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EXHIBIT 1.01
960,000 SHARES(1)
INVIVO CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
March ____, 1999
CRUTTENDEN ▇▇▇▇ INCORPORATED
As Representative of the several Underwriters
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Invivo Corporation, a Delaware corporation (the "Company"), addresses
you as the Representative of each of the persons, firms and corporations listed
in Schedule A hereto (herein collectively called the "Underwriters") and hereby
confirms its agreement with the several Underwriters as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell 860,000
shares of its authorized and unissued Common Stock, $0.01 par value per share
(the "Company Shares"), to the several Underwriters. The Pillar Charitable
Remainder Unitrust ("Pillar") proposes to sell to the several Underwriters
100,000 shares of the Company's Common Stock, $0.01 par value per share
(collectively with the Company Shares, the "Firm Shares"), which are
beneficially owned by Pillar. The Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇" and
collectively with Pillar, the "Selling Securityholders," and individually, each
a "Selling Securityholder"), also propose to grant to the Underwriters an option
to purchase up to 144,000 additional shares of the Company's Common Stock, $0.01
par value per share (the "Option Shares"), of which the Company proposes to sell
94,000 of such Option Shares and ▇▇▇▇▇▇▇ proposes to sell 50,000 of such Option
Shares, as further provided in Section 8 hereof. As used in this Agreement, the
term "Shares" shall include the Firm Shares and the Option Shares. All shares of
Common Stock, $0.01 par value per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby, including the Shares, are
hereinafter referred to as "Common Stock."
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(1) Plus an option to purchase up to 144,000 additional shares to cover
overallotments from the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
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2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company represents and warrants to, and agrees with, each Underwriter that:
(a) A registration statement on Form S-2 (File No. 333-72071)
with respect to the Shares, including a prospectus, has been prepared and filed
by the Company in conformity with the requirements of the Securities Act of
1933, as amended (the "Act"), and the applicable rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Act and has been filed with the Commission; such
amendments to such registration statement, such prospectuses and abbreviated
registration statements pursuant to Rule 462(b) of the Rules and Regulations (a
"462 Registration Statement") as may have been required prior to the date hereof
have been similarly prepared and filed with the Commission; and the Company will
file such additional amendments to such registration statement, such amended
prospectuses and such 462 Registration Statements as may hereafter be required.
Copies of such registration statement and amendments together with each exhibit
filed therewith, of each related prospectus contained or filed as part of any
pre-effective amendment to such registration statement or filed pursuant to Rule
424(a) (the "Preliminary Prospectuses") and of any 462 Registration Statement
have been delivered to you.
If the registration statement relating to the Shares has been
declared effective under the Act by the Commission, the Company will prepare and
promptly file with the Commission the information omitted from the registration
statement pursuant to Rule 430A(a) or, if the Representative, on behalf of the
several Underwriters, shall agree to the utilization of Rule 434 of the Rules
and Regulations, the information required to be included in any term sheet filed
pursuant to Rule 434(b) or (c), as applicable, of the Rules and Regulations
pursuant to subparagraph (1), (4) or (7) of Rule 424(b) of the Rules and
Regulations or as part of a post-effective amendment to the registration
statement (including a final form of prospectus). If the registration statement
relating to the Shares has not been declared effective under the Act by the
Commission, the Company will prepare and promptly file an amendment to the
registration statement, including a final form of prospectus, or, if the
Representative, on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules and Regulations, the information required
to be included in any term sheet filed pursuant to Rule 434(b) or (c), as
applicable, of the Rules and Regulations. The term "Registration Statement" as
used in this Agreement shall mean such registration statement, including
financial statements, schedules and exhibits (including exhibits incorporated by
reference), in the form in which it became or becomes, as the case may be,
effective (including, if the Company omitted information from the registration
statement pursuant to Rule 430A(a) or files a term sheet pursuant to Rule 434 of
the Rules and Regulations, the information deemed to be a part of the
registration statement at the time it became effective pursuant to Rule 430A(b)
or Rule 434(d) of the Rules and Regulations) and, in the event of any amendment
thereto or the filing of any 462 Registration Statement after the effective date
of such registration statement, shall also mean (from and after the
effectiveness of such amendment or the filing of any 462 Registration Statement)
such registration statement as so amended, together with any such abbreviated
registration statement. The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Shares as included in such Registration
Statement at the time it becomes effective (including, if the Company omitted
information from the Registration Statement pursuant to Rule 430A(a) of the
Rules and Regulations, the information deemed to be a part of the Registration
Statement at the time it became effective pursuant to Rule 430A(b) of the Rules
and Regulations); provided, however, that if in
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reliance on Rule 434 of the Rules and Regulations and with the consent of the
Representative, on behalf of the several Underwriters, the Company shall have
provided to the Underwriters a term sheet pursuant to Rule 434(b) or (c), as
applicable, prior to the time that a confirmation is sent or given for purposes
of Section 2(10)(a) of the Act, the term "Prospectus" shall mean the "prospectus
subject to completion" (as defined in Rule 434(g) of the Rules and Regulations)
last provided to the Underwriters by the Company and circulated by the
Underwriters to all prospective purchasers of the Shares (including the
information deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 434(d) of the Rules and Regulations).
Notwithstanding the foregoing, if any revised prospectus shall be provided to
the Underwriters by the Company for use in connection with the offering of the
Shares that differs from the prospectus referred to in the immediately preceding
sentence (whether or not such revised prospectus is required to be filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations), the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to the Underwriters for such use. If in reliance on Rule 434
of the Rules and Regulations and with the consent of the Representative, on
behalf of the several Underwriters, the Company shall have provided to the
Underwriters a term sheet pursuant to Rule 434(b) or (c), as applicable, prior
to the time that a confirmation is sent or given for purposes of Section
2(10)(a) of the Act, the Prospectus and the term sheet, together, will not be
materially different from the prospectus in the Registration Statement. Any
reference to the Registration Statement or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-2 under the Act, as of the date of the Registration Statement
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to the Registration Statement or the Prospectus shall be deemed to
refer to and include any documents filed after such date under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which, upon filing, are
incorporated by reference therein. As used in this Agreement, the term
"Incorporated Documents" means the documents which at the time are incorporated
by reference in the Registration Statement, the Prospectus or any amendment or
supplement thereto.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted proceedings for
that purpose, and each such Preliminary Prospectus has conformed in all material
respects to the requirements of the Act and the Rules and Regulations and, as of
its date, has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and at the time
the Registration Statement became or becomes, as the case may be, effective and
at all times subsequent thereto up to and on the Closing Date (hereinafter
defined) and on any later date on which Option Shares are to be purchased, (i)
the Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained and will contain all material information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, (ii) the Registration Statement, and any amendments or supplements
thereto, did not and will not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (iii) the Prospectus, and any
amendments or supplements thereto, did not and will not include 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; provided, however, that none of the representations and
warranties contained in this subparagraph (b) shall apply to
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information contained in or omitted from the Registration Statement or
Prospectus, or any amendment or supplement thereto, in reliance upon, and in
conformity with, written information relating to any Underwriter furnished to
the Company by such Underwriter specifically for use in the preparation thereof.
The information set forth on the inside front cover page of the Prospectus
(insofar as such information relates to the Underwriters) concerning
stabilization, over-allotment and passive market making by the Underwriters ,
and under the first, third, sixth and ninth paragraphs under the caption
"Underwriting" in any Preliminary Prospectus and in the Prospectus constitutes
the only information furnished by the Underwriters to the Company for inclusion
in any Preliminary Prospectus, the Prospectus or the Registration Statement.
(c) If the Company has elected to rely on Rule 462(b) and the
462 Registration Statement has not been declared effective (i) the Company has
filed a 462 Registration Statement in compliance with, and that is effective
upon filing pursuant to, Rule 462(b) and has received confirmation of its
receipt and (ii) (a) the Company has given irrevocable instructions for
transmission of the applicable filing fee in connection with the filing of the
462 Registration Statement, in compliance with Rule 111 promulgated under the
Act or (b) the Commission has received payment of such filing fee.
(d) Each of the Company and its direct and indirect subsidiaries
(hereinafter, the "Subsidiaries") is duly incorporated and validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation with full power and authority (corporate and other) to own, lease
and operate its properties and conduct its business as described in the
Prospectus; each of the Company and its Subsidiaries is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure to be so
qualified or to be in good standing would not have a material adverse effect on
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its Subsidiaries, taken as a whole
(hereinafter, a "Material Adverse Effect"); no proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing, or seeking to revoke,
limit or curtail, such power and authority or qualification; each of the Company
and the Subsidiaries is in possession of and operating in compliance with all
authorizations, licenses, certificates, consents, orders and permits from state,
federal and other regulatory authorities that are material to the conduct of its
business, all of which are valid and in full force and effect. Neither Company
nor any of its Subsidiaries is in violation of their respective charter or
bylaws and no event has occurred which, with notice or lapse of time or both,
would constitute a breach or violation of any of the terms and provisions of, or
constitute a default under, any obligation, agreement, covenant or condition
contained in any bond, debenture, note or other evidence of indebtedness, or in
any lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which either the Company or any of
its Subsidiaries is a party or by which their properties may be bound. Neither
the Company nor any of its Subsidiaries is in violation of any law, order, rule,
regulation, writ, injunction, judgment or decree of any court, administrative
agency, regulatory body, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or any Subsidiary or their
respective properties except where such violation would not have a Material
Adverse Effect.
(e) Each of the Company and its Subsidiaries has full legal
right, power and authority to enter into this Agreement and perform the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Company and is a valid and
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binding agreement on the part of the Company, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles and
rules of law governing specific performance, estoppel, waiver, injunctive
relief, and other equitable remedies (regardless of whether enforcement is
sought in a proceeding at law or in equity). The making, execution and
performance of this Agreement by the Company and the consummation of the
transactions herein contemplated will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
(i) any bond, debenture, note or other evidence of indebtedness, or under any
lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which the Company or any Subsidiary
is a party or by which their respective properties may be bound, (ii) the
charter or bylaws of the Company or any Subsidiary or (iii) any law, order,
rule, regulation, writ, injunction, judgment or decree of any court,
administrative agency, regulatory body, government or governmental agency or
body, domestic or foreign, having jurisdiction over the Company or any
Subsidiary or their respective properties. No consent, approval, authorization
or order of or qualification with any court, government or governmental agency
or body, domestic or foreign, having jurisdiction over the Company or any
Subsidiary or their respective properties is required for the execution and
delivery of this Agreement and the consummation by the Company of the
transactions herein contemplated, except such as may be required under the Act,
all of which requirements have been satisfied in all material respects, by the
National Association of Securities Dealers, Inc. (the "NASD"), or under or state
or other securities laws or Blue Sky laws.
