SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 22, 1997
EMISPHERE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10615 13-3306985
- -------- ------- ----------
(State or other (Commission (IRS Employer
jurisdiction File No.) Identification No.)
incorporation)
15 Skyline Drive, Hawthorne, N.Y. 10532
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 347-2220
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Item 5. Other Events.
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On July 21, 1997, Emisphere Technologies, Inc. (the "Company")
entered into an Underwriting Agreement with Goldman, Sachs & Co. (the
"Underwriters") with respect to the sale of up to 1,150,000 shares of common
stock par value $.01 per share (the "Common Stock") of the Company
(including 150,000 shares of Common Stock subject to an over-allotment option
granted to the Underwriters by the Company).
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(c) Exhibits:
The exhibit listed below relates to the Registration Statement (No.
333- 23423) on Form S-3 of the Company (the "Registrant") and is filed herewith
for incorporation by reference in such Registration Statement.
Exhibit number
(Referenced to
Item 601 of Regulation S-K) Description of Exhibit
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1.1 Underwriting Agreement dated July 21,
1997 between the Company and Goldman,
Sachs & CO.
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Signatures
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Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: July 21, 1997
EMISPHERE TECHNOLOGIES, INC.
/s/ Michael M. Goldberg
-------------------------------------
Name: Michael M. Goldberg
Title: Chairman of the Board
and Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit number
(Referenced to
Item 601 of
Regulation S-K) Description of Exhibit Sequentially Numbered Page
- --------------- ---------------------- --------------------------
<S> <C> <C>
1.1 Underwriting Agreement dated July 21,
1997
</TABLE>
EMISPHERE TECHNOLOGIES, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
----------------------
Underwriting Agreement
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July 21, 1997
Goldman, Sachs & Co.,
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Emisphere Technologies, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to Goldman, Sachs & Co. (the "Underwriters") an aggregate of 1,000,000 shares
(the "Firm Shares") and, at the election of the Underwriters, up to 150,000
additional shares (the "Optional Shares") of Common Stock, par value $.01 per
share ("Stock") of the Company (the Firm Shares and the Optional Shares that the
Underwriters elect to purchase pursuant to Section 2 hereof being collectively
called the "Shares").
1. The Company represents and warrants to, and agrees with, the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-23423) (the
"Initial Registration Statement") in respect of certain shares of Stock
including the Shares has been filed with the Securities and Exchange Commission
(the "Commission"); the Initial Registration Statement and any post-effective
amendment thereto, each in the form heretofore delivered or to be delivered to
the Underwriters, and, excluding exhibits thereto but including all documents
incorporated by reference in the prospectus included therein, have been declared
effective by the Commission in such form other than a registration statement, if
any, increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended (the "Act"), which became effective upon filing; no other document with
respect to the Initial Registration Statement or document incorporated by
reference therein has heretofore been filed or transmitted for filing with the
Commission (other than prospectuses filed pursuant to Rule 424(b) under the Act
each in the form heretofore delivered to the Underwriters); and no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has been initiated or,
to the knowledge of the Company, threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act, is hereinafter called a "Preliminary Prospectus"; the
various parts of the Initial Registration Statement, and post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, including
all exhibits thereto and the documents incorporated by reference in the
prospectus contained in the registration statement at the time such part of the
registration statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, each as
amended at the time such part of the registration statement became effective,
are hereinafter collectively called the "Registration Statement"; the prospectus
relating to certain shares of Stock including the Shares, in the form in which
it has most recently been filed, or transmitted for filing, with the Commission
on or prior to the date of this Agreement, and the supplement thereto dated July
21, 1997 as filed by the
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Company pursuant to Rule 424 of the rules and regulations of the Act, is
hereinafter called the "Prospectus"; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
documents filed after the date of such Preliminary Prospectus or Prospectus, as
the case may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any annual report
of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Initial Registration Statement that is
incorporated by reference in the Registration Statement); and any reference to
the Prospectus as amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented in relation to the Shares in the form in
which it is filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5(a) hereof, including any documents incorporated by
reference therein as of the date of such filing);
(b) The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus or any
further amendment or supplement thereto, when such documents become effective or
are filed with the Commission, as the case may be, conforms or, as the case may
be, will conform in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; PROVIDED, HOWEVER, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by
the Underwriters expressly for use in the Prospectus as amended or supplemented
relating to the Shares;
(c) The Registration Statement and the Prospectus conform, and any further
amendments or supplements to the Registration Statement or the Prospectus will
conform, in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder and do not and will not, as of the
applicable effective date as to the Registration Statement and any amendment
thereto, and as of the applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; PROVIDED, HOWEVER, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by the Underwriters expressly for use in the Prospectus as amended or
supplemented relating to the Shares.
