UNDERWRITING AGREEMENT
2,000,000 Shares*
CARDIOPULMONARY CORP.
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
(this "Agreement")
ADVEST, INC.
CRUTTENDEN ROTH INCORPORATED
As Representatives of the Several Underwriters
c/o Advest, Inc.
One Commercial Plaza
280 Trumbull Street
Hartford, Connecticut 06103
--------------------, 1996
Ladies and Gentlemen:
SECTION 1. INTRODUCTION. Subject to the terms and conditions hereof,
Cardiopulmonary Corp., a Delaware corporation (the "Company"), proposes to issue
and sell an aggregate of 2,000,000 shares (the "Firm Shares") of Common Stock,
$.01 par value (the "Common Stock"), to the several underwriters identified in
SCHEDULE A annexed hereto (collectively, the "Underwriters"), who are acting
severally and not jointly. In addition, the Company has agreed to grant to the
Underwriters an option to purchase up to 300,000 additional shares of Common
Stock (the "Option Shares") on the terms and for the purposes set forth in
Section 5. The Firm Shares and, to the extent such option is exercised, the
Option Shares are hereinafter collectively called the "Shares."
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* Plus an option to acquire up to 300,000 additional shares of Common Stock from
the Company to cover over-allotments.
You, as the representatives of the Underwriters (the "Representatives"),
have advised the Company that the Underwriters intend to make a public offering
of their respective portions of the Shares as soon hereafter as in your judgment
is advisable and that the public offering price of the Shares will be $[__] per
share.
The parties hereby agree as follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to, and agrees with, the several
Underwriters as follows:
(a) The Company is a corporation duly organized and incorporated and
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with full corporate power and authority to
own or lease the properties owned or leased by it and to conduct its businesses
as described in the Prospectus (as hereinafter defined). The Company is duly
licensed or qualified to do business and in good standing as a foreign
corporation in each jurisdiction in which the nature of the activities conducted
by the Company or the character of the assets owned or leased by the Company
makes such licensure or qualification necessary except where the failure to so
qualify would not have a material adverse effect upon the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise), or prospects of the Company (a "Material Adverse Effect"). Complete
and correct copies of the Company's Certificate of Incorporation, as from time
to time amended (the "Charter") and By-laws, as from time to time amended (the
"By-laws") have been delivered to the Representatives, and no changes to the
Charter as in effect on the date hereof or By-laws other than the effectiveness
of the Amended and Restated Certificate of Incorporation that the Company
proposes to file on the First Closing Date and the amendment and restatement of
the By-laws (forms of which amendments have been delivered to the
Representatives) will be made subsequent to the date of this Agreement and prior
to the First Closing Date (as hereinafter defined) or, if later, the Second
Closing Date (as hereinafter defined).
(b) The Company is not in violation of any provision of its Charter. No
state of facts exists which, upon notice or lapse of time or both, would
constitute a violation of any provision of its Charter.
(c) At the time of delivery of the Shares to the Underwriters hereunder,
all of the issued and outstanding shares of capital stock of the Company will
have been duly authorized and validly issued, will be fully paid and
nonassessable, and the descriptions thereof contained in the Prospectus and the
Registration Statement (as hereinafter defined) will be complete and accurate in
all material respects. The shares of Common Stock issuable upon exercise of the
Warrants (as hereinafter defined), will, upon issuance and payment therefor, be,
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. The shares of Common Stock issuable upon exercise of the
Warrants
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have been duly and validly reserved for issuance. There are no preemptive,
preferential or other rights to subscribe for or purchase any of the Shares that
have not been validly waived, and no shares of Common Stock have been issued in
violation of any such rights. The Shares are duly authorized, and, when issued,
delivered and paid for pursuant to this Agreement, will be validly issued, fully
paid and nonassessable and will conform in all material respects to the
description thereof contained in the Prospectus and the Registration Statement.
Upon delivery to the Underwriters or upon the Representatives' order against
payment of the agreed consideration therefor in accordance with the provisions
of this Agreement, the Underwriters will acquire good title to the Shares, free
and clear of any lien, claim, security interest or other encumbrance or
restriction on transfer.
(d) No consent, approval, authorization or other order of any regulatory
agency is required for the execution or delivery of the Warrants, except as may
be required under the Securities Act of 1933, as amended (the "Act") or the
by-laws and rules of the National Association of Securities Dealers, Inc. (the
"NASD").
(e) Except as disclosed in the Prospectus, the Company has not issued (i)
any options, warrants or other rights of any description, contractual or
otherwise, entitling any person to purchase or receive any class of security
from the Company, or (ii) any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of the Company's capital
stock, or any of such options, warrants, other rights or convertible securities
or obligations.
(f) The Common Stock has been approved for listing on the National
Association of Securities Dealers, Inc. Automated Quotation System (the
"Nasdaq") National Market, subject only to official notice of issuance.
(g) The Company has full corporate power and authority to execute, deliver
and perform this Agreement and the Warrants. The execution, delivery and
performance by and on behalf of the Company of this Agreement and the Warrants,
the performance of the Company's obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action; will not violate any provision of
the Charter or By-laws of the Company; will not result in the breach, or be in
contravention of, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the assets of the Company pursuant to the terms or
provisions of (i) any provision of any lease, franchise, license, indenture,
loan agreement, mortgage, deed of trust, voting trust agreement or any other
contract, agreement or instrument to which the Company is a party or by which
the Company or any of its properties may be bound or affected, (ii) any statute,
order, rule or regulation applicable to the Company of any court or regulatory
body, administrative agency, authority or other governmental body having
jurisdiction over the Company or any of its properties or (iii) any order of any
court or regulatory body, administrative agency, authority or other governmental
body rendered in any proceeding to which the Company was or is now a party or by
which it and/or any of its properties is bound, except those, if any, described
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in the Prospectus or which would not have a "Material Adverse Effect". Each of
this Agreement and the Warrants is a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except as
rights to indemnity or contribution may be limited by applicable law and as
enforceability of this Agreement may be limited by the application of
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and by equitable principles being applied to the
discretion of a court before which any proceeding may be brought.
(h) No consent, approval, authorization or other order of, or filing or
declaration with, any court or regulatory body, administrative agency or other
governmental body of the United States or any other jurisdiction is necessary in
connection with the execution, delivery and performance of this Agreement and/or
the issuance and/or sale of the Shares by the Company pursuant to this Agreement
and/or the consummation of the transactions contemplated by this Agreement,
other than such as have been obtained or made by the Company on or before the
date of this Agreement, except the registration of the Shares under the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Rules and
Regulations (as hereinafter defined) and such consents, approvals,
authorizations, registrations or qualifications as may be required by the state
securities laws ("Blue Sky Laws") applicable to the public offering of the
Shares by the several Underwriters or the by-laws and rules of the NASD in
connection with the purchase and distribution by the several Underwriters of the
Shares.
(i) The Company has prepared a registration statement on Form S-1 (File No.
[333-______]) with respect to the Shares, including a form of preliminary
prospectus, in conformity with the requirements of the Act and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") promulgated thereunder and has filed such
registration statement with the Commission under the Act. The Company has
prepared and filed such amendments thereto and such amended preliminary
prospectuses as may have been required to the date hereof, and will file such
additional amendments thereto and such amended preliminary prospectuses as may
hereafter be required. The Company has delivered or caused to be delivered to
the Representatives without charge two (2) signed copies of such registration
statement and each amendment thereto together with two (2) copies of each
exhibit filed therewith; one (1) conformed copy of such registration statement
and each amendment thereto, but without exhibits, for each of the Underwriters
if requested; and such number of the related Preliminary Prospectus (as
hereinafter defined) and of the Prospectus as the Representatives heretofore
have reasonably requested. As used in this Agreement, the term "Preliminary
Prospectus" means each and every prospectus filed with the registration
statement and amendments thereto (except the Prospectus). Such registration
statement, as amended, has been declared effective by the Commission under the
Act and is not proposed to be further amended. If such registration statement,
as it may have been amended, omits information in accordance with Rule 430A
under the Act, promptly after the execution of this Agreement the Company will
file with the Commission a prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment shall have
been filed, in such registration
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statement) with such changes or insertions as are required by Rule 430A or
permitted by Rule 424(b) under the Act and as have been provided to and approved
by the Representatives. Such registration statement, as finally amended and
revised at the time such registration statement is or was declared effective by
the Commission, and the information contained in the form of final prospectus,
filed with the Commission pursuant to Rule 424(b) and Rule 430A of the Rules and
Regulations and deemed to be part of the registration statement), is referred to
herein as the "Registration Statement." "Prospectus" means (a) the form of
prospectus first filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations or (b) the last preliminary prospectus included in the
Registration Statement filed prior to the time it becomes effective or filed
pursuant to Rule 424(a) under the Act that is delivered by the Company to the
Underwriters for delivery to purchasers of the Shares, together with the term
sheet or abbreviated term sheet filed with the Commission pursuant to Rule
424(b)(7).
(j) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act.
(k) Neither the Commission nor the securities authority of any state or
other jurisdiction has issued any order preventing or suspending the use of any
Preliminary Prospectus, and no proceeding for that purpose has been instituted
or, to the best of the Company's knowledge after due inquiry, threatened by the
Commission or any such securities authority. No stop order suspending the
effectiveness of the Registration Statement or any part thereof has been issued
and no proceeding for that purpose has been instituted or, to the best of the
Company's knowledge after due inquiry, threatened or contemplated by the
Commission or any such securities authority. Each Preliminary Prospectus
complies with the requirements of the Act and the Rules and Regulations and did
not include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Registration
Statement and the Prospectus contained therein, and any amendments or
supplements thereof, including without limitation the financial statements
included in such Prospectus, contained or will contain all statements that are
required to be stated therein in accordance with the Act and the Rules and
Regulations and conformed or will conform in all respects to the requirements of
the Act and the Rules and Regulations, and neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, included or will
include any untrue statement of a material fact or omitted or will omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading. When the Prospectus or any amendment or
supplement thereto is filed with the Commission pursuant to Rule 424(b) (or, if
the Prospectus or such amendment or supplement is not required to be so filed,
when the Registration Statement or amendment thereto containing such amendment
or supplement to the Prospectus was or is declared effective), the Prospectus,
as amended or supplemented at any such time, contained or will contain all
statements that are required to be stated therein in accordance with the Act and
the Rules and Regulations and conformed or will conform in all material respects
to the requirements of the Act and the Rules and Regulations and did not or will
not include any
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untrue statements of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they were made. No
representation or warranty in this Section 2(k) is made as to information
contained in or omitted from the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. The Company hereby
acknowledges and agrees that the information set forth under the heading
"Underwriting" in the Prospectus constitutes the only written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto.