(f) There is not pending or, to the Company's knowledge,
threatened, any action, suit, claim or proceeding against either the Company or
any of its Subsidiaries, any of Company's or any of its Subsidiaries' officers,
any of their respective properties, assets or rights before any court,
administrative agency, regulatory body, government or governmental agency or
body, domestic or foreign, having jurisdiction over the Company or any of its
Subsidiaries or their respective officers or properties, or otherwise which (i)
except as set forth in the Registration Statement, might individually or in the
aggregate, result in any material adverse change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its Subsidiaries, taken as a whole (a "Material Adverse Change"), or (ii)
might prevent consummation of the transactions contemplated hereby, or (iii) is
required to be disclosed in the Registration Statement or Prospectus and is not
so disclosed. For purposes of this Agreement, the phrases "to the Company's
knowledge" or "to the knowledge of the Company" shall mean the knowledge of the
senior management personnel of each of the Company and its Subsidiaries. There
are no agreements, contracts, leases or documents of the Company or any
Subsidiary of a character required to be described or referred to in the
Registration Statement or Prospectus or to be filed as an exhibit to the
Registration Statement by the Act or the Rules and Regulations which have not
been accurately described in all material respects in the Registration Statement
or Prospectus or filed as exhibits to the Registration Statement. Neither the
Company nor any Subsidiary is a party or subject to the provisions of any
injunction, judgment, decree or order of any court, administrative agency,
regulatory body, government or governmental agency or body domestic or foreign,
that could be expected to result in a Material Adverse Change. Each of the
Company and its Subsidiaries has conducted and is conducting its business in
compliance with all applicable federal, state, local and foreign statutes, laws,
rules, regulations, ordinances, codes, decisions, decrees, directives and
orders,
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except where the failure to do so would not, singly or in the aggregate, have a
Material Adverse Effect.
(g) All outstanding shares of capital stock of each of the
Company and its Subsidiaries have been duly authorized and validly issued and
are fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase securities.
The Company has an authorized, issued and outstanding capitalization as set
forth in the Prospectus under the caption "Capitalization." The capital stock of
the Company conforms to the description thereof contained in the Registration
Statement and the Prospectus (and such statements correctly state the substance
of the instruments defining the capitalization of the Company). The Shares to be
issued and sold by the Company hereunder have been duly authorized for issuance
and sale to the Underwriters pursuant to this Agreement, and, when issued and
delivered by the Company against payment therefor in accordance with the terms
of this Agreement, will be duly and validly issued and fully paid and
nonassessable, and will be sold free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest. No preemptive right, co-sale
right, registration right, right of first refusal or other similar right of
stockholders exists with respect to any of the Shares or the issuance and sale
thereof other than those that have been satisfied or expressly waived prior to
the date hereof and those that will automatically expire upon and will not apply
to the consummation of the transactions contemplated on or before the Closing
Date. No further approval or authorization of any stockholder, the Board of
Directors of the Company or others is required for the issuance and sale or
transfer of the Shares except as may be required under the Act or under state or
other securities or Blue Sky laws. Except as disclosed in the Registration
Statement, Prospectus and the financial statements of the Company, and the
related notes thereto included in the Prospectus, the Company has no outstanding
options to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations. The description of the
Company's stock option, stock bonus and other stock plans or arrangements, and
the options or other rights granted and exercised thereunder, set forth in the
Incorporated Documents fairly and accurately presents the information required
to be shown with respect to such plans, arrangements, options and rights. All
outstanding options of the Company have been duly authorized and issued in
compliance with the option plan pursuant to which such options were granted and
with all federal and state securities laws and the Delaware General Corporation
Law.
(h) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, there has not been (i)
any Material Adverse Change, (ii) any transaction that is material to either the
Company or any of its Subsidiaries, (iii) any obligation, direct or contingent,
incurred by either the Company or any of its Subsidiaries, except obligations
incurred in the ordinary course of business, (iv) any change in the capital
stock or outstanding indebtedness of either the Company or any of its
Subsidiaries, (v) any dividend or distribution of any kind declared, paid or
made on the capital stock of either the Company or any of its Subsidiaries, (vi)
any default in the payment of principal of or interest on any outstanding debt
obligations, or (vii) any loss or damage (whether or not insured) to the
property of either the Company or any of its Subsidiaries which has been
sustained or will have been sustained which has a Material Adverse Effect.
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(i) Except as set forth in the Registration Statement and
Prospectus, (i) each of the Company and its Subsidiaries has good and marketable
title to all properties and assets described in the Registration Statement and
Prospectus as owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest, other than such as would not
have a Material Adverse Effect, (ii) the agreements to which either the Company
or any of its Subsidiaries is a party described in, or filed as exhibits to, the
Registration Statement and Prospectus are valid agreements, enforceable by the
Company or its Subsidiaries, as the case may be, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles and rules of law governing specific
performance, estoppel, waiver, injunctive relief and other equitable remedies
(regardless of whether enforcement is sought in a proceeding at law or in
equity) and, to the Company's knowledge, the other contracting party or parties
thereto are not in breach or default under any of such agreements, and (iii)
either the Company or its Subsidiaries has valid and enforceable leases for all
properties described in the Registration Statement and Prospectus, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles and rules of law
governing specific performance, estoppel, waiver, injunctive relief and other
equitable remedies (regardless of whether enforcement is sought in a proceeding
at law or in equity). Except as set forth in the Registration Statement and
Prospectus, the Company and its Subsidiaries own or lease all such properties as
are necessary to its operations as now conducted or as proposed to be conducted.
(j) KPMG LLP ("KPMG"), Independent Auditors, which has examined
the consolidated financial statements of the Company, together with the related
schedules and notes, as of June 30, 1998, 1997, and 1996, and for the years
ended June 30, 1998, 1997 and 1996, filed with the Commission as a part of the
Registration Statement, which are included in the Prospectus, are independent
accountants within the meaning of the Act and the Rules and Regulations. The
audited consolidated financial statements of the Company, together with the
related schedules and notes, and the unaudited consolidated financial
information, forming part of the Registration Statement and Prospectus, fairly
present the consolidated financial position and the results of operations of the
Company and its Subsidiaries at the respective dates and for the respective
periods to which they apply; and all audited consolidated financial statements
of the Company, together with the related schedules and notes, and the unaudited
consolidated financial information, filed with the Commission as part of the
Registration Statement, have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
except as may be otherwise stated therein. The selected and summary consolidated
financial and statistical data included in the Registration Statement fairly
present the information shown therein and have been compiled on a basis
consistent with the audited consolidated financial statements presented therein.
No other financial statements or schedules are required to be included in the
Registration Statement.
(k) Each of the Company and its Subsidiaries 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 authorizations, (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
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accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(l) There are no issues related to the Company's, or any of its
Subsidiaries', preparedness for the Year 2000 that (i) are of a character
required to be described or referred to in the Registration Statement or
Prospectus or by the Act or the Rules and Regulations or by the Exchange Act or
the rules and regulations of the Commission thereunder which have not been
accurately described in the Registration Statement or Prospectus or (ii) might
reasonably be expected to result in any Material Adverse Change or have a
Material Adverse Effect. Except as set forth in the Registration Statement, all
internal computer systems and each Constituent Component (as defined below) of
those systems and all computer-related products and each Constituent Component
(as defined below) of those products of the Company and each of its Subsidiaries
fully comply with the Year 2000 Qualification Requirements. "Year 2000
Qualification Requirements" means that the internal computer systems and each
Constituent Component (as defined below) of those systems and all
computer-related products and each Constituent Component (as defined below) of
those products of the Company and each of its Subsidiaries (i) have been
reviewed to confirm that they store, process (including sorting and performing
mathematical operations, calculations and computations), input and output data
containing date and information correctly regardless of whether the date
contains dates and times before, on or after January 1, 2000, (ii) have been
designated to ensure date and time entry recognition, calculations that
accommodate same-century and multi-century formulas and date values, leap year
recognition and calculations, and date-data interface values that reflect the
century, (iii) accurately manage and manipulate data involving dates and times,
including single-century formulas and multi-century formulas, and will not cause
an abnormal ending scenario within the application or generate incorrect values
or invalid results involving such dates, (iv) accurately process any date
rollover, and (v) accept and respond to two-digit year date input in a manner
that resolves any ambiguities as to the century. "Constituent Component" means
all software (including operating systems, programs, packages and utilities),
firmware, hardware, networking components, and peripherals provided as part of
the configuration.
(m) Each of the Company and its Subsidiaries has timely filed
all necessary federal, state, local and foreign income and franchise tax returns
and has paid all taxes shown thereon as due, and there is no tax deficiency that
has been or, might be asserted against the Company or any of its Subsidiaries
that might have a Material Adverse Effect. All tax liabilities are adequately
provided for on the books of each of the Company and its Subsidiaries.
(n) Each of the Company and its Subsidiaries maintains insurance
with insurers of recognized financial responsibility of the types and in the
amounts generally deemed prudent for its business and consistent with insurance
coverage maintained by similar companies in similar businesses or as otherwise
required by any agreement to which either the Company or a Subsidiary is a
party, including, but not limited to, insurance covering real and personal
property owned or leased by the Company or its Subsidiaries against theft,
damage, destruction, acts of vandalism, products liability, errors and
omissions, and all other risks customarily insured against, all of which
insurance is in full force and effect. Neither the Company nor any Subsidiary
has been refused any insurance coverage sought or applied for; and the Company
does not have any reason to believe that it will not be able to renew its or any
Subsidiary's existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect.
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(o) The conditions for use of Form S-2, as set forth in the
General Instructions thereto, have been satisfied.
(p) No labor disturbance by the employees of the Company or any
of its Subsidiaries exists or, to the Company's knowledge, is imminent. The
Company is not aware of any existing or imminent work stoppage or labor strike
by the employees of any of the Company's or any of its Subsidiaries' principal
suppliers, subcontractors, distributors (domestic or foreign) that might be
expected to result in a Material Adverse Change or to have a Material Adverse
Effect. No collective bargaining agreement exists with any of the Company's or
any of its Subsidiaries' employees and, to the Company's knowledge, no such
agreement is imminent.
(q) 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 its Subsidiaries,
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 its Subsidiaries as described in the Prospectus or such person's
performance of his or her obligations to the Company or any Subsidiary. To the
Company's knowledge, no consultant or scientific advisor of the Company or any
Subsidiary (individually, a "Consultant" and collectively "Consultants") is in
violation of any non-competition, non-disclosure, confidentiality or similar
agreement between such Consultant and any party other than the Company or a
Subsidiary. Each Consultant engaged by or on behalf of the Company or any of its
Subsidiaries to render services for the Company or any of its Subsidiaries has
entered into an agreement with the Company or such Subsidiary, as the case may
be, providing for terms and conditions of non-competition, non-disclosure and
confidentiality in connection with such services ("Consulting Agreements"),
except where the failure to enter into such agreements does not or would not
have a Material Adverse Effect. Assuming due authorization, execution and
delivery of the Consulting Agreements by each Consultant, the Consulting
Agreements are the legal, valid, binding and enforceable instruments of the
Consultants, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting rights generally or by general equitable principles and rules of law
governing specific performance estoppel, waiver, injunctive relief, and other
equitable remedies (regardless of whether enforcement is sought in a proceeding
at law or in equity).
(r) The Common Stock is registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is
approved for quotation on the Nasdaq National Market ("Nasdaq"). The Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from Nasdaq, nor has the Company received any notification that the
Commission or Nasdaq is contemplating terminating such registration or
quotation.
(s) (i) Each of the Company and its Subsidiaries owns or
possesses sufficient rights to use all patents, patent rights, patent licenses,
inventions, trade secrets, trademarks, service marks, trade names, copyrights,
service names, mask works, technology, know-how and other proprietary
intellectual rights which are necessary to conduct its business as now conducted
and as described in the Registration Statement and Prospectus. Each of the
patents owned by the Company or its Subsidiaries (for purposes of this paragraph
(s), the "Patents") and each of the patent applications owned by the Company or
its Subsidiaries (for purposes of this paragraph (s), the "U.S.
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Applications") were properly executed by the named inventor of such Patent or
U.S. Application. All pertinent prior art references known to the Company or its
Subsidiaries or its patent counsel during the prosecution of the Patents or U.S.
Applications were disclosed to the PTO and, neither the Company, its
Subsidiaries nor its patent counsel at such time made any representation to, or
concealed any relevant prior art from the PTO during such prosecution.
