sale, on an all or none basis, by the Company and the Selling
Shareholder of the Shares and the Selling Shareholder Shares to the Investors.
Each of the Company and the Selling Shareholder shall pay to the Placement
Agents 7.0% of the respective gross proceeds (the "Placement Fee") received by
the Company and the Selling Shareholder from the sale of the Shares and the
Selling Shareholder Shares, as applicable, as set forth on the cover page of the
Prospectus (as hereinafter defined).
b. Certificates in negotiable form (endorsed in blank or
accompanied by stock powers in blank, with signatures appropriately guaranteed,
and any funds necessary for the purchase of stock transfer stamps) representing
all of the Selling Shareholder Shares to be sold by the Selling Shareholder have
been placed in custody under a custody agreement ("Custody Agreement") with
__________, as Custodian (the "Custodian") and the Selling Shareholder has duly
executed and delivered a Power of Attorney (a "Power of Attorney") appointing
______ ______ and _______ _____, and each of them, as Selling Shareholder's
attorneys-in-fact (the "Attorneys-in-Fact") with authority to execute this
Agreement and the Escrow Agreement (as defined) and to deliver this Agreement
and the Escrow Agreement on behalf of the Selling Shareholder, to authorize the
delivery of the Selling Shareholder Shares to be
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sold by the Selling Shareholder hereunder and thereunder and otherwise to act on
behalf of the Selling Shareholder in connection with the transactions
contemplated by this Agreement, the Escrow Agreement and the Custody Agreement.
The Selling Shareholder agrees that the shares represented by the certificates
held in custody for the Selling Shareholder under the Custody Agreement are
subject to the interests of the Placement Agents hereunder and the arrangements
made by the Selling Shareholder for such custody, as well as the appointment by
the Selling Shareholder of the Attorneys-in-Fact, are, to that extent,
irrevocable. The Selling Shareholder specifically agrees that its obligations
hereunder shall not be terminated, except as otherwise provided herein, by any
act of the Selling Shareholder, operation of law or otherwise, or by the
occurrence of any event.
2. Delivery and Payment. Concurrently with the execution and
delivery of this Agreement, the Company, the Selling Shareholder, the Placement
Agents and Citibank, N.A., as escrow agent (the "Escrow Agent"), shall enter
into an Escrow Agreement substantially in the form of Exhibit A attached hereto
(the "Escrow Agreement"), pursuant to which an escrow account will be
established, at the Company's expense, for the benefit of the Investors (the
"Escrow Account"). Prior to the Closing Date (as defined below), (i) each of the
Investors will deposit an amount equal to the Price to Public per Share as shown
on the cover page of the Prospectus (as hereinafter defined) multiplied by the
number of Shares and the Selling Shareholder Shares purchased by said Investor
in the Escrow Account, and (ii) the Escrow Agent will notify the Company, the
Selling Shareholder and the Placement Agents in writing whether the Investors
have deposited in the Escrow Account funds in the amount equal to the proceeds
of the sale of all of the Shares and the Selling Shareholder Shares offered
hereby (the "Requisite Funds") into the Escrow Account. At 10:00 a.m., New York
City time, on October __, 1997, or at such other time on such other date as may
be agreed upon by the Company, the Selling Shareholder and the Placement Agents
but in no event prior to the date on which the Escrow Agent shall have received
all of the Requisite Funds (such date is hereinafter referred to as the "Closing
Date"), the Escrow Agent will release the Requisite Funds from the Escrow
Account for collection by the Company, the Selling Shareholder and the Placement
Agents as provided in the Escrow Agreement and the Company and the Selling
Shareholder shall deliver the Company Shares and the Selling Shareholder Shares,
respectively, to the Investors, which delivery may be made through the
facilities of The Depository Trust Company. The closing (the "Closing") shall
take place at the office of Heller, Ehrman, White & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. All actions taken at the
Closing shall be deemed to have occurred simultaneously.
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as Vector Securities
International, Inc., as Representative (the "Representative") of the Placement
Agents, shall request by written notice to the Company. For the purpose of
expediting the checking and packaging of certificates for the Shares, the
Company and the Selling Shareholders agree to make such certificates available
for inspection at least 24 hours prior to delivery to the Investors.
3. Representations and Warranties of the Company. The Company
represents and warrants to and covenants with the Placement Agents that:
a. The Company meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "1933 Act"), and the rules and
regulations (the "1933 Act Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has filed a registration statement
on such Form (Registration No. 333-36685) which has become
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effective, for the registration of the Shares under the 1933 Act and the 1933
Act Regulations. The Commission has not issued any order preventing or
suspending the use of the Prospectus or the Preliminary Prospectus (as defined
below). The term "Preliminary Prospectus" as used herein means a preliminary
prospectus relating to the Shares and the Selling Shareholder Shares as
contemplated by Rule 430 or Rule ▇▇▇▇ ("▇▇▇▇ ▇▇▇▇") ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇ Regulations
included at any time as part of the registration statement. Copies of such
registration statement and amendments and of each related Preliminary Prospectus
have been delivered to the Placement Agents. If such registration statement has
not become effective, a further amendment to such registration statement,
including a form of final prospectus, necessary to permit such registration
statement to become effective will be filed promptly by the Company with the
Commission. If such registration statement has become effective, a final
prospectus relating to the Shares and the Selling Shareholder Shares containing
information permitted to be omitted at the time effectiveness by Rule 430A will
be filed by the Company with the Commission in accordance with Rule 424(b) of
the 1933 Act Regulations promptly after execution and delivery of this
Agreement. The term "Registration Statement" means the registration statement as
amended at the time it becomes or became effective (the "Effective Date"),
including all material incorporated by reference therein and any information
deemed to be included by Rule 430A and any additional registration statement
filed pursuant to Rule 462(b) of the Rules and Regulations ("Rule 462(b)") with
respect to the Shares and the Selling Shareholder Shares ("Rule 462(b)
Registration Statement"). The term "Prospectus" means the prospectus relating to
the Shares and the Selling Shareholder Shares as first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or, if no such filing is
required, the form of final prospectus relating to the Shares and the Selling
Shareholder Shares included in the Registration Statement at the Effective Date.
Any reference herein to the Registration Statement, the Prospectus or any
Preliminary Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Securities Exchange Act of 1934, as amended (the "1934 Act"), on
or before the date of this Agreement, or the issue date of the Prospectus or any
Preliminary Prospectus, as the case may be; and any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the Registration
Statement, the Prospectus or any Preliminary Prospectus shall be deemed to refer
to and include the filing of any document under the 1934 Act after the date of
this Agreement, or the issue date of the Prospectus or any Preliminary
Prospectus, as the case may be, and deemed to be incorporated therein by
reference.
b. On the date that any Preliminary Prospectus was filed with
the Commission, the date the Prospectus is first filed with the Commission
pursuant to Rule 424(b) (if required), at all times subsequent to and including
the Closing Date and when any post-effective amendment to the Registration
Statement becomes effective or any amendment or supplement to the Prospectus is
filed with the Commission, the Registration Statement, each Preliminary
Prospectus and the Prospectus (as amended or as supplemented if the Company
shall have filed with the Commission any amendment or supplement thereto),
including the financial statements included in the Prospectus, did or will
comply with all applicable provisions of the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the rules and regulations promulgated
thereunder (the "1934 Act Regulations") and did or will contain all statements
required to be stated therein in accordance with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations. On the Effective Date
and when any post-effective amendment to the Registration Statement becomes
effective, no part of the Registration Statement or any such amendment did or
will contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. At the Effective Date, at the date the Prospectus or any
amendment or supplement to the Prospectus is filed with the Commission and at
the Closing Date the Prospectus did not or will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
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statements therein, in the light of the circumstances under which they were
made, not misleading. The Company has not distributed any offering material in
connection with the offering or sale of the Shares and the Selling Shareholder
Shares, other than the Registration Statement, the Preliminary Prospectus and
the Prospectus.
c. Deloitte & Touche LLP, who have certified the financial
statements and supporting schedules included in the Registration Statement, are
independent public accountants as required by the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations.
d. The financial statements included or incorporated by
reference in the Registration Statement and the Prospectus present fairly the
consolidated financial position of the Company and Thoratec Europe Ltd. (the
"Subsidiary") as of the dates indicated and their consolidated results of
operations for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis; and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein. The financial
information and statistical data set forth in the Prospectus are prepared on an
accounting basis consistent with such financial statements.
e. Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise stated
therein, (i) there has been no material adverse change or any development
involving a prospective material adverse change in or affecting the condition,
financial or otherwise, or in the earnings, business affairs, or business
prospects of the Company and the Subsidiary, whether or not arising in the
ordinary course of business, (ii) there have been no transactions entered into
by the Company or the Subsidiary, other than those in the ordinary course of
business, which are material with respect to the Company and the Subsidiary, and
(iii) there has been no dividend or distribution of any kind declared, paid or
made by the Company or the Subsidiary on any class of their capital stock.
Neither the Company nor the Subsidiary has material contingent obligations which
are not disclosed in the Registration Statement.
f. The Company and the Subsidiary have been duly incorporated
and are validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation, with corporate power and
authority to own, lease and operate their properties and to conduct their
businesses as described in the Prospectus and, in the case of the Company, to
enter into and perform its obligations under this Agreement; the Company and the
Subsidiary are duly qualified as foreign corporations to transact business and
are in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not, singly or
in the aggregate, have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs, results of operations or business
prospects of the Company and the Subsidiary, taken as a whole (a "Material
Adverse Effect"). Other than in the Subsidiary, short-term freely transferrable
investments in publicly traded companies aggregating less than 5% of such
companies or otherwise required to be disclosed under Item 601 of Regulation
S-K, the Company does not own, directly or indirectly, any shares of capital
stock or any other equity securities of
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any corporation or have any equity interest in any firm, partnership, joint
venture, association or other entity.
g. The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement or pursuant to
reservations, agreements, employee or director benefit plans or the exercise of
convertible securities referred to in the Prospectus); the shares of issued and
outstanding capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable and have not been issued in
violation of or are not otherwise subject to any preemptive or other similar
rights; the Company owns, beneficially and of record, all of the outstanding
capital stock of the Subsidiary; the Shares have been duly authorized for
issuance and sale to the Investors pursuant to this Agreement and, when issued
and delivered by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and
nonassessable; the certificates evidencing the Shares and the Selling
Shareholder Shares are in due and proper form under California law; the
authorized capital stock of the Company, including the Shares and the Selling
Shareholder Shares, conforms to all statements relating thereto contained in the
Prospectus; and the issuance of the Shares is not subject to preemptive or other
similar rights. There are no outstanding subscriptions, options, warrants,
convertible or exchangeable securities or other rights granted to or by the
Company to purchase shares of capital stock or other securities of the Company
and there are no commitments, plans or arrangements to issue any shares of
capital stock or any security convertible into or exchangeable for capital
stock, in each case other than as described in the Prospectus.
h. The Company and the Subsidiary: (i) are in material
compliance with any and all applicable foreign, United States, state and local
environmental laws, rules, regulations, treaties, statutes and codes promulgated
by any and all governmental authorities relating to the protection of human
health and safety, the environment or toxic substances or wastes, pollutants or
contaminates ("Environmental Laws"); (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their business as currently conducted; and (iii) are in compliance with all
terms and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permit
licenses or other approvals would not, individually or in the aggregate, have a
Material Adverse Effect. No action, proceeding, revocation proceeding,
writ,injunction or claim is pending or threatened against the Company or the
Subsidiary relating to the Environmental Laws or to the activities of the
Company or the Subsidiary involving Hazardous Materials. The terms "Hazardous
Materials" as used in this Agreement means any material or substance that: (i)is
prohibited or regulated by any environmental law, rule, regulation, order,
treaty, statute or code promulgated by any governmental authority, or any
amendment or modification thereto; or (ii) has been designated or regulated by
any governmental authority as radioactive, toxic, hazardous or otherwise a
danger to health, reproduction or the environment.