(l) Price Waterhouse LLP, who is certifying and has expressed its opinion
with respect to certain of the financial statements filed with the Commission as
a part of the Registration Statement and included or to be included, as the case
may be, in the Prospectus and in the Registration Statement, are independent
accountants with respect to the Company as required by the Act and the Rules and
Regulations.
(m) Deloitte & Touche LLP (together with Price Waterhouse LLP, the
"Accountants"), who is certifying and has expressed its opinion with respect to
certain of the financial statements filed with the Commission as a part of the
Registration Statement and included or to be included, as the case may be, in
the Prospectus and in the Registration Statement, are independent accountants
with respect to the Company as required by the Act and the Rules and
Regulations.
(n) Except as disclosed in the Prospectus, the financial statements and
related notes thereto included or to be included, as the case may be, in the
Registration Statement and the Prospectus present fairly the financial position
of the Company as of the respective dates thereof and the results of operations
and cash flows of the Company for the respective periods covered thereby, all in
conformity with generally accepted accounting principles consistently applied
throughout the entire period involved. No other financial statements or
schedules of the Company are required by the Act or the Rules and Regulations to
be included in the Registration Statement or the Prospectus. Except as disclosed
in the Prospectus, the summary financial and statistical data and the other
financial and numerical information included in the Registration Statement and
the Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with the financial statements presented therein.
(o) The Company is not in default under any court or administrative order
or decree, or in default with respect to any provision of any lease, loan
agreement, indenture, commission sales agreement, license, permit or other
agreement or contractual obligation to which the Company is a party or by which
any of its properties are bound, and there does not exist any state of facts
which constitute an event of default as defined in any
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such document or which, upon notice or lapse of time or both, would constitute
such an event of default, where in any such case such default or event of
default by any party thereto has or is reasonably likely to have a Material
Adverse Effect.
(p) Except as disclosed in the Registration Statement and the Prospectus,
there are no actions, suits or proceedings pending or, to the best of the
Company's knowledge after due inquiry, threatened against or affecting the
Company or any property owned or leased by the Company or any of the Company's
officers or directors in their capacity as such, before or by any foreign,
federal, state, municipal or local court, commission, regulatory body,
administrative agency or other government body, which are required to be
disclosed in the Registration Statement or the Prospectus and are not so
disclosed, or which question the validity of this Agreement or any action taken
or to be taken pursuant hereto.
(q) The Company does not own any real property. The Company has good and
marketable title to all personal property and other assets reflected as owned by
the Company in the financial statements described above (or elsewhere in the
Registration Statement or the Prospectus), free and clear of all liens,
mortgages, pledges, charges, encumbrances or restrictions of every kind or
nature whatsoever except those, if any, reflected in such financial statements
(or elsewhere in the Registration Statement or the Prospectus), or which would
not have a Material Adverse Effect or which do not interfere in any material
respect with the use of the property or the conduct of the business of the
Company; all properties (including without limitation real property and
buildings) held or used by the Company under leases, licenses, franchises or
other agreements are held by the Company under valid, subsisting, binding and
enforceable leases, franchises, licenses or other agreements with respect to
which the Company is not in default, except to the extent that such defaults in
the aggregate do not have a Material Adverse Effect on the conduct of its
business or to the extent that the enforceability of the rights and remedies of
the Company under any such lease, franchise, license or other agreement may be
limited by the application of bankruptcy, reorganization, insolvency or other
laws generally affecting the rights of creditors and by equitable principles
being applied at the discretion of a court before which any proceeding may be
brought.
(r) Neither the Company nor any of its directors, officers, affiliates or
controlling persons has, directly or indirectly (i) taken any action designed,
or which might reasonably be expected, to cause or result in, or which has
constituted, or might reasonably be expected to constitute, stabilization or
manipulation, under the Act or the Exchange Act or otherwise, of the price of
any security of the Company to facilitate the sale or resale of any of the
Shares; or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased or paid any person any compensation for soliciting purchases of
the Shares or (B) paid or agreed to pay to any person any compensation for
soliciting another person to purchase any securities of the Company, except
pursuant to this Agreement.
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(s) Except as disclosed in the Registration Statement or the Prospectus,
since the respective dates as of which information is given in the Registration
Statement or the Prospectus and prior to the First Closing Date and Second
Closing Date:
(i) the Company has not incurred any material liabilities or
obligations, direct, indirect or contingent, or entered into any material
transactions, other than in the ordinary course of business or pursuant to this
Agreement and the transactions referred to herein;
(ii) the Company has not purchased any of its outstanding capital
stock or paid or declared or otherwise made any dividends or other distributions
of any kind with respect to any class of its capital stock, and the Company is
not delinquent in the payment of principal or interest on any outstanding
material debt obligation; and
(iii) there has not been (A) any change in the capital stock or
any material change in the indebtedness of the Company, or (B) any material
adverse change or any development involving a prospective material adverse
change in its business (resulting from litigation or otherwise), properties,
business prospects, condition (financial or otherwise), net worth or results of
operations.
(t) There is no contract or other document, transaction or relationship of
a character required to be described in the Prospectus or the Registration
Statement or to be filed as an exhibit to the Registration Statement that has
not been described, incorporated therein by reference or filed as required. All
such contracts to which the Company is a party have been duly authorized,
executed and delivered by the Company, constitute valid and binding agreements
of the Company and are enforceable against the Company in accordance with the
terms thereof, except as enforceability of any such agreement may be limited by
the application of bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors rights generally and by equitable principles being
applied at the discretion of a court before which any proceeding may be brought.
(u) Except as disclosed in the Prospectus, the Company has filed all
necessary foreign, federal, state, municipal and local income and franchise tax
returns and paid all taxes shown as due thereon as well as all other taxes,
assessments and governmental charges that are due and payable; and no tax
deficiency has been asserted or, to the best of the Company's knowledge after
due inquiry, threatened against the Company that would have a Material Adverse
Effect.
(v) To the best knowledge of the officers of the Company, neither the
Company nor any director, officer, employee or other person associated with or
acting on behalf of the Company has, directly or indirectly, at any time:
(i) made any unlawful contribution to any candidate for political
office or failed to disclose fully any contribution in violation of law; or
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(ii) made any payment to any foreign, federal, state, municipal or
local government officer or official, or any 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 or any applicable foreign
jurisdiction.
(w) The Company has in place and effective such policies of insurance, with
limits of liability in such amounts, as are customary and prudent in the
business in which it is engaged. The Company has no reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its businesses at a comparable cost.
(x) Except as disclosed in the Prospectus, the Company owns or has adequate
rights to use all trademarks, service marks, trade names, trademark
registrations, service mark registrations, patent rights, patent applications,
mask works and copyrights necessary for the conduct of its businesses and the
ownership of its properties, and the Company has no knowledge of any
infringement by it of any trademark, service mark, trade name right, patent
right, mask work, copyright, license, trade secret or other similar right of any
other person or entity, and there is no claim being made against the Company, or
to the best of the Company's knowledge, any employee of the Company, regarding
trademark, service mark, trade name, patent, mask work, copyright, license,
trade secret or other infringement.
(y) The Company holds and is in substantial compliance with all material
permits, certificates, licenses, approvals, registrations, franchises and
authorizations (collectively, the "Permits") required under all laws, rules and
regulations to own its properties and conduct its business in the manner
described in the Prospectus; and all of such Permits are in full force and
effect; the Company has fulfilled and performed all of its material obligations
with respect to such Permits; no event has occurred which allows or, after
notice or lapse of time or both, would allow revocation or termination of any
such Permit or result in any other material impairment of the Company's rights
under any such Permit; and such Permits contain no restrictions that materially
affect the Company's ability to conduct its business. There are no pending
proceedings, and the Company has not received notice of any threatened
proceedings, relating to the revocation, withdrawal, cancellation, modification,
suspension or non-renewal of any such Permit. The Company is not and has not
been (by virtue of any action, omission to act, contract to which it is a party
or by which it is bound, or any occurrence or state of facts whatsoever) in
violation of any applicable foreign, federal, state, municipal or local
statutes, laws, ordinances, rules, regulations and/or orders pursuant to
foreign, federal, state, municipal or local statutes, laws, ordinances, rules or
regulations (including without limitation those relating to environmental
protection, occupational safety and health and equal employment practices)
heretofore or currently in effect, except any such violations that have been
fully cured or satisfied without recourse or that are not, either individually
or collectively, reasonably likely to have a Material Adverse Effect.
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(z) Except for the Company's Pioneer Simplified Employee Pension Plan, the
Company does not maintain, contribute to, or sponsor any program or arrangement
that is an "employee benefit plan," an "employee welfare plan," or a
"multi-employer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). The Company does not now, and has at no time previously,
maintained or contributed to a "defined benefit plan," as defined in Section
3(35) of ERISA.
(aa) The Company is not an "investment company," or a company "controlled"
by, or an "affiliated person" of, or a "promoter" or "principal underwriter"
for, an "investment company," within the meaning of the Investment Company Act
of 1940, as amended (the "1940 Act"), and upon the Company's receipt of any
proceeds from the sale of the Shares, it will not become or be deemed to be an
"investment company" under the 1940 Act.
(ab) The Company makes and keeps accurate books and records reflecting the
Company's assets and maintains internal accounting controls which provide
reasonable assurance that:
(i) transactions are executed with management's authorization; and
(ii) transactions are recorded as necessary to permit preparation of
the Company's consolidated financial statements in accordance with
generally accepted accounting principles and to maintain accountability for
the assets of the Company; and
(iii) access to the assets of the Company is permitted only in
accordance with management's authorization; and
(iv) the reported amounts of the assets of the Company are compared
with the existing assets of the Company at reasonable intervals and
appropriate action is taken with respect to any differences.
(ac) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in (i) the
securities registered pursuant to the Registration Statement or (ii) any other
securities now or hereafter registered pursuant to any other registration
statement filed by the Company under the Act. Except as disclosed in the
Prospectus, no holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement, and all such holders, if any, have waived all such
rights as of the date hereof.
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(ad) Any certificate signed by any officer of the Company and delivered to
the Representatives or to counsel for the Underwriters at the Closing shall be
deemed a representation and warranty of the Company to the Underwriters as to
the matters covered thereby.