(ii) There are no asserted or, to the Company's
knowledge, unasserted or threatened claims of any persons relating to the scope
or ownership of the Patents or the U.S. Applications; there are no liens which
have been filed against any of the Patents or the U.S. Applications; there are
no material defects of form in the preparation or filing of the Patents or the
U.S. Applications; none of the U.S. Applications have been finally rejected or
abandoned. Nothing has come to Company's or any Subsidiary's attention that
leads the Company to believe that the pending U.S. Applications will not
eventually result in issued patents, or that any patents issued in respect
thereto will not be valid or will not afford the Company or its Subsidiaries, as
the case may be, any reasonable patent protection relative to the subject matter
thereof.
(iii) Neither the Company nor any of its Subsidiaries
has received any notice of, nor has it any knowledge of, any infringement of or
conflict with asserted rights of either the Company or any of its Subsidiaries
by others with respect to any patents, patent rights, inventions, trade secrets,
trademarks, service marks, trade names, copyrights, mask works, technology or
know-how. Neither the Company nor any of it Subsidiaries has received any notice
of, nor has it any knowledge of, any infringement of or conflict with asserted
rights of others with respect to any patent, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, might have a Material Adverse Effect. Except as set forth in the
Registration Statement, there are no actual or, to the Company's knowledge,
threatened legal, governmental or other third party action, suit, claim or
proceeding (including those relating to infringement) relating to patents or
patent rights owned by or affecting the business operations of the Company or
any of its Subsidiaries which are pending or threatened against the Company or
any of its Subsidiaries and which action, suit, claim or proceeding would, with
respect to any of the foregoing, have a Material Adverse Effect.
(iv) The information contained in the Registration
Statement and Prospectus concerning the Patents or patents licensed to the
Company or its Subsidiaries is accurate in all material respects. To the
Company's knowledge, there are no facts or circumstances which would require the
Company to obtain licenses under third party patents which are necessary to
allow the Company to conduct the business now being conducted or proposed to be
conducted by the Company as described in the Prospectus.
(t) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future to conduct,
its affairs in such a manner as to ensure that it is not
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and will not become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the 1940 Act and such rules and
regulations.
(u) Each of the Company and its Subsidiaries is conducting
business in compliance with all applicable statutes, rules, regulations and
orders administered or issued by any domestic or foreign administrative agency,
regulatory body, government or governmental agency in the jurisdictions in which
each is conducting business except where such noncompliance would not result in
a Material Adverse Effect. Without limiting the foregoing, each of the Company
and its Subsidiaries is in compliance with the provisions of the Federal Food,
Drug, and Cosmetic Act ("FDC Act") relating to medical devices except where such
noncompliance would not result in a Material Adverse Effect. Each device that
the Company and its Subsidiaries manufacture, cause to be manufactured and
distribute or cause to be distributed (the "Company Devices") is the subject of
a 510(k) premarket notification which resulted in a finding of substantial
equivalence by U.S. Food and Drug Administration ("FDA") or the Company believes
such device qualifies for exemption from 510(k) premarket notification
requirements. None of the Company Devices found substantially equivalent by the
FDA have been modified in such a manner as to require the submission of a new
510(k) premarket notification. None of the Company Devices have been labeled or
promoted in such a manner as to require the submission of a new 510(k)
notification. All the Company Devices are listed with the FDA and have been
manufactured in a facility registered by the Company with FDA. All the Company
Devices are manufactured in accordance with the Quality Systems Regulations and
current Good Manufacturing Practices Regulations, 21 C.F.R. Part 820, except
where such failure to be so manufactured in accordance would not have a Material
Adverse Effect. Either the Company or one of its Subsidiaries has submitted all
reports necessary to be submitted in accordance with the Medical Device
Reporting regulations, 21 C.F.R. Part 803. The Company has labeled and promoted
the Company Devices in accordance with the provisions of the FDC Act and FDA's
implementing regulations. The Company Devices are not misbranded, adulterated or
otherwise in violation of the FDC Act or FDA's regulations, or any foreign
regulatory law, regulation, order or rule governing the Company's or any of its
Subsidiaries' current business except where such misbranding, adulteration or
other violation would not have a Material Adverse Effect.
(v) Each of the Subsidiaries to which ISO 9000 or 9001
certification standards apply is in compliance with such ISO 9000 or 9001
certification standards and all CE ▇▇▇▇ certification requirements. Each of the
Company and its Subsidiaries has submitted all reports and other documentation
necessary to be submitted in accordance with all foreign regulatory orders, laws
and regulations in jurisdictions in which the Company or such Subsidiary is
conducting business except where such failure would not have a Material Adverse
Effect. Neither the Company nor any such Subsidiaries has received notification
of violation of any applicable statute, rule, regulation or order administered
or issued by any foreign administrative agency, regulatory body, government or
governmental agency in foreign jurisdictions in which it is conducting business.
(w) There are no actions, suits, or proceedings pending or, to
the knowledge of the Company, threatened by the FDA against the Company or any
of its Subsidiaries seeking limitations, suspension or revocation of any
license, permit, approval or authorization required by the Company or any of its
Subsidiaries to conduct its business as described in the Registration Statement
and the Prospectus. Except as set forth 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 any of its Subsidiaries which, if the
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subject of an action unfavorable to the Company or any of its Subsidiaries,
would have a Material Adverse Effect.
(x) Except as set forth in the Registration Statement and
Prospectus, (i) each of the Company and its Subsidiaries is in compliance with
all laws, orders, rules and regulations relating to the use, treatment, storage
and disposal of toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to their respective businesses
except where failure to do so would not have a Material Adverse Effect, (ii)
neither the Company nor any of its Subsidiaries has received notice from any
administrative agency, regulatory body, government, governmental authority or
third party of an asserted claim under Environmental Laws, (iii) neither the
Company nor any of its Subsidiaries will be required to make material capital
expenditures to comply or cause its Subsidiaries to comply with Environmental
Laws in the foreseeable future and (iv) no property which is, or has been,
owned, leased or occupied by the Company or any of its Subsidiaries has been
designated as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended, or otherwise designated as
a contaminated site under applicable state or local law.
(y) Each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that is maintained, administered or contributed to by the Company or
any of its Subsidiaries for employees or former employees of the Company or any
of its Subsidiaries has been maintained in compliance with its respective terms
and the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"). Each employee benefit plan intended to be qualified under
Section 401(a) of the Code has either obtained from the Internal Revenue Service
("IRS") a favorable determination letter as to its qualified status under the
Code, including all amendments to the Code effected by the Tax Reform Act of
1986 and subsequent legislation, or has applied to the IRS for such a
determination letter prior to the requisite period under applicable Treasury
Regulations or IRS pronouncements in which to apply for a determination letter
and to make any amendments necessary to obtain a favorable determination. No
prohibited transaction, within the meaning of Section 406 of ERISA or Section
4975 of the Code, has occurred with respect to any such plan, excluding
transactions effected pursuant to a statutory or administrative exemption. For
each such plan which is subject to the funding rules of Section 412 of the Code
or Section 302 of ERISA, no "accumulated funding deficiency", as defined in
Section 412 of the Code, has been incurred, whether or not waived, and the fair
market value of the assets of each such plan (excluding for these purposes
accrued but unpaid contributions) exceeded the present value of all benefits
accrued under such plan determined using reasonable actuarial assumptions.
Neither the Company nor any of its Subsidiaries has been a party to or made
contributions to or otherwise incurred any obligation under any employee benefit
plan that was subject to Title IV of ERISA or Section 412 of the Code, and any
"multi-employer plan" as defined in Section 3(37) of ERISA.
With respect to each employee benefit plan, the Company and each
Subsidiary has complied with (i) the applicable health care continuation and
notice provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") and the proposed regulations thereunder, (ii) the applicable
requirements of the Family and Medical Leave Act of 1993 and the regulations
thereunder, and (iii) the applicable requirements of the Health Insurance
Portability and Accountability Act of 1996 and the temporary regulations
thereunder. Neither the Company nor any
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Subsidiary has any material obligations under COBRA with respect to any former
employees or qualifying beneficiaries thereunder. Neither the Company nor any of
its Subsidiaries are parties to a retiree medical plan.
(z) The Company has not distributed, and will not distribute
prior to the later of (i) the Closing Date or any date on which Option Shares
are to be purchased, as the case may be, and (ii) completion of the distribution
of the Shares, any offering material in connection with the offering and sale of
the Shares other than any Preliminary Prospectuses, the Prospectus, the
Registration Statement and other materials, if any, permitted by the Act.
(aa) Neither the Company nor any of its Subsidiaries has at any
time during the last five (5) years (i) made any unlawful contribution to any
candidate for foreign office or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
(bb) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
(cc) Except as otherwise set forth in the Registration Statement
and the Prospectus, each person listed on Schedule B attached hereto has agreed
in writing that such person will not, except as described below, for a period of
75 days from the date of the final Prospectus (the "Lock-Up Period"), sell,
offer to sell, solicit an offer to buy, contract to sell, loan, pledge, grant
any option to purchase, or otherwise transfer or dispose of (collectively, a
"Disposition"), any shares of Common Stock, or any securities convertible into
or exercisable or exchangeable for Common Stock (collectively, "Securities"),
now owned or hereafter acquired by such person or with respect to which such
person has or hereafter acquires the power of disposition otherwise than (i) on
the transfer of shares of Common Stock or Securities during such person's
lifetime by bona fide gift or upon death by will or intestacy, provided that any
transferee agrees to be bound by the Lock-Up Agreement, and (ii) on the transfer
or other disposition of shares of Common Stock or Securities as a distribution
to limited partners or stockholders of such person, provided that the
distributees thereof agree to be bound by the terms of the Lock-Up Agreement.
The foregoing restriction has been expressly agreed to preclude the holder of
the Securities from engaging in any hedging, pledge or other transaction which
is designed to or may reasonably be expected to lead to or result in a
disposition of securities during the Lock-up Period, even if such Securities
would be disposed of by someone other than such stockholder. Such prohibited
hedging, pledge or other transactions would include, without limitation, any
short sale (whether or not against the box) any pledge of shares covering an
obligation that matures, or could reasonably mature during the Lock-Up Period,
or any purchase, sale or grant of any right (including, without limitation, any
put or call option) with respect to any Securities or with respect to any
security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from Securities.
Furthermore, such person has also agreed and consented to the entry of stop
transfer instructions with the Company's transfer agent against the transfer of
the Securities held by such person except in compliance with the restrictions
described in this subsection (cc). The Company has provided to
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counsel for the Underwriters ("Underwriters' Counsel") a complete and accurate
list of all securityholders of the Company as of December 31, 1998 and the
number and type of securities held by each securityholder. The Company has
provided to Underwriters' Counsel true, accurate and complete copies of all of
the agreements pursuant to which its officers, directors and stockholders have
agreed to such or similar restrictions (the "Lock-up Agreements") presently in
effect or effected hereby. The Company hereby represents and warrants that it
will not release any of its officers, directors or other stockholders from any
Lock-up Agreements currently existing or hereafter effected without the prior
written consent of Cruttenden ▇▇▇▇ Incorporated.
(dd) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any stockholder who owns beneficially more than five
percent (5%) of the Common Stock or any of the members of the families of any of
them, except as disclosed in the Registration Statement and the Prospectus.
(ee) Other than the Representative, on behalf of the several
Underwriters, no person is or will be owed any finder's fee or commission or
similar payment in connection with the transactions contemplated by this
Agreement.
(ff) 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 Act and were duly registered or subject to an
available exemption from the registration requirements of the applicable state
securities or Blue Sky laws. 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 Act, other than those
which have been waived or complied with.