(d) The Company has not sustained since the date of the latest audited
financial statements included or incorporated by reference in the Prospectus any
material loss or
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interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been any change in the capital stock of the Company (other than in
connection with the Company's employee benefit plans described in the Prospectus
or incorporated therein by reference) or any material adverse change in, or any
development known to the Company involving a prospective material adverse change
in or affecting, the business, management, financial condition, stockholders'
equity or results of operations of the Company, otherwise than as set forth or
contemplated in the Prospectus;
(e) The Company has good and marketable title in fee simple to all
material real property and good and marketable title to all material personal
property owned by it, in each case free and clear of all liens, encumbrances and
defects or such as do not materially affect the value or marketability of such
property and do not interfere with the use made and proposed to be made of such
property by the Company; and any material real property and buildings held under
lease by the Company are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company;
(f) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with power
and corporate authority to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business in, and is in good standing under
the laws of, each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so qualified in
any such jurisdiction;
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued in accordance with all applicable
federal and state securities laws, rules and regulations, are fully paid and
non-assessable and conform to the description of the Stock contained in the
Prospectus or incorporated therein by reference. The Prospectus accurately sets
forth all outstanding options and warrants (whether or not exercisable) to
purchase shares of capital stock of the Company (or other instruments
convertible or exchangeable into such shares) ("Options"), as well as all
relevant terms thereof as of the date of the Prospectus;
(h) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued and
fully paid and non-assessable and will conform to the description of the Stock
contained in the Prospectus or incorporated therein by reference;
(i) The issue and sale of the Shares by the Company and the compliance by
the Company with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated: have been duly authorized and approved by
all requisite actions of the Company; will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which the Company
is bound
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or to which any of the property or assets of the Company is subject
(all of the foregoing constituting a "Conflict"); will not result in any
violation of the provisions of the Certificate of Incorporation or By-laws of
the Company or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties (all of the foregoing constituting a "Violation"); and do not require
the consent, approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body or other third party (all of
the foregoing constituting a "Consent") for the issue and sale of the Shares or
the
3
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consummation by the Company of the transactions contemplated by this Agreement,
except (i) such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters
and any such Conflict, Violation or Consent that would not, or if not obtained
(in the case of a Consent) would not, individually or in the aggregate, result
in a material adverse effect on the business, operations, financial condition,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect") or that would not,
individually or in the aggregate, impair the Company's ability to consummate the
transactions herein contemplated;
(j) (i) The Company is not in violation of its Certificate of
Incorporation or By-laws, and (ii) the Company is not in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other material agreement or instrument to which it is a party or by
which it or any of its properties may be bound, including, without limitation,
the Elan Agreements and the Lilly Agreement, each as hereinafter defined, which
default could have a Material Adverse Effect;
(k) The statements set forth in the Prospectus under the captions "RISK
FACTORS Need for Regulatory Approval of Products," "BUSINESS - Collaboration
Agreements, Patents and Governmental Regulation," and "Underwriting," insofar as
they purport to describe the provisions of the laws and documents referred to
therein, are accurate and fair in all material respects;
(l) Except for those legal or governmental proceedings described in the
Prospectus, there are no legal or governmental proceedings pending to which the
Company is a party or of which any property of the Company is the subject which,
if determined adversely to the Company, would individually or in the aggregate
have a Material Adverse Effect; and, to the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(m) The Company is not and, after giving effect to the offering and sale
of the Shares, will not be an "investment company" or an entity "controlled" by
an "investment company", as such terms are defined in the Investment Company Act
of 1940, as amended (the "Investment Company Act");
(n) Neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba within the
meaning of Section 517.075, Florida Statutes;
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(o) Coopers & Lybrand L.L.P., who have certified certain financial
statements of the Company, are independent public accountants as required by the
Act and the rules and regulations of the Commission thereunder;
(p) The financial statements and schedules of the Company and the related
notes thereto, included or incorporated by reference in the Registration
Statement and the Prospectus present fairly the financial position of the
Company as of the respective dates of such financial statements and schedules,
and the results of operations and changes in financial position of the Company
for the respective periods covered thereby. Such statements, schedules and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and (where audited) as
certified by the independent accountants named in subsection 1(o). No other
financial statements or schedules are required to be included in the
Registration Statement or the Prospectus. The selected financial data set forth
in the Prospectus under the captions "Capitalization" and "Selected Consolidated
Financial Data" fairly present the information set forth therein on the basis
stated in Registration Statement;
(q) There are no contracts or other documents required to be described in
the Registration Statement or to be filed as exhibits to the Registration
Statement by the Act or by the rules and regulations of the Commission
thereunder which have not been described, filed or incorporated by reference as
required. The contracts so described in the Prospectus are in full force and
effect on the date hereof; neither the Company nor, to the Company's knowledge,
any other party is in breach of or default under any of such contracts, where
such breach or default, individually or in the aggregate, would be material to
the Company; and the descriptions of such contracts in the Registration
Statement are accurate and fair in all material respects;
(r) Except as disclosed in the Prospectus, the Company has sufficient and
requisite trademarks, trade names, patent rights, copyrights and licenses and
approvals ("Intellectual Property Rights") to conduct its business as now
conducted (as described in the Prospectus); without limiting the generality of
the foregoing, the Company is unaware of any limitations with respect to its
Intellectual Property Rights not described in the Prospectus that would prevent
it from (i) performing its obligations under the Elan Agreements and for the
Elan Joint Venture, as hereinafter defined, (ii) performing its obligations
under the Lilly Agreement, and (iii) engaging in its contemplated activities, as
described in the Prospectus; the Company does not have any Intellectual Property
Rights material to the operations of the Company's business except as described
in the Prospectus and such Intellectual Property Rights will not expire earlier
than as disclosed in the Prospectus; the Company has no knowledge of any
material infringement by it of Intellectual Property Rights of others and, to
the Company's knowledge, there are no outstanding claims against the Company
regarding Intellectual Property Rights or other infringement which, if adversely
determined, could have a Material Adverse Effect; and the Company has no
knowledge of any material infringement by others of its Intellectual Property
Rights;
(s) The Company has taken usual and customary measures to protect the
secrecy, confidentiality and value of all of its intellectual property
(including the Intellectual Property Rights) in all material respects;
(t) Except as otherwise disclosed in the Prospectus, the Company now
holds, and at each Time of Delivery (as defined in Section 4 hereof) will hold,
all licenses, certificates, approvals and permits from all state, United States,
foreign and other regulatory authorities,
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including but not limited to the United States Food and Drug Administration (the
"FDA") and any foreign regulatory authorities performing functions similar to
those performed by the FDA (together, "FDA Permits"), that are material to the
conduct of the business of the Company (as such business is currently
conducted), except for such licenses, certificates, approvals and permits the
failure of which to hold would not have a Material Adverse Effect, all of which