A certificate delivered by the Company to its counsel for purposes of
enabling such counsel to render the opinion referred to in Section 9(g)(i) or
9(g)(ii) will also be furnished to the Representatives and counsel for the
Underwriters and shall be deemed to be additional representations and warranties
to the Underwriters by the Company as to the matters covered thereby.
SECTION 3. REPRESENTATIVES OF UNDERWRITERS. The Representatives will act as
the representatives for the several Underwriters in connection with the
transactions contemplated by this Agreement, and any action under or in respect
of this Agreement taken by the Representatives will be binding upon all of the
Underwriters.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company that only the information set forth in the section in the Prospectus
entitled "Underwriting," was furnished to the Company by and on behalf of the
Underwriters for use in connection with the preparation of the Registration
Statement and the Prospectus, and that such information is correct and complete
in all material respects and does not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
SECTION 5. PURCHASE, SALE AND DELIVERY OF SHARES.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to all of the terms and conditions
herein set forth, (i) the Company agrees to issue and to sell to the
Underwriters identified in SCHEDULE A a total of 2,000,000 Firm Shares and (ii)
each of the Underwriters agrees, severally and not jointly, to purchase from the
Company the respective number of Firm Shares set forth opposite the name of such
Underwriter in SCHEDULE A at the price per share of [$ ] at a closing described
in Section 5(d) below.
(b) Upon the basis of the representations, warranties, covenants and
agreements herein contained, but subject to all of the terms and conditions
herein set forth, the Company hereby grants an option (the "Option") to the
several Underwriters to purchase, severally and not jointly, from the Company up
to 300,000 Option Shares in the same proportion as the number of shares set
forth opposite their names on SCHEDULE A bears to the total number of Firm
Shares to be sold to the Underwriters hereunder, as adjusted by the
Representatives in such manner as the Representatives deem advisable to avoid
fractional shares, at the purchase price per share to be paid by the
Underwriters for the Firm Shares,
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for use solely in covering any over-allotments made by the Underwriters in the
sale and distribution of the Firm Shares. The Option may be exercised at any
time (but not more than once), in whole or in part, on or before the 30th day
after the date of this Agreement, upon written or telecopied notice (the "Option
Notice") by the Representatives to the Company no later than 5:00 p.m. eastern
time, setting forth the aggregate number of Option Shares as to which the
Underwriters are exercising the Option, the names and denominations in which the
certificates for such shares are to be registered, and the time and place at
which such certificates shall be delivered to and paid for by the Underwriters.
Such time of delivery may not be earlier than the First Closing Date, and is
herein called the "Second Closing Date." The Second Closing Date shall be
determined by the Representatives, but if at any time other than the First
Closing Date, shall not be earlier than three (3) nor later than ten (10) full
business days after delivery of the Option Notice unless otherwise agreed upon
by the Representatives and the Company. Certificates for the Option Shares
shall be made available for checking and packaging at 9:00 a.m., eastern time,
on the business day immediately preceding the Second Closing Date at a location
to be designated by the Representatives. On the Second Closing Date the Company
shall issue and sell to the Underwriters the number of Shares set forth in the
Option Notice, and each Underwriter will purchase the number of Option Shares
allocated to it pursuant to the first sentence of this Section 5(b). The MANNER
of payment for and delivery of (including the denominations of and the names in
which certificates are to be registered) the Option Shares shall be the same as
for the Firm Shares as specified in Section 5(d).
(c) The Representatives have advised the Company that each Underwriter has
authorized the Representatives to accept delivery of such Underwriter's Shares
and to make payment therefor. It is understood that the Representatives,
individually and not as representatives of the Underwriters, may (but shall not
be obligated to) make payment on behalf of any Underwriter whose funds shall not
have been received by the Representatives by the First Closing Date or the
Second Closing Date, as the case may be, for the account of such Underwriter,
but any such payment shall not relieve such Underwriter from any obligation
under this Agreement.
(d) At 9:00 a.m., eastern time, on the fourth business day after the date
of this Agreement, unless otherwise required by the Commission pursuant to Rule
15c6-1 of the Exchange Act or at such other time on such other day not later
than five business days after such fourth business day as the Representatives
and the Company may agree, the Company shall deliver to the Representatives, at
the offices of Advest, Inc., 40 Rector Street, New York, New York 10006, or
through the facilities of the Depository Trust Company, 55 Water Street, New
York, New York 10041, for the accounts of the several Underwriters, certificates
in definitive form representing the Firm Shares to be sold by them, against
payment in Hartford, Connecticut or such other location agreed upon by the
parties of the purchase price therefor by certified or bank cashier's check in
New York Clearing House (next day) funds payable to the order of the Company for
the shares to be sold by it. Such time of delivery against payment is referred
to herein as the "First Closing Date," and the First Closing Date and the Second
Closing Date are referred to herein individually as a
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"Closing Date." The certificates representing the Firm Shares to be delivered
shall be in denominations and registered in such names as the Representatives
request by notice to the Company prior to 9:00 a.m., eastern time, on the second
full business day preceding the First Closing Date, and shall be made available
for checking and packaging at 9:00 a.m., eastern time, on the business day
immediately preceding the First Closing Date at a location to be designated by
the Representatives.
(e) The Company shall bear the cost of original issue tax stamps, if any,
in connection with the issuance and delivery of the Company Firm Shares and the
Option Shares sold by the Company to the respective Underwriters. The Company
shall pay and save each Underwriter and any subsequent holder of each Share
harmless from any and all liabilities with respect to or resulting from any
failure or delay in paying foreign, federal and state stamp and other transfer
taxes, if any, which may be payable or determined to be payable in connection
with the original issuance or sale to such Underwriter of the Firm Shares and/or
the Option Shares.
SECTION 6. WARRANTS. In order to induce you to enter into this Agreement,
the Company shall execute and deliver to you, in your respective individual
capacities and not as the Representatives, warrants (the "Warrants") to purchase
an aggregate of 100,000 shares of Common Stock at an exercise price of
$____________ per share (120% of the price per share set forth in Section 1
hereof). The Warrants shall be exercisable in whole or in part from time to time
during the period commencing one year and ending five years after the effective
date of the Registration Statement. The Warrants shall be in the form of Exhibit
__ to the Registration Statement. Execution and delivery of the Warrants,
registered in your respective name or the names of such of your respective
officers as you shall notify the Company in writing, shall be made to you, at
the offices of Advest, Inc. at 40 Rector Street, New York, New York 10006, on
the Closing Date. The cost of original issue tax stamps, if any, in connection
with the execution and delivery of the Warrants shall be borne by the Company.
SECTION 7. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the several Underwriters that:
(a) The Company shall not during such period as the Prospectus is required
by law to be delivered in connection with sales of the Shares by an underwriter
or any dealer, file any amendment or supplement to the Registration Statement or
any Preliminary Prospectus or the Prospectus (including without limitation a
prospectus filed pursuant to Rule 424(b)), unless a copy thereof shall first
have been submitted to the Representatives within a reasonable period of time
prior to the filing thereof and the Representatives shall not have objected
thereto in good faith.
(b) The Company shall use its best efforts to cause the Registration
Statement to continue to be effective and each post-effective amendment thereto
to become effective, and shall notify the Representatives and counsel to the
Underwriters promptly, and
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shall confirm such advice in writing, (i) when any post-effective amendment to
the Registration Statement becomes effective; (ii) of any request by the
Commission or any securities authority of any other jurisdiction for amendments
or supplements to the Registration Statement or the Prospectus or for additional
information; (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof; (iv) of receipt by the
Company or any representative or attorney of the Company of any other
communication from the Commission relating to the Company, the Registration
Statement, any Preliminary Prospectus or the Prospectus (other than a
communication confirming the effectiveness of the Registration Statement); and
(v) of receipt by the Company of any notification of the suspension of
qualification of the Shares for sale in any jurisdiction or the initiation of
any proceedings for that purpose or threat thereof. The Company shall use its
best efforts to prevent the issuance of any such stop order or suspension.
(c) The Company shall comply with all the provisions of any undertakings
contained in the Registration Statement.
(d) The Company consents to the use of the Prospectus or any amendment or
supplement thereto by the several Underwriters and by all dealers to whom the
Shares may be sold, both in connection with the offering or sale of the Shares
and for any period of time thereafter during which the Prospectus is required by
law to be delivered in connection therewith.
(e) For a period of three years from the effective date of the Registration
Statement (the "Effective Date"), the Company shall furnish to its stockholders
as soon as practicable after the end of each fiscal year an annual report
(including without limitation a balance sheet and statements of income,
stockholders' equity and cash flow of the Company certified by independent
public accountants) and, as soon as practicable after the end of each of the
first three quarters of each fiscal year (beginning with the fiscal quarter
ending after the Effective Date), consolidated summary financial information of
the Company for such quarter in reasonable detail.
(f) The Company shall make generally available to holders of its securities
and the Representatives as soon as may be practicable, but in no event later
than the 45th day following the end of the first quarter first occurring after
the first anniversary of the Effective Date, an earnings statement (which need
not be audited but shall be in reasonable detail) satisfying the provisions of
Section 11(a) of the Act (including without limitation Rule 158 of the Rules and
Regulations).
(g) Neither the Company nor any of its officers, directors or affiliates
will at any time, directly or indirectly, (i) take any action designed, or which
might reasonably be expected to cause or result in, or which shall constitute,
or might reasonably be expected to constitute, stabilization or manipulation,
under the Act or the Exchange Act or otherwise, of the price of any security of
the Company to facilitate the sale or resale of any of the Shares,
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(ii) sell, bid for, purchase or pay any person any compensation for soliciting
purchases of the Shares or (iii) pay or agree to pay any person any compensation
for soliciting another person to purchase any securities of the Company, except
pursuant to this Agreement.
(h) The Company shall apply the net proceeds from the Offering and sale of
the Shares to be sold by it hereunder solely for the purposes set forth in the
Prospectus under "Use of Proceeds" and shall file such reports with the
Commission with respect to the sale of the Shares and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(i) The Company shall not file with the Commission any registration
statement on Form S-8 relating to shares of its Common Stock prior to 90 days
after the Effective Date.
(j) If any information shall have been omitted from the Registration
Statement in reliance upon Rule 430A, the Company, at the earliest possible
time, shall furnish the Representatives with a copy of the Prospectus to be
filed by the Company with the Commission to comply with Rule 424(b) and Rule
430A under the Act, and, if the Representatives do not object to the contents
thereof, shall file such Prospectus with the Commission in compliance with such
Rules, provided that the Company shall file such prospectus with the Commission
not later than the earlier of (i) the second business day following the
execution and delivery of this Agreement or (ii) the fifteenth business day
after the Effective Date. Upon filing the Prospectus with the Commission in
compliance with such Rules, the Company shall so advise the Representatives
promptly.