(gg) No relationship, direct or indirect, exists between or
among the Company on the one hand and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, that is required by the
Act or the 1934 Act or the Rules and Regulations to be described in the
Registration Statement and the Prospectus that is not described as so required.
(hh) The Preliminary Prospectuses and Prospectus delivered to
the Underwriters for use in connection with this offering were identical to the
versions of the Preliminary Prospectuses and Prospectuses created to be
transmitted to the Commission for filing via Electronic Data Gathering Analysis
and Retrieval System ("▇▇▇▇▇"), except to the extent permitted by Regulation
S-T.
(ii) The Incorporated Documents, at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission under the Exchange Act, and, when read together
with the other information in the Prospectus, at the time the Registration
Statement and any amendments thereto become effective and at the Closing Date
and the Option Closing Date, if any, will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
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(jj) The Company has complied with all provisions of Section
517.075, Florida Statutes, relating to doing business with the Government of
Cuba or with any person or affiliate located in Cuba.
3. REPRESENTATIONS AND WARRANTIES OF SELLING SECURITYHOLDERS. Each
Selling Securityholder represents and warrants to, and agrees with, each of the
several Underwriters that:
(a) Such Selling Securityholder has full power to enter into
this Agreement and to sell, assign, transfer and deliver to the Underwriters the
Securities to be sold by such Selling Securityholder hereunder in accordance
with the terms of this Agreement. This Agreement has been duly executed and
delivered by such Selling Securityholder.
(b) Such Selling Securityholder has duly executed and delivered
a custody agreement (with respect to such Selling Securityholder, the "Custody
Agreement"), in the form heretofore delivered to the Representative, appointing
U.S. Stock Transfer Corporation as custodian thereunder (the "Custodian").
Certificates in negotiable form, endorsed in blank or accompanied by blank stock
powers duly executed, with signatures appropriately guaranteed, representing the
Securities to be sold by such Selling Securityholder hereunder have been
deposited with the Custodian pursuant to the Custody Agreement for the purpose
of delivery pursuant to this Agreement. Such Selling Securityholder has full
power (corporate and other) to enter into the Custody Agreement and to perform
its obligations under the Custody Agreement. The Custody Agreement has been duly
executed and delivered by such Selling Securityholder and, assuming due
authorization, execution and delivery by the Custodian, is the legal, valid,
binding and enforceable instrument of such Selling Securityholder. Such Selling
Securityholder agrees that each of the Shares represented by the certificates on
deposit with the Custodian is subject to the interests of the Underwriters
hereunder, and that the obligations of such Selling Securityholder hereunder
shall not be terminated, except as provided in this Agreement or the Custody
Agreement, by any act of such Selling Securityholder, by operation of law or
otherwise, whether in the case of any individual Selling Securityholder by the
death or incapacity of such Selling Securityholder, in the case of a trust or
estate by the death of the trustee or trustees or the executor or executors or
the termination of such trust or estate, or in the case of a corporate or
partnership Selling Securityholder by its liquidation or dissolution or by the
occurrence of any other event. If any individual Selling Securityholder, trustee
or executor should die or become incapacitated or any such trust should be
terminated, or if any corporate or partnership Selling Securityholder shall
liquidate or dissolve, or if any other event should occur, before the delivery
of such Shares hereunder, the certificates for such Shares deposited with the
Custodian shall be delivered by the Custodian in accordance with the respective
terms and conditions of this Agreement as if such death, incapacity,
termination, liquidation or dissolution or other event had not occurred,
regardless of whether the Custodian shall have received notice thereof.
(c) Such Selling Securityholder is the lawful owner of the
Shares to be sold by such Selling Securityholder hereunder and upon sale and
delivery of, and payment for, such Shares,
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as provided herein, such Selling Securityholder will convey good and marketable
title to such Shares, free and clear of any security interests, liens,
encumbrances, equities, claims or other defects.
(d) Such Selling Securityholder has not, directly or indirectly,
(i) taken any action designed to cause or result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares or (ii) since the filing of the Registration Statement
(A) sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Shares (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company (except for the sale of Shares by the Selling Securityholders under this
Agreement).
(e) The information contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with information furnished to the Company by
such Selling Securityholder, as such information may be amended or supplemented
as of the Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein not
misleading; such Selling Securityholder has reviewed the Prospectus and the
Registration Statement, and although such Selling Securityholder has not
independently verified the accuracy or completeness of all the information
contained therein, nothing has come to the attention of the Selling
Securityholder that would lead such Selling Securityholder to believe that the
Prospectus contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(f) The sale by such Selling Securityholder of Shares pursuant
hereto is not prompted by any adverse information concerning the Company that is
not set forth in the Registration Statement or the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(g) The sale of the Shares to the Underwriters by such Selling
Securityholder pursuant to this Agreement, the compliance by such Selling
Securityholder with the other provisions of this Agreement, the Custody
Agreement and the consummation of the other transactions herein contemplated do
not (i) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have been
obtained or such as may be required under state securities or Blue Sky laws and,
if the registration statement filed with respect to the Shares (as amended) is
not effective under the Act as of the time of execution hereof, such as may be
required (and shall be obtained as provided in this Agreement) under the Act or
(ii) conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which such Selling
Securityholder is a party or by which such Selling Securityholder or any of such
Selling Securityholder's properties are bound, or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental authority
or any arbitrator applicable to such Selling Securityholder.
4. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and Pillar agree to sell to
the Underwriters, and each Underwriter agrees, severally and
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not jointly, to purchase from the Company and Pillar, at a purchase price of
$_____ per share, the respective number of Firm Shares which is set forth
opposite the name of such Underwriter in Schedule A hereto (subject to
adjustment as provided in Section 11).
Delivery of definitive certificates for the Firm Shares to be
purchased by the Underwriters pursuant to this Section 4 shall be made against
payment of the purchase price therefor by the several Underwriters by certified
or official bank check or checks drawn in same-day funds, payable to the order
of the Company and Pillar or by wire transfer in same day funds, at the offices
of Howard, Rice, Nemerovski ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (or at such other place as may be agreed upon
between the Representative and the Company), at 7:00 A.M. Pacific daylight
savings time, (a) on the third (3rd) full business day following the first day
that Shares are traded or (b) if this Agreement is executed and delivered after
1:30 P.M. Pacific daylight savings time, the fourth (4th) full business day
following the day that this Agreement is executed and delivered or (c) at such
other time and date not later than seven (7) full business days following the
first day that Shares are traded as the Representative and the Company may
determine (or at such time and date to which payment and delivery shall have
been postponed pursuant to Section 10 hereof), such time and date of payment and
delivery being herein called the "Closing Date;" provided, however, that if the
Company has not made available to the Representative copies of the Prospectus
within the time provided in Section 5(a)(4) hereof, the Representative may, in
its sole discretion, postpone the Closing Date until no later than two (2) full
business days following delivery of copies of the Prospectus to the
Representative. The certificates for the Firm Shares to be so delivered will be
made available to you at such office or such other location as you may
reasonably request for checking at least one (1) full business day prior to the
Closing Date and will be in such names and denominations as you may request,
such request to be made at least two (2) full business days prior to the Closing
Date. If the Representative so elects, delivery of the Firm Shares may be made
by credit through full fast transfer to the accounts at The Depository Trust
Company designated by the Representative.
It is understood that you, individually, and not as the
Representative of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by you prior to the Closing
Date for the Firm Shares to be purchased by such Underwriter or Underwriters.
Any such payment by you shall not relieve any such Underwriter or Underwriters
of any of its or their obligations hereunder.
After the Registration Statement becomes effective, the several
Underwriters intend to make a public offering (as such term is described in
Section 13 hereof) of the Firm Shares at a public offering price of $_____ per
share. After the public offering, the several Underwriters may, in their
discretion, vary the public offering price.
5. FURTHER AGREEMENTS OF THE COMPANY AND SELLING SECURITYHOLDERS.
(a) The Company covenants and agrees with each of Underwriters
that:
(1) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto, to
become effective as promptly as possible. The
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Company will use its best efforts to cause any 462 Registration Statement as may
be required subsequent to the date the Registration Statement is declared
effective to become effective as promptly as possible. The Company will notify
you, promptly after it shall receive notice thereof, of the time when the
Registration Statement, any subsequent amendment to the Registration Statement
or any 462 Registration Statement has become effective or any supplement to the
Prospectus has been filed. If the Company omitted information from the
Registration Statement at the time it was originally declared effective in
reliance upon Rule 430A(a) of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus contains such
information and has been filed, within the time period prescribed, with the
Commission pursuant to subparagraph (1) or (4) of Rule 424(b) of the Rules and
Regulations or as part of a post-effective amendment to such Registration
Statement as originally declared effective which is declared effective by the
Commission. If the Company files a term sheet pursuant to Rule 434 of the Rules
and Regulations, the Company will provide evidence satisfactory to you that the
Prospectus and term sheet meeting the requirements of Rule 434(b) or (c), as
applicable, of the Rules and Regulations have been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (7) of Rule 424(b) of
the Rules and Regulations. If for any reason the filing of the final form of
Prospectus is required under Rule 424(b)(3) of the Rules and Regulations, it
will provide evidence satisfactory to you that the Prospectus contains such
information and has been filed with the Commission within the time period
prescribed. The Company will notify you promptly of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information. Promptly upon your request, the
Company will prepare and file with the Commission any amendments or supplements
to the Registration Statement or Prospectus which, in the opinion of
Underwriters' Counsel, may be necessary or advisable in connection with the
distribution of the Shares by the Underwriters. The Company will promptly
prepare and file with the Commission, and promptly notify you of the filing of,
any amendments or supplements to the Registration Statement or Prospectus which
may be necessary to correct any statements or omissions, if, at any time when a
prospectus relating to the Shares is required to be delivered under the Act, any
event shall have occurred as a result of which the Prospectus or any other
prospectus relating to the Shares as then in effect would include 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. In case any Underwriter is required to deliver a
prospectus nine (9) months or more after the effective date of the Registration
Statement in connection with the sale of the Shares, the Company will prepare
promptly upon request, but at the expense of such Underwriter, prepare such
amendment or amendments to the Registration Statement and such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Act. The Company will file no amendment or supplement to
the Registration Statement or Prospectus which shall not previously have been
submitted to you a reasonable time prior to the proposed filing thereof or to
which you shall reasonably object in writing, subject, however, to compliance
with the Act and the Rules and Regulations and the provisions of this Agreement.
(2) The Company will advise you, promptly after it shall
receive notice or obtain knowledge, of the issuance of any stop order by the
Commission suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.
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(3) The Company will arrange for qualification
(including by providing full cooperation with Underwriter's Counsel, whose
services in this matter are required and which you and the Company will seek to
expedite) of the Shares for offering and sale under the securities laws of such
jurisdictions as you may designate and to continue such qualifications in effect
for so long as may be required for purposes of the distribution of the Shares,
provided, however, that the Company shall not be required in connection
therewith or as a condition thereof to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction in which it
is not otherwise required to be so qualified or to so execute a general consent
to service of process. In each jurisdiction in which the Shares shall have been
qualified as above provided, the Company will make and file such statements and
reports in each year as are or may be required by the laws of such jurisdiction
for such purpose.
(4) The Company will furnish to you, as soon as
available, and, in the case of the Prospectus and any term sheet or abbreviated
term sheet under Rule 434, in no event later than the first full business day
following the first day that Shares are traded, copies of each Registration
Statement (two of which will include all exhibits), each Preliminary Prospectus,
the Prospectus and any amendments or supplements to such documents, including
any prospectus prepared to permit compliance with Section 10(a)(3) of the Act,
all in such quantities as you may from time to time reasonably request.