are valid and in full force and effect (and there is no proceeding pending or,
to the knowledge of the Company, threatened which may cause any such license,
certificate, approval or permit to be withdrawn, canceled, suspended or not
renewed). The Company is unaware of any reason not described in the Prospectus
why it (or, as applicable, the Elan Joint Venture) will not be granted all such
FDA Permits as may be necessary in order for it (or, as applicable, the Elan
Joint Venture), to engage in the commercialization of the products as
contemplated by the Elan Joint Venture within a reasonable time period. The
Company is not in violation of any law, order, rule, regulation, writ,
injunction or decree of any court or governmental agency or body, applicable to
the investigation of new drugs in humans and animals, including, but not limited
to, those promulgated by the FDA. All of the descriptions in the Registration
Statement and Prospectus of the legal and governmental proceedings by or before
the FDA or any foreign, state or local government body exercising comparable
authority are accurate and fair;
(u) The Company has filed on a timely basis all necessary federal, state
and foreign income, franchise and other tax returns and has paid or made
provision for all taxes shown thereon as due, except where the failure to file
such returns would not have a Material Adverse Effect. The Company has no
knowledge of any tax deficiency that has been or might be asserted against the
Company that might have a material adverse effect on the Company's business;
(v) The Company maintains insurance of the types and in the amounts which
it believes are reasonably adequate for its business, all of which insurance is
in full force and effect;
(w) The clinical studies and tests (including, but without limitation, the
human and animal clinical trials) conducted by the Company or in which the
Company has participated that are described in the Registration Statement and
Prospectus or the results of which are referred to in the Registration Statement
and Prospectus, and, to the Company's knowledge, such studies and tests that
were conducted on behalf of the Company, were and, if still pending, are being
conducted in all material respects (i) in accordance with the protocols,
procedures and controls for such studies and tests of new medical devices or
biologic products, as the case may be, and (ii) in accordance with all
applicable laws, rules and regulations; the descriptions of the results of such
studies and tests contained in the Registration Statement and Prospectus are
accurate, complete and fair, and the Company has no knowledge of any other
studies or tests, the results of which call into question the results described
or referred to in the Registration Statement and Prospectus; and the Company has
not received any notices or correspondence from the FDA or any other
governmental agency requiring the termination, suspension or modification of any
studies or tests conducted by, or on behalf of, the Company or in which the
Company has participated that are described in the Registration Statement and
Prospectus or the results of which are referred to in the Registration Statement
and Prospectus that would cause the Company to change the descriptions in the
Registration Statement or Prospectus;
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(x) The Company is in material compliance with, and has received no notice
alleging non-compliance with, all applicable foreign, United States, state and
local laws, rules, regulations, treaties, statutes and codes of any and all
governmental authorities;
(y) Without limiting the generality of (x) above, the Company: (i) is in
material compliance with any and all applicable foreign, United States, state
and local laws, rules, regulations, treaties, statutes and codes promulgated by
any and all governmental authorities relating to the protection of human health
and safety, the environment or toxic substances or wastes, pollutants or
contaminates ("Environmental Laws"); (ii) is in material compliance with any and
all applicable foreign, United States, state and local laws, rules, regulations,
treaties, statutes and codes promulgated by any and all governmental authorities
(including pursuant to the Occupational Health and Safety Act) relating to the
protection of human health and safety in the workplace ("Occupational Laws" and,
together with Environmental Laws, "Environmental and Occupational Laws"); (iii)
has received all material permits, licenses or other approvals required of it
under applicable Environmental and Occupational Laws to conduct its business as
currently conducted; and (iv) is in compliance with all terms and conditions of
any such permit, license or approval, except with respect to all such cases
where such noncompliance with the applicable Environmental and Occupational Laws
or failure to receive or act in compliance with the required permit, license or
other approval would not, individually or in the aggregate, have a Material
Adverse Effect. No action, proceeding, revocation proceeding, writ, injunction
or claim is pending or, to the Company's knowledge, threatened against the
Company relating to Environmental and Occupational Laws or to the Company's
activities involving Hazardous Materials. The term "Hazardous Materials" as used
in this Agreement means any material or substance that: (i) is prohibited or
regulated by any environmental law, rule, regulation, order, treaty, statute or
code promulgated by any governmental authority, or any amendment or modification
thereto; or (ii) has been designated or regulated by any governmental authority
as radioactive, toxic, hazardous or otherwise a danger to health, reproduction
or the environment;
(z) The Company is not or was not engaged in the generation, use,
manufacture, transportation or storage of any Hazardous Materials on any of the
Company's properties or former properties, except where such use, manufacture,
transportation or storage is or was in material compliance with Environmental
Laws. No Hazardous Materials have been treated or disposed of by the Company on
any of the Company's properties or on properties formerly owned or leased by the
Company during the time of such ownership or lease, except in compliance with
Environmental Laws. No spills, discharges, releases, deposits, emplacements,
leaks or disposal of any Hazardous Materials have occurred on or under, or have
emanated from, any of the Company's properties or former properties for which
the cost of remediation would have a material adverse effect on the Company's
business;
(aa) The Company has not at any time during the last five years, (i) made
any unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof;
(bb) Neither the Company nor, to its knowledge, any of its officers,
directors or affiliates has taken, and at each Time of Delivery, neither the
Company, nor, to its knowledge, any of its officers, directors or affiliates
will have taken, directly or indirectly, any action that has
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constituted, or might reasonably be expected to constitute, the stabilization or
manipulation of the price of sale or resale of the Shares;
(cc) (i) The execution, delivery and performance by the Company of the
Joint Venture Agreement with Elan Corporation PLC ("Elan") and Ebbisham Limited
and of all agreements to which the Company is a party as contemplated thereby
(the "Elan Agreements") and the Company's participation in the joint venture
contemplated by the Elan Agreements (the "Elan Joint Venture") (A) were duly
authorized and approved by all requisite actions of the Company, and (B) will
not constitute or give rise to a Conflict or Violation or require a Consent; and
(ii) The execution, delivery and performance by the Company of the
Research Collaboration and Option Agreement (the "Lilly Agreement") with Eli
Lilly and Company ("Lilly") (C) were duly authorized and approved by all
requisite actions of the Company, and (D) will not constitute or give rise to a
Conflict or Violation or require a Consent;
(dd) The Company has not violated any Federal, state or local law relating
to discrimination in the hiring, promotion or pay of employees nor any
applicable wage or hour laws, nor any provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") or the rules and regulations promulgated
thereunder. There is (A) no significant unfair labor practice complaint pending
against the Company or threatened against it before the National Labor Relations
Board or any state or local labor relations board, and no significant grievance
or significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or threatened against it,
(B) no labor dispute in which the Company is involved nor is any labor dispute
imminent, other than routine disciplinary and grievance matters, and (C) no
union representation question existing with respect to the employees of the
Company and no union organizing activities are taking place, except (with
respect to any matter specified in clause (A), (B) or (C) above, singly or in
the aggregate) such as would not have a material adverse effect on the Company;
and
(ee) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to the Underwriters, and the Underwriters agree to
purchase from the Company, the Firm Shares at a purchase price per share of
$17.91 and (b) in the event and to the extent that the Underwriters shall
exercise the election to purchase Optional Shares as provided below, the Company
agrees to issue and sell to the Underwriters, and the Underwriters agree to
purchase from the Company, at the purchase price per share set forth in clause
(a) of this Section 2, that number of Optional Shares as to which such election
shall have been exercised (to be adjusted by the Underwriters so as to eliminate
fractional shares).