(k) If, at any time when a prospectus relating to the Shares is required by
law to be delivered, any event occurs as a result of which the Prospectus or the
Registration Statement, as then amended or supplemented, would include an untrue
statement of a material fact, or would omit to state any 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 if it is
necessary at any time to amend or supplement the Prospectus, including any
amendment or supplement thereto, to comply with the Act, the Company promptly
shall advise the Representatives and counsel to the Underwriters thereof and
forthwith shall prepare and duly file with the Commission an appropriate
amendment or supplement that will correct such statement or omission or an
amendment that will effect such compliance and will furnish without charge to
each Underwriter and to any dealer in securities as many copies of such amended
or supplemented Prospectus as the Representatives may from time to time
reasonably request. If any Underwriter is required to deliver a prospectus nine
months or more after the Effective Date, the Company, upon request of the
Representatives but at the expense of the Company, shall prepare promptly such
prospectus or prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act. Neither the Representatives'
consent to, nor the Underwriters' delivery of, any such amendment or supplement
shall constitute a waiver of any condition set forth in Section 9.
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(l) Except as contemplated by the Prospectus, the Company shall not, prior
to the Second Closing Date or thirty (30) days after the date of this Agreement,
whichever occurs first, incur any material liability or obligation, direct or
contingent, or enter into any material transaction or any transaction with a
related party which is required to be disclosed in the Prospectus pursuant to
Item 404 of Regulation S-K under the Act unless the Company gives the
Representatives adequate prior notice of any such transaction and, if the
Representatives reasonably request but at the Company's expense, files a
post-effective amendment to the Registration Statement to include the required
disclosure regarding any such transaction.
(m) Except as disclosed in the Prospectus, the Company shall not acquire
any of the Common Stock before the Second Closing Date or thirty (30) days after
the date of this Agreement, whichever occurs first; and the Company shall not
declare or pay any dividend or make any other distribution upon its Common Stock
payable to shareholders of record on a date prior to such earlier date.
(n) During such period as a prospectus is required by law to be delivered
in connection with sales by an Underwriter or any dealer, the Company shall
furnish or cause to be furnished to the Representatives, at the expense of the
Company, copies of the Registration Statement, the Prospectus, any Preliminary
Prospectus and all amendments and supplements to any such documents, in each
case as soon as available and in such quantities as the Representatives
reasonably may request for the purposes contemplated by the Act.
(o) Prior to any public offering of the Shares, the Company shall cooperate
with the Representatives and counsel to the Underwriters in qualifying or
registering the Shares for offer and sale under the Blue Sky Laws of such
jurisdictions as the Representatives reasonably may designate, provided the
Company shall not be required to qualify as a foreign corporation in any
jurisdiction where it is not now so qualified or to consent to general service
of process under the law of any state where it is not now so qualified (except
with respect to the offering and sale of the Shares), and the Company shall
continue such qualifications or registrations in effect so long as reasonably
requested by the Representatives to effect the distribution of the Shares. In
each jurisdiction where any of the Shares shall have been qualified as provided
above, the Company shall file such reports and statements as may be required to
continue such qualification in effect for so long a period as the
Representatives may reasonably request for a distribution of the Shares.
(p) During the period ending three (3) years after the date of this
Agreement, (i) as soon as practicable after the end of each of its fiscal years,
the Company shall furnish to the Representatives one (1) copy, of the annual
report of the Company containing the consolidated balance sheet of the Company
as of the close of such fiscal year and corresponding consolidated statements of
earnings, shareholders' equity and cash flows for the year then ended, such
consolidated financial statements to be under the certificate or opinion of the
Company's independent accountants, and (ii) the Company shall file promptly and
shall furnish to the Representatives at or before the filing thereof copies of
all reports
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and any definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Sections 13, 14 or 15 of the Exchange
Act. During such three-year period, the Company also shall furnish to the
Representatives one (1) copy of each of the following:
(A) as soon as practicable after the filing thereof, each report,
statement, or other document filed by the Company with the Commission;
(B) as soon as practicable after the filing thereof, all reports,
statements, other documents and financial statements furnished by the Company to
either the NASD or Nasdaq pursuant to requirements of or agreements with the
NASD or Nasdaq; and
(C) as soon as available, each report, statement or other document of the
Company mailed to its stockholders.
(q) The Company shall use its best efforts to satisfy or cause to be
satisfied the conditions to the obligations of the Underwriters in Section 9.
(r) The Company shall deliver the requisite notice of issuance to the NASD
and shall take all necessary or appropriate action within its power to maintain
the listing of the Common Stock on the Nasdaq National Market for a period of at
least thirty-six months after the date of the Agreement.
(s) The Company shall prepare and timely file with the Commission, from
time to time, such reports and statements as may be required to be filed by the
Exchange Act and/or the Rules and Regulations.
(t) The Company shall comply in all respects with the undertakings given by
the Company in connection with the qualification or registration of the Shares
for offering and sale under the Blue Sky Laws.
(u) Without the prior written consent of the Representatives, during the
period from the date of this Agreement until one hundred eighty (180) days from
the Effective Date: the Company shall not, directly or indirectly, grant, offer,
sell, contract to sell, issue, dividend, transfer or otherwise dispose of any
equity security of the Company, including without limitation shares of the
Company's Common Stock or any options, rights or warrants with respect to any
equity security of the Company, including without limitation shares of the
Company's Common Stock, except pursuant to this Agreement for the grant of
options with respect to shares of Common Stock pursuant to the Company's 1991,
1994, and Non-Employee Director Stock Option Plans ("Stock Option Plans") or
except upon the exercise of stock options or warrants outstanding on the date of
this Agreement to the extent that such stock options or warrants are disclosed
in the Prospectus or granted hereafter pursuant to the Company's Stock Option
Plans.
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SECTION 8. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated, or if this Agreement is terminated for
any reason, the Company shall pay, or reimburse the Representatives if paid by
the Representatives, for all costs, fees and expenses incurred by or on behalf
of the Company in connection with the public offering. Such costs, fees and
expenses to be paid by the Company include the following:
(a) All costs, fees and expenses (other than expenses customarily paid by
the Underwriters) incurred in connection with the performance of the Company's
obligations hereunder, including, without limiting the generality of the
foregoing, the reasonable fees and expenses of the Company's accountants and the
reasonable fees and expenses of counsel for the Company, all costs and expenses
incurred in connection with the preparation, printing, filing, and distribution
of the Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all agreements and
supplements provided for herein, and with the reproduction of this Agreement,
the Agreement Among Underwriters, the Selling Agreement, the Underwriters'
Questionnaire, various Underwriters' letters, and the Preliminary and all
Supplemental Blue Sky Memoranda. Except as set forth in Section 8(b), 10, 12 or
15, the Underwriters will pay all their own costs and expenses, including the
legal fees and disbursements of counsel for the Underwriters, stock transfer
taxes on resale of the Shares by any Underwriter and any travel, telephone and
advertising relating to any offers made by the Underwriters.
(b) All filing and registration fees and expenses, including without
limitation the legal fees and disbursements of counsel for the Underwriters,
incurred in connection with qualifying or registering all or any part of the
Shares for offer and sale under the Blue Sky Laws (including without limitation
the preparation of the Preliminary and all Supplemental Blue Sky Memoranda),
NASD filing fees and the listing of the Shares on the Nasdaq National Market.
(c) All fees and expenses of the Company's transfer agent, the cost of
printing and delivering the certificates representing the Shares, and all
transfer taxes, if any, with respect to the sale and delivery of the Shares to
the underwriters.
SECTION 9. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters under this Agreement shall be subject to
the accuracy of the representations and warranties on the part of the Company
herein set forth as of the date hereof and as of the First Closing Date or the
Second Closing Date, as the case may be; and to the performance by the Company
of its obligations hereunder theretofore to be performed; and to the following
additional conditions, except to the extent waived in writing by the
Representatives:
(a) The Representatives shall have been notified not later than 5:00 p.m.,
eastern time, on the date of this Agreement, that the Commission has declared
the Registration Statement effective. The Representatives shall also be notified
not later than the
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time specified in Section 7(j) hereof that all filings of the Company required
by Rule 424 and Rule 430A of the Rules and Regulations have been made.
(b) No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceedings for such
purpose shall be pending before or, to the knowledge of the Company or the
Representatives, threatened or contemplated by the Commission. Any request for
additional information on the part of the staff of the Commission or any such
authority shall have been complied with to the satisfaction of the staff of the
Commission or such authority. After the date of this Agreement, no amendment or
supplement to the Registration Statement or the Prospectus shall have been filed
unless a copy thereof was first submitted to the Representatives and the
Representatives did not object thereto in good faith.
(c) The Shares shall have been qualified or registered for sale under the
Blue Sky Laws of such jurisdictions as shall have been reasonably specified by
the Representatives as contemplated by Section 7(o); each such qualification
shall be in effect and not subject to any stop order and no proceeding for such
purpose shall be pending before or, to the knowledge of the Company or the
Representatives, threatened or contemplated by the authorities of any such
jurisdiction on the applicable Closing Date; and the offering of the Shares
shall have been cleared by the NASD.
(d) The legality and sufficiency of the authorization, issuance and sale of
the Shares, the validity and form of the certificates representing the Shares,
the execution and delivery of this Underwriting Agreement, and all corporate
proceedings and other legal matters incident thereto, and the form of the
Registration Statement and the Prospectus (except financial statements and other
statistical or financial data included therein) shall have been approved by
Ropes & Gray, counsel for the Underwriters.
(e) The Representatives shall not have been advised by the Company that the
Registration Statement or Prospectus, or any amendment or supplement thereto,
contains a material untrue statement of fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading.
(f) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus:
(i) There shall not have been any material adverse change or development in
the business (whether by reason of any court, legislative, other governmental
action, order or decree, or otherwise), business prospects, properties, general
affairs, management, condition (financial or otherwise), net worth or results of
operations of the Company, whether or not arising from transactions in the
ordinary course of business, which has not been disclosed in or otherwise
contemplated by the Registration Statement or the Prospectus; and
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(ii) The Company shall not have sustained any material loss or interference
with its business or properties from any labor dispute, strike, fire, flood,
windstorm, accident or other calamity (whether or not covered by insurance) or
from any court or legislative or other governmental action, order or decree,
which is not set forth in the Registration Statement and the Prospectus, if any
such development or developments described in Section 9(f)(i) or Section
9(f)(ii), in the sole judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares on
the terms and in the manner contemplated in the Registration Statement, the
Prospectus and/or this Agreement.