Notwithstanding the foregoing, if the Representative, on behalf of the several
Underwriters, shall agree to the utilization of Rule 434 of the Rules and
Regulations, the Company shall provide to you copies of a Preliminary Prospectus
updated in all respects through the date specified by you in such quantities as
you may from time to time reasonably request.
(5) During a period of five (5) years after the date
hereof, the Company will furnish to its stockholders as soon as practicable
after the end of each respective period, annual reports (including financial
statements audited by independent certified public accountants) and, upon
request by a stockholder, unaudited quarterly reports of operations for each of
the first three quarters of the fiscal year, and will furnish to you and the
other several Underwriters hereunder, upon request (i) concurrently with
furnishing such reports to its stockholders, statements of operations of the
Company for each of the first three (3) quarters in the form furnished to the
Company's stockholders, (ii) concurrently with furnishing to its stockholders, a
balance sheet of the Company as of the end of such fiscal year, together with
statements of operations, of stockholders' equity, and of cash flows of the
Company for such fiscal year, accompanied by a copy of the certificate or report
thereon of independent certified public accountants, (iii) as soon as they are
available, copies of all reports (financial or other) mailed to stockholders,
(iv) as soon as they are available, copies of all reports and financial
statements furnished to or filed with the Commission, any securities exchange or
the NASD, (v) every material press release and every material news item or
article in respect of the Company or its affairs which was generally released to
stockholders or prepared by the Company, and (vi) any additional information of
a public nature concerning the Company, or its business which you may reasonably
request. During such five (5) year period, if the Company shall have active
subsidiaries, the foregoing financial statements shall be on a consolidated
basis to the extent that the accounts of the Company and such subsidiaries are
consolidated, and shall be accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(6) The Company will apply the net proceeds from the
sale of the Shares being sold by it in the manner set forth under the caption
"Use of Proceeds" in the Prospectus.
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(7) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for its Common Stock.
(8) If at any time during the ninety (90) day period
after the Registration Statement becomes effective, any rumor, publication or
event relating to or affecting the Company shall occur as a result of which in
your opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect set forth
above, forthwith consult with you concerning the substance and relative
advantages of a press release or other public statement responding to or
commenting on such rumor, publication or event.
(9) During the Lock-up Period, the Company will not,
without the prior written consent of the Representative, effect the Disposition
of, directly or indirectly, any Securities other than the sale of the Firm
Shares and the Option Shares hereunder and the Company's issuance of options or
Common Stock under the Company's presently authorized stock option and stock
purchase plans described in the Registration Statement and the Prospectus
following Stockholder Approval.
(10) The Company will not issue shares of Common Stock
or securities convertible into Common Stock of an amount which is greater than
the difference between (X) the total number of shares of Common Stock authorized
pursuant to the Company's Certificate of Incorporation and (Y) the total number
of shares of Common Stock outstanding after the completion of the transactions
contemplated by this Agreement plus the number of Shares of Common Stock
underlying securities convertible into the Common Stock.
(11) The Company will cause the Shares to be included
for quotation on Nasdaq following the Firm Closing Date.
(12) Prior to the Firm Closing Date, the Company will
cause its subsidiary, Invivo Research, Inc. to enter into a proprietary rights
or similar agreement (the "Susi Agreement") with ▇▇▇▇▇ ▇▇▇▇ ("▇▇▇▇") providing
for, among other things, the engagement of certain services, the assignment of
all proprietary rights related to the Company's business and conceived during
the scope of Susi's employment or consultation with the Company. The form of the
Susi Agreement shall be in a form reasonably acceptable to the Representative
and Underwriters' Counsel.
(b) Each of the Selling Securityholders covenants and agrees
with each of the Underwriters that:
(1) Each Selling Securityholder will not, directly or
indirectly, (i) take any action designed to cause or result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or (ii) (A) sell, bid for,
purchase, or pay anyone any compensation for soliciting purchases of, the
Securities or (B) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Company (except for
the sale of Securities by the Selling Securityholders under this Agreement).
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(2) Each Selling Securityholder acknowledges the receipt
of valuable consideration under this Agreement in connection with the sale of
the Securities hereunder and agrees to be bound by all terms of this Agreement
applicable to such Selling Securityholder.
6. EXPENSES.
(a) The Company agrees with each Underwriter that:
(1) The Company will pay and bear all costs and expenses
in connection with the preparation, printing and filing of the Registration
Statement (including financial statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus and any amendments or supplements thereto; the
printing of this Agreement, the Agreement Among Underwriters, the Selected
Dealer Agreement, the Underwriters' Questionnaire and Power of Attorney, and any
instruments related to any of the foregoing; the issuance and delivery of the
Shares hereunder to the several Underwriters, including transfer taxes, if any,
the cost of all certificates representing the Shares and transfer agents' and
registrars' fees; the fees and disbursements of counsel for the Company; all
fees and other charges of the Company's independent certified public
accountants; the cost of furnishing to the several Underwriters copies of the
Registration Statement (including appropriate exhibits), Preliminary Prospectus
and the Prospectus, and any amendments or supplements to any of the foregoing;
NASD filing fees and the cost of qualifying the Shares under the laws of such
jurisdictions as you may designate (including filing fees and fees and
disbursements of Underwriters' Counsel in connection with such NASD filings and
Blue Sky qualifications and related expenses, not to exceed $10,000); and all
other expenses directly incurred by the Company in connection with the
performance of its obligations hereunder. The provisions of this Section 5(a)(i)
are intended to relieve the Underwriters from the payment of the expenses and
costs which the Company hereby agrees to pay.
(2) In addition to its other obligations under Section
9(a) hereof, the Company agrees that, as an interim measure during the pendency
of any claim, action, investigation, inquiry or other proceeding described in
Section 9(a) hereof, it will reimburse the Underwriters on a monthly basis for
all reasonable legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse the Underwriters for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Underwriters
shall promptly return such payment to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing) listed from time to
time in The Wall Street Journal which represents the base rate on corporate
loans posted by a substantial majority of the nation's thirty (30) largest banks
(the "Prime Rate"). Any such interim reimbursement payments which are not made
to the Underwriters within thirty (30) days after a request for reimbursement
shall bear interest at the Prime Rate from the date of such request.
(b) In addition to their other obligations under Section 9(b)
hereof, the Underwriters severally and not jointly agree that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding described in Section 9(b) hereof, they will
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reimburse the Company on a monthly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company shall
promptly return such payment to the Underwriters together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within thirty (30) days
after a request for reimbursement shall bear interest at the Prime Rate from the
date of such request.
(c) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections
6(a)(ii) and 6(b) hereof, including the amounts of any requested reimbursement
payments, the method of determining such amounts and the basis on which such
amounts shall be apportioned among the reimbursing parties, shall be settled by
arbitration conducted in accordance with the commercial arbitration rules, then
in effect, of the American Arbitration Association. Any such arbitration must be
commenced by service of a written demand for arbitration or a written notice of
intention to arbitrate, therein electing the arbitration tribunal. In the event
the party demanding arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to said demand or
notice is authorized to do so. Any such arbitration will be limited to the
operation of the interim reimbursement provisions contained in Sections 6(a)(ii)
and 6(b) hereof and will not resolve the ultimate propriety or enforceability of
the obligation to indemnify for expenses which is created by the provisions of
Sections 9(a) and 9(b) hereof or the obligation to contribute to expenses which
is created by the provisions of Section 9(d) hereof.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Shares as provided herein shall
be subject to the accuracy, as of the date hereof and the Closing Date and any
later date on which Option Shares are to be purchased, as the case may be, of
the representations and warranties of the Company herein, to the performance by
the Company of its obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not
later than 2:00 P.M., Pacific time, on the date following the date of this
Agreement, or such later date and time as shall be consented to in writing by
you; and no stop order suspending the effectiveness thereof shall have been
issued and no proceedings for that purpose shall have been initiated or, to the
knowledge of the Company or any Underwriter, threatened by the Commission, and
any request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to the satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in
connection with this Agreement, the form of Registration Statement and the
Prospectus, and the registration, authorization, issue, sale and delivery of the
Shares, shall have been satisfactory to Underwriters' Counsel, and such counsel
shall have been furnished with such papers and information as they may have
requested to enable them to pass upon the matters referred to in this Section.
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(c) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date, or any later date on which Option Shares are to
be purchased, as the case may be, there shall not have been any change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its Subsidiaries, taken as a whole, from that set
forth in the Registration Statement or Prospectus, which, in your sole judgment,
is material and adverse and that makes it, in your sole judgment, impracticable
or inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus.
(d) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, the
following opinion of Howard, Rice, Nemerovsky, Canady, ▇▇▇▇ & ▇▇▇▇▇▇, A
Professional Corporation, counsel for the Company, dated the Closing Date or
such later date on which Option Shares are to be purchased, as the case may be,
addressed to the Underwriters and with reproduced copies or signed counterparts
thereof for each of the Underwriters, to the effect that:
(1) Each of the Company and its Subsidiaries has been
duly incorporated and are validly existing as corporations in good standing
under the laws of the jurisdiction of their incorporation with requisite
corporate power and authority to own, lease and operate its properties and to
conduct their respective businesses as described in the Registration Statement
and the Prospectus;
(2) Each of the Company and its Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction, if any, in which the ownership or leasing of their respective
properties or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its Subsidiaries, taken as a whole;
(3) The authorized, issued and outstanding capital stock
of the Company conforms as to legal matters to the description thereof contained
in the Prospectus;
(4) The shares of the capital stock of the Company
outstanding prior to the issuance of the Shares or the Option Shares, as the
case may be, have been duly authorized and are validly issued, fully paid and
nonassessable, and have not been issued in violation of the Company's charter or
bylaws, and all sales of the Company's capital stock were at all relevant times
exempt from the registration or qualification requirements of the Act and state
securities laws;
(5) The Firm Shares or the Option Shares, as the case
may be, to be issued and sold by the Company under this Agreement have been duly
authorized and, upon when delivered and paid for by the Underwriters in
accordance with the terms of the Underwriting Agreement, will be validly issued,
fully paid and non-assessable and the issuance of the Shares or the Option
Shares, as the case may be, is not subject to any preemptive right, co-sale
right, registration right, right of first refusal or other similar rights under
the Company's charter or bylaws or under any agreement known to such counsel;
and the forms of certificates evidencing the Shares comply with Delaware law;
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(6) The Company has the corporate power and authority to
enter into this Agreement and to issue, sell and deliver to the Underwriters the
Shares to be issued and sold by it hereunder;
(7) This Agreement has been duly authorized, executed
and delivered by the Company and, assuming due authorization, execution and
delivery by the Representative, is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except insofar as indemnification and
contribution provisions may be limited by applicable law and except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights generally
or by general equitable principles;
(8) The Registration Statement has become effective
under the Act and, to our knowledge based solely on the telephonic confirmation
of the staff of the Securities and Exchange Commission on the date immediately
preceding the Closing Date or Option Closing Date, as the case may be, no stop
order suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or,
threatened under the Act;
(9) The Registration Statement and the Prospectus, and
each amendment or supplement thereto (other than the financial statements
(including supporting schedules), financial data derived therefrom and other
financial and statistical information included therein, as to which such counsel
need express no opinion), comply as to form in all material respects with the
requirements of the Act and the applicable Rules and Regulations;
(10) The statements in the Prospectus under the caption
"Description of Capital Stock," and "Shares Eligible For Future Sale" and the
Registration Statement Item 15, to the extent that it constitutes matters of law
or legal conclusions, has been reviewed by such counsel and is a fair summary of
such matters and conclusions;
(11) The description in the Registration Statement and
the Prospectus of the charter and bylaws of the Company and of statutes are
accurate and fairly present the information required to be presented by the Act
and the applicable Rules and Regulations;
(12) To such counsel's knowledge, there are no
agreements, contracts, leases or documents that are required to be described or
referred to in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described therein or filed
as exhibits thereto;
(13) The Company is not, nor with the giving of notice
or lapse of time or both will the Company be, in violation of or in default
under, its Certificate of Incorporation or ByLaws, except for violations and
defaults which individually and in the aggregate are not material to the
Company; the issue and sale of the Shares being delivered on the closing date,
and the performance by the Company of its obligations under the Underwriting
Agreement and the consummation of the transactions contemplated therein in
accordance with the terms thereof does not result in a breach of any of the
terms or provisions of, or constitute a default under, any agreement or
instrument set forth in Exhibit A, nor does any such action result in any
violation of the provisions of the Certificate of Incorporation or the Bylaws of
the Company or any applicable laws
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(as defined in such opinion) or any order, writ or decree of any court or
governmental agency in which the Company is a named party.