i. Neither the Company nor the Subsidiary is engaged in the
generation, use, manufacture, transportation or storage of any Hazardous
Materials on any of the properties of the Company or the Subsidiary or former
properties, except where such use, manufacture, transportation or storage is in
compliance with Environmental Laws. No Hazardous Materials have been treated or
disposed of on any properties of the Company or the Subsidiary or on properties
formerly owned or leased by the Company or the Subsidiary during the time of
such ownership or lease, except in compliance with Environmental
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Laws. No spills, discharges, releases, deposits, emplacements, leaks or disposal
of any Hazardous Materials have occurred on or under or have emanated from any
of the Company's properties or former properties of the Company or the
Subsidiary for which the cost of remediation would materially and adversely
affect the Company.
j. Neither the Company nor the Subsidiary is in violation of
its respective charter or bylaws or similar governing instruments or in default
in the performance or observance of any material obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan agreement,
deed, trust, note, lease, sublease, voting agreement, voting trust, or other
instrument or agreement to which either the Company or the Subsidiary is a party
or by which either the Company or the Subsidiary may be bound, or to which any
of the property or assets of the Company or the Subsidiary are subject; and the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein and compliance by the Company with its
obligations hereunder have been duly authorized by all necessary corporate
action and will not conflict with or constitute a breach of, or default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or the Subsidiary pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Company or the Subsidiary is a party or by which they may be bound, or
to which any of the property or assets of the Company or the Subsidiary are
subject, nor will such action result in any violation of the provisions of the
charter or bylaws of the Company or any applicable statute, law, rule,
regulation, ordinance, decision, directive or order.
k. No labor dispute with the employees of the Company or the
Subsidiary exists or, to the best knowledge of the Company, is imminent; and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors which
might, singly or in the aggregate, be expected to have a Material Adverse
Effect.
l. There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the Company or
the Subsidiary, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which, singly or in the aggregate, might
result in any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company or the
Subsidiary, or which, singly or in the aggregate, might materially and adversely
affect the properties or assets thereof or which might materially and adversely
affect the consummation of this Agreement; all pending legal or governmental
proceedings to which the Company or the Subsidiary is a party or of which any of
their respective properties or assets is the subject which are not described in
the Registration Statement, including ordinary routine litigation incidental to
the business, are, considered in the aggregate, not material; and there are no
contracts or documents of the Company or the Subsidiary which are required to be
filed as exhibits to the Registration Statement by the 1933 Act or by the 1933
Act Regulations which have not been so filed.
m. No relationship, direct or indirect, exists between or
among the Company and the Subsidiary on the one hand and the directors,
officers, shareholders, customers or suppliers of the Company and the Subsidiary
on the other hand, that is required by the 1933 Act or 1934 Act or the 1933 Act
Regulations or 1934 Act Regulations to be described in the
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Registration Statement and the Prospectus or documents incorporated by reference
therein that is not described as so required.
n. The Company and the Subsidiary own or are licensed to use
all patents, patent applications, inventions, trademarks, trade names,
applications for registration of trademarks, service marks, service ▇▇▇▇
applications, copyrights, know-how, manufacturing processes, formulae, trade
secrets, licenses and rights in any thereof and any other intangible property
and assets (herein called the "Proprietary Rights") which are material to the
businesses of the Company or the Subsidiary as now conducted and as proposed to
be conducted, in each case as described in the Prospectus. The description of
the Proprietary Rights is correct in all material respects and fairly and
correctly describes the Company's rights with respect thereto. Neither the
Company nor the Subsidiary have any knowledge of, and neither the Company nor
the Subsidiary has given or received any notice of, any pending conflicts with
or infringement of the rights of others with respect to any Proprietary Rights
or with respect to any license of Proprietary Rights. No action, suit,
arbitration, or legal, administrative or other proceeding, or investigation is
pending, or, to the knowledge of the Company, threatened, which involves any
Proprietary Rights. Neither the Company nor the Subsidiary is subject to any
judgment, order, writ, injunction or decree of any court or any Federal, state,
local, foreign or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or any arbitrator, or has
entered into or is a party to any contract which restricts or impairs the use of
any such Proprietary Rights in a manner which would have a material adverse
effect on the use of any of the Proprietary Rights. To the knowledge of the
Company, no Proprietary Rights used by the Company or the Subsidiary, and no
services or products sold by the Company or the Subsidiary, conflict with or
infringe upon any proprietary rights available to any third party. The Company
has not received written notice of any pending conflict with or infringement
upon such third party proprietary rights. Neither the Company nor the Subsidiary
has entered into a consent, indemnification, forbearance to ▇▇▇ or settlement
agreement with respect to Proprietary Rights other than in the ordinary course
of business. No claims have been asserted by any person with respect to the
validity of the ownership or right to use the Proprietary Rights of the Company
or the Subsidiary and, to the knowledge of the Company, there is no reasonable
basis for any such claim to be successful. The Proprietary Rights are valid and
enforceable and no registration relating thereto has lapsed, expired or been
abandoned or canceled or is the subject of cancellation or other adversarial
proceedings, and all applications therefore are pending and are in good
standing. The Company and the Subsidiary have complied, in all material
respects, with their respective contractual obligations relating to the
protection of the Proprietary Rights used pursuant to licenses. To the knowledge
of the Company, no person is infringing on or violating the Proprietary Rights
owned or used by the Company.
o. No registration, authorization, approval, qualification or
consent of any court or governmental authority or agency is necessary in
connection with the offering, issuance or sale of the Shares hereunder, except
such as may be required under the 1933 Act or the 1933 Act Regulations or state
securities or Blue Sky laws (or such as may be required by the National
Association of Securities Dealers, Inc. ("NASD") or the Nasdaq National Market).
p. Except as otherwise disclosed in the Prospectus, the
Company and the Subsidiary now hold and at the Closing Date will hold, all
licenses, certificates, approvals and permits from all state, United States,
foreign and other regulatory authorities, including but not limited to the
United States Food and Drug Administration (the "FDA") and any foreign
regulatory authorities performing functions similar to those performed by the
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FDA, that are material to the conduct of the businesses of the Company and the
Subsidiary (as such business is currently conducted), except for such licenses,
certificates, approvals and permits the failure of which to hold would not have
a Material Adverse Effect, all of which are valid and in full force and effect
(and there is no proceeding pending or, to the knowledge of the Company,
threatened which may cause any such license, certificate, approval or permit to
be withdrawn, canceled, suspended or not renewed). Neither the Company nor the
Subsidiary is in violation of any law, order, rule, regulation, writ, injunction
or decree of any court or governmental agency or body, including, but not
limited to, the FDA, and neither the Company nor the Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
permit or any circumstance which would lead them to believe that such
proceedings are reasonably likely which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect. All of the descriptions in the Registration Statement and
Prospectus of the legal and governmental proceedings by or before the FDA or any
foreign, state or local governmental body exercising comparable authority are
true, complete and accurate in all material respects.
q. The Company has all corporate power and authority to enter
into this Agreement and the Escrow Agreement, and to perform its obligations
hereunder and thereunder, and all consents, authorizations, approvals and orders
required in connection herewith and therewith have been obtained, except such as
may be required under state securities or Blue Sky laws or the by-laws and rules
of the NASD and, if the Registration Statement is not effective under the 1933
Act as of the time of execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the 1933 Act. Each of this
Agreement and the Escrow Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
nor or hereafter in effect relating to or affecting creditors' rights generally
or by general principles of equity relating to the availability of remedies and
except as rights to indemnity and contribution hereunder may be limited by
federal or state securities laws or the public policy underlying such laws.
r. There are no persons with registration or other similar
rights to have any securities registered pursuant to the Registration Statement
or otherwise registered by the Company under the 1933 Act, other than those
which have been waived.
s. No order preventing or suspending the use of any
preliminary prospectus has been issued and no proceedings for that purpose are
pending, threatened, or, to the knowledge of the Company, contemplated by the
Commission; and to the knowledge of the Company, no order suspending the
offering of the Shares in any jurisdiction designated by the Placement Agents
pursuant to Section 5(f) of this Agreement has been issued and, to the knowledge
of the Company, no proceedings for that purpose have been instituted or
threatened or are contemplated.
t. The Company and the Subsidiary have good and marketable
title to their respective properties, free and clear of all material security
interests, mortgages, pledges, liens, charges, encumbrances, claims and equities
of record. The properties of the Company and the Subsidiary are, in the
aggregate, in good repair (reasonable wear and tear excepted), and suitable for
their respective uses. Any real properties held under lease by the Company and
the Subsidiary are held by it under valid, subsisting and enforceable leases
with such exceptions as are not material and
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do not interfere with the conduct of the business of the Company or the
Subsidiary.
u. The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization,
(ii)transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
v. The Company and the Subsidiary have conducted and are
conducting their businesses in compliance with all applicable Federal, state,
local and foreign statutes, laws, rules, regulations, ordinances, codes,
decisions, decrees, directives and orders, except where the failure to do so
would not, singly or in the aggregate, have a Material Adverse Effect.
w. To the Company's knowledge, neither the Company nor the
Subsidiary nor any employee or agent of the Company or the Subsidiary have made
any payment of funds of the Company or the Subsidiary or received or retained
any funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the Prospectus.
x. The Company is not now, and after sale of the Shares to be
sold by it hereunder and application of the net proceeds from such sale as
described in the Prospectus under the caption "Use of Proceeds" will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
y. All offers and sales of capital stock of the Company prior
to the date hereof were at all relevant times duly registered or exempt from the
registration requirements of the 1933 Act and were duly registered or subject to
an available exemption from the registration requirements of the applicable
state securities or Blue Sky laws.
z. The Company has complied with all provisions of Florida
H.B. 1771, codified as Section 517.075 of the Florida statutes, and all
regulations promulgated thereunder relating to issuers doing business with Cuba.
aa. The Common Stock is registered pursuant to Section 12(g)
of the 1934 Act. The Shares and the Selling Shareholder Shares have been duly
authorized for quotation on the Nasdaq National Market. The Company has taken no
action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the 1934 Act or delisting the Common
Stock from the Nasdaq National Market ("NNM"), nor has the Company received any
notification that the Commission or the NNM is contemplating terminating such
registration or listing.
bb. Neither the Company, nor, to its knowledge, any of its
officers, directors or affiliates has taken, and at the Closing Date, neither
the Company nor, to its knowledge, any of its officers, directors or affiliates
will have taken, directly or indirectly, any action which has constituted, or
might reasonably be expected to constitute, the stabilization or manipulation of
the price of sale or resale of the Common Stock.