(g) There shall have been furnished to the Representatives, as the
representatives of the Underwriters, on each Closing Date, except as otherwise
expressly provided below:
(i) An opinion of Fulbright & Jaworski L.L.P., counsel for the Company,
reasonably satisfactory to the Representatives and counsel for the Underwriters,
addressed to the Representatives as the representatives of the Underwriters and
dated the First Closing Date or the Second Closing Date, as the case may be, to
the effect that:
(A) The Company has been duly organized, is validly existing and is in
good standing as a corporation under the laws of its jurisdiction of
incorporation, with full corporate power and authority to own or lease its
properties and to conduct its business as described in the Prospectus. To
the knowledge of such counsel, the Company does not own, directly or
indirectly any shares of capital stock of any corporation or have any
equity interest in any firm, partnership or joint venture. The Company is
qualified to do business as a foreign corporation in the State of
Connecticut; and
(B) The authorized capital stock of the Company consists of [ ] shares
of Common Stock, $.01 par value, and [ ] shares of Preferred Stock, $.01
par value, and all such stock, including the Shares, conformed in all
material respects as to legal matters to the descriptions thereof in the
Prospectus under the caption "Description of Capital Stock" as of the date
of the Prospectus; and
(C) To the best of counsel's knowledge after due inquiry, the Company
is not in violation of any provision of its Charter; and
(D) The authorized, issued and outstanding capital stock of the
Company is as set forth in the "Capitalization" table contained in the
Prospectus, except for issuances or forfeitures subsequent to the date of
the information provided in such table, if any, pursuant to [stock option
and other sources of subsequent issuances such as debt or preferred stock
conversions]. The Shares and the other shares of capital stock issued and
outstanding on this date have been duly authorized and validly issued and
are fully paid and nonassessable. To the best of counsel's
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knowledge after due inquiry, there are no preemptive, preferential or
other rights to subscribe for or purchase any of the Shares; and
(E) The Shares have been duly authorized; the certificates for the
Shares to be delivered hereunder are in due and proper form; and when the
certificates for the Shares to be sold by the Company are duly
countersigned by the Company's transfer agent and delivered to the
Representatives or upon the order of the Representatives against payment of
the agreed consideration therefor in accordance with the provisions of this
Agreement, the Common Stock represented thereby will be validly issued,
fully paid and nonassessable. Upon delivery to the Underwriters or upon the
Representatives' order against payment of the agreed consideration therefor
in accordance with the provisions of this Agreement, each Underwriter who
purchases shares in good faith and without knowledge of any adverse claim
(as defined in Section 8-302 of the New York Uniform Commercial Code) will
acquire good and valid title to the Shares being issued by the Company to
the Underwriters, free and clear of any adverse claim; and
(F) To the best of counsel's knowledge after due inquiry, except as
disclosed in the Prospectus, there are no outstanding (1) options, warrants
or other rights of any description, contractual or otherwise, entitling any
person to purchase or receive any class of security from the Company, or
(2) securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of the Company's capital stock, or
any of such options, warrants, other rights or convertible securities or
obligations; and
(G) The Common Stock has been approved for listing on the Nasdaq
National Market, subject only to official notice of issuance; and
(H) The Company has full corporate power and authority to execute,
deliver and perform this Agreement. The execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action; will not violate any provision of its Charter; will not result in
the breach or be in violation of or result in the creation or imposition of
any lien, charge or encumbrance upon any of the assets of the Company
pursuant to the terms or provisions of (1) any lease, franchise, license,
indenture, loan agreement, mortgage, deed of trust, voting trust agreement
or any other contract, agreement or instrument listed as an exhibit to the
Registration Statement (2) any statute, order, rule or regulation
applicable to the Company of any court or regulatory body, administrative
agency, authority or other governmental body having jurisdiction over the
Company or any of its properties or (3) any order of which such counsel is
aware of any court or regulatory body, administrative agency, authority or
other governmental body rendered in any proceeding to which the Company was
or is now a party or by which
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it and/or any of its properties is bound. This Agreement has been duly
executed and delivered by the Company; and
(I) The Warrants have been duly authorized, executed, issued and
delivered by the Company and constitute the legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms. The shares of Common Stock required to be issued by the
Company upon exercise of the Warrants have been duly authorized and
reserved for issuance, and, when issued and delivered upon payment of the
exercise price therefor as provided in the Warrants, will be duly
authorized, validly issued, fully paid and nonassessable.
(J) No consent, approval, authorization or other order of, or filing
or declaration with, any court or regulatory body, administrative agency or
other governmental body of the United States or any other jurisdiction is
necessary in connection with the execution, delivery and performance of
this Agreement and/or the issuance and/or sale of the Shares or the
Warrants, or the issuance of shares of Common Stock upon exercise of the
Warrants, by the Company pursuant to this Agreement and/or the consummation
of the transactions contemplated by this Agreement, other than such as have
been obtained or made by the Company on or before the date of this
Agreement, except the registration of the Shares under the Act, the
Exchange Act and the Rules and Regulations and such consents, approvals,
authorizations, registrations or qualifications as may be required by the
Blue Sky Laws applicable to the public offering of the Shares by the
several Underwriters (as to which such counsel need express no opinion) or
the by-laws and rules of the NASD in connection with the purchase and
distribution by the several Underwriters of the Shares (as to which such
counsel need express no opinion); and
(K) (1) The Registration Statement has become effective under the Act
and any required filing pursuant to Rule 424(b) has been made in the manner
and within the time period required by Rule 424(b); (2) to the best
knowledge of such counsel after due inquiry no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for such purpose are pending before or threatened by the
Commission; (3) the Registration Statement, the Prospectus and each
amendment or supplement thereto (except for the financial statements and
other statistical or financial data included therein as to which such
counsel need express no opinion) as of their respective effective or issue
dates complied as to form in all material respects with the requirements of
the Act and the Rules and Regulations; and (4) such counsel does not know
of any actions, suits or legal or governmental proceedings pending, or, to
such counsel's best knowledge, after due inquiry, threatened against the
Company or any property owned or leased by the Company or any of the
Company's officers or directors in their capacity as such, before or by any
foreign, federal, state, municipal or local court, commission, regulatory
body, administrative agency or other governmental body, that are required
to be described in the Registration Statement or the Prospectus that are
not described
-22-
as required or which question the validity of this Agreement or any action
taken or to be taken pursuant hereto, nor is such counsel aware of any
contracts or other documents, transactions or relationships of a character
required to be described in the Registration Statement or the Prospectus or
to be filed as exhibits to the Registration Statement that are not
described, incorporated therein or filed as required; and
(L) To the best of counsel's knowledge after due inquiry, there are no
pending or threatened proceedings relating to the revocation, withdrawal,
cancellation, modification, suspension or non-renewal of any material
permits, certificates, licenses, approvals, registrations and
authorizations of the Company; and
(M) The Company is not an "investment company," or a company
"controlled" by, or an "affiliated person" of, or a "promoter" or
"principal underwriter" for, an "investment company," within the meaning of
the 1940 Act, and upon the Company's receipt of any proceeds from the sale
of the Shares, it will not become or be deemed to be an "investment
company" under the 1940 Act; and
(N) To the best of counsel's knowledge after due inquiry, except as
disclosed in the Prospectus, there are no contracts or agreements between
the Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or to require
the Company to include such securities in (1) the securities registered
pursuant to the Registration Statement or (2) any other securities now or
hereafter registered pursuant to any other registration statement filed by
the Company under the Act. To the best of counsel's knowledge after due
inquiry, except as disclosed in the Prospectus, no holder of securities of
the Company has rights to the registration of any securities of the Company
because of the filing of the Registration Statement, or all such holders,
if any, have waived all such rights as of the date hereof; and
(O) The description in the Registration Statement and the Prospectus
of statutes and contracts and other legal documents described therein are
fair summaries thereof and present fairly the information required to be
shown with respect to such matters.
Such counsel may rely as to factual matters on certificates of officers of
the Company and of state officials, in which case the opinion of counsel to the
Company shall state that they are so doing and copies of such certificates or
opinions shall be attached to such counsel's opinion.
In addition to the matters set forth above, such opinion shall also include
a statement to the effect that although such counsel has not undertaken, except
as otherwise indicated in their opinion, to determine independently, and does
not assume responsibility for, the accuracy or completeness of statements in the
Registration Statement or the
-23-
Prospectus, such counsel has participated in the preparation of the Registration
Statement and the Prospectus, including without limitation review and discussion
of the contents thereof, and no facts have come to the attention of such counsel
which lead them to believe that either the Registration Statement or the
Prospectus, or any amendment or supplement to the Registration Statement or the
Prospectus, as of their respective effective or issue dates, 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
in light of the circumstances under which such statements were made or that the
Prospectus, as amended or supplemented, if applicable, as of the First Closing
Date or the Second Closing Date, as the case may be, 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 in
light of the circumstances under which such statements were made (except for the
financial statements and other statistical or financial data included therein as
to which such counsel need express no opinion). Notwithstanding anything herein
to the contrary, it is understood and agreed that other counsel to the Company
are rendering opinions with respect to (i) the sections of the Prospectus
entitled "Risk Factors--Protection of Intellectual Property and Proprietary
Technology," "Business--Patents and Proprietary Information," and (ii) the
sections of the Prospectus relating to the FDA under sections entitled "Risk
Factors--Government Regulation" and "Business--Government Regulation," and
no opinions are expressed herein with respect to such sections or matters
notwithstanding the location of such matters in the Prospectus.
(ii) An opinion of Testa, Hurwitz & Thibeault, special patent counsel for
the Company, reasonably satisfactory to the Representatives and counsel to the
Underwriters, addressed to the Representatives as the representatives of the
Underwriters and dated the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
[THIS IS UNDER REVIEW PENDING COMPLETION OF PATENT DILIGENCE]
[_______________(A) [Record title in each of [______________]
(individually a "U.S. Patent," and collectively the "U.S. Patents") is
owned by the Company free and clear of any liens or interests therein held
by any other person or entity; and
(B) Record title in each of the following non-U.S. patents:
COUNTRY PATENT NO. DATE OF GRANT
------- ---------- -------------
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(individually a "Foreign Patent," and collectively the "Foreign Patents")
is owned by the Company free and clear of any liens or interests therein
held by any other person or entity; and
(C) Record title in each of the following U.S. patent applications:
APPLICATION NO. DATE OF FILING
--------------- --------------
(individually a "U.S. Application" and collectively the "U.S.