(14) No consent, approval, authorization, order,
license, registration or qualification with any court, government or
governmental agency or body is required for the issue and sale of the Shares or
the consummation by the Company of the transactions herein contemplated, except
such consents as have been obtained under the Act and such as may be required
under state securities or Blue Sky laws in connection with the purchase and the
distribution of the Shares or Option Shares, as the case may be, by the
Underwriters;
(15) Other than as set forth or contemplated in the
Registration Statement and Prospectus, to such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened against the Company or
any of its Subsidiaries that, if determined adversely to the Company, would
individually or in the aggregate have, or reasonably be expected to have, a
Material Adverse Effect;
(16) Each of the Company and its Subsidiaries is not,
and after giving effect to the offering and sale of the Shares will not be, an
"investment company,' or entity "controlled" by an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended.
(17) The conditions for use of Form S-2, as set forth in
the General Instructions thereto, have been satisfied.
In addition, such counsel shall state that such counsel has acted
as outside corporate legal counsel to the Company and participated in
conferences with officials and other representatives of the Company, the
Representative, Underwriters' Counsel and the independent certified public
accountants of the Company, at which such conferences the contents of the
Registration Statement and Prospectus and related matters were discussed, and
although they have not verified the accuracy or completeness of the statements
contained in the Registration Statement or the Prospectus, nothing has come to
the attention of such counsel which leads such counsel to believe that, at the
time the Registration Statement became effective and at all times subsequent
thereto up to and on the Closing Date and on any later date on which Option
Shares are to be purchased, the Registration Statement and any amendment or
supplement thereto (other than the financial statements including supporting
schedules, other financial information derived therefrom and other financial and
statistical information included therein, as to which such counsel need express
no opinion) contained any 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 at the Closing Date or any later date on
which the Option Shares are to be purchased, as the case may be, the
Registration Statement, the Prospectus and any amendment or supplement thereto
(except as aforesaid) contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Counsel rendering the foregoing opinion may rely, as to matters
of fact, to the extent such counsel deems proper, upon certificates of
responsible officers of the Company, and of government officials, in which case
their opinion is to state that they are so relying and that they have no
knowledge of any material misstatement or inaccuracy in any such opinion,
representation
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or certificate. References to the Registration Statement and the
Prospectus in this subsection (d) shall include any amendment or supplement
thereto at the date of such opinion. Copies of any opinion, representation or
certificate so relied upon shall be delivered to you, as Representative of the
Underwriters, and to Underwriters' Counsel.
References to the Registration Statement and the Prospectus in
this subsection (d) shall include any amendment or supplement thereto at the
date of such opinion.
(e) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, an opinion
from Hopgood, Calimafde, ▇▇▇▇▇ & Judlowe, LLP, patent counsel for the Company,
dated the Closing Date or such later date on which Option Shares as the case may
be, are to be purchased and addressed to the Underwriters and with reproduced
copies or signed counterparts thereof for each of the Underwriters:
(A) Each of the patents applications listed in such
opinion (for purposes of this paragraph e, the "Patent Application") have been
properly filed in the United States Patent and Trademark Office (the "PTO").
Each of the foreign applications listed in such opinion (for purposes of this
paragraph (e), the "Foreign Applications") have been properly filed in the
respective appropriate foreign patent office. Each of the National Stage
Applications listed in such opinion (for purposes of this paragraph (e), the
"National Stage Applications") have been properly filed in the respective patent
offices.
(B) The Patents and the U.S. Applications were properly
assigned to the Company by the respective inventors of the Patents and the U.S.
Applications. Except as otherwise stated in such opinion, the Company is listed
in the records of the U.S. Patent and Trademark Office ("PTO") as the sole
assignee of record of each of the Patents and each of the U.S. Applications. The
Company is listed in the records of the appropriate foreign patent offices as
the sole assignee of record of each of the Foreign Applications.
References to the Registration Statement and the Prospectus
in this subsection (e) shall include any amendment or supplement thereto at the
date of such opinion.
(f) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, an opinion
of ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, in form and substance reasonably
satisfactory to you, with respect to the sufficiency of all such corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as you may reasonably require, and the Company
shall have furnished to such counsel such documents as they may have requested
for the purpose of enabling them to pass upon such matters.
(g) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, the
following opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ S.C. and Howard, Rice, Nemerovski,
Canady, ▇▇▇▇ & Rabkin, A Professional Corporation, counsel for Pillar and
▇▇▇▇▇▇▇, respectively, dated the Closing Date and any later date on which Option
Shares are to be purchased, as the case may be, to the effect that:
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(1) Such Selling Securityholder has full corporate power
to enter into this Agreement, the Custody Agreement and to sell, transfer and
deliver the Securities being sold by such Selling Securityholder hereunder in
the manner provided in this Agreement and to perform its obligations under the
Custody Agreement. The execution and delivery of this Agreement and the Custody
Agreement have been duly authorized by all necessary action (corporate or other)
of each Selling Securityholder. This Agreement and the Custody Agreement have
been duly executed and delivered by each Selling Securityholder. Assuming due
authorization, execution and delivery by the Custodian, the Custody Agreement is
a legal, valid, binding and enforceable instrument of such Selling
Securityholder, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law);
(2) The delivery by such Selling Securityholder to the
several Underwriters of certificates for the Securities being sold hereunder by
such Selling Securityholder against payment therefor as provided herein, will
convey good and marketable title to such Securities to the several Underwriters,
free and clear of all; security interests, liens, encumbrances, equities, claims
or other defects; and
(3) The sale of the Securities to the several
Underwriters by such Selling Securityholder pursuant to this Agreement, the
compliance by such Selling Securityholder with the other provisions of this
Agreement, the Custody Agreement and the consummation of the other transactions
herein contemplated do not (i) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except such
as have been obtained and such as may be required under state securities or blue
sky laws, or (ii) conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under any indenture, mortgage,
deed of trust, lease or other agreement or instrument to which such Selling
Securityholder is a party or by which such Selling Securityholder or any of such
Selling Securityholder's respective properties are bound, or the charter
documents or by-laws of such Selling Securityholder, if applicable, or any
statute or any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to such Selling
Securityholder.
In rendering such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials. Copies of such opinion
shall be delivered to the Representative and Underwriters' Counsel.
References to the Registration Statement and the Prospectus
in this subsection (g) shall include any amendment or supplement thereto at the
date of such opinion.
(h) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, a letter or
letters from KPMG, addressed to the Underwriters, dated the Closing Date or such
later date on which Option Shares are to be purchased, as the case may be (in
each case, the "Bring Down Letter"), confirming that they are independent
certified public accountants with respect to the Company within the meaning of
the Act and the applicable published Rules and Regulations and based upon the
procedures described in the letter delivered to you concurrently with the
execution of this Agreement (herein called the "Original Letter"), dated the
date hereof, or such later date on which Option Shares are to be purchased, as
the
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case may be, (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing Date
or such later date on which Option Shares are to be purchased, as the case may
be, and (ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter that are necessary to reflect any
changes in the facts described in the Original Letter since its date, or to
reflect the availability of more recent financial statements, data or
information. The Bring Down Letter shall not disclose any change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company from that set forth in the Registration Statement or
Prospectus, which, in your sole judgment, is material and adverse and that makes
it, in your sole judgment, impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus. The Original
Letter from KPMG shall be addressed to or for the use of the Underwriters in
form and substance satisfactory to the Underwriters and shall (i) represent, to
the extent true, that they are independent certified public accountants with
respect to the Company within the meaning of the Act and the applicable
published Rules and Regulations, (ii) set forth their opinion with respect to
their examination of the consolidated balance sheets of the Company as of June
30, 1998 and June 30, 1997, respectively, and related consolidated statements of
income and common stockholders' equity (deficit) and cash flows for the years
ended June 30, 1998, June 30, 1997, and June 30, 1996, respectively, (iii) state
that KPMG has performed the procedures set out in Statement on Auditing
Standards No. 71 ("SAS 71") for a review of interim financial information and
providing the report of KPMG as described in SAS 71 on the financial statements
for the periods ended September 30, 1998, and December 31, 1998 (the "Quarterly
Financial Statements"), (iv) state that in the course of such review, nothing
came to their attention that leads them to believe that any material
modifications need to be made to any of the Quarterly Financial Statements in
order for them to be in compliance with generally accepted accounting principles
consistently applied across the periods presented, (v) state that nothing came
to their attention that caused them to believe that the financial statements
included in the Registration Statement and Prospectus do not comply as to form
in all material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X and that any adjustments thereto have not been properly
applied to the historical amounts in the compilation of such statements, and
(vi) address other matters agreed upon by KPMG and you. In addition, you shall
have received from KPMG a letter addressed to the Company and made available to
you for the use of the Underwriters stating that their review of the Company's
system of internal accounting controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's financial
statements as of June 30, 1998, did not disclose any weaknesses in internal
controls that they considered to be material weaknesses.
(i) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, a
certificate of the Company, dated the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, signed by the Chief
Executive Officer and Chief Financial Officer of the Company, to the effect
that, and you shall be satisfied that:
(1) The representations and warranties of the Company in
this Agreement are true and correct in all material respects, as if made on and
as of the Closing Date and such later date on which Option Shares are to be
purchased, as the case may be, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
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satisfied at or prior to the Closing Date or any later date on which Option
Shares are to be purchased, as the case may be;
(2) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Act;
(3) When the Registration Statement became effective and
at all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained all material information required to be included therein by
the Act and the Rules and Regulations, and in all material respects conformed to
the requirements of the Act and the Rules and Regulations; the Registration
Statement, and any amendment or supplement thereto, did not and does not include
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, the Prospectus, and any amendment or supplement thereto, did not and
does not include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and, since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented Prospectus which has not
been so set forth; and
(4) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been (a) any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company or any of
its Subsidiaries, (b) any transaction that is material to the Company or any of
its Subsidiaries, except transactions entered into in the ordinary course of
business, (c) any obligation, direct or contingent, that is material to the
Company or any of its Subsidiaries, incurred by the Company or any of its
Subsidiaries, except obligations incurred in the ordinary course of business,
(d) any change in the capital stock or outstanding indebtedness of the Company
or any of its Subsidiaries that is material to the Company or such Subsidiary or
is out of the ordinary course of business of the Company or such Subsidiary ,
(e) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company, or (f) any loss or damage (whether or not insured)
to the property of the Company or any of its Subsidiaries which has been
sustained or will have been sustained which has a Material Adverse Effect.