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The Company hereby grants to the Underwriters the right to purchase
at their election up to 150,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised once only by written notice from the
Underwriters to the Company, given within a period of 30 calendar days after the
date of this Agreement, setting forth the aggregate number of Optional Shares to
be purchased and the date on which such Optional Shares are to be delivered, as
determined by the Underwriters but in no event earlier than the First Time of
Delivery (as defined in Section 4 hereof) or, unless the Underwriters and the
Company otherwise agree in writing, earlier than two or later than ten business
days after the date of such notice.
3. Upon the authorization by the Underwriters of the release of the Firm
Shares, the Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus as amended or supplemented.
4. (a) The Shares to be purchased by the Underwriters hereunder, in
definitive form, and in such authorized denominations and registered in such
names as the Underwriters may request upon at least forty-eight hours' prior
notice to the Company shall be delivered by or on behalf of the Company to the
Underwriters, through the facilities of the Depository Trust Company ("DTC"),
for the account of the Underwriters, against payment by or on behalf of the
Underwriters of the purchase price therefor by wire transfer of immediately
available funds. The Company will cause the certificates representing the Shares
to be made available for checking and packaging at least twenty-four hours prior
to the Time of Delivery (as defined below) with respect thereto at the office of
DTC or its designated custodian (the "Designated Office"). The time and date of
such delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m.,
New York City time, on July 24, 1997 or such other time and date as the
Underwriters and the Company may agree upon in writing, and, with respect to the
Optional Shares, 9:30 a.m., New York time, on the date specified by the
Underwriters in the written notice given by the Underwriters of their election
to purchase such Optional Shares, or such other time and date as the
Underwriters and the Company may agree upon in writing. Such time and date for
delivery of the Firm Shares is herein called the "First Time of Delivery", such
time and date for delivery of the Optional Shares, if not the First Time of
Delivery, is herein called the "Second Time of Delivery", and each such time and
date for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipts
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 7(k) hereof, will be delivered at the offices of McDermott,
Will & Emery, 50 Rockefeller Plaza, New York, New york 10020 (the "Closing
Location"), and the Shares will be delivered at the Designated Office, all at
appropriate Times of Delivery. A meeting will be held at the Closing Location at
3:00 p.m., New York City time, on the New York Business Day next preceding each
Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Company agrees with the Underwriters:
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<PAGE>
(a) To prepare the Prospectus as amended or supplemented in relation to
the Shares in a form approved by the Underwriters and to file such Prospectus
pursuant to Rule 424(b) under the Act not later than the Commission's close of
business on the second business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required by Rule
424(b) under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus relating to the Shares prior to the last
Time of Delivery which shall be disapproved by the Underwriters promptly after
reasonable notice thereof; to advise the Underwriters, promptly of any such
amendment or supplement after any Time of Delivery and to furnish the
Underwriters with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a Prospectus is required in
connection with the offering or sale of the Shares; to advise the Underwriters,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed with the Commission, of
the issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or suspending any
such qualification, promptly to use its best efforts to obtain the withdrawal of
such order;
(b) Promptly from time to time to take such action as the Underwriters may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as the Underwriters may reasonably request
and to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Shares, provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction or to take any other
action which would subject it to the service of process in suits or taxation,
other than as to matters and transactions relating to the offer and sale of the
Shares in each jurisdiction in which the Shares have been qualified as provided
above;
(c) Prior to 12:00 noon, New York City time, on the New York Business Day
next succeeding the date of this Agreement, to furnish the Underwriters with
copies of the Prospectus as amended or supplemented in New York City in such
quantities as the Underwriters may reasonably request, and, if the delivery of a
prospectus is required at any time in connection with the offering or sale of
the Shares and if at such time any event shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act or
the Exchange Act, to notify the Underwriters and upon the Underwriters' request
to file such document and to prepare and furnish without charge to the
Underwriters and to any dealer in securities as many copies as the Underwriters
may from time to time reasonably request of an amended Prospectus
10
<PAGE>
or a supplement to the Prospectus which will correct such statement or omission
or effect such compliance;
(d) If the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 p.m., Washington, D.C. time, on the date of this Agreement, and
the Company shall at the time of filing either pay to the Commission the filing
fee for the Rule 462(b) Registration Statement or give irrevocable instructions
for the payment of such fee pursuant to Rule 111(b) under the Act;
(e) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations thereunder (including, at
the option of the Company, Rule 158);
(f) During the period beginning from the date hereof and continuing to and
including the date that is 90 days thereafter, not to offer, sell, contract to
sell or otherwise dispose of, except as provided hereunder, any securities of
the Company that are substantially similar to the Shares, including but not
limited to any securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially similar
securities (other than pursuant to employee benefit plans existing on, or upon
the exercise, conversion or exchange of warrants or other convertible or
exchangeable securities outstanding as of, the date of this Agreement), without
the prior written consent of the Underwriters;
(g) To furnish to its stockholders as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and to furnish to any
stockholder who so requests, 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 date of this Agreement), consolidated summary financial
information of the Company for such quarter in reasonable detail;
(h) During a period of five years from the date of this Agreement, to
furnish to the Underwriters copies of all reports or other communications
(financial or other) furnished to stockholders, and to deliver to the
Underwriters (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company is listed
(such financial statements to be on a consolidated basis to the extent the
accounts of the Company are consolidated in reports furnished to its
stockholders generally or to the Commission); and (ii) such additional
information as the Underwriters may from time to time reasonably request
concerning the business and financial condition of the Company (A) that is
available without undue expense, and (B) that is available to the public without
confidentiality restrictions;
(i) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus as amended
or supplemented under the caption "Use of Proceeds";
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(j) To use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National Market
System ("NASDAQ"); and
(k) To deliver agreements, in form satisfactory to the Underwriters, of
all directors and executive officers of the Company providing that each of such
persons will not offer, sell, contract to sell, grant any option to purchase,
make any short sale or otherwise dispose of any shares of the Stock of the
Company during the period beginning from the date hereof and continuing to and
including the date 90 days thereafter without the prior written consent of the
Underwriters.