Applications") is owned by the Company free and clear of any liens or
interests therein held by any other person or entity; and
(D) Record title in each of the following non-U.S. patent
applications:
COUNTRY APPLICATION NO. DATE OF FILING
------- --------------- --------------
(individually a "Foreign Application" and collectively the "Foreign
Applications") is owned by the Company free and clear of any liens or
interests therein held by any other person or entity; and
(E) Each of the U.S. Patents and Foreign Patents was duly and validly
issued and, on the basis of all information which has been made available
to us, is neither invalid nor unenforceable; and
(F) On the basis of information supplied by the Company, such counsel
has no reason to believe that any of the Company's products infringe any
rights of any third party; and
(G) On the basis of such counsel's knowledge and representations by
the Company, there is no pending or threatened litigation, administrative
or other proceeding or claim of any third party the outcome of which could
adversely affect the Company's rights in and to any U.S. or Foreign Patent
or any U.S. or Foreign Application; and
-25-
(H) The Company has not been charged or, to such counsel's knowledge
after due inquiry of the Company, been threatened to be charged with any
infringement of any patent, copyright, copyright registration, trade secret
or any other proprietary right of any other person or entity; and
(I) The Company owns or has adequate rights to use all patent rights
and all rights under mask works and copyrights necessary for the conduct of
its businesses, and, after due inquiry of the Company, such counsel has no
knowledge of any infringement by the Company of any patent, mask work
registration, copyright, license, trade secret or other similar right of
any other person or entity, and, after due inquiry of the Company, such
counsel has no knowledge of any claim being made against the Company or any
employee of the Company, regarding patent, mask work or copyright
infringement, breach of license, trade secret misappropriation or other
similar violation of a third party's rights materially affecting the
ability of the Company to conduct its business, except as set forth herein;
and
(J) Neither the execution, delivery and performance of this Agreement
nor the consummation of the transactions contemplated hereby will violate
any law, rule, regulation or order applicable to any U.S. Patent, Foreign
Patent or to any U.S. or Foreign Application; and
(K) Each of the hardware products being manufactured and sold by the
Company is covered by at least one claim of at least one of the U.S.
Patents, Foreign Patents or Foreign Applications; and
(L) Although such counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not assume
responsibility for, the accuracy or completeness of statements in the
Registration Statement or the Prospectus, such counsel has participated in
the preparation of the Registration Statement and the Prospectus, including
without limitation review and discussion of the contents thereof, and no
facts have come to the attention of such counsel which lead them to believe
that any of the portions of the Registration Statement or the Prospectus
under the captions "Risk Factors-Protection of Intellectual Property and
Proprietary Technology," "Business-Patents and Proprietary Information" or
any amendment or supplement to the Registration Statement or the Prospectus
relating to any of such portions of the Registration Statement or the
Prospectus, as of their respective effective or issue dates, 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 in light of the circumstances under which such statements
were made or that the Prospectus, as amended or supplemented, if
applicable, as of the First Closing Date or the Second Closing Date, as the
case may be, 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 in light of the circumstances under
which such
-26-
statements were made (except for the financial statements and other
statistical or financial data included therein as to which such counsel
need express no opinion); and
(M) There are no amendments to the Registration Statement required to
be filed or any legal or governmental proceedings pending, or, to such
counsel's best knowledge, after due inquiry, threatened, that are required
to be described in the Prospectus that are not described as required, nor
are there any contracts or documents of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required, and
(N) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body
applicable to any U.S. Patent, Foreign Patent or any Foreign Application is
required for the issuance and/or sale of the Shares and/or the consummation
of the transactions contemplated by this Agreement, other than such as have
been obtained by the Company on or before the date of this Agreement,
except the registration of the Shares under the Act, and such consents,
approvals, authorizations, registrations or qualifications as may be
required under any Blue Sky Laws in connection with the purchase and
distribution of the Shares by the Underwriters and the clearance of the
offering contemplated by this Agreement with the NASD; and
(O) The description in the Registration Statement and the Prospectus
of statutes, legal and governmental proceedings, and contracts and other
legal documents described therein as they apply to each U.S. Patent,
Foreign Patent U.S. Application and Foreign Application present fairly the
information required to be shown.
Such counsel may rely as to factual matters on certificates of officers of
the Company and of governmental officials, in each case satisfactory to the
Representatives, in which case their opinion shall state that they are so doing
and that they have no reason to believe that any such certificate is not
complete and accurate, and copies of such certificates or opinions shall be
attached to such counsel's opinion.]
(iii) [AN OPINION OF KING & SPALDING, REGULATORY COUNSEL FOR THE COMPANY,
DATED THE CLOSING DATE AND ADDRESSED TO YOU, AS REPRESENTATIVES OF THE SEVERAL
UNDERWRITERS TO THE EFFECT THAT:
ANY STATEMENTS SET FORTH IN THE REGISTRATION STATEMENT AND THE PROSPECTUS
UNDER THE CAPTIONS "RISK FACTORS - GOVERNMENTAL REGULATION: AND "BUSINESS -
GOVERNMENT REGULATION" (COLLECTIVELY, THE "FDA PORTION") CONSTITUTE AN ACCURATE
SUMMARY IN ALL MATERIAL RESPECTS OF RESTRICTIONS APPLICABLE TO THE BUSINESS OF
THE COMPANY ARISING UNDER THE FEDERAL FOOD, DRUG, AND COSMETIC ACT (THE "FFDCA")
OR THE REGULATIONS THEREUNDER OR THE FDA REGULATION OF THE BUSINESS OR
OPERATIONS OF THE COMPANY, OR OF ANY LEGAL
-27-
MATTERS, DOCUMENTS OR PROCEEDINGS REFERRED TO THEREIN AND RELATING TO THE FFDCA
OR THE FDA'S REGULATION OF THE BUSINESS OR OPERATIONS OF THE COMPANY OR THE
COMPANY'S COMPLIANCE THEREWITH.
TO COUNSEL'S KNOWLEDGE, THE COMPANY HAS FILED WITH THE FDA FOR AND RECEIVED
APPROVAL OF ALL APPLICATIONS, LICENSES, REGISTRATIONS, AND PERMITS ("REGULATORY
AUTHORIZATIONS") NECESSARY TO CONDUCT THE BUSINESS OF THE COMPANY DESCRIBED IN
THE REGISTRATION STATEMENT AND THE PROSPECTUS; THE COMPANY IS IN THE PROCESS OF
COMING INTO COMPLIANCE WITH ALL SUCH REGULATORY AUTHORIZATIONS AND ALL
APPLICABLE FDA RULES, REGULATIONS, GUIDELINES AND POLICIES, INCLUDING BUT NOT
LIMITED TO, APPLICABLE FDA RULES, REGULATIONS AND POLICIES RELATING TO THE
DEVELOPMENT, TESTING, MANUFACTURE, LABELING, STORAGE, RECORD KEEPING, REPORTING,
OR MARKETING OF THE PRODUCTS OF THE COMPANY.
TO COUNSEL'S KNOWLEDGE, THE COMPANY HAS NO REASON TO BELIEVE THAT THE FDA
IS CONSIDERING TAKING ANY ACTION TO LIMIT, SUSPEND, REVOKE, OR WITHDRAW ANY SUCH
REGULATORY AUTHORIZATION.
BASED UPON A REVIEW OF THE FDA PORTION, COUNSEL HAS NO REASON TO BELIEVE
THAT THE INFORMATION CONTAINED IN THE FDA PORTION OF THE REGISTRATION STATEMENT
AND THE PROSPECTUS AT THE TIME IT BECAME EFFECTIVE 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
THAT ON THE FIRST CLOSING DATE THE INFORMATION CONTAINED IN THE FDA PORTION OF
THE PROSPECTUS OR ANY AMENDMENTS OR SUPPLEMENTS TO THE FDA PORTION OF 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 NOT
MISLEADING.]
(iv) Such opinion or opinions of Ropes & Gray, counsel for the
Underwriters, dated the First Closing Date or the Second Closing Date, as the
case may be, with respect to the incorporation of the Company, validity of the
Shares, the Registration Statement and the Prospectus, and other related matters
as the Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents and shall have exhibited to them such
papers and records as such counsel reasonably request for the purpose of
enabling them to pass upon such matters.
(v) Concurrently with the execution of this Agreement and on each Closing
Date, a certificate of the chief executive officer and the principal financial
officer of the Company, dated the date of this Agreement, the First Closing Date
or the Second Closing Date, as the case may be, in form and substance reasonably
satisfactory to the Representatives, to the effect that;
(A) Each of the representations and warranties of the Company set
forth in Section 2 are true and correct as of the date of this Agreement
and as of the First Closing Date or the Second Closing Date, as the case
may be; and
-28-
(B) The Company has duly, timely and fully performed each of the
covenants required to be performed by it under this Agreement; and the
Company has duly, timely and fully satisfied or fulfilled each condition
required to be satisfied or fulfilled by it on or prior to the date of such
certificate; and
(C) To the best of such officers' information and belief after due
inquiry, the Commission has not issued an order preventing or suspending
the use of the Prospectus or any Preliminary Prospectus filed as a part of
the Registration Statement or any amendment thereto; no stop order
suspending the effectiveness of the Registration Statement has been issued;
and no proceedings for that purpose have been instituted or, to the best
knowledge of the respective signatories, are pending or contemplated under
the Act; and
(D) To the best of such officers' knowledge and belief after due
inquiry, no order suspending the qualification or registration of the
Shares under the Blue Sky Laws of any jurisdiction shall be in effect and
no proceeding for such purpose shall be pending before or, to the knowledge
of the Company or the Representatives, threatened or contemplated by the
authorities of any such jurisdiction; and
(E) Each of the respective signatories of the certificate has
carefully examined the Registration Statement and the Prospectus, and the
Registration Statement and the Prospectus and any amendment or supplement
thereto contain all statements and information required to be included
therein, and neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make all statements therein not misleading in light of the
circumstances under which such statements were made, and since the date on
which the Registration Statement was initially filed with the Commission,
no event has occurred that was required to be set forth in an amended or
supplemented prospectus or in an amendment to the Registration Statement
that has not been so set forth; and
(F) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there, has not been any material
adverse change or development (or development involving a potential adverse
change) in the business, properties, financial condition or earnings of the
Company, whether or not arising from transactions in the ordinary course of
business, having a Material Adverse Effect, except as disclosed in or
otherwise contemplated by the Prospectus and the Registration Statement as
heretofore amended or (but only if the Representatives expressly consents
thereto in writing) as disclosed in an amendment or supplement thereto
filed with the Commission and delivered to the Representatives after the
execution of this Agreement; since such respective dates and except as so
disclosed the Company has not incurred any liability or obligation, direct
or indirect,
-29-
or entered into any transaction that is material to the Company and was not
contemplated by the Prospectus; since such respective dates and except as
so disclosed there has not been any material change in the outstanding
capital stock of the Company, or any material change in the short-term debt
or long-term debt of the Company; since such respective dates and except as
to disclosed the Company has not acquired any of the Common Stock or other
capital stock of the Company nor has the Company declared or paid any
dividend, or made any other distribution not expressly consented to in
writing by the Representatives upon its outstanding Common Stock payable to
shareholders of record on a date prior to the First Closing Date or Second
Closing Date, as the case may be; since such respective dates and except as
so disclosed the Company has not incurred any material contingent
obligations, and no material litigation is pending or threatened against
the Company; and since such respective dates and except as so disclosed in
the Prospectus the Company has not sustained any material loss or
interference (1) from any strike, fire, flood, windstorm, accident or other
calamity or casualty (whether or not insured) or (2) from any court or
governmental action, order or decree.