(j) The Representative shall have received a certificate from
each Selling Securityholder, signed by such Selling Securityholder, dated the
Closing Date and such any later date on which Option Shares are to be purchased,
as the case may be, to the effect that:
(1) The representations and warranties of such Selling
Securityholder in this Agreement are true and correct in all material respects
as if made on and as of the Closing Date, or the date on which Option Shares are
to be purchased, as the case may be;
(2) Such Selling Securityholder has performed all
covenants and agreements on its part to be performed or satisfied at or prior to
the Closing Date, or the date which Option Shares are to be purchased, as the
case may be;
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(3) The information contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with information furnished
to the Company by such Selling Securityholder, as such information may be
amended or supplemented as of the Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading; such Selling Securityholder has
reviewed the Registration Statement and the Prospectus and, although such
Selling Securityholder has not independently verified the accuracy or
completeness of all the information contained therein, nothing has come to the
attention of such Selling Securityholder that would lead such Selling
Securityholder to believe that the Prospectus, as amended or supplemented as of
the Closing Date, contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
(4) As to Pillar only, the Attorney-In-Fact of Pillar
has the authority and power to execute the Underwriting Agreement and all other
documents related thereto on behalf of Pillar.
(k) The Company shall have obtained and delivered to you an
agreement from each person set forth on Schedule B attached hereto and each
entity that is a stockholder and is affiliated with an officer or director of
the Company in writing prior to the date hereof that such person will not,
except as described below, during the Lock-up Period, effect the Disposition of
any Securities now owned or hereafter acquired by such person or with respect to
which such person has or hereafter acquires the power of disposition, otherwise
than (i) on the transfer of shares of Common Stock or Securities during such
person's lifetime by bona fide gift or upon death by will or intestacy, provided
that any transferee agrees in writing to be bound by the Lock-Up Agreement, and
(ii) on the transfer or other disposition of shares of Common Stock or
Securities as a distribution to limited partners or stockholders of such person,
provided that the distributees thereof agree in writing to be bound by the terms
of the Lock-Up Agreement. The foregoing restriction shall have been expressly
agreed to preclude the holder of the Securities from engaging in any hedging,
pledge or other transaction which is designed to or may reasonably be expected
to lead to or result in a Disposition of Securities during the Lock-Up Period,
even if such Securities would be disposed of by someone other than the such
holder. Such prohibited hedging, pledge or other transactions would include,
without limitation, any short sale (whether or not against the box), any pledge
of shares covering an obligation that matures or could reasonably mature during
the Lock-Up Period, or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any Securities or
with respect to any security (other than a broad-based market basket or index)
that includes, relates to or derives any significant part of its value from
Securities. Furthermore, such person will have also agreed and consented to the
entry of stop transfer instructions with the Company's transfer agent against
the transfer of the Securities held by such person except in compliance with
this restriction.
(l) The Company shall have delivered to you an executed copy of
the Susi Agreement;
(m) The Company shall have furnished to you such further
certificates and documents as you shall reasonably request (including
certificates of officers of the Company) as to the accuracy of the
representations and warranties of the Company herein, as to the performance by
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the Company of its obligations hereunder and as to the other conditions
concurrent and precedent to the obligations of the Underwriters hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
8. OPTION SHARES.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company and ▇▇▇▇▇▇▇ hereby grant to the several Underwriters, for the
purpose of covering over-allotments in connection with the distribution and sale
of the Firm Shares only, a nontransferable option to purchase up to an aggregate
of 144,000 Option Shares, of which up to 94,000 Option Shares will be sold by
the Company and 50,000 Option Shares will be sold by ▇▇▇▇▇▇▇, at the purchase
price per share for the Firm Shares set forth in Section 4 hereof (the
"Option"). The Option may be exercised by the Representative on behalf of the
several Underwriters on one (1) or more occasions in whole or in part during the
period of forty five (45) days after the date on which the Firm Shares are
initially offered to the public by giving written notice (the "Option Notice")
to the Company. The number of Option Shares to be purchased by each Underwriter
upon the exercise of the Option shall be the same proportion of the total number
of Option Shares to be purchased by the several Underwriters pursuant to the
exercise of the Option as the number of Firm Shares purchased by such
Underwriter (set forth in Schedule A hereto) bears to the total number of Firm
Shares purchased by the several Underwriters (set forth in Schedule A hereto),
adjusted by the Representative in such manner as to avoid fractional shares.
Delivery of definitive certificates for the Option Shares
to be purchased by the several Underwriters pursuant to the exercise of the
Option granted by this Section 7 shall be made against payment of the purchase
price therefor by the several Underwriters by certified or official bank check
or checks drawn in same day funds, payable to the order of the Company and
▇▇▇▇▇▇▇, or by wire transfer in same day funds. In the event of any breach of
the foregoing, the Company shall reimburse the Underwriters for the interest
lost and any other expenses borne by them by reason of such breach. Such
delivery and payment shall take place at the offices of Howard, Rice, Nemerovski
▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇, A Professional Corporation, ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, or at such other place as may be agreed upon
between the Representative and the Company (i) on the Closing Date, if written
notice of the exercise of such option is received by the Company at least two
(2) full business days prior to the Closing Date, or (ii) on a date which shall
not be later than the third (3rd) full business day following the date the
Company receives written Notice of the Option, if such notice is received by the
Company after the date two (2) full business days prior to the Closing Date.
The certificates for the Option Shares to be so delivered will
be made available to you at such office or such other location, as you may
reasonably request for checking at least one (1) full business day prior to the
date of payment and delivery and will be in such names and denominations as you
may request, such request to be made at least two (2) full business days prior
to such date of payment and delivery. If the Representative so elects, delivery
of the Option Shares may be made
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by credit through full fast transfer to the accounts at The Depository Trust
Company designated by the Representative.
It is understood that you, individually, and not as the
Representative of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by you prior to the date of
payment and delivery for the Option Shares to be purchased by such Underwriter
or Underwriters. Any such payment by you shall not relieve any such Underwriter
or Underwriters of any of its or their obligations hereunder.
(b) Upon exercise of any option provided for in Section 8(a)
hereof, the obligations of the several Underwriters to purchase such Option
Shares will be subject (as of the date hereof and as of the date of payment and
delivery for such Option Shares) to the accuracy of and compliance with the
representations, warranties and agreements of the Company herein, to the
accuracy of the statements of the Company and officers of the Company made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, to the conditions set forth in Section 7 hereof, and to
the condition that all proceedings taken at or prior to the payment date in
connection with the sale and transfer of such Option Shares shall be
satisfactory in form and substance to you and to Underwriters' Counsel, and you
shall have been furnished with all such documents, certificates and opinions as
you may request in order to evidence the accuracy and completeness of any of the
representations, warranties or statements, the performance of any of the
covenants or agreements of the Company or the satisfaction of any of the
conditions herein contained.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, and each person, if any, who controls any Underwriter within the
meaning of the Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such controlling
person may become subject (including, without limitation, in its capacity as an
Underwriter or as a "qualified independent underwriter" within the meaning of
Schedule E of the Bylaws of the NASD), under the Act, the Exchange Act or
otherwise, specifically including, but not limited to, losses, claims, damages
or liabilities (or actions in respect thereof) arising out of or based upon (i)
any breach of any representation, warranty, agreement or covenant of the Company
herein contained, (ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment or
supplement thereto, or 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, (iii) any untrue statement or alleged untrue statement
of any material fact contained in any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or (iv) any untrue statement or alleged untrue statement
of any material fact contained in any audio or visual materials used in
connection with the marketing of the Securities and furnished by the Company,
including without limitation, slides, videos, films and tape recordings, and
agrees to reimburse each Underwriter for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company shall
not be liable in any such case
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to the extent that any such loss, claim, damage, liability or action arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, such Preliminary
Prospectus or the Prospectus, or any such amendment or supplement thereto, in
reliance upon, and in conformity with, written information relating to any
Underwriter furnished to the Company by such Underwriter, directly or through
the Representative, specifically for use in the preparation thereof and,
provided further, that the indemnity agreement provided in this Section 9(a)
with respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any losses, claims, damages,
liabilities or actions based upon any untrue statement or alleged untrue
statement of material fact or omission or alleged omission to state therein a
material fact purchased Shares, if a copy of the Prospectus in which such untrue
statement or alleged untrue statement or omission or alleged omission was
corrected had not been sent or given to such person within the time required by
the Act and the Rules and Regulations, unless such failure is the result of
noncompliance by the Company with Section 5(a)(4) hereof. This indemnity
agreement shall be in addition to any liabilities which the Company may
otherwise have.
(b) Pillar and ▇▇▇▇▇▇▇, as Selling Securityholders, severally
and not jointly agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the Act or
the Exchange Act against any losses, claims, damages, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject under the Act, the Exchange Act or otherwise, arising out of or
are based upon: (i) any breach of any representation, warranty, agreement or
covenant of such Selling Securityholder herein contained, (ii) any untrue
statement or alleged untrue statement of any material fact contained in (A) the
Registration Statement or any amendment thereto or any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto based upon information
furnished by or on behalf of such Selling Securityholders, or (iii) the omission
or alleged omission to state in the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, a material fact required to be stated therein or necessary
to make the statements therein relating to such Selling Securityholders not
misleading, and agrees to reimburse, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Selling Securityholders
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omissions made in the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or any such Application
in reliance upon and in conformity with written information furnished to the
Selling Securityholder by any Underwriter through the Representative
specifically for use therein and (ii) the Company will not be liable to any
Underwriter or any person controlling such Underwriter with respect to any such
untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting to such loss, claim, damage or liability purchased Securities
from such Underwriter but was not sent or given a copy of the Prospectus (as
amended or supplemented) at or prior to the written confirmation or the sale of
such Securities to such person in any case where such delivery of the Prospectus
(as amended and supplemented) is required by the Act, unless such failure to
deliver to the Prospectus (as amended and supplemented) was a result of
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noncompliance by the Company with Section 5(a)(4) of this Agreement. This
indemnity agreement shall be in addition to any liability which the Selling
Securityholders may otherwise have.
(c) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company and each of the Selling Securityholders
against any losses, claims, damages or liabilities, joint or several, to which
the Company may become subject under the Act or otherwise, specifically
including, but not limited to, losses, claims, damages or liabilities (or
actions in respect thereof) arising out of or based upon (i) any breach of any
representation, warranty, agreement or covenant of such Underwriter herein
contained, (ii) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment or supplement
thereto, or 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, or (iii) any untrue statement or alleged untrue statement of any
material fact contained in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, in the case of
subparagraphs (ii) and (iii) of this Section 9(c) to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company or the Selling Shareholders by such
Underwriter, directly or through the Representative, specifically for use in the
preparation thereof, and agrees to reimburse the Company or the Selling
Securityholders for any legal or other expenses reasonably incurred by the
Company or the Selling Securityholders in connection with investigating or
defending any such loss, claim, damage, liability or action.
The indemnity agreement in this Section 9(c) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
officer of the Company who signed the Registration Statement and each director
of the Company, and each person, if any, who controls the Company within the
meaning of the Act or the Exchange Act. This indemnity agreement shall be in
addition to any liabilities which such Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 9, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 9 except to the extent that it has been
prejudiced by such omission. In case any such action is brought against any
indemnified party, and it notified the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it shall elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of the indemnifying party's election so to
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assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 9 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with appropriate local counsel) approved by the
indemnifying party representing all the indemnified parties under Section 9(a,
9(b), or 9(c) hereof who are parties to such action), (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. In no event shall any indemnifying party be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
party shall have approved the terms of such settlement; provided that such
consent shall not be unreasonably withheld. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is a
party and indemnification could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on all claims that are the subject matter
of such proceeding.