6. The Company covenants and agrees with the Underwriters that the Company
will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses of the Company
in connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing, this
Agreement, any Blue Sky Memorandum, closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Shares; (iii) all expenses in connection with
the qualification of the Shares for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky survey; (iv) all fees and expenses in connection
with listing the Shares on the NASDAQ; (v) the filing fees incident to, and the
fees and disbursements of counsel for the Underwriters in connection with,
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Shares; (vi) the cost of preparing
certificates for the Shares; (vii) the cost and charges of any transfer agent or
registrar; and (viii) all other costs and expenses incident to the performance
of its obligations hereunder which are not otherwise specifically provided for
in this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 10 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, stock transfer
taxes on resale of any of the Shares by them, and any advertising expenses
connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to the Underwriters'
reasonable satisfaction;
12
<PAGE>
(b) McDermott, Will & Emery, counsel for the Underwriters, shall
have furnished to the Underwriters such opinion or opinions (substantially in
the form attached as Annex II(a) hereto), dated such Time of Delivery, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Paul, Weiss, Rifkind, Wharton & Garrison, counsel for the
Company, shall have furnished to the Underwriters their written opinion (in the
form attached as Annex II(b) hereto), dated such Time of Delivery, in form and
substance satisfactory to the Underwriters.
(d) On the date hereof, but at a time prior to the execution of this
Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and at each Time of Delivery, Coopers & Lybrand L.L.P.
shall have furnished to the Underwriters a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to the
Underwriters, to the effect set forth in Annex I hereto, and with respect to
such letter dated the Effective Date of any post-effective amendment to the
Registration Statement and at each Time of Delivery, as to such other matters as
the Underwriters may reasonably request, and in form and substance satisfactory
to the Underwriters (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex I(a) hereto and a draft of the
form of letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);
(e)(i)The Company shall not have sustained since the date of the
latest audited financial statements included or incorporated by reference in the
Prospectus as amended or supplemented any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus as
amended or supplemented, and (ii) since the respective dates as of which
information is given in the Prospectus as amended or supplemented there shall
not have been any material change in the capital stock of the Company (including
the issuance of any Options other than Options pursuant to the Company's
employee stock purchase plan) or any material change that resulted in, or any
development that would result in, a Material Adverse Effect, otherwise than as
set forth or contemplated in the Prospectus as amended or supplemented, the
effect of which, in any such case described in Clause (i) or (ii), is in the
judgment of the Underwriters so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus as amended or supplemented;
(f) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on NASDAQ; (ii) a suspension or
material limitation in trading in the Company's securities on NASDAQ; (iii) a
general moratorium on commercial banking activities declared by either Federal
or New York State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in this
Clause (iv) in the judgment of the Underwriters makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus as amended or supplemented;
13
<PAGE>
(g) The Shares to be sold at such Time of Delivery shall have been
duly listed for quotation on NASDAQ;
(h) The Company shall have obtained and delivered to the
Underwriters executed copies of an agreement from each executive officer and
director of the Company, substantially to the effect set forth in Subsection
5(k) hereof in form and substance satisfactory to the Underwriters;
(i) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement;
(j) Darby & Darby, P.C., outside intellectual property counsel to
the Company, shall have furnished to the Underwriters such opinion or opinions
(in the form attached as Annex II(c) hereto), dated such Time of Delivery, with
respect to the matters covered in paragraph 1(r) above as well as such other
related matters as the Underwriters may reasonably request, and such counsel
shall have received such papers and information as they may reasonably request
to enable them to pass upon such matters;
(k) The Company shall have furnished or caused to be furnished to
the Underwriters at such Time of Delivery certificates of officers of the
Company reasonably satisfactory to the Underwriters as to the accuracy of the
representations and warranties of the Company herein at and as of such Time of
Delivery, as to the performance by the Company of all of its obligations
hereunder to be performed at or prior to such Time of Delivery, as to the
matters set forth in subsections (a) and (e) of this Section and as to such
other matters as the Underwriters may reasonably request.
8. (a) The Company will indemnify and hold harmless the Underwriters
against any losses, claims, damages or liabilities, joint or several, to which
the Underwriters may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, as amended or supplemented, any other prospectus
relating to the Shares 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, and will reimburse the Underwriters for any legal or other
expenses reasonably incurred by the Underwriters in connection with
investigating or defending any such action or claim as such expenses are
incurred upon the indemnified party undertaking to return such expenses in the
event that it is determined by a final judgment of a court of competent
jurisdiction no longer subject to appeal or review that the indemnified party is
not entitled to indemnification hereby; PROVIDED, HOWEVER, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus as amended or
supplemented, any other prospectus relating to the Shares or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company by the Underwriters expressly for use in the
Prospectus.
14
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(b) The Underwriters will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, as amended
or supplemented, any other prospectus relating to the Shares 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 any Preliminary
Prospectus, the Registration Statement or the Prospectus as amended or
supplemented, any other prospectus relating to the Shares or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company by the Underwriters expressly for use in the
Prospectus; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsections. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party. If an indemnifying party has agreed to
assume the defense of any claim against an indemnified party, the indemnified
party shall provide the indemnifying party with prior written notice of any
proposed settlement and shall not complete such settlement without the prior
consent of the indemnifying party; PROVIDED, HOWEVER, that, as a condition to
the withholding of any such consent by the indemnifying party, the indemnifying
party must irrevocably agree to indemnify the indemnified party in respect of
such underlying claim and the indemnified party must be satisfied that the
indemnifying party has the resources with which to satisfy any such claim.
15
<PAGE>
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Shares sold under this Agreement (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters with respect to the
Shares purchased under this Agreement, in each case as set forth in the table on
the cover page of the Prospectus as amended or supplemented. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this subsection (d) were
determined by PRO RATA allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), the
Underwriters shall not be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by them and
distributed to the public were offered to the public exceeds the amount of any
damages which the Underwriters have otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Underwriters within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
9. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Underwriters, as set forth in this
Agreement or made by or
16
<PAGE>
on behalf of them, respectively, pursuant to this Agreement, shall remain in
full force and effect, regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of the Underwriters or any controlling
person of the Underwriters, or the Company, or any officer or director or
controlling person of the Company, and shall survive delivery of and payment for
the Shares.
10. If for any reason other than a failure by the Underwriters, through no
fault of the Company, to purchase the Shares from the Company hereunder, any
Shares are not delivered by or on behalf of the Company as provided herein, the
Company will reimburse the Underwriters for all out-of-pocket expenses,
including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Shares not so delivered, but the Company shall then be under no further
liability to the Underwriters except as provided in Sections 6 and 8 hereof.