(vi) Concurrently with the execution of this Agreement, each of the
Accountants shall have delivered to the Representatives a letter, dated the date
of this Agreement, addressed to the Representatives, as representatives of the
Underwriters and the directors of the Company , in form and substance reasonably
satisfactory to the Representatives, confirming that the Accountants are
independent accountants with respect to the Company as required by the Act and
the Rules and Regulations and with respect to certain financial and other
statistical and numerical information contained in the Registration Statement.
On the First Closing Date and, as to the Option Shares, the Second Closing Date,
the Accountants shall have furnished to the Representatives a letter, dated the
date of the applicable Closing Date, which shall confirm, on the basis of a
review in accordance with the procedures set forth in such letter from the
Accountants, that nothing has come to their attention during the period from the
date of this Agreement to a date (specified in such letter) not more than five
(5) days prior to the First Closing Date or the Second Closing Date, as the case
may be, which would require any change in their letter dated the date of this
Agreement if it were required to be dated and delivered at the First Closing
Date or the Second Closing Date, as applicable. There shall not have been any
change or decrease set forth in any of the letters referred to in this Section
9(g)(vi) that makes it impracticable or inadvisable in the reasonable judgment
of the Representatives to proceed with the public offering or purchase of the
Shares contemplated hereby.
(vii) Such further certificates and documents as the Representatives
reasonably may request (including without limitation certificates of officers of
the Company).
All such opinions, certificates, letters and documents shall be in
compliance with the provisions of this Agreement only if they are reasonably
satisfactory to the Representatives and to Ropes & Gray, counsel for the
Underwriters. The Company shall furnish the
-30-
Representatives with such manually signed or conformed copies of such opinions,
certificates, letters and documents as the Representatives reasonably may
request.
(h) On the First Closing Date and the Second Closing Date the Common Stock
shall be listed on the Nasdaq National Market and no proceeding relating to
delisting the Common Stock from the Nasdaq National Market shall be pending.
(i) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted against the Company, or any of its officers or
directors in their capacities as such, for or by any foreign, federal, state,
municipal or local court, commission, regulatory body, administrative agency or
other governmental body, in which litigation or proceeding an unfavorable
ruling, decision or finding would have a Material Adverse Effect.
(j) Each of the representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects at the First
Closing Date and, with respect to the Option Shares, at the Second Closing Date,
and all covenants and agreements contained in this Agreement to be performed on
the part of the Company and all conditions contained herein to be fulfilled or
complied with by the Company at or prior to the First Closing Date and, with
respect to the Option Shares, at or prior to the Second Closing Date, shall have
been duly performed, fulfilled or complied with.
(k) On or prior to the First Closing Date the Representatives shall have
received the written agreement of each of its officers, directors, principal
shareholders and certain option holders evidencing their agreement not to engage
in certain transaction in the shares of capital stock of the Company for a
period of 180 days following the Effective Date in the form provided by counsel
to the Underwriters.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement, at
the Representatives' election, shall, upon notification of the Company,
terminate without liability on the part of any Underwriter, including without
limitation the Representatives, or the Company, except for the expenses to be
paid by the Company pursuant to Section 8 or reimbursed by the Company pursuant
to Section 10 and except to the extent provided in Section 12.
SECTION 10. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale to the
Underwriters of the Shares at the First Closing is not consummated because any
condition to the Underwriters' obligations under this Agreement is not satisfied
or because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof, the Company
agrees to reimburse the Representatives and the other Underwriters through you
upon demand for all reasonable out-of-pocket expenses (including without
limitation reasonable fees and disbursements of counsel) that shall have been
incurred by the Representatives and the other Underwriters in connection with
the
-31-
proposed purchase and the sale of Shares up to a maximum of $50,000. Any such
failure of consummation shall be without liability of any party to any other
except that the provisions of this Section 10 and Sections 8 and 12 shall at all
times be effective and shall apply.
SECTION 11. MAINTENANCE OF EFFECTIVENESS OF REGISTRATION STATEMENT. The
Representatives and the Company shall use their respective best efforts to
prevent the issuance of any stop order suspending the effectiveness of the
Registration Statement and, if any such stop order is issued, to obtain the
withdrawal of such order at the earliest possible moment.
SECTION 12. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter; the
directors, officers, employees and agents of each Underwriter, and each person,
if any, who controls any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act; from and against any losses, claims, damages,
expenses, liabilities or actions in respect thereof (including without
limitation any and all investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted) (collectively, "Claims"), whether
joint or several, to which any such Underwriter, person or controlling person
may become subject under the Act, the Exchange Act, any Blue Sky Law, or any
other federal or state statutory law or regulation, at common law or otherwise
(including without limitation payments made in settlement of any litigation, if
such settlement is effected with the written consent of the Company, which
consent shall not be unreasonably withheld), insofar as such Claims arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were made,
and will reimburse each Underwriter, each such other person and each such
controlling person for any reasonable legal fees or other expenses reasonably
incurred by such Underwriter or any such other person party or any such
controlling person in connection with investigating, defending against or
appearing as a third witness in connection with any such Claim; provided,
however, that the Company will not be liable in any such case to the extent
that:
(i) any such Claim arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission to state a material
fact made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with the written information furnished by or on behalf of the
Underwriters to the Company pursuant to Section 4; or
-32-
(ii) such untrue statement or alleged untrue statement or omission or
alleged omission to state a material fact was contained or made in any
Preliminary Prospectus and corrected in the Prospectus and (A) any such Claim
suffered or incurred by any Underwriter (or any person who controls any
Underwriter within the meaning of Section 15 of the Act of or Section 20 of the
Exchange Act) resulted from a Claim by any person who purchased Shares that are
the subject thereof from such Underwriter in the offering, and (B) such
Underwriter failed to deliver a copy of the Prospectus (as then amended if the
Company shall have amended the Prospectus) to such person at or prior to the
confirmation of the sale of such Shares in any case where such delivery is
required by the Act, unless such failure was due to failure by the Company to
provide copies of the Prospectus (as so amended) to the Underwriters as required
by this Agreement. The indemnification obligations of the Company pursuant to
this Section 12(a) are in addition to any liabilities the Company may otherwise
have.
The Company will not, without the prior written consent of the
Representatives, settle or compromise or consent to the entry of any judgment in
any pending or threatened Claim (or related cause of action or portion thereof)
in respect of which indemnification may be sought hereunder (whether or not any
Underwriter is a party to such Claim), unless such settlement, compromise or
consent includes an unconditional release of each Underwriter from all liability
arising out of such Claim (or related cause of action or portion thereof).
(b) Each Underwriter, severally and not jointly, agrees to indemnify and
hold harmless the Company, each of its directors, and each of its officers who
signs the Registration Statement, and each person who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
against any Claim to which the Company or any of its directors, officers or
controlling persons or person controlling such persons may become subject under
the Act, the Exchange Act, any Blue Sky Law or any other federal or state
statutory law or regulation, at common law or otherwise (including without
limitation payments made in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter and the Representatives,
which consent shall not be unreasonably withheld), insofar as such Claims arise
out of or are based upon any untrue or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement by such Underwriter to the Company pursuant to Section
4. Each Underwriter will severally reimburse any legal fees or other expenses
reasonably incurred by the Company, or any of its directors, officers or
controlling persons or any of the controlling persons of such persons in
connection with investigating or defending any such Claim, and from any and all
Claims resulting from failure of an Underwriter to deliver a copy of the
Prospectus, if the person asserting such Claim purchases Shares from such
Underwriter and a copy of the Prospectus
-33-
(as then amended if the Company shall have amended the Prospectus) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended) would have
cured the defect giving rise to such Claim. The indemnification obligations of
each Underwriter pursuant to this Section 12(b) are in addition to any
liabilities any such Underwriter may otherwise have.
(c) Any party that proposes to assert its right to be indemnified under
this Section 11 shall, promptly after receipt of notice of the commencement of
any action against such party in respect of a Claim, if a Claim in respect
thereof is to be made against an indemnifying party under this Section 11,
notify each such indemnifying party in writing of the commencement thereof (a
"Commencement Notice"), and such Commencement Notice shall include a copy of all
papers served upon the notifying party, provided that the omission to so notify
such indemnifying party or parties shall only relieve the indemnifying party or
parties from any liability it or they may have to any indemnified party under
this Section 11 to the extent that such omission to give such notice results in
the loss of substantive rights or defenses by the indemnifying party. If any
such action is brought against any indemnified party, and such indemnified party
notifies an indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving a
Commencement Notice, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded (based on advice of counsel)
that there may be legal defenses available to the indemnified party and/or other
indemnified parties that are different from or in addition 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 in accordance with clause (d) hereof.
(d) Upon receipt of notice from the indemnifying party to such indemnified
party of the indemnifying party's election to assume the defense of such action
and upon approval by the indemnified party of counsel selected by the
indemnifying party, the indemnifying party shall not be liable to such
indemnified party under Section 12(a) or Section 12(b) for any legal fees or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with such defense,
unless:
(i) the indemnified party shall have employed separate counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the last sentence of Section 12(c) (it being understood, however, that the
indemnifying party shall not be liable for the legal fees and expenses of more
than one separate counsel, approved by the Representatives if one or more of the
Underwriters or their controlling persons are the indemnified parties); or
-34-
(ii) the indemnifying party has authorized in writing the employment of
counsel at the expense of the indemnifying party; or
(iii) a conflict or potential conflict exists (based on advice of counsel
to the indemnified party) between the indemnified party and any indemnifying
party (in which case the indemnifying party shall not have the right to direct
the defense of such action on behalf of the indemnified party).