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cc. The Company maintains insurance of the types and in
amounts adequate for its and its Subsidiary's businesses and consistent with
insurance coverage maintained by similar companies in similar businesses,
including but not limited to, insurance covering clinical trial liability,
product liability and real and personal property owned or leased against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect.
dd. The Company and the Subsidiary have filed all material
U.S. and foreign tax returns required to be filed, which returns are true and
correct in all material respects, and neither the Company nor the Subsidiary is
in default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or otherwise assessed,
other than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without interest which were
payable pursuant to said returns or any assessments with respect thereto.
ee. Except as described in the Prospectus, to the Company's
knowledge, there are no rule making or similar proceedings before the FDA or
comparable Federal, state, local or foreign government bodies which involve or
affect the Company or the Subsidiary, which, if the subject of an action
unfavorable to the Company or the Subsidiary could involve a prospective
Material Adverse Effect.
ff. Except for the compassionate use of the graft products as
described in the Registration Statement and Prospectus, the human clinical
trials conducted by the Company or in which the Company has participated that
are described in the Registration Statement and Prospectus or the results of
which are referred to in the Registration Statement and Prospectus, and any
studies and tests conducted on behalf of the Company, were and, if still
pending, are being conducted in accordance with experimental protocols,
procedures and controls pursuant to accepted professional scientific standards
for the clinical study of new medical devices; the descriptions of the results
of such studies, tests and trials contained in the Registration Statement and
Prospectus are accurate and complete in all material respects, and the Company
has no knowledge of any other trials, studies or tests, the results of which
reasonably call into question the results described or referred to in the
Registration Statement and Prospectus; and the Company has not received any
notices or correspondence from the FDA or any other governmental agency
requiring the termination, suspension or modification of any clinical trials
conducted by, or on behalf of, the Company in which the Company has participated
that are described in the Registration Statement and Prospectus or the results
of which are referred to in the Registration Statement or Prospectus.
gg. Neither the Company nor the Subsidiary has received any
communication (whether written or oral) relating to the termination or
threatened termination or modification or threatened modification of any
material, consulting, licensing, marketing, research and development,
cooperative or any similar agreement. Each of the Company's or the Subsidiary's
collaborative and licensing agreements is in effect substantially as described
in the Prospectus.
hh. To the knowledge of the Company, if any full-time employee
identified in the Prospectus has entered into any non-competition,
non-disclosure, confidentiality or other similar agreement with any party other
than the Company or any Subsidiary, such employee is neither in violation
thereof nor is expected to be in violation thereof as a result of the business
conducted or expected to be conducted by the Company or the Subsidiary as
described in the Prospectus or such person's performance of his
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obligations to the Company or any Subsidiary; neither the Company nor the
Subsidiary has received written notice that any consultant or scientific advisor
of the Company or the Subsidiary is in violation of any noncompetition,
non-disclosure, confidentiality or similar agreement.
ii. The Company has delivered to the Placement Agents an
agreement in the form of Attachment A hereto to the effect that neither the
Company nor any of its offers, directors or affiliates will, without the prior
written consent of the Representative, offer, sell, or otherwise dispose (or
announce any offer, sale, grant of any option to purchase or other disposition)
of any shares of capital stock of the Company or securities convertible into, or
exchangeable or exercisable for, shares of capital stock of the Company for a
period of 90 days after the Closing Date other than (i) securities issued
pursuant to contractual obligations of the Company in effect as of August 29,
1997 and disclosed to and approved by the Placement Agents prior to the
Effective Date; (ii) securities issued on a pro rata basis to all holders of
outstanding equity securities of the Company; and (iii) equity securities issued
pursuant to employee benefit or purchase plans in effect on August 29, 1997.
4. Representations, Warranties and Covenants of the Selling
Shareholder. The Selling Shareholder represents, warrants and covenants to the
Company and to the Placement Agents that:
a. The Selling Shareholder is, and at the Closing Date will
be, duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with corporate power and authority to own,
lease and operate its properties and to conduct its business.
b. The Selling Shareholder has all corporate power and
authority to enter into this Agreement and the Escrow Agreement and to carry out
all the terms and provisions hereof and thereof to be carried out by it. All
authorizations and consents necessary for the execution and delivery by the
Selling Shareholder of this Agreement and the Escrow Agreement have been given.
This Agreement and the Escrow Agreement have been duly authorized, executed and
delivered by or on behalf of the Selling Shareholder and constitute valid and
binding agreements of the Selling Shareholder and are enforceable against the
Selling Shareholder in accordance with their terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws now
or hereafter in effect relating to or affecting creditors' rights generally or
by general principles of equity relating to the availability of remedies and
except as rights to indemnity or contribution may be limited by federal or state
securities laws and the public policy underlying such laws.
c. The Selling Shareholder has full power and authority to
enter into the Power of Attorney in the form heretofore furnished to the Selling
Shareholder and the Custody Agreement in the form heretofore furnished to the
Selling Shareholder and to carry out all the terms and provisions thereof to be
carried out by it. All authorizations and consents necessary for the execution
and delivery by the Selling Shareholder of the Power of Attorney and the Custody
Agreement have been given. Each of the Power of Attorney and the Custody
Agreement has been duly authorized, executed and delivered by the Selling
Shareholder and is enforceable against the Selling Shareholder in accordance
with the terms thereof, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws now or hereafter in effect relating to
or affecting creditors' rights generally or by general principles of equity
relating to the availability of remedies.
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d. The Selling Shareholder now has, and at the time of
delivery thereof hereunder will have, (i) good and marketable title to the
Selling Shareholder Shares to be sold by the Selling Shareholder hereunder, free
and clear of all encumbrances, and (ii) full legal right and power, and all
authorizations and approvals required by law, to sell, transfer and deliver the
Selling Shareholder Shares to the Investors hereunder and to make the
representations, warranties and agreements made by the Selling Shareholder
herein.
e. None of the execution, delivery or performance of this
Agreement, the Escrow Agreement, the Power of Attorney or the Custody Agreement
and the consummation of the transactions contemplated herein or therein by the
Selling Shareholder conflicts or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any encumbrance upon,
any property or assets of the Selling Shareholder pursuant to (i) the terms of
its organizational documents; (ii) the terms of any contract or other agreement
to which the Selling Shareholder is a party or by which it is bound or to which
any of its properties is subject, which conflict, breach, violation or default
would adversely affect the Selling Shareholders' ability to perform its
obligations hereunder; (iii) any statute, rule or regulation of any governmental
body having jurisdiction over the Selling Shareholder or any of its activities
or properties; or (iv) the terms of any judgment, decree or order of any
arbitration or governmental body having such jurisdiction.
f. No consent, approval, authorization or order of, or any
filing or declaration with any governmental body is required for the
consummation by the Selling Shareholder of the transactions on its part
contemplated herein, except such as have been obtained under the state
securities or Blue Sky laws and under the NASD rules.
g. The sale of the Selling Shareholder Shares proposed to be
sold by the Selling Shareholder is not prompted by the Selling Shareholder's
knowledge of any material adverse information concerning the Company or its
subsidiaries which is not set forth or described in the Prospectus.
h. On the date of the Prospectus, the information with respect
to the Selling Shareholder included therein did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading.
i. On the date that any Preliminary Prospectus was filed with
the Commission, the date the Prospectus is first filed with the Commission
pursuant to Rule 424(b) (if required), at all times subsequent to and including
the Closing Date and, when any post-effective amendment to the Registration
Statement becomes effective or any amendment or supplement to the Prospectus is
filed with the Commission, all information with respect to the Selling
Shareholder included in the Registration Statement, each Preliminary Prospectus
and the Prospectus (as amended or as supplemented if the Company shall have
filed with the Commission any amendment or supplement thereto), did or will
comply with all applicable provisions of the 1933 Act and the 1933 Act
Regulations and did or will contain all statements required to be stated therein
in accordance with the 1933 Act and the 1933 Act Regulations. On the Effective
Date and when any post-effective amendment to the Registration Statement becomes
effective, no information regarding the Selling Shareholder included in the
Registration Statement or any such amendment did or will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the
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statements therein not misleading. At the Effective Date, the date the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Date, the information regarding the Selling
Shareholder included in the Prospectus did not or will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
j. The Selling Shareholder has delivered to the Placement
Agents an agreement in the form of Attachment B hereto to the effect that it
will not, without the prior written consent of the Representative, offer, sell,
or otherwise dispose (or announce any offer, sale, grant of any option to
purchase or other disposition) of any shares of capital stock of the Company or
securities convertible into, or exchangeable or exercisable for, shares of
capital stock of the Company for a period of 90 days after the Closing Date.
5. Agreements of the Company and the Selling Shareholder. The
Company (as to Sections 5(a)-(j)) and the Selling Shareholder (as to Section
5(k)) covenant and agree with the Placement Agents as follows:
a. The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus would be required by law to be
delivered in connection with sales of the Shares by an underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Placement Agents within a reasonable period of time prior to the filing thereof
and the Placement Agents shall not have objected thereto in good faith.
b. The Company will use its best efforts to cause the
Registration Statement to become effective, and will notify the Placement Agents
promptly, and will confirm such advice in writing, (1) when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective, (2) of any request by the securities or other governmental
authority (including, without limitation, the Commission) of any jurisdiction
for amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (3) of the issuance by any securities or other
governmental authority (including, without limitation, the Commission) of any
jurisdiction of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose or the threat
thereof, (4) of the happening of any event during the period mentioned in
Section 5(a) that in the judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue or that requires the making of
any changes in the Registration Statement or the Prospectus in order to make the
statements therein, in light of the circumstances in which they are made, not
misleading and (5) of receipt by the Company or any representative or attorney
of the Company of any other communication from the securities or other
governmental authority (including, without limitation, the Commission) of any
jurisdiction relating to any of the Registration Statement, any Preliminary
Prospectus or the Prospectus. If at any time any securities or other
governmental authority (including, without limitation, the Commission) of any
jurisdiction shall issue any order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible moment. If the Company has
omitted any information from the Registration Statement, pursuant to Rule 430A,
it will use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to said Rule 430A and to notify
the Placement Agents promptly of all such filings. If the Company elects to rely
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on Rule 462(b), the Company shall both file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) and pay the applicable filing
fees in accordance with Rule 111 of the Rules and Regulations by the earlier of
(A) 10:00 p.m., New York time, on the date of this Agreement and (B) the time
confirmations are sent or given, as specified by Rule 462(b)(2).
c. If, at any time when a Prospectus relating to the Shares
and the Selling Shareholder Shares is required to be delivered under the 1933
Act, any event occurs as a result of which the Prospectus, as then amended or
supplemented, would, in the judgment of counsel to the Company or counsel to the
Placement Agents, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or the
Registration Statement, as then amended or supplemented, would, in the judgment
of counsel to the Company or counsel to the Placement Agents, include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading, or if for any other reason it is
necessary, in the judgment of counsel to the Company or counsel to the Placement
Agents, at any time to amend or supplement the Prospectus or the Registration
Statement to comply with the 1933 Act or the 1933 Act Regulations, the Company
will promptly notify the Placement Agents and, subject to Section 5(a) hereof,
will promptly prepare and file with the Commission, at the Company's expense, an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus that corrects such statement or omission or effects such compliance
and will deliver to the Placement Agents, without charge, such number of copies
thereof as the Placement Agents may reasonably request. The Company consents to
the use of the Prospectus or any amendment or supplement thereto by the
Placement Agents.
d. The Company will furnish to the Placement Agents and its
counsel, without charge, (i) an aggregate of three signed copies of the
registration statement described in Section 3(a) hereof and each pre-effective
amendment thereto, including financial statements and schedules, and all
exhibits thereto, and any registration statement filed pursuant to Rule 462(b)
and (ii) so long as a prospectus relating to the Shares and the Selling
Shareholder Shares is required to be delivered under the 1933 Act, as many
copies of each Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto as the Placement Agents may reasonably request.
e. The Company will comply with all the undertakings contained
in the Registration Statement.
f. Prior to the sale of the Shares and the Selling Shareholder
Shares to the Investors, the Company and the Selling Shareholder will cooperate
with the Placement Agents and their counsel in connection with the registration
or qualification of the Shares and the Selling Shareholder Shares for offer and
sale under the state securities or Blue Sky laws of such jurisdictions as the
Placement Agents may request; provided, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject.
g. During the period of five years commencing on the Effective
Date, the Company will furnish to the Placement Agents copies of such financial
statements and other periodic and special reports as the Company may from time
to time distribute generally to the holders of any class
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of its capital stock, and will furnish to the Placement Agents a copy of each
annual or other report it shall be required to file with the Commission.
h. The Company will make generally available to holders of its
securities, as soon as may be practicable, but in no event later than the last
day of the fifteenth full calendar month following the calendar quarter in which
the Effective Date falls, a consolidated earnings statement (which need not be
audited but shall be in reasonable detail) for a period of 12 months ended
commencing after the Effective Date, and satisfying the provisions of Section
11(a) of the 1933 Act (including Rule 158 of the 1933 Act Regulations).
i. Neither the Company nor the Selling Shareholder will, at
any time, directly or indirectly, take any action intended, or which might
reasonably be expected, to cause or result in, or which will constitute,
stabilization of the price of the Common Stock to facilitate the sale or resale
of any of the Shares or the Selling Shareholder Shares.
j. The Company will apply the net proceeds from the offering
and sale of the Shares in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
k. The Selling Shareholder will deliver to the Placement
Agents and the Escrow Agent prior to or on the effective date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
You may waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their performance.