11. All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to Goldman, Sachs & Co., 85 Broad Street, New York, New
York 10004, Attention: Registration Department; and if to the Company shall be
delivered or sent by mail to the address of the Company set forth in the
Registration Statement, Attention: Secretary. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
12. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Sections 8 and
9 hereof, the officers and directors of the Company and each person who controls
the Company or the Underwriters, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from the Underwriters shall be deemed a successor or assign by reason
merely of such purchase.
13. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
17
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If the foregoing is in accordance with your understanding, please sign and
return to us four counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between the Underwriters and the Company.
Very truly yours,
EMISPHERE TECHNOLOGIES, INC.
By: /s/ Sam J. Milstein
------------------------------
Name: Sam J. Milstein
Title: President
Accepted as of the date hereof:
Goldman, Sachs & Co.
By: /s/ Goldman, Sachs & Co.
------------------------------
(Goldman, Sachs & Co.)
<PAGE>
Annex I(a)
Form of Comfort Letter
July , 1997
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Dear Sirs and Mesdames:
We have audited the balance sheets of (the "Company") as of (date) and (date),
and the statements of operations, stockholders' equity and cash flows for each
of the three years in the period ended (date) and the related financial
statement schedule, all included in the Company's annual report on Form 10-K for
the year ended (date) and incorporated by reference in the registration
statement (No. xxx-xxxxx) on Form S-3 filed by the Company under the Securities
Act of 1933 (the "Act"); our report with respect thereto is also incorporated by
reference in the registration statement. This registration statement, as amended
on (date) and as supplemented by the prospectus supplement dated (date) for the
offer of one million shares of the Company's common stock, is referred to herein
as the "Registration Statement".
In connection with the Registration Statement:
1. We are independent certified public accountants with respect to the
Company within the meaning of the Act and the applicable published rules
and regulations thereunder.
2. In our opinion, the financial statements and the related financial
statement schedule of the Company audited by us and incorporated by
reference in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Securities Exchange Act of 1934 (the "Exchange Act") and the related
published rules and regulations.
3. We have not audited any financial statements of the Company as of any date
or for any period subsequent to (date) although we have conducted an audit
for the year ended (date) the purpose (and therefore the scope) of the
audit was to enable us to express our opinion on the financial statements
as of (date) and
<PAGE>
Goldman, Sachs & Co.
Page 2
for the year then ended, but not on the financial statements for any
interim period within that year. Therefore, we are unable to and do not
express any opinion on the unaudited interim condensed financial
statements included in Part 1, Item 1 of the Company's quarterly reports
on Form 10-Q, or as amended on Form 10-Q/A, for the quarters ended (date)
(the "date 10-Q"), (date) (the "date 10-Q") and (date) (the "date 10-Q")
(collectively the "Form 10-Qs") incorporated by reference in the
Registration Statement. In addition, we are unable to and do not express
any opinion on the Company's financial position, results of operations or
cash flows as of any date for any period subsequent to (date).
4. For purposes of this letter, we have read the minutes of the meetings of
the stockholders, Board of Directors of the Company and compensation
committee of the Board of Directors as set forth in the minute books at
(date); officials of the Company having advised us that the minutes of all
such meetings through that date were set forth therein. We have carried
out other procedures to (date), as follows (our work did not extend to the
period from (date) to (date) (inclusive):
With respect to the quarters and year-to-date periods ended (date),
(date) and (date), we have:
(i) Performed the procedures (completed on (date) with regards to
the (date) 10-Q and the (date) 10-Q and (date) with regards to
the (date) 10-Q) specified by the American Institute of
Certified Public Accountants for a review of interim financial
information as described in SAS No. 71, Interim Financial
Information, on the unaudited interim condensed financial
statements for these periods, described in paragraph 3.,
included in the Form 10-Qs and incorporated by reference in
the Registration Statement.
(ii) Inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether
the unaudited condensed financial statements referred to in
4.(i) comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act as it
applies to Form 10-Q and the related published rules and
regulations.
The foregoing procedures do not constitute an audit conducted in
accordance with generally accepted auditing standards. Also, they
would not necessarily reveal matters of significance with respect to
the comments in the following paragraph. Accordingly, we make no
representations regarding the sufficiency of the foregoing
procedures for your purposes.
<PAGE>
Goldman, Sachs & Co.
Page 3
5. Nothing came to our attention as a result of the foregoing procedures,
however, that caused us to believe that:
(i) Any material modifications should be made to the unaudited condensed
financial statements described in 3., incorporated by reference in
the Registration Statement, for them to be in conformity with
generally accepted accounting principles.
(ii) The unaudited condensed financial statements described in 3. do not
comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to Form
10-Q and the related published rules and regulations.
6. Company officials have advised us that no financial statements as of any
date or for any period subsequent to (date), are available; accordingly,
the procedures carried out by us with respect to changes in financial
statement items after (date) have been, of necessity, even more limited
than those with respect to the periods referred to in 4. We have inquired
of certain officials of the Company who have responsibility for financial
and accounting matters regarding whether there was any change at (date) in
the common stock as compared with amounts shown on the (date) unaudited
condensed balance sheet incorporated by reference in the Registration
Statement. On the basis of these inquiries and our reading of the minutes
as described in 4, we have been informed by officials of the Company that
there is an increase in outstanding shares of common stock of x. Such
increase is the result of the exercise of stock options (proceeds to the
Company totaled $xx).
7. For purposes of this letter, we have also read the items identified by you
on the attached copy of certain pages of the Registration Statement and
have performed the following procedures, which were applied as indicated
with respect to the letters explained below. In connection with these
items, we make no comment as to the Company's determination as to what
constitutes the appropriate presentations, disclosures, explanations or
causal relationships of such items. The "Offering" is defined as the sale
of one million shares of the Company's common stock at $x per share.
Letter Procedures and Findings
------ -----------------------
A. We compared the amounts to the corresponding amounts included
in the Company's audited financial statements, or unaudited
condensed financial statements incorporated by reference in
the Registration Statement, for the corresponding periods and
found them to be in agreement (after giving effect to
rounding, if applicable).
<PAGE>
Goldman, Sachs & Co.
Page 4
B. We compared the amounts to the corresponding amounts included
in or derived from the Company's accounting records (or
recomputed the amount, if applicable) and found them to be in
agreement (after giving effect to rounding, if applicable.)