(e) In order to provide for just and equitable contribution in
any action in which a claim for indemnification is made pursuant to this Section
9 but it is judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 9 provides for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that the Underwriters
severally and not jointly are responsible pro rata for the portion represented
by the percentage that the underwriting discount bears to the public offering
price, and the Company and the Selling Securityholders are responsible for the
remaining portion, provided, however, that (i) no Underwriter shall be required
to contribute any amount in excess of the amount by which the underwriting
discount applicable to the Shares purchased by such Underwriter exceeds the
amount of damages which such Underwriter has otherwise been required to pay and
(ii) no person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
is not guilty of such fraudulent misrepresentation. The contribution agreement
in this Section 9(d) shall extend upon the same terms and conditions to, and
shall inure to the benefit of, each person, if any, who controls any Underwriter
or the Company within the meaning of the Act or the Exchange Act and each
officer of the Company who signed the Registration Statement and each director
of the Company.
(f) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 9, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 9 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in
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order to assure that adequate disclosure is made in the Registration Statement
and Prospectus as required by the Act and the Exchange Act.
(g) The liability of Pillar under this Section 9 shall not
exceed an amount equal to the total proceeds received by Pillar from the sale of
Firm Shares. The liability of ▇▇▇▇▇▇▇ under this Section 9 shall not exceed an
amount equal to the total proceeds received by ▇▇▇▇▇▇▇ from the sale of Option
Shares.
10. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties, covenants and agreements of the
Company, the Selling Securityholders and the Underwriters herein or in
certificates delivered pursuant hereto, and the indemnity and contribution
agreements contained in Section 9 hereof shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter within the meaning of the
Act or the Exchange Act, or by or on behalf of the Company, or any of its
officers, directors or controlling persons within the meaning of the Act or the
Exchange Act, and shall survive the delivery of the Shares to the several
Underwriters hereunder or termination of this Agreement.
11. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters
shall fail to take up and pay for the number of Firm Shares agreed by such
Underwriter or Underwriters to be purchased hereunder upon tender of such Firm
Shares in accordance with the terms hereof, and if the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters so agreed but failed to
purchase does not exceed 10% of the Firm Shares, the remaining Underwriters
shall be obligated, severally in proportion to their respective commitments
hereunder, to take up and pay for the Firm Shares of such defaulting Underwriter
or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters agreed
but failed to take up and pay for exceeds 10% of the Firm Shares, the remaining
Underwriters shall have the right, but shall not be obligated, to take up and
pay for (in such proportions as may be agreed upon among them) the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase, the Closing Date shall be postponed for
twenty-four (24) hours to allow the several Underwriters the privilege of
substituting within twenty-four (24) hours (including non-business hours)
another underwriter or underwriters (which may include any nondefaulting
Underwriter) satisfactory to the Company. If no such underwriter or underwriters
shall have been substituted as aforesaid by such postponed Closing Date, the
Closing Date may, at the option of the Company, be postponed for a further
twenty-four (24) hours, if necessary, to allow the Company the privilege of
finding another underwriter or underwriters, satisfactory to you, to purchase
the Firm Shares which the defaulting Underwriter or Underwriters so agreed but
failed to purchase. If it shall be arranged for the remaining Underwriters or
substituted underwriter or underwriters to take up the Firm Shares of the
defaulting Underwriter or Underwriters as provided in this Section 11, (i) the
Company shall have the right to postpone the time of delivery for a period of
not more than seven (7) full business days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus,
or in any other documents or arrangements, and the Company agrees promptly to
file any amendments to the Registration Statement, supplements to the Prospectus
or other such documents which may
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thereby be made necessary, and (ii) the respective number of Firm Shares to be
purchased by the remaining Underwriters and substituted underwriter or
underwriters shall be taken as the basis of their underwriting obligation. If
the remaining Underwriters shall not take up and pay for all such Firm Shares so
agreed to be purchased by the defaulting Underwriter or Underwriters or
substitute another underwriter or underwriters as aforesaid and the Company
shall not find or shall not elect to seek another underwriter or underwriters
for such Firm Shares as aforesaid, then this Agreement shall terminate.
In the event of any termination of this Agreement pursuant to
the preceding paragraph of this Section 11, then, other than as set forth in the
Letter Agreement, the Company shall not be liable to any Underwriter (except as
provided in Sections 5 and 8 hereof) nor shall any Underwriter (other than an
Underwriter who shall have failed, otherwise than for some reason permitted
under this Agreement, to purchase the number of Firm Shares agreed by such
Underwriter to be purchased hereunder, which Underwriter shall remain liable to
the Company and the other Underwriters for damages, if any, resulting from such
default) be liable to the Company (except to the extent provided in Sections 6
and 9 hereof).
The term "Underwriter" in this Agreement shall include any
person substituted for an Underwriter under this Section 11.
12. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at the earlier of (i)
6:30 A.M., Pacific time, on the first full business day following the effective
date of the Registration Statement, or (ii) the time of the public offering of
any of the Shares by the Underwriters after the Registration Statement becomes
effective. The time of the public offering shall mean the time of the release by
you, for publication, of the first newspaper advertisement relating to the
Shares, or the time at which the Shares are first generally offered by the
Underwriters to the public by letter, telephone, telegram or telecopy, whichever
shall first occur. By giving notice as set forth in Section 11 before the time
this Agreement becomes effective, you, as Representative of the several
Underwriters, or the Company, may prevent this Agreement from becoming effective
without liability of any party to any other party, except as provided in
Sections 5(a)(9) and hereof.
(b) You, as Representative of the several Underwriters, shall
have the right to terminate this Agreement by giving notice as hereinafter
specified at any time on or prior to the Closing Date or on or prior to any
later date on which Option Shares are to be purchased, as the case may be, (i)
if the Company shall have failed, refused or been unable to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled is not fulfilled,
including, without limitation, any change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
from that set forth in the Registration Statement or Prospectus, which, in your
sole judgment, is material and adverse, and that makes it, in your sole
judgment, impracticable or inadvisable to proceed with the public offering of
the Shares as contemplated by the Prospectus, or (ii) if additional governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have been suspended on either such
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38
exchange or in the over the counter market by the NASD, or if a banking
moratorium shall have been declared by federal, New York or California
authorities, or (iii) if the Company shall have sustained a loss by strike,
fire, flood, earthquake, accident or other calamity of such character as to
interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured, or (iv)
if there shall have been a material adverse change in the general political or
economic conditions or financial markets as in your judgment makes it
inadvisable or impracticable to proceed with the offering, sale and delivery of
the Shares, or (v) if there shall have been an outbreak or escalation of
hostilities or of any other insurrection or armed conflict or the declaration by
the United States of a national emergency which, in the opinion of the
Representative, makes it impracticable or inadvisable to proceed with the public
offering of the Shares as contemplated by the Prospectus. In the event of
termination pursuant to subparagraph (i) above, the Company shall remain
obligated to pay costs and expenses pursuant to Sections 6 and 9 hereof. Any
termination pursuant to any of subparagraphs (ii) through (v) above shall be
without liability of any party to any other party except as provided in Section
9 hereof.
If you elect to prevent this Agreement from becoming effective
or to terminate this Agreement as provided in this Section 12, you shall
promptly notify the Company by telephone, telecopy or telegram, in each case
confirmed by letter. If the Company shall elect to prevent this Agreement from
becoming effective, the Company shall promptly notify you by telephone, telecopy
or telegram, in each case, confirmed by letter.
(c) Upon execution of this Agreement, that certain Letter of
Intent dated as of February 8, 1999 shall terminate and shall be of no further
force and effect.
13. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall be
mailed, delivered, or telecopied (and confirmed by letter) to you c/o Cruttenden
▇▇▇▇ Incorporated, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
telecopier number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: General Counsel, with a copy to
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ "▇" ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇, telecopier number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.;
if sent to the Company, such notice shall be mailed, delivered, telegraphed or
telecopied (and confirmed by letter) to Invivo Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier number (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: President, with a copy to ▇▇▇▇▇▇ ▇▇▇▇ Nemerovski ▇▇▇▇▇▇ ▇▇▇▇ &
Rabkin, ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
telecopier number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.; if sent to
the Selling Securityholders, such notice shall be mailed, delivered, telegraphed
(and confirmed by letter) or telecopied (and confirmed by letter) to the
addresses set forth below such Selling Securityholders' signature hereto.
14. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the several Underwriters and the Company and the Selling Securityholders
and their respective executors, administrators, successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person or entity, other than the parties hereto and their respective
executors, administrators, successors and assigns, and the controlling persons
within the meaning of the Act or the Exchange Act, officers and directors
referred to in Section 9 hereof, any legal or equitable right, remedy or claim
in respect of this Agreement or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of the parties hereto and their respective executors,
administrators,
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39
successors and assigns and said controlling persons and said officers and
directors, and for the benefit of no other person or entity. No purchaser of any
of the Shares from any Underwriter shall be construed a successor or assign by
reason merely of such purchase.
In all dealings with the Company and the Selling Securityholders
under this Agreement, you shall act on behalf of each of the several
Underwriters, the Company and the Selling Securityholders shall be entitled to
act and rely upon any statement, request, notice or agreement made or given by
you jointly or by Cruttenden ▇▇▇▇ Incorporated on behalf of you.
15. APPLICABLE LAW. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be governed by, and
construed in accordance with, the laws of the State of California.
16. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All judicial
proceedings arising out of or relating to this Agreement shall be initiated and
tried exclusively in the state and federal courts located in the State of
California. The aforementioned choice of venue is intended by the parties to be
mandatory and not permissive in nature, thereby precluding the possibility of
litigation between the parties with respect to or arising out of this Agreement
in any jurisdiction other than that specified in this Section 16. The Company
and each Selling Securityholder accepts for itself and in connection with its
properties, generally and unconditionally, the nonexclusive personal
jurisdiction of the aforesaid courts and waives any defense of forum non
conveniens and irrevocably agrees to be bound by any final judgment rendered
thereby in connection with this Agreement. Each party hereby authorizes and
accepts service of process sufficient for personal jurisdiction in any action
against it as contemplated by this Section 16 by registered or certified mail,
return receipt requested, postage prepaid, to its address for the giving of
notices as set forth in this Agreement.
17. COUNTERPARTS. This Agreement may be signed in several counterparts,
each of which will constitute an original.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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40
If the foregoing correctly sets forth the understanding among the
Company and the several Underwriters, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement between the Company, the Selling Securityholders and the several
Underwriters.
Very truly yours,
Invivo Corporation
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
THE PILLAR CHARITABLE REMAINDER
UNITRUST
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Sole Trustee
Address:
------------------------------------
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Address:
------------------------------------
------------------------------------
Accepted as of the date first above written:
CRUTTENDEN ▇▇▇▇ INCORPORATED, on its behalf
and on behalf of each of the several
Underwriters named in Schedule A hereto.
By: CRUTTENDEN ▇▇▇▇ INCORPORATED
By:
--------------------------------------
Authorized Signatory
For and on behalf of the Representative
[SIGNATURE PAGE TO UNDERWRITING AGREEMENT]
41
SCHEDULE A
Number of Firm Shares
Underwriters To Be Purchased
Cruttenden ▇▇▇▇ Incorporated.....................
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc................
TOTAL...............................
A-1
42
SCHEDULE B
LOCK-UP LETTERS
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
B-1