6. Expenses. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay
all costs and expenses incident to the performance of the obligations of the
Company under this Agreement, including but not limited to costs and expenses of
or relating to (1) the preparation, printing and filing of the Registration
Statement (including each pre- and post-effective amendment thereto) and
exhibits thereto, any registration statement filed pursuant to Rule 462(b), each
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, including all fees, disbursements and other charges of counsel to
the Company, (2) the preparation and delivery of certificates representing the
Shares, (3) furnishing (including costs of shipping and mailing) such copies of
the Registration Statement (including all pre- and post-effective amendments
thereto), the Prospectus and any Preliminary Prospectus, and all amendments and
supplements to the Prospectus, as may reasonably be requested for use in
connection with the direct placement of the Shares and the Selling Shareholder
Shares, (4) the listing of the Common Stock on the NNM, (5) any filings required
to be made by the Placement Agents with the NASD and the registration or
qualification of the Shares and the Selling Shareholder Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions designated
pursuant to Section 5(f), including the reasonable fees, disbursements and other
charges of counsel to the Placement Agents in connection therewith, up to a
maximum of $10,000, and the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, (6) fees, disbursements and other
charges of counsel to the Company and (7) the fees of the Escrow Agent. The
Company shall reimburse the Placement Agents for all their travel expenses,
reasonable legal fees, disbursements and other charges and other out-of-pocket
expenses incurred in connection with the engagement hereunder, up to a maximum
of $150,000,
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regardless of whether or not the placement of the Shares is consummated as
contemplated hereby.
If, within three months after the termination of this Agreement, the
Company shall sell any shares of Common Stock to investors previously identified
and/or contacted by the Placement Agents in their capacity as such hereunder,
then the Company shall pay the Placement Agents, at the time of each such sale,
an amount equal to the Placement Fee with respect to the gross proceeds to the
Company from each such sale; provided, however, that if any sale which would
give rise to the Company's obligation to pay the Placement Fee to the Placement
Agents pursuant to this paragraph also gives rise to the Company's obligation to
pay fees to Vector Securities International, Inc. pursuant to that certain
letter agreement dated May 27, 1997 (the "Letter Agreement"), then the only fees
which shall be payable by the Company shall be paid pursuant to such Letter
Agreement and not pursuant to this paragraph.
7. Conditions of the Obligations of the Placement Agents. The
obligations of the Placement Agents hereunder are subject to the following
conditions:
a. Notification that the Registration Statement has become
effective shall be received by the Placement Agents not later than 5:30 p.m.,
Chicago time, on the date of this Agreement or at such later date and time as
shall be consented to by the Placement Agents and all filings required by Rule
424 of the Rules and Regulations and Rule 430A shall have been made.
b. (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceedings for that
purpose shall be pending or threatened by any securities or other governmental
authority (including, without limitation, the Commission), (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares and the Selling Shareholder Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceeding for such purpose shall be pending before or threatened or
contemplated by any securities or other governmental authority (including,
without limitation, the Commission), (iii) any request for additional
information on the part of the staff of any securities or other governmental
authority (including, without limitation, the Commission) shall have been
complied with to the satisfaction of the staff of the Commission or such
authorities and iv) after the date hereof no amendment or supplement to the
Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Placement Agents and the Placement Agents did
not object thereto in good faith, and the Placement Agents shall have received
certificates, dated the Closing Date and signed by the President and Chief
Executive Officer or the Chairman of the Board of Directors of the Company, and
the Chief Financial Officer of the Company (who may, as to proceedings
threatened, rely upon the best of their information and belief), to the effect
of clauses (i), (ii) and (iii).
c. Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) there shall not have been
a material adverse change in the general affairs, business, prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company and the Subsidiary, taken as a whole, whether or not
arising from transactions in the ordinary course of business, in each case other
than as set forth in or contemplated by the Registration Statement and the
Prospectus and (ii) neither the Company nor the Subsidiary shall have sustained
any material loss or interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or
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other governmental action, order or decree, which is not set forth in the
Registration Statement and the Prospectus, if in the judgment of the Placement
Agents any such development makes it impracticable or inadvisable to consummate
the sale and delivery of the Shares to Investors at the public offering price.
d. Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or the Subsidiary
or any of its officers or directors in their capacities as such, before or by
any Federal, state or local court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, in which litigation or
proceeding an unfavorable ruling decision or finding would have a Material
Adverse Effect.
e. Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at the
Closing Date, as if made on such date, and all covenants and agreements herein
contained to be performed on the part of the Company and all conditions herein
contained to be fulfilled or complied with by the Company at or prior to the
Closing Date shall have been duly performed, fulfilled or complied with.
f. The Placement Agents shall have received:
i) The favorable opinion, dated as of the Closing
Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇, counsel for the Company, in form and
substance satisfactory to counsel for the Placement Agents, to the effect that:
(a) The Company and the Subsidiary have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation.
(b) The Company has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus and to enter
into and perform its obligations under this Agreement and the Escrow
Agreement.
(c) To their knowledge and information, the Company is
duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, except to the extent that the failure to be so qualified or be
in good standing would not materially and adversely affect the Company or
its business, properties, financial condition or results of operations.
(d) The number of shares of authorized, issued and
outstanding capital stock of the Company is as set forth in the Prospectus
under "Capitalization" (except for subsequent issuances, if any, pursuant
to reservations, agreements, employee benefit plans or the exercise of
convertible securities referred to in the Prospectus), and the shares of
issued and outstanding capital stock of the Company, including the Common
Stock, have been duly authorized and validly issued and are fully paid and
non-assessable and have not been issued in violation of or are not
otherwise subject to any preemptive rights set forth in the Articles or
Bylaws of the Company, or to their knowledge and information, other
similar rights, and all offers and sales of the Company's capital stock
since November, 1992 were at all relevant times
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exempt from the registration or qualification requirements of the 1933 Act
and were duly registered or the subject of an available exemption from the
registration or qualification requirements of the securities or Blue Sky
laws of the various states.
(e) The Shares to be issued and sold by the Company to
the Investors pursuant to this Agreement have been duly authorized for
issuance and sale to the Investors pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued and
fully paid and non-assessable; and the issuance of the Shares is not
subject to preemptive or, to their knowledge and information, other
similar rights.
(f) To their knowledge and information, except as
described in the Prospectus, there are no outstanding options, warrants or
other rights granted to or by the Company to purchase shares of capital
stock or other securities of the Company or the Subsidiary and there are
no commitments, plans or arrangements to issue any shares of capital stock
or other securities.
(g) This Agreement and the Escrow Agreement have been
duly authorized, executed and delivered by the Company.
(h) The form of certificate used to evidence each of the
Shares and the Selling Shareholder Shares is in due and proper form and
complies with all applicable statutory requirements.
(i) The information in the Prospectus or in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996
incorporated by reference in the Prospectus under "Risk Factors,"
"Business --Legal Proceedings," "Description of Capital Stock" to the
extent that it constitutes matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been reviewed by them
and is correct in all material respects and fairly and correctly presents
the information called for with respect thereto.
(j) To their knowledge and information, there are no
contracts, indentures, mortgages, loan agreements, deeds, trusts, notes,
leases, subleases, voting trusts, voting agreements or other instruments
or agreements required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed as exhibits thereto, the descriptions thereof
or references thereto are correct; and to the best of their knowledge and
information, no default exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, loan agreement, deed, trust, note,
lease, sublease, voting trust, voting agreement or other instrument or
agreement of the Company or the Subsidiary which is filed as an exhibit
under item 10 of item 601 of Regulation S-K in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996.
(k) No authorization, approval, consent or order of any
court or governmental authority or agency is required in connection with
the offering, issuance or sale of the Shares and the Selling Shareholder
Shares to the Investors, except such as may be required under the 1933 Act
or the 1933 Act Regulations or state securities or Blue Sky laws or such
as may be required by the NASD; and the execution, delivery and
performance of this Agreement and the consummation of the
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transactions contemplated herein and compliance by the Company with its
obligations hereunder will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or the
Subsidiary pursuant to, any contract, indenture, mortgage, loan agreement,
note, deed, trust, lease, sublease, voting trust, voting agreement or
other instrument or agreement to which the Company or the Subsidiary is a
party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or the Subsidiary is subject, nor will
such action result in any violation of the provisions of the charter or
bylaws of the Company or the Subsidiary, or any applicable statute, law,
rule, regulation, ordinance, code, decision, directive or order.
(l) Neither the execution and delivery nor the
performance of the Underwriting Agreement by the Company (i) conflicts
with any provision of the Restated Articles of Incorporation or Bylaws of
the Company, (ii) violates any law applicable to the Company (except with
respect to laws related to patents, proprietary rights and all laws, rules
and regulations administered by or under the jurisdiction of the United
States Food and Drug Administration, with respect to which we express no
opinion), or (iii) results in a breach or violation of, or constitutes a
default under, any term of any agreement or instrument filed as an exhibit
to the Registration Statement or filed as an exhibit to the 1995 Form
10-K, or of any order, writ or decree, of which we have knowledge, of any
court, governmental agency or body.
(m) To their knowledge and information, there are no
proceedings, pending or threatened before any regulatory body or agency,
which if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect.
(n) Except as described in the Prospectus and which have
all been waived as required, to their knowledge, there are no persons with
registration or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the
Company under the ▇▇▇▇ ▇▇▇.
(o) The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(p) To their knowledge and information, the Company is
in compliance with, and conducts its respective businesses in conformity
with, all applicable laws and regulations relating to the operation of its
business as described in the Registration Statement, except to the extent
that any failure so to comply or conform would not have a Material Adverse
Effect.
(q) The Registration Statement and all post-effective
amendments, if any, have become effective under the 1933 Act; any required
filing of the Prospectus, and any supplements thereto or the Term Sheet,
pursuant to Rule 424(b) and if applicable, Rule 434, has been made in the
manner and within the time period required; and to their best knowledge
and information, no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceedings therefor have been instituted or are pending or contemplated
under the 1933 Act.
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ii) The favorable opinion, dated as of the Closing
Date, of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C., regulatory counsel to the Company, in
form and substance satisfactory to counsel for the Placement Agents to the
effect that:
(a) The information in the Prospectus under the captions
"Risk Factors--U.S. Government Regulations," "Risk Factors--Dependence on
Suppliers," "Business--Government Regulation," "Prospectus Summary," and
"Business," insofar as they constitute summaries of Food and Drug
Administration ("FDA") regulatory provisions in general, have been
reviewed by us and are correct in all material respects and fairly and
correctly present the material information called for with respect
thereto.
(b) We have not conducted any investigation of the facts
and our representation of Thoratec on FDA issues has been limited to a
single FDA matter. We have reviewed the Registration Statement, and
nothing has come to our attention that leads us to believe that, with
respect to matters pending before the FDA, the Registration Statement, at
the time it became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus, as of its date (unless the term "Prospectus" refers to a
prospectus which has been provided to the Placement Agents by the Company
for use in connection with the offering of the Shares which differs from
the Prospectus on file at the Commission at the time the Registration
Statement becomes effective, in which case at the time it is first
provided to the Placement Agents for such use) or at the Closing Date or
Option Closing Date (as such terms are defined in the Placement Agency
Agreement), as the case may be, included or includes an untrue statement
of a material fact or omitted or omits to state a material fact relating
to matters pending before the FDA necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
iii) The favorable opinion, dated as of the Closing
Date of Fish & ▇▇▇▇▇▇▇▇▇▇ P.C., special patent counsel to the Company, in form
and substance satisfactory to counsel for the Placement Agents to the effect
that:
(a) The information in the Prospectus contained under
the headings "Risk Factors--Patents and Protection of Proprietary
Technology" and "Business--Patents" to the extent that it constitutes
description of legal matters or summaries of legal matters, documents or
proceedings, has been reviewed by us and is correct in all material
respects and it fairly and correctly presents the information presented
therein.