C. We compared net tangible book value before the Offering, and
the related per share amount at (date) to corresponding
amounts shown on a schedule prepared by management and found
them to be in agreement (after giving effect to rounding). The
Company computed net tangible book value before the Offering
as total assets, less total liabilities, all as shown on the
Company's unaudited condensed balance sheet as of (date)
incorporated by reference in the Registration Statement. The
Company computed net tangible book value per share, before the
Offering, by dividing net tangible book value before the
Offering by common shares outstanding before the Offering as
shown in the (date) unaudited condensed balance sheet
incorporated by reference in the Registration Statement. We
recomputed the arithmetic accuracy of such schedule and found
it to be correct. However, we make no comment as to the
definition of tangible assets, net tangible book value, or net
tangible book value per share.
D. We compared the pro forma net tangible book value, after
giving effect to the Offering, and the related per share
amounts, including the increase attributable to new investors
and dilution to new investors, at (date) to corresponding
amounts shown on a schedule prepared by management and found
them to be in agreement (after giving effect to rounding). The
Company computed net tangible book value after the Offering as
total assets, less total liabilities, all as shown on the
Company's unaudited condensed balance sheet as of (date)
incorporated by reference in the Registration Statement,
increased by the net proceeds of the Offering of approximately
$ x million. The Company computed the per share pro forma net
tangible book value after the Offering by dividing net
tangible book value after the Offering by common shares
outstanding as shown in the (date) unaudited condensed balance
sheet, incorporated by reference in the Registration
Statement, increased by one million shares of common stock to
be issued in connection with the Offering. We recomputed the
arithmetic accuracy of such schedule and found it to be
correct. However, we make no comment with respect to: (i) the
definition of tangible assets, net tangible book value or net
tangible book value per share;
<PAGE>
Goldman, Sachs & Co.
Page 5
(ii) the number of shares to be sold, the assumed public
offering price per share or the assumed net proceeds to the
Company; and (iii) the reasonableness of the "Use of Proceeds"
or whether such will actually take place.
E. We compared the adjusted pro forma net tangible book value per
share, after giving effect to the Offering and the exercise of
all outstanding options and warrants, including dilution to
new investors, at (date) to corresponding amounts shown on a
schedule prepared by management and found them to be in
agreement (after giving effect to rounding). The Company
computed the adjusted pro forma net tangible book value after
the Offering as total assets, less total liabilities, all as
shown on the Company's unaudited condensed balance sheet as of
(date) incorporated by reference in the Registration
Statement, increased by the net proceeds of approximately $xx
million from: (i) the Offering; and (ii) the exercise of all
outstanding options and warrants. The Company computed the per
share adjusted pro forma net tangible book value by dividing
adjusted pro forma net tangible book value after the Offering
by common shares outstanding as shown in the (date) unaudited
condensed balance sheet, incorporated by reference in the
Registration Statement, increased by one million shares of
common stock to be issued in connection with the Offering, and
approximately x million shares to be issued in connection with
the exercise of outstanding options and warrants. We
recomputed the arithmetic accuracy of such schedule and found
it to be correct. However, we make no comment with respect to:
(i) the definition of tangible assets, net tangible book value
or net tangible book value per share; (ii) the number of
shares to be sold, the assumed public offering price per share
or the assumed net proceeds to the Company; (iii) the exercise
of outstanding options and warrants; and (iv) the
reasonableness of the "Use of Proceeds" or whether such will
actually take place.
F. We compared the amounts and number of shares listed under the
caption " (date) As Adjusted" ("As Adjusted Amounts") to
corresponding amounts shown on a schedule prepared by
management and found such amounts to be in agreement (after
giving effect to rounding.) The Company computed the As
Adjusted Amounts by increasing stockholders' equity and the
respective components of stockholders' equity, all as shown on
the Company's unaudited condensed balance sheet as of (date)
incorporated by reference in the Registration Statement, for
the
<PAGE>
Goldman, Sachs & Co.
Page 6
issuance of one million shares of common stock and the assumed
net proceeds to the Company of approximately $x million. We
recomputed the arithmetic accuracy of such schedule and found
it to be correct. However, we make no comment with respect to
the number of shares to be sold, the assumed public offering
price per share or the assumed net proceeds to the Company,
nor do we comment with respect to the reasonableness of the
"Use of Proceeds" or whether such will actually take place.
8. Our audits of the financial statements and related financial statement
schedule for the periods referred to in the introductory paragraph of this
letter comprised audit tests and procedures deemed necessary for the
purpose of expressing an opinion on such financial statements taken as a
whole. For none of the periods referred to therein, or any other period,
did we perform audit tests for the purpose of expressing an opinion on
individual balances of accounts (percentages, ratios) or summaries of
selected transactions such as those items marked on the attached copies of
pages of the Registration Statement and, accordingly, we express no
opinion thereon.
9. It should be understood that we make no representations regarding
questions of legal interpretation or regarding the sufficiency for your
purposes of the procedures enumerated in paragraph 7; also, such
procedures would not necessarily reveal any material misstatement of the
amounts listed above. Further, we have addressed ourselves solely to the
foregoing data as set forth or incorporated by reference in the
Registration Statement and make no representations regarding the adequacy
of disclosure or regarding whether any material facts have been omitted.
10. This letter is solely for the information of the addressees and to assist
the underwriters in conducting and documenting their investigation of the
affairs of the Company in connection with the offering of the securities
covered by the Registration Statement, and it is not to be used,
circulated, quoted or otherwise referred to within or without the
underwriting group for any other purpose, including, but not limited to,
the registration, purchase, or sale of securities, nor is it to be filed
with or referred to in whole or in part in the Registration Statement or
any other document, except that reference may be made to it in the
underwriting agreement or in any list of closing documents pertaining to
the offering of the securities covered by the Registration Statement.
Very truly yours,
<PAGE>
Annex I(b)
Form of Bring-Down
Comfort Letter
The Bring-Down Comfort Letter shall be substantially in the form of Annex
I(a) to the Underwriting Agreement with the following additions.
Insert the following text as paragraph 4.b.
b. With respect to the period from May 1, 1997 to May 31, 1997, we
have;
(i) Read the unaudited condensed financial information of the
Company for May of each of 1996 and 1997 furnished to us by
the Company, officials of the Company having advised us that
no such information as of any date or for any period
subsequent to May 31, 1997 were available. The financial
information for May of 1996 and 1997 is incomplete in that it
omits the statements of cash flows and other disclosure.
(ii) Inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether
the unaudited condensed financial information referred to in
4.b.(i) are stated on a basis substantially consistent with
that of the audited financial statements incorporated by
reference in the Registration Statement.