It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties. All such fees, disbursements and other
charges shall be reimbursed by the indemnifying party or parties promptly as
they are incurred. No indemnifying party shall be liable for any settlement of
any action or claim effected without such indemnifying party's written consent
(which consent shall not be unreasonably withheld).
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 12 is
applicable in accordance with its terms but for any reason is held to be
unavailable from the Company or the Underwriters, the Company and the
Underwriters shall contribute to the total losses, claims, liabilities, expenses
and damages (including without limitation any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any Claim, but after deducting any contribution received by the
Company from persons other than the Underwriters, such as persons who control
the Company within the meaning of the Act, officers of the Company who signed
the Registration Statement and directors of the Company, who also may be liable
for contribution) to which each indemnified party may be subject as a result of
such Claim:
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other hand
from the offering of the Shares; or
(ii) if the allocation provided by Section 12(e)(i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in Section 12(e)(i) above, but also the relative
fault of the Company on the one hand and the Underwriters on the other hand in
connection with the statements or omissions that resulted in such Claim, as well
as any other relevant equitable considerations.
The respective relative benefits received by the Company on the one hand
and the Underwriters on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions and other compensation received by the
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Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Underwriters on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 12(e) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to in this Section 12(e). The amount paid or payable by
an indemnified party as a result of the Claims referred to above shall be deemed
to include, subject to the limitations set forth in Sections 12(c) and 12(d),
any legal or other fees or expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim.
(f) Notwithstanding the other provisions of this Section 12, no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions and other compensation received by it, and no person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 12 are several in proportion to the
respective number of Firm Shares set forth opposite their names in SCHEDULE A
(or such number of Firm Shares increased as set forth in Section 12) and not
joint. For purposes of this Section 12, any person who controls a party to this
Agreement within the meaning of the Act shall have the same rights to
contribution as that party, and each officer of the Company who signed the
Registration Statement shall have the same rights to contribution as the
Company, subject in each case to the provisions of this Section 12. Any party
entitled to contribution, promptly after receipt of notice of commencement of
any action against any such party in respect of which a claim for contribution
may be made under this Section 12, shall notify any such party or parties from
whom contribution may be sought, but the omission so to notify shall not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have under this Section 12. No party shall be liable
for contribution with respect to any action or claim settled without its written
consent (which consent shall not be unreasonably withheld).
(g) The indemnity and contribution agreements contained in this Section 12
shall remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Underwriters, (ii) acceptance of any
of the Shares and payment therefor or (iii) any termination of this Agreement.
SECTION 13. SUBSTITUTION OF UNDERWRITERS. It shall be a condition to this
Agreement and to the obligations of the Company to sell and deliver the Shares
hereunder, and to the obligations of each Underwriter to purchase the Shares in
the manner as described
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herein, that, except as hereinafter provided in this Section 13, each of the
Underwriters shall purchase and pay for all of the Shares agreed to be purchased
by such Underwriter hereunder upon tender to the Representatives of all such
Shares in accordance with the terms hereof. If any Underwriter or Underwriters
defaults in its or their obligations to purchase Shares hereunder on either the
First Closing Date or the Second Closing Date and the aggregate number of Shares
that such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase does not exceed ten percent (10%) of the total number of Shares the
Underwriters are obligated to purchase on such Closing Date, the Representatives
may make arrangements for the purchase of such Shares by other persons,
including without limitation any of the Underwriters, but if no such
arrangements are made by such Closing Date the nondefaulting Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder,
to purchase the Shares such defaulting Underwriters agreed but failed or refused
to purchase on such Closing Date, provided that in no event shall the maximum
number of Shares which any Underwriter has become obligated to purchase pursuant
to Section 5 be increased pursuant to this Section 13 by more than one-eleventh
of such number of Shares without the prior written consent of such Underwriter.
If any Underwriter or Underwriters so default and the aggregate number of Shares
with respect to which such default or defaults occur is greater than the above
percentage and arrangements satisfactory to the Representatives for the purchase
of such Shares by other persons are not made within thirty-six (36) hours after
such default, this Agreement shall terminate without liability on the part of
any nondefaulting Underwriter or the Company, except for the expenses to be paid
by the Company pursuant to Section 8 and except to the extent provided in
Section 12.
If the Shares to which such a default relates are to be purchased by the
nondefaulting Underwriters or by another party or parties, the Representatives
or the Company shall have the right to postpone the First or Second Closing
Date, as the case may be, for not more than seven (7) business days so that the
required changes in the Registration Statement, Prospectus and any other
documents, as well as any other arrangements, may be effected. The term
"Underwriter" shall include any person substituting for a defaulting Underwriter
hereunder. Nothing contained in this Agreement shall relieve a defaulting
Underwriter from liability for its default.
SECTION 14. EFFECTIVE DATE OF THIS AGREEMENT. This Agreement shall become
effective immediately upon the execution hereof on the date hereof.
SECTION 15. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may be
terminated by the Representatives prior to the First Closing Date and the
Option, if exercised, may be canceled by the Representatives at any time prior
to the Second Closing Date, prior to delivery of and payment for the applicable
Shares, if in the Representatives' sole judgment, payment for and delivery of
the Shares is rendered impracticable or inadvisable because:
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(a) additional government 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 over-the-counter on the
Nasdaq Stock Market or on the New York Stock Exchange, or trading in securities
generally shall have been suspended or limited on the Nasdaq Stock Market or the
New York Stock Exchange; or
(b) a general banking moratorium shall have been established by federal,
New York or Connecticut authorities;
(c) any event shall have occurred or shall exist that makes untrue or
incorrect in any material respect any statement or information contained in the
Registration Statement or that is not reflected in the Registration Statement
but should be reflected therein to make the statements or information contained
therein not misleading in an material respect; or
(d) any outbreak or escalation of major hostilities or other national or
international calamity or crisis or any substantial change in political,
financial or economic conditions or any other event or events shall have
occurred or shall have accelerated to such extent, in the Representatives' sole
judgment, as to have a material adverse effect on the general financial and/or
securities markets of the United States or make it impracticable or inadvisable
to proceed with completion of the sale of and payment for the Shares as provided
in this Agreement; or
(e) trading in any of the equity securities of the Company shall have been
suspended by the Commission, by an exchange that lists the Shares or by the
Nasdaq Stock Market.
Any termination pursuant to this Section 15 shall be without liability on
the part of any Underwriter to the Company or on the part of the Company to any
Underwriter (except for expenses to be paid by the Company pursuant to Section 8
or reimbursed by the Company pursuant to Section 10 and except as to
indemnification to the extent provided in Section 12).
SECTION 16. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company or its officer or directors and of the several
Underwriters set forth in or made by or on behalf of them pursuant to this
Agreement shall remain in full force and effect, regardless of (a) any
investigation made by or on behalf of any Underwriter, the Company or any of its
or their partners, officers, directors, or any controlling person, as the case
may be; (b) any termination of this Agreement; and (c) delivery of and payment
for the Shares sold hereunder.
SECTION 17. NOTICES. All communications hereunder shall be in writing and,
if sent to the Representatives, shall be mailed, delivered, telecopied (with
receipt confirmed) or
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telegraphed and confirmed to Advest, Inc. at One Commercial Plaza, 280 Trumbull
Street, Hartford, Connecticut 06103, Attention: Roger E. Linnemann, with a copy
to Steven A. Wilcox, Esq., Ropes & Gray, One International Place, Boston,
Massachusetts 02110; and if sent to the Company, shall be mailed, delivered,
telecopied (with receipt confirmed) or telegraphed and confirmed to the Company
at 200 Cascade Boulevard, Milford, Connecticut 06460, Attention: James Biondi,
President, with a copy to Paul Jacobs, Esq., Fulbright & Jaworski L.L.P., 666
Fifth Avenue, New York, NY 10103.
SECTION 18. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns, and
to the benefit of the officers and directors (and their personal representatives
and controlling persons referred to in Section 12), and no other person shall
acquire or have any right or obligation hereunder. The term successors and
assigns shall not include any purchaser of the Shares as such from any of the
Underwriters merely by reason of such purchase.
SECTION 19. PARTIAL UNENFORCEABILITY. If any Section, subsection, clause or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
provision is invalid, illegal or incapable of being enforced, the parties
thereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible.
SECTION 20. WAIVER OF JURY TRIAL. The Company and the Underwriters each
hereby waive any right they may have to a trial by jury in respect of any claim
based upon or arising out of this Agreement or any of the transactions
contemplated hereby.
SECTION 21. APPLICABLE LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York. No
doctrine of choice of law shall be used to apply any law other than that of the
State of Connecticut, and no defense, counterclaim or right of set-off given or
allowed by the laws of any other state jurisdiction, or arising out of the
enactment, modification or repeal of any law, regulation, ordinance or decree of
any foreign jurisdiction, shall be interposed in any action upon or relating to
this Agreement.
SECTION 22. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and there have been and there are no agreements between the parties with respect
to such transactions other than as set forth, or provided for herein.
SECTION 23. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
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SECTION 24. HEADINGS FOR CONVENIENCE. The Section titles contained in this
Agreement are for convenience of reference only and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties.
SECTION 25. CONSTRUCTION. The terms "hereof," "herein," "hereunder" and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Section, paragraph and Schedule
references are to this Agreement unless otherwise specified.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon this
Agreement shall become a binding agreement among the Company and the several
Underwriters, including without limitation the Representatives, all in
accordance with its terms.
Very truly yours,
CARDIOPULMONARY CORP.
By:________________________________
Title:_____________________________
The foregoing Underwriting Agreement
is hereby confirmed and accepted by the
undersigned, acting as Representatives
of the several Underwriters (including
themselves) identified in SCHEDULE A
annexed hereto, as of the date first
above written
ADVEST, INC.
By:_____________________________
Title:__________________________
CRUTTENDEN ROTH INCORPORATED
By:_____________________________
Title:__________________________
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SCHEDULE A
Number of Firm
Name of Underwriter Shares to be Purchased
- ------------------- ----------------------
Advest, Inc..............................
Cruttenden Roth Incorporated.............
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Total: 2,000,000
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