(b) To our knowledge, there are no pending legal or
governmental proceedings, or allegations on the part of any person of
infringement by the Company of patents, trade secrets, trademarks, service
marks, or copyrights of others, nor to our knowledge, has any threat been
communicated to the Company that such proceedings threatened or
contemplated. To our knowledge, the Company is not infringing any patents,
trademarks, service marks, copyrights or violating any trade secrets of
others. We conducted an infringement search of the Patent and Trademark
Office (the "PTO") patent records in the subject matter areas of
biomaterials and arterial grafts, and we reviewed the patents uncovered in
the search. We have not reviewed the prosecution files and make no opinion
as to such files. To our knowledge, no person is
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infringing or otherwise violating any of the Company's patents, trade
secrets, trademarks, service marks, copyrights or other proprietary
information or know-how of the Company in a way which could materially
affect the use thereof by the Company.
(c) To our knowledge, the Company owns or possesses
sufficient licenses or other rights to use of all patents, trade secrets,
trademarks, service marks or other proprietary information or know-how
described in the above-identified headings of the Prospectus necessary to
conduct the business now being or proposed to be conducted by the Company
as described in the Prospectus.
(d) With respect to the United States patents and patent
applications to biomaterials, MVAD and grafts identified in the heading
"Business--Patents" in the Prospectus, the Company is listed in the
records of the United States Patent and Trademark Office ("PTO") as the
sole assignee of record in each of the relevant patents and applications
listed in the attached Schedule I, except that U.S. Patent No. 5,443,504
is assigned to ▇▇▇▇▇▇ ▇▇▇▇ and U.S. Patent No. 4,222,127 is assigned to
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇. Additionally, U.S. Patent Nos. 5,235,003 and 4,731,073
are solely assigned to the Company by virtue of assignments recorded in
their respective parent applications, therefore there are no assignments
in the PTO recorded on these patents. To our knowledge, there are no
asserted claims of any person relating to the scope of or to the ownership
of the patents or applications, nor to our knowledge has any unasserted
claim relating to such scope or ownership been communicated to the
Company. To our knowledge, there are no outstanding liens which have been
filed in the PTO against the patents or applications in Schedule I, except
as listed. There are no material defects of form in the preparation or
filing of the applications which we have reviewed. A list of the
applications which we have reviewed is attached as Schedule II. These
applications are being diligently prosecuted and no application has been
finally rejected. None of these applications is abandoned.
(e) To our knowledge, according to our files of the
foreign patents listed in Schedule I, the Company is listed as the sole
assignee of record.
(f) To our knowledge, there are no asserted claims of
any persons relating to the scope or ownership of the foreign patents in
Schedule I nor, to our knowledge, has any unasserted claim relating to
such scope or ownership been communicated to the Company. To our
knowledge, there are no material defects of form in the preparation or
filing of the foreign applications. The foreign applications have
completed prosecution, and issued as patents indicated in Schedule I.
(g) The Company is the exclusive licensee in fields of
use respectively specified in the license with ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ dated March
29, 1989, and in the license with ▇. ▇▇▇▇▇▇▇ and ▇. ▇▇▇▇▇▇, dated October
18, 1993, of the United States patent and foreign patent and patent
applications in Schedule III. With your permission, we assume the validity
of the signatures and proper authorization of the signatures to such
licenses. To our knowledge, such licenses are duly executed, validly
binding and enforceable in accordance with their terms and the Company is
not in default of any material provision of such license. To our
knowledge, there are no asserted claims of any persons relating to the
scope or ownership of the foreign patents or foreign applications in
Schedule III.
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(h) To our knowledge, and upon inquiry of the Company,
all relevant prior art references known to the Company or its counsel in
the prosecution of the U.S. patents and applications in Schedules I and II
as "prosecuted by us" were disclosed to the PTO and to our knowledge and
upon inquiry of the Company, neither we nor the Company made any
misrepresentation to or concealed any material fact from the PTO during
such prosecution.
(i) Upon inquiry of the Company, the Company takes
security measures adequate to assert trade secret protection in its
non-patented technology. On inquiry of the Company, the agreements
executed by the Company's employees, consultants and other advisors
respecting trade secrets, confidentiality, or intellectual property rights
appear to be valid, binding and enforceable in accordance with their
terms.
(j) We are not aware of any other matter that leads us
to believe that, with respect to licenses, patents, trade secrets,
copyrights or other proprietary information or know-how owned or used by
the Company which are the subject of the foregoing opinion, the
registration statement, at the time it became effective, contained an
untrue statement of material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (as of its date, unless the term
"Prospectus" refers to a prospectus which has been provided to the
Placement Agents by the Company for use in connection with the offering of
the securities which differs from the Prospectus on file with the
Commission at the time the registration statement becomes effective, in
which case at the time it is first provided to the Placement Agents for
such use or at the closing date or the optional closing date, as the case
may be), included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of circumstances under which they were
made, not misleading.
iv) The favorable opinion, dated as of the Closing
Date, of ▇▇▇▇▇ & ▇▇▇▇▇, LLP, special patent counsel to the Company, in form and
substance satisfactory to counsel for the Placement Agents, to the effect that:
(a) The information in the Prospectus insofar as it
relates to the MVAD Patents, contained under the headings "Risk Factors--
Patents and Protection of Proprietary Technology" and "Business--Patents
and Proprietary Rights," and to the extent that such information
constitutes matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, has been reviewed by the Firm and is
correct in all material respects and correctly describes the information
called for with respect thereto. Two U.S. patents (5,443,504 ("'504
Patent") to Hill and 5,344,385 ("'385 Patent") to Buck et al.) have issued
and three U.S. patent applications are currently pending that relate to
the MVAD technology. The '385 Patent was issued with the Company as
assignee of record. The '504 Patent was issued in the name of ▇▇▇▇ ▇.
▇▇▇▇. The '504 Patent covers (with apparatus and method of use claims) the
overall design of an MVAD system, while the '385 Patent covers an access
port/valve assembly used with the energy conversion part of the MVAD
system.
(b) To the best of the Firm's knowledge, there are no
pending legal or governmental proceedings (other than those associated
with the pending Applications in the U.S. Patent and Trademark Office), or
allegations on the part of any person of infringement, relating to
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the MVAD Patent rights of the Company nor, to the best of the Firm's
knowledge, have any such proceedings been threatened or contemplated.
(c) To the best of the Firm's knowledge, the MVAD
Applications (defined on Schedule IV hereto), as to form, were filed in
compliance with the Rules and Regulations governing United States patent
applications, the pending MVAD Applications are being prosecuted in
accordance with normal practices and none of the pending MVAD Applications
have been finally rejected or abandoned. To the best of the Firm's
knowledge, there are no asserted or unasserted claims of any persons
relating to the ownership of the MVAD Patents or MVAD Applications (except
that U.S. Patent No. 5,443,504 is owned by ▇▇▇▇ ▇. ▇▇▇▇) and there are no
liens which have been filed in the U.S. Patent and Trademark Office
against any of the MVAD Patents or the MVAD Applications.
(d) To the best of the Firm's knowledge, all pertinent
prior art references known to the Firm during the prosecution of the MVAD
Patents and the MVAD Applications were disclosed to the U.S. Patent and
Trademark Office and, to the best of the Firm's knowledge, the Firm has
complied with the duty of candor in the dealings with the U.S. Patent and
Trademark Office during such prosecution.
(e) Having due regard to the limited nature of our
engagement, nothing has come to our attention that leads us to believe
that the Company does not have a reasonable expectation that the MVAD
Applications will eventually result in issued patents, or that any patents
issued in respect of any such Applications will not be valid or will not
afford the Company reasonable patent protection relative to the subject
matter thereof.
v) In giving their opinions required by subsection (f)(i) of
this Section 7, ▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇ shall additionally state that
nothing has come to their attention that leads them to believe that the
Registration Statement (except for financial statements and schedules and other
financial and statistical information included therein, as to which counsel need
make no statement), at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements and schedules and other
financial and statistical information included therein, as to which counsel need
make no statement), as of its date (unless the term "Prospectus" refers to a
prospectus which has been provided to the Placement Agents by the Company for
use in connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective, in which case at the time it is first provided to the
Placement Agents for such use) or at the Closing Date, included or includes an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
g. At the time of the execution of this Agreement, the Placement
Agents shall have received from Deloitte & Touche LLP a letter dated such date,
in form and substance satisfactory to the Placement Agents, to the effect that
(i) they are independent public accountants with respect to the Company within
the meaning of the 1933 Act and the 1933 Act Regulations, (ii) it is their
opinion that the financial statements and supporting schedules included in the
Registration Statement and covered by their opinions therein comply as to form
in all material respects with the applicable accounting
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requirements of the 1933 Act and the 1933 Act Regulations, (iii) based upon
limited procedures set forth in detail in such letter, nothing has come to their
attention which causes them to believe that (A) the unaudited financial
statements and supporting schedules of the Company included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations and the
1934 Act and the 1934 Act Regulations or are not presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement or (B) at a specified date not more than five days prior
to the date of this Agreement, there has been any change in the capital stock of
the Company or any increase in the consolidated long-term debt of the Company or
any decrease in consolidated net current assets or net assets as compared with
the amounts shown in the June 30, 1997 balance sheet included in the
Registration Statement or, during the period from June 30, 1997 to a specified
date not more than five days prior to the date of this Agreement, there were any
decreases, as compared with the corresponding period in the preceding year, in
consolidated revenues, net income or net income per share of the Company, except
in all instances for changes, increases or decreases which the Registration
Statement and the Prospectus disclose have occurred or may occur and (iv) in
addition to the examination referred to in their opinions and the limited
procedures referred to in clause(iii) above, they have carried out certain
specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are included in the
Registration Statement and Prospectus and which are specified by the Placement
Agents, and have found such amounts, percentages and financial information to be
in agreement with the relevant accounting, financial and other records of the
Company identified in such letter.
h. The Placement Agents shall have received from Deloitte & Touche
LLP a letter, dated as of the Closing Date, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (g) of this
Section, except that the specified date referred to shall be a date not more
than five days prior to the Closing Date.
i. At the Closing Date, there shall be furnished to the Placement
Agents a certificate, dated the date of its delivery, signed by each of the
Chief Executive Officer and the Chief Financial Officer of the company, in form
and substance satisfactory to the Placement Agents, to the effect that:
i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus and (A) as of the date of such
certificate, (x) the Registration Statement does not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading and (y) the Prospectus does not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading and (B)
since the Effective Date no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein not untrue or misleading in any material respect.
ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct in all material
respects.
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iii) Each of the covenants required herein to be performed by
the Company on or prior to the date of such certificate has been duly,
timely and fully performed and each condition herein required to be
complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with.
iv) No stop order suspending the effectiveness of the
Registration Statement or of any part thereof has been issued and no
proceedings for that purpose have been instituted or, to their knowledge,
are contemplated by the Commission.
v) Subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse change in
the financial position or results of operations of the Company or the
Subsidiary, except as set forth in or contemplated by the Prospectus.
j. The Shares and the Selling Shareholder Shares shall be
qualified for sale in such states as the Placement Agents may reasonably
request, each such qualification shall be in effect and not subject to any
stop order or other proceeding on the Closing Date.
k. The Shares shall have been authorized for quotation on the
NNM.
l. Counsel for the Placement Agents shall have been furnished
with such documents and opinions as they may require in order to evidence
the accuracy of any of the representations or warranties or the
fulfillment of any of the conditions herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the
Shares as herein contemplated shall be satisfactory in form and substance
to the Placement Agents and counsel for the Placement Agents. Any
certificate or document signed by any officer of the Company and delivered
to you or to your counsel shall be deemed a representation and warranty by
the Company to each of you as to the statements made therein and such
statements are true and correct except where the inaccuracy of such
statements alone or in the aggregate would not have a Material Adverse
Effect.
m. The Selling Shareholder shall have furnished to the
Placement Agents such certificates, in addition to those specifically
mentioned herein, as the Placement Agents may have reasonably requested as
to the accuracy and completeness at the Closing Date of any statement in
the Registration Statement or the Prospectus regarding the Selling
Shareholder, as to the accuracy at the Closing Date of the representations
and warranties of the Selling Shareholder as to the performance by the
Selling Shareholder of its obligations hereunder, or as to the fulfillment
of the conditions concurrent and precedent to the obligations hereunder of
the Placement Agents.
8. Indemnification.
a. The Company shall indemnify and hold harmless the Placement
Agents and the Selling Shareholder, the directors, officers, employees and
agents of the Placement Agents and the Selling Shareholder and each person, if
any, who controls the Placement Agents or the Selling Shareholder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act from and
against any and all losses, claims, liabilities, expenses and damages, joint or
several, (including any and all investigative, reasonable legal and other
expenses reasonably incurred in connection with,
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and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which any of them may become subject under the 1933 Act or
other Federal or state statutory law or regulation, at common law or otherwise.
Such indemnity shall not, however, cover any such loss, claim, damage,
liability, cost or expense which is held in a final judgment of a court to have
arisen primarily out of the gross negligence or willful misconduct of the
Placement Agents. This indemnity agreement will be in addition to any liability
which the Company may otherwise have. The Company will not, without the prior
written consent of the Placement Agents or the Selling Shareholder, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification has been
sought hereunder (whether or not such Placement Agents or the Selling
Shareholder or any person who controls such Placement Agents or the Selling
Shareholder within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act is a party to each claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Placement Agents and the Selling Shareholder and each such controlling person
from all liability arising out of such claim, action, suit or proceeding.
b. The Selling Shareholder shall indemnify and hold harmless
the Placement Agents and the Company, the directors, officers, employees and
agents of the Placement Agents and the Company and each person, if any, who
controls the Placement Agents or the Company within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act from and against any and all losses,
claims, liabilities, expenses and damages, joint or several, (including any and
all investigative, reasonable legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which any of them may become subject under
the 1933 Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based on a breach of the terms and conditions of this Agreement, or arise
out of or are based upon the inaccuracy of any representation made by the
Selling Shareholder herein or any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, 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 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 the Registration
Statement, the Prospectus, or any amendment or supplement thereto, in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of the Selling Shareholder expressly for use therein. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have. The Selling Shareholder will not, without the prior written consent of the
Placement Agents or the Company, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification has been sought hereunder (whether or not such
Placement Agents or the Company or any person who controls such Placement Agents
or the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act is a party to each claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Placement Agents and the Company and each such controlling person from all
liability arising out of such claim, action, suit or proceeding. Such indemnity
shall not, however, cover any such loss, claim, damage, liability, cost or
expense which is held in a final judgment of a court to have arisen primarily
out of the gross negligence or willful misconduct of the Placement Agents. This
indemnity agreement will be in
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addition to any liability which the Selling Shareholder may otherwise have. The
liability of the Selling Shareholder under this section shall be limited to an
amount equal to the aggregate offering price of the shares sold by the Selling
Shareholder to the Investors. The Company and the Selling Shareholder may agree,
as among themselves and without limiting the rights of the Placement Agents
under this Agreement, as to the respective amounts of such liability for which
they each shall be responsible.
c. Any party that proposes to assert the right to be
indemnified under this Section 8 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 8, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve it from any liability that it may have to any indemnified party
under the foregoing provisions of this Section 8 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defenses
by, or otherwise prejudices, the indemnifying party. If any such action is
brought against any indemnified party and it notifies the indemnifying party of
its commencement, the indemnifying party will be entitled to participate in and,
to the extent that it elects by delivering written notice to the indemnified
party promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
except as provided below and except for the reasonable costs of investigation
incurred by the indemnified party in connection with the defense. The
indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded that a conflict exists (based on
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party that would prevent the counsel selected by the
indemnifying party from representing the indemnified party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (3) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be
paid by the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred and demand delivered
therefor. No indemnifying party will, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification has been sought hereunder (whether or not the
indemnified parties are parties to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding. An indemnifying party will not be liable for any settlement
of any action or claim effected without its written consent (which consent will
not be unreasonably withheld).
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d. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 8 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company, the Selling Shareholder
or the Placement Agents, the Company, the Selling Shareholder and the Placement
Agents will contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than the Placement Agents such as
persons who control the Company within the meaning of the 1933 Act or the 1934
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) to which the Company,
the Selling Shareholder and the Placement Agents may be subject in proportion to
the relative benefits received by the Company, the Selling Shareholder and the
Placement Agents and the relative fault of the Company, the Selling Shareholder
and the Placement Agents, with respect to the statements or omissions which
resulted in such loss, claim, liability, expense or damage, or action in respect
thereof, as well as any other relevant equitable considerations with respect to
such offering. The relative benefits received by the Company, the Selling
Shareholder and the Placement Agents shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting Company
expenses) received by the Company and the Selling Shareholder as set forth in
the table on the cover page of the Prospectus bear to the fee received by the
Placement Agents hereunder. The relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
the Company, the Selling Shareholder or the Placement Agents, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Selling
Shareholder and the Placement Agents agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, liability,
expense or damage, or action in respect thereof, referred to above in this
Section 8(d) shall be deemed to include, for purpose of this Section 8(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), the Placement Agents shall
not be required to contribute any amount in excess of the fee received by it
under this Agreement, and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8(d), any person who controls a
party to this Agreement within the meaning of the 1933 Act or the 1934 Act will
have the same rights to contribution as that party, and each officer of the
Company who signed the Registration Statement will have the same rights to
contribution as the Company, subject in each case to the provisions hereof. Any
party entitled to contribution, promptly after receipt of notice of commencement
of any action against such party in respect of which a claim for contribution
may be made under this Section 8(d), will notify any such party or parties from
whom contribution may be sought, but the omission so to notify will not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have under this Section 8(d). No party will be liable
for contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
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9. Termination.
a. The obligations of the Placement Agents under this
Agreement may be terminated at any time prior to the Closing Date, by notice to
the Company from the Placement Agents, without liability on the part of the
Placement Agents to the Company if, prior to delivery and payment for the
Shares, in the sole judgment of the Placement Agents (i) trading in the Common
Stock of the Company shall have been suspended by the Commission or by the NNM,
(ii) trading in securities generally on the New York Stock Exchange or the NNM
shall have been suspended or limited or minimum or maximum prices shall have
been generally established on any of such exchanges, or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by any of such exchanges
or by order of the Commission or any court or other governmental authority,
(iii) a general banking moratorium shall have been declared by Federal or New
York State authorities or (iv) any material adverse change in the financial or
securities markets in the United States or any outbreak or material escalation
of hostilities or declaration by the United States of a national emergency or
war or other calamity or crisis shall have occurred, the effect of any of which
is such as to make it, in the sole judgment of the Placement Agents,
impracticable or inadvisable to market the Shares on the terms and in the manner
contemplated by the Prospectus.
b. The obligations of the parties under this Agreement shall
be automatically terminated in the event that the Requisite Funds have not been
deposited by the Investors into the Escrow Account by the close of business on
the date scheduled for the Closing.
10. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: President or (b) if to the
Placement Agents, at the office of Vector Securities International, Inc., ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ or (c) if to the Selling Shareholder, at the office of Sulzer
Intermedics, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Any such notice shall be effective only upon receipt. Any
notice under Section 8 may be made by facsimile or telephone, but if so made
shall be subsequently confirmed in writing.
11. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers and the Placement Agents set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, the Placement Agents or any
controlling person referred to in Section 8 hereof and (ii) delivery of and
payment for the Shares. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6 and 8 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement.
12. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the Placement Agents, the Selling Shareholders, the
Company and their respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and
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being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnification and contribution contained
in Sections 8(a) and (e) of this Agreement shall also be for the benefit of the
directors, officers, employees and agents of the Placement Agents and any person
or persons who control the Placement Agents within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act and (ii) the indemnification and
contribution contained in Sections 8(b) and (e) of this Agreement shall also be
for the benefit of the directors of the Company, the officers of the Company who
have signed the Registration Statement and any person or persons who control the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act. No Investor shall be deemed a successor because of such purchase.
13. Headings. Section headings in this Agreement are for convenience
of reference only, do not constitute a part of this Agreement, and shall not
affect its interpretation.
14. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company, the Selling
Shareholders and the Placement Agents.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATIONS OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon
it will become a binding agreement between the Company, the Selling Shareholder
and the Placement Agents in accordance with its terms.
Very truly yours,
THORATEC LABORATORIES CORPORATION
By:
-----------------------------
Name:
Title:
SULZER INTERMEDICS, INC.
By:
-----------------------------
As Attorney-in-Fact for the
Selling Shareholder
The foregoing Placement Agency Agreement is hereby confirmed and accepted as of
the date first above written.
VECTOR SECURITIES INTERNATIONAL, INC.
CRUTTENDEN ▇▇▇▇ INCORPORATED
By: Vector Securities International, Inc.
By:
-----------------------------------
Name:
Title:
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EXHIBIT A
ESCROW AGREEMENT
With
CITIBANK, N.A.
ESCROW AGREEMENT, dated as of October __, 1997, by and among THORATEC
LABORATORIES CORPORATION, a California corporation (the "Company"), SULZER
INTERMEDICS, INC. (the "Selling Shareholder"), VECTOR SECURITIES INTERNATIONAL,
INC. and CRUTTENDEN ▇▇▇▇, INCORPORATED (the "Placement Agents"), and CITIBANK,
N.A., a national banking institution incorporated under the laws of the United
States of America (the "Escrow Agent").
WHEREAS, the Company proposes to sell 1,500,000 shares of its Common Stock
and the Selling Shareholder proposes to sell 500,000 shares of Common Stock of
the Company (together, the "Securities") all as described in the Company's
Prospectus dated October __, 1997, (the "Prospectus"), under a Registration
Statement on Form S-3 (File No. 333-36685), at $_____ per share;
WHEREAS, the Securities are being offered to investors by the Placement
Agents, pursuant to registration under the Securities Act of 1933, as amended,
and pursuant to registration or exemptions from registration under state
securities laws;
WHEREAS, the offering of the Securities will terminate on _______ __, 1997
(the "Final Closing Date") and, if acceptable subscriptions for the Securities
have not been received by the Company on or before the Final Closing Date, no
Securities will be sold and all payments made by subscribers will be refunded by
the Escrow Agent with interest earned thereon, if any; and
WHEREAS, with respect to all subscription payments received from
subscribers, the Company proposes to establish an escrow account with the Escrow
Agent at the office of its Escrow Administration, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
NOW THEREFORE, it is agreed as follows:
1. Establishment of Escrow. The Escrow Agent hereby agrees to receive and
disburse the proceeds from the offering of the Securities and any interest
earned thereon in accordance herewith.
2. Deposit of Escrowed Property. The Placement Agents, on behalf of the
subscribers for Securities, shall from time to time, but in no event later than
12:00 noon on the date following the date of receipt by the Placement Agents,
cause to be wired to or deposited with, or cause the subscribers for the
Securities to wire to or deposit with, the Escrow Agent funds or checks of the
subscribers delivered in payment for Securities (the "Escrowed Property"). Any
checks delivered to the Escrow Agent pursuant to the terms hereof shall be made
payable to or endorsed to the order of the Escrow Agent for the account of the
Company. The Escrow Agent upon receipt of such checks shall present such checks
for payment to the drawee-bank under such checks. Any checks not honored by the
drawee-bank thereunder after the first presentment for payment shall be returned
to the Placement Agent, on behalf of the subscriber, in the same manner notices
are delivered pursuant to Section 6. Upon receipt of funds or checks from the
Placement Agents, the Escrow Agent shall credit such funds and the amount of
such checks to a non-interest-bearing account (the "Escrow Account") held by the
Escrow Agent. If following the credit of the amount of any check to the Escrow
Account such check is dishonored, the Escrow Agent, if such dishonored check
amount shall have been invested pursuant to Section 3, shall liquidate to the
extent of such dishonored check amount such investments and debit the Escrow
Account for the amount of such dishonored check plus, if any, the amount of
interest and other income earned with respect to any investment of such
dishonored check amount.
3. Investment of Escrowed Property. The Escrow Agent on the second
business day ("business day" defined for purposes of this Escrow Agreement as
any day which is not a Saturday, a Sunday or a day on which banks or trust
companies in the City and State of New York are authorized or obligated by law,
regulation or executive order to remain closed) succeeding (unless such deposit
is made in federal or other immediately available or "same day" funds, in which
case, on the business day next succeeding) the credit of any subscription
proceeds to the Escrow Account pursuant to Section 2 and until release of such
proceeds in accordance with the terms hereof, shall invest
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such proceeds in a Citibank Money Market Deposit Account, pursuant to Rule
15c2-4 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, in accordance with the terms set
forth on Exhibit A hereto (made a part of this Escrow Agreement as if herein set
forth). The Escrow Agent shall in no event be liable for any loss resulting from
any change in interest rates applicable to proceeds invested pursuant to this
Section. Interest on proceeds invested pursuant to this Section shall accrue
from the date of investment of such proceeds until the termination of such
investment pursuant to the terms hereof and shall be paid as set forth in
Section 5. The parties recognize that in authorizing the Escrow Agent to invest
principal and income cash balances held as Escrowed Property into money market
instruments or deposits that are obligations of Citibank or related entities, in
addition to the fees provided for herein, the Escrow Agent or a related entity
may also benefit or profit from the use of such obligations. The parties hereby
authorize the receipt of such benefit or profit and expressly waive any special
computation or accounting. The Escrow Agent hereby agrees to provide the parties
with periodic statements describing such obligations and reporting the interest
earned thereon so that the parties may review and evaluate the transactions
effected by the Escrow Agent pursuant to this authorization.
4. List of Subscribers. The Placement Agents shall furnish or cause to be
furnished to the Escrow Agent, at the time of each deposit of funds or checks
pursuant to Section 2, a list, substantially in the form of Exhibit B hereto,
containing the name of, the address of, number of Securities subscribed for by,
the subscription amount delivered to the Escrow Agent on behalf of, and the
social security or taxpayer identification number, if applicable, of, each
subscriber whose funds are being deposited, and to which is attached a completed
W-9 form (or, in the case of any subscriber who is not a United States citizen
or resident, a W-8 form) for each listed subscriber. The Escrow Agent shall
notify the Placement Agents, the Company and the Selling Shareholder of any
discrepancy between the subscription amounts set forth on any list delivered
pursuant to this Section 4 and the subscription amounts received by the Escrow
Agent. The Escrow Agent is authorized to revise such list to reflect the actual
subscription amounts received and the release of any subscription amounts
pursuant to Section 5.
5. Withdrawal of Subscription Amounts. (a) If the Escrow Agent shall
receive a notice, substantially in the form of Exhibit C hereto (an "Offering
Termination Notice"), from the Company, the Escrow Agent shall (i) promptly
after receipt of such Offering Termination Notice and the clearance of all
checks received by the Escrow Agent as Escrowed Property, liquidate any
investments that shall have been made pursuant to Section 3 and send to each
subscriber listed on the list held by the Escrow Agent pursuant to Section 4
whose total subscription amount shall not have been released pursuant to
paragraph (b) or (c) of this Section 5, in the manner set forth in paragraph (d)
of this Section 5, a check to the order of such subscriber in the amount of the
remaining subscription amount held by the Escrow Agent as set forth on such list
held by the Escrow Agent, and (ii) promptly after the fourth business day of the
month immediately following the month in which the investments made pursuant to
Section 3 were terminated pursuant to this paragraph, send, in the manner set
forth in paragraph (d) of this Section 5, a check to the order of each such
subscriber in the amount of interest and other income earned and not yet paid
with respect to any investment of such subscriber's funds. The Escrow Agent
shall notify the Company, the Selling Shareholder and the Placement Agents of
the distribution of such funds to the subscribers.
(b) In the event that (i) the Securities have been subscribed for
and funds in respect thereof shall have been deposited with the Escrow Agent on
or before the Final Closing Date and (ii) no Offering Termination Notice
A-2
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shall have been delivered to the Escrow Agent, the Company, the Selling
Shareholder and the Placement Agents from time to time may deliver to the Escrow
Agent a joint notice, substantially in the form of Exhibit D hereto (a "Closing
Notice"), designating the date on which Securities are to be sold and delivered
to the subscribers thereof (the "Closing Date"), which date shall not be earlier
than the clearance of any checks received by the Escrow Agent as Escrowed
Property, the proceeds of which are to be distributed on such Closing Date, and
identifying the subscribers and the number of Securities to be sold to each
thereof on such Closing Date. Such Closing Notice, unless the parties otherwise
agree, shall be delivered not less than two (2) nor more than seven (7) business
days prior to such Closing Date. The Escrow Agent, after receipt of such Closing
Notice and the clearance of such checks:
(i) on or prior to the Closing Date identified in such Closing
Notice, shall liquidate any investments that shall have been made pursuant
to Section 3 to the extent of the subscription amount to be distributed
pursuant to the immediately succeeding clause (ii);
(ii) on such Closing Date, pay to the Company, the Selling
Shareholder and the Placement Agents, in federal or other immediately
available funds and otherwise in the manner specified by the Company in
such Closing Notice, an amount equal to the aggregate of the subscription
amounts paid by the subscribers identified in such Closing Notice for the
Securities to be sold on such Closing Date as set forth on the list held
by the Escrow Agent pursuant to Section 4; and
(iii) promptly after the fourth business day of the month
immediately following the month in which the investments made pursuant to
Section 3 were terminated pursuant to such Closing Notice, shall send, in
the manner set forth in paragraph (d) of this Section 5, a check to the
order of each subscriber identified in such Closing Notice in the amount
of interest and other income earned and not yet paid with respect to any
investment of each such subscriber's funds distributed on such Closing
Date. At the time of such transfer, the Escrow Agent shall identify in
writing to the Company, the Selling Shareholder and the Placement Agents
the amount of the interest earned for the account of each subscriber and
the date such subscription was received.
(c) If at any time and from time to time prior to the release of any
subscriber's total subscription amount pursuant to paragraph (a) or (b) of this
Section 5 from escrow, the Company shall deliver to the Escrow Agent a notice,
substantially in the form of Exhibit E hereto (a "Subscription Termination
Notice"), to the effect that any or all of the subscriptions of such subscriber
have been rejected by the Company (a "Rejected Subscription"), the Escrow Agent
(i) promptly after receipt of such Subscription Termination Notice and, if such
subscriber delivered a check in payment of its Rejected Subscription, after the
clearance of such check, shall liquidate, to the extent of the sum of such
subscriber's Rejected Subscription amount as set forth in the Subscription
Termination Notice, any investments that shall have been made pursuant to
Section 3 and send to such subscriber, in the manner set forth in paragraph (d)
of this Section 5, a check to the order of such subscriber in the amount of such
Rejected Subscription amount, and (ii) promptly after the fourth business day of
the month immediately following the month in which the investments made pursuant
to Section 3 were terminated pursuant to this paragraph, shall send to such
subscriber, in the manner set forth in paragraph (d) of this Section 5, a check
to the order of such subscriber in the amount of interest and other income
earned and not yet paid with respect to any investment of such subscriber's
Rejected Subscription amount. At the time of such transfer, the Escrow Agent
shall identify in writing to the Company, the Selling Shareholder and the
Placement Agent the
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amount of the interest earned for the account of each subscriber and the date
such subscription was received.
(d) On a date following the transfer of any interest earned for the
account of each subscriber pursuant to Section 5(a), (b) or (c), but not later
than February 15, 1998, the Escrow Agent shall provide each subscriber with tax
form 1099 setting forth the amount of such interest.
(e) For the purposes of this Section 5, any check that the Escrow
Agent shall be required to send to any subscriber shall be sent to such
subscriber by first class mail, postage prepaid, at such subscriber's address
furnished to the Escrow Agent pursuant to Section 4.
6. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be (a) delivered by hand or (b)
sent by mail, registered or certified, with proper postage prepaid, and
addressed as follows:
if to the Company, to:
Thoratec Laboratories Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
with a copy to:
Heller, Ehrman, White & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: August ▇. ▇▇▇▇▇▇▇
if to the Selling Shareholder, to:
Sulzer Intermedics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
if to the Placement Agents to:
Vector Securities International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ____________________
and
Cruttenden ▇▇▇▇, Incorporated
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ____________________
with a copy to:
Stroock & Stroock & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
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if to the Escrow Agent, to:
Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. All such
notices and communications, if mailed, shall be effective when deposited in the
mails, except that notices and communications to the Escrow Agent and notices of
changes of address shall not be effective until received.
7. Concerning the Escrow Agent. To induce the Escrow Agent to act
hereunder, it is further agreed by the Company, the Selling Shareholder and the
Placement Agents that:
(a) The Escrow Agent shall not be under any duty to give the
Escrowed Property held by it hereunder any greater degree of care than it gives
its own similar property and shall not be required to invest any funds held
hereunder except as directed in this Escrow Agreement. Uninvested funds held
hereunder shall not earn or accrue interest.
(b) This Escrow Agreement expressly sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Escrow Agreement against the
Escrow Agent. The Escrow Agent shall not be bound by the provisions of any
agreement among the other parties hereto except this Escrow Agreement.
(c) The Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct, and, except with respect to claims based upon
such negligence or misconduct that are successfully asserted against the Escrow
Agent, the other parties hereto shall jointly and severally indemnify and hold
harmless the Escrow Agent (and any successor Escrow Agent) from and against any
and all losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursements, arising out of and in connection
with this Escrow Agreement. Without limiting the foregoing, the Escrow Agent
shall in no event be liable in connection with its investment or reinvestment of
any cash held by it hereunder in good faith, in accordance with the terms
hereof, including without limitation any liability for any delays (not resulting
from negligence or misconduct) in the investment or reinvestment of the Escrowed
Property, or any loss of interest incident to any such delays.
(d) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it in good faith to be genuine and may assume, if in good
faith, that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
(e) The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Escrow Agreement and shall not be liable
for any action taken or omitted in good faith and in accordance with such
advice.
(f) The Escrow Agent does not have any interest in the Escrowed
Property deposited hereunder but is serving as escrow holder only. Any
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payments of income from the Escrow Account shall be subject to withholding
regulations then in force with respect to United States taxes. The parties
hereto will provide the Escrow Agent with appropriate W-9 forms for tax I.D.,
number certification, or non-resident alien certifications.
This paragraph (f) and paragraph (c) of this Section 7 shall survive
notwithstanding any termination of this Escrow Agreement or the resignation of
the Escrow Agent.
(g) The Escrow Agent makes no representation as to the validity,
value, genuineness or the collectibility of any security or other document or
instrument held by or delivered to it.
(h) The Escrow Agent shall not be called upon to advise any party as
to the wisdom of selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
(i) The Escrow Agent (and any successor escrow agent) at any time
may be discharged from its duties and obligations hereunder by the delivery to
it of notice of termination signed by the Company, the Selling Shareholder and
the Placement Agents or at any time may resign by giving written notice to such
effect to the Company, the Selling Shareholder and the Placement Agents. Upon
any such termination or resignation, the Escrow Agent shall deliver the Escrowed
Property to any successor escrow agent jointly designated by the other parties
hereto in writing, or to any court of competent jurisdiction if no such
successor escrow agent is agreed upon, whereupon the Escrow Agent shall be
discharged of and from any and all further obligations arising in connection
with this Escrow Agreement. The termination or resignation of the Escrow Agent
shall take effect on the earlier of (i) the appointment of a successor
(including a court of competent jurisdiction) or (ii) the day that is 30 days
after the date of delivery: (A) to the Escrow Agent of the other parties' notice
of termination or (B) to the other parties hereto of the Escrow Agent's written
notice of resignation. If at that time the Escrow Agent has not received a
designation of a successor escrow agent, the Escrow Agent's sole responsibility
after that time shall be to keep the Escrowed Property safe until receipt of a
designation of successor escrow agent or a joint written disposition instruction
by the other parties hereto or any enforceable order of a court of competent
jurisdiction.
(j) The Escrow Agent shall have no responsibility for the contents
of any writing of any third party contemplated herein as a means to resolve
disputes and may rely without any liability upon the contents thereof.
(k) In the event of any disagreement among or between the other
parties hereto and/or the subscribers of the Securities resulting in adverse
claims or demands being made in connection with the Escrowed Property, or in the
event that the Escrow Agent in good faith is in doubt as to what action it
should take hereunder, the Escrow Agent shall be entitled to retain the Escrowed
Property until the Escrow Agent shall have received (i) a final and
non-appealable order of a court of competent jurisdiction directing delivery of
the Escrowed Property or (ii) a written agreement executed by the other parties
hereto and consented to by the subscribers directing delivery of the Escrowed
Property, in which event the Escrow Agent shall disburse the Escrowed Property
in accordance with such order or agreement. Any court order referred to in (i)
above shall be accompanied by a legal opinion by counsel for the presenting
party satisfactory to the Escrow Agent to the effect that said court order is
final and non-appealable. The Escrow Agent shall act on such court order and
legal opinion without further question.
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38
(l) As consideration for its agreement to act as Escrow Agent as
herein described, the Company agrees to pay the Escrow Agent $5,000. In
addition, the Company agrees to reimburse the Escrow Agent for all reasonable
expenses, disbursements and advances incurred or made by the Escrow Agent in
performance of its duties hereunder (including reasonable fees, expenses and
disbursements of its counsel).
(m) All parties hereto irrevocably (i) submit to the jurisdiction of
any New York State or federal court sitting in New York City in any action or
proceeding arising out of or relating to this Escrow Agreement, (ii) agree that
all claims with respect to such action or proceeding shall be heard and
determined in such New York State or federal court and (iii) waive, to the
fullest extent possible, the defense of an inconvenient forum. The other parties
hereby consent to and grant any such court jurisdiction over the persons of such
parties and over the subject matter of any such dispute and agree that delivery
or mailing of process or other papers in connection with any such action or
proceeding in the manner provided hereinabove, or in such other manner as may be
permitted by law, shall be valid and sufficient service thereof.
(n) No printed or other matter in any language (including, without
limitation, the Prospectus, notices, reports and promotional material) which
mentions the Escrow Agent's name or the rights, powers, or duties of the Escrow
Agent shall be issued by the other parties hereto or on such parties' behalf
unless the Escrow Agent shall first have given its specific written consent
thereto. The Escrow Agent hereby consents to the use of its name and the
reference to the escrow arrangement in the Prospectus.
8. Miscellaneous. (a) This Escrow Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their respective
successors and assigns, heirs, administrators and representatives, and the
subscribers of the Securities and shall not be enforceable by or inure to the
benefit of any other third party except as provided in paragraph (i) of Section
7 with respect to the termination of, or resignation by, the Escrow Agent. No
party may assign any of its rights or obligations under this Escrow Agreement
without the written consent of the other parties.
(b) This Escrow Agreement shall be construed in accordance with and
governed by the internal law of the State of New York (without reference to its
rules as to conflicts of law).
(c) This Escrow Agreement may only be modified by a writing signed
by all of the parties hereto and consented to by the subscribers of the
Securities adversely affected by such modifications. No waiver hereunder shall
be effective unless in a writing signed by the party to be charged.
(d) This Escrow Agreement shall terminate upon the payment pursuant
to Section 5 of all amounts held in the Escrow Account.
(e) The section headings herein are for convenience only and shall
not affect the construction thereof. Unless otherwise indicated, references to
Sections are to Sections contained herein.
(f) This Escrow Agreement may be executed in one or more
counterparts but all such separate counterparts shall constitute but one and the
same instrument; provided that, although executed in counterparts, the executed
signature pages of each such counterpart may be affixed to a single copy of this
Agreement which shall constitute an original.
A-7
39
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be executed as of the day and year first above written.
THORATEC LABORATORIES CORPORATION
By:
-------------------------------------------
Name:
Title:
SULZER INTERMEDICS, INC.
By:
-------------------------------------------
Name:
Title:
VECTOR SECURITIES INTERNATIONAL, INC.
CRUTTENDEN ▇▇▇▇, INCORPORATED
By: Vector Securities International, Inc.
By:
-------------------------------------------
Name:
Title:
CITIBANK, N.A.
By:
-------------------------------------------
Name:
Title:
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ Insured Money Market Deposit Accounts
Deposits/Withdrawals may be made to the Citibank Money Market Deposit
Account ("MMDA") established under the Escrow Agreement to which this Exhibit is
attached only through the Escrow Account. All transaction and balance reporting
of the MMDA will be included as part of the Escrow Account Statement. Activity
in the MMDA will be reflected as the equivalent of dollars on deposit in a
Citibank Money Market Deposit Account. Deposits/Withdrawals to the MMDA will be
made only as permitted by the Escrow Agreement to which this Exhibit is
attached. The MMDA has certain regulatory restrictions as well as some minimum
requirements:
1. By regulation, Citibank, N.A. is required to reserve the right to
require seven days' prior notice of any withdrawals of funds from an account;
provided, however, that, if Citibank, N.A. elects to exercise its right to
require seven days' prior notice, it shall exercise such right as to all such
accounts established.
2. Rates will be determined by Citibank, N.A. and can be determined by
calling your custody account officer.
3. Balances up to $100,000 (total on deposit at Citibank, N.A.) are
FDIC-insured.
A-1
41
EXHIBIT B
SUMMARY OF CASH RECEIVED
NEW PARTICIPANT DEPOSIT
Date:_______________
Deposit Date: List Number:_______________
Investment Date: Page of_______________
Batch Number: Approved By:_______________
JOB#:_______________
For Bank use only
TITLE:
---------------------------------------------------------------------------------------------------------
| | NUMBER OF | |TAX ID NO./ | | FOR BANK
NAME | DEPOSIT | SHARES | ADDRESS |SOC.SEC. NO. | | USE ONLY | |
----------------------- ------------ ----------- -------------------------- ----------- -----------------
| | | | TAX CODE
| | | | | | EXEMPT(Y/N)
| | | | | | W-9(YR) NRA
| | | | | | W-8(YR)
| | | | | | 1008(87)
| | | | | |
----------------------------------------------------------------------------------------------------------
Broker Misc. | | | | Misc. II | Misc. III | TAX CODE
| | | | | | EXEMPT(Y/N)
| | | | | | W-2(YR) NRS
| | | | | | W-8(YR)
| | | | | | 1008(87)
| | | | | |
----------------------------------------------------------------------------------------------------------
Broker Misc. | | | | Misc. II | Misc. III | TAX CODE
| | | | | | EXEMPT(Y/N)
| | | | | | W-2(YR) NRS
| | | | | | W-8(YR)
| | | | | | 1008(87)
| | | | | |
----------------------------------------------------------------------------------------------------------
Broker Misc. | | | | Misc. II | Misc. III | TAX CODE
| | | | | | EXEMPT(Y/N)
| | | | | | W-2(YR) NRS
| | | | | | W-8(YR)
| | | | | | 1000(87)
| | | | | |
----------------------------------------------------------------------------------------------------------
Broker Misc. | | | | Misc. II | Misc. III |
| | | | | |
42
EXHIBIT C
[Form of Offering Termination Notice]
Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇,
Vice President
Dear ▇▇. ▇▇▇▇:
Pursuant to Section 5(a) of the Escrow Agreement dated as of October __,
1997 (the "Escrow Agreement") among Thoratec Laboratories Corporation (the
"Company"), Sulzer Intermedics, Inc., Vector Securities International, Inc. and
Cruttenden ▇▇▇▇, Inc., and you, the Company hereby notifies you of the
termination of the offering of the Securities (as that term is defined in the
Escrow Agreement) and directs you to make payments to subscribers as provided
for in Section 5(a) of the Escrow Agreement.
Very truly yours,
THORATEC LABORATORIES CORPORATION
By:
---------------------------
Name:
Title:
C-1
43
EXHIBIT D
[Form of Closing Notice]
[Date]
Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
Dear ▇▇. ▇▇▇▇:
Pursuant to Section 5(b) of the Escrow Agreement dated as of October __,
1997 (the "Escrow Agreement") among Thoratec Laboratories Corporation (the
"Company"), Sulzer Intermedics, Inc., Vector Securities International, Inc. and
Cruttenden ▇▇▇▇, Inc., and you, the Company hereby certifies that it has
received subscriptions for the Securities (as that term is defined in the Escrow
Agreement) and the Company will sell and deliver Securities to the subscribers
thereof at a closing to be held on __________, 1997 (the "Closing Date"). The
names of the subscribers concerned, the number of Securities subscribed for by
each of such subscribers and the related subscription amounts are set forth on
the schedule annexed hereto.
We hereby request that the aggregate subscription amount be paid to the
Placement Agents and us as follows:
[To be inserted].
Very truly yours,
THORATEC LABORATORIES CORPORATION
By:
-------------------------------------------
Name:
Title:
SULZER INTERMEDICS, INC.
By:
-------------------------------------------
Name:
Title:
VECTOR SECURITIES INTERNATIONAL, INC.
CRUTTENDEN ▇▇▇▇, INCORPORATED
By: Vector Securities International, Inc.
By:
-------------------------------------------
Name:
Title::
D-1
44
EXHIBIT E
[Form of Subscription Termination Notice]
Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇,
Vice President
Dear ▇▇. ▇▇▇▇:
Pursuant to Section 5(c) of the Escrow Agreement dated as of October __,
1997 (the "Escrow Agreement") among Thoratec Laboratories Corporation (the
"Company"), Sulzer Intermedics, Inc., Vector Securities International, Inc. and
Cruttenden ▇▇▇▇, Inc. and you, the Company hereby notifies you that the
following subscription(s) have been rejected:
Amount of Subscribed
Name of Subscriber(s) Securities Rejected
--------------------- ---------------------
$
Very truly yours,
THORATEC LABORATORIES CORPORATION
By:
-----------------------------------
Name:
Title:
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
List of persons from whom Lock Up Letters were received:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
D. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Resources Company
COBE Laboratories, Inc.
Sulzer Intermedics, Inc.
46
ATTACHMENT A
Vector Securities International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Cruttenden ▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to a Placement Agency Agreement (the "Placement
Agency Agreement"), which will be executed between Thoratec Laboratories
Corporation, a California corporation (the "Company"), and Sulzer Intermedics,
Inc. and Vector Securities International, Inc. and Cruttenden ▇▇▇▇, Inc. (the
"Placement Agents").
In consideration of the Placement Agency Agreement, the undersigned
hereby agrees not to, without the prior written consent of the Placement Agents,
offer, sell or otherwise dispose of any shares of the Company's Common Stock, no
par value per share (the "Common Stock"), or any securities convertible into or
exercisable or exchangeable for Common Stock, for a period of 90 days after the
date of the Placement Agency Agreement except with respect to (i) the issuance
of shares of Common Stock upon the exercise of stock options and warrants
outstanding as of the date hereof, (ii) the issuance of shares of Common Stock
or stock options under any benefit plan of the Company, or (iii) the issuance of
shares of Common Stock to all holders of outstanding equity securities of the
Company after the date of the Placement Agency Agreement.
It is understood that, if the Placement Agency Agreement does not
become effective, the undersigned will be released from his obligations under
this letter agreement.
Dated: October __, 1997
Very truly yours,
By:
------------------------------
Name:
Title:
47
ATTACHMENT B
Vector Securities International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Cruttenden ▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to a Placement Agency Agreement (the "Placement
Agency Agreement"), which will be executed between Thoratec Laboratories
Corporation, a California corporation (the "Company"), and Sulzer Intermedics,
Inc. and Vector Securities International, Inc. and Cruttenden ▇▇▇▇, Inc. (the
"Placement Agents").
In consideration of the Placement Agency Agreement, the undersigned
hereby agrees not to, without the prior written consent of the Placement Agents,
offer, sell or otherwise dispose of any shares of the Company's Common Stock, no
par value per share (the "Common Stock"), or any securities convertible into or
exercisable or exchangeable for Common Stock, for a period of 90 days after the
date of the Placement Agency Agreement.
It is understood that, if the Placement Agency Agreement does not
become effective, the undersigned will be released from his obligations under
this letter agreement.
Dated: October __, 1997
Very truly yours,
By:
------------------------------
Name:
Title:
48
SCHEDULE 1-4
[TO BE PROVIDED BY COUNSEL TO THORATEC]