Insert the following text as paragraph 5.b.
b. (i) At May 31, 1997 there was any change in common stock or
decrease in net current assets of the Company as compared with
amounts shown on the January 31, 1997 unaudited condensed
balance sheet incorporated by reference in the Registration
Statement, or (ii) for the period from May 1, 1997 to May 31,
1997, there was any decrease, as compared with the
corresponding period in the preceding year, in contract
revenue or an increase in total or per-share amounts of net
loss, except as discussed below. The unaudited condensed
financial
<PAGE>
information referred to in paragraph 4.b.(i), which were
furnished to us by the Company, showed the following changes,
decreases or increases:
January 31, May 31, Increase/
1997 1997 (Decrease)
---- ---- ----------
Common Stock $63,083,110 $__________ $__________
(includes paid-in capital)
Net Current Assets 16,578,467 $__________ $__________
One month One Month
Ended May Ended May Increase/
31, 1996 31, 1997 (Decrease)
Net Loss $__________ $__________ $__________
2
<PAGE>
Annex IIa - Form of McDermott, Will & Emery Opinion
July __, 1997
1. The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its business as
described in the Prospectus.
2. The issuance and sale of the Shares have been duly authorized by
the requisite corporate action on the part of the Company, and the Shares, when
issued and delivered to and paid for by the Underwriters in accordance with the
terms of the Under writing Agreement, will be validly issued, fully paid and
nonassessable; and the Shares conform to the description of the Common Stock of
the Company incorporated by reference to the Prospectus.
3. The Registration Statement, as of its effective date, and the
Prospectus, as of its date, each appeared on its face to be appropriately
responsive in all material respects to the requirements of the Securities Act
and the General Rules and Regulations thereunder, except that in each case we
express no opinion as to (a)(i) the financial statements, schedules and other
financial information included therein or excluded therefrom and (ii) the
material contract exhibits with respect to the Registration Statement and (b)
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus other than the description of the
common stock referred to in opinion (2) above and the description of the
"Underwriting" section referred to in opinion (5) below.
4. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
5. The statements in the Prospectus under the caption "Underwriting"
insofar as it relates to statements of law or legal conclusions and documents
referred to therein, fairly summarize the information called for with respect to
such legal matters, subject to the qualification that such summaries are
inherently incomplete descriptions of complex statutes, regulations and
documents.
<PAGE>
Annex II(b)
Form of Paul, Weiss
Opinion
1. The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and to conduct its business
as described in the Prospectus.
2. The Company has an authorized capitalization as set forth in the
Prospectus; to our knowledge, there are no Options outstanding on the date of
the Prospectus other than as set forth in the Prospectus; the description in the
Prospectus of such Options is accurate and fair; all of the issued shares of
Common Stock of the Company have been duly authorized by all requisite corporate
action on the part of the Company and are validly issued and are fully paid and
non-assessable; the Shares have been duly authorized by all requisite corporate
action on the part of the Company and, when issued and delivered upon payment
therefor in accordance with the terms of the Underwriting Agreement, will be
validly issued, fully paid and non-assessable; and the Shares conform to the
description of the Common Stock contained in the Prospectus.
3. Based solely on our review of certificates from public officials,
the Company has been duly qualified as a foreign corporation for the transaction
of business in, and is in good standing under the laws of, the State of New
York.
4. To our knowledge and except as described in the Prospectus, there
are no legal or governmental proceedings pending to which the Company is a party
or of which any property of the Company is the subject which, if determined
adversely to the Company, would reasonably be expected individually or in the
aggregate to have a Material Adverse Effect on the Company; and, to our
knowledge and except as described in the Prospectus, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
5. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
<PAGE>
6. The issuance and sale of the Shares and the compliance by the
Company with all of the provisions of the Underwriting Agreement and the
consummation of the transactions therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument set forth on Schedule B hereto (the
"Identified Agreements") to which the Company is a party or by which the Company
is bound or to which any of the property or assets of the Company is subject,
nor will such action result in any violation of the provisions of (A) the
Certificate of Incorporation or By-laws of the Company, (B) any Applicable Law
or (C) those court orders, decrees and judgments, if any, specifically
identified by the Company and set forth on Schedule C hereto, except where such
violation would not reasonably be expected to have a Material Adverse Effect.
For the purposes of this opinion, the term "Applicable Law" shall mean the
General Corporation Law of the State of Delaware (the "GCL") and those laws,
rules and regulations of the United States of America and the State of New York,
in each case which in our experience are normally applicable to the transactions
of the type contemplated by the Underwriting Agreement.
7. Based on our review of Applicable Law, but without having made
any investigation concerning any other laws, rules or regulations, no consent,
approval, authorization or order of, or filing, registration or qualification
with, any Governmental Authorities (the "Governmental Approvals"), which has not
been obtained, taken or made (other than pursuant to any state securities or
foreign securities laws, as to which we express no opinion), is required for the
performance by the Company of its obligations under the Underwriting Agreement.
This opinion relates only to Governmental Approvals required under Applicable
Law. For purposes of this opinion, the term "Governmental Authorities" means any
executive, legislative, judicial, administrative or regulatory body of the State
of New York, the United States of America or any similar body responsible for
the administration of the GCL.
8. To our knowledge, the Company is not in violation of its
Certificate of Incorporation or By-laws or in default in the performance or
observance of any Identified Agreement, which default would reasonably be
expected to have a Material Adverse Effect.
9. The statements in the Prospectus under the caption "Business
Collaboration Agreements" insofar as they purport to describe the provisions of
the laws and documents referred to therein are accurate and fair.
10. The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
<PAGE>
11. The documents incorporated by reference in the Prospectus
(except for the financial statements, financial statement schedules and other
financial data included therein or omitted therefrom, as to which we express no
opinion) when they became effective or were filed with the Commission, as the
case may be, complied as to form in all material respects with the requirements
of the Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as applicable, and the rules and regulations of the Commission
thereunder.
12. Each of the Registration Statement and the Prospectus (except
for the financial statements, financial statement schedules and other financial
data included therein or omitted therefrom, as to which we express no opinion)
comply as to form in all material respects to the requirements of the Securities
Act and the rules and regulations of the Commission thereunder.
13. The Elan Agreements and the Company's participation in the Elan
Joint Venture were duly authorized, executed and delivered by, and approved by
all requisite actions of, the Company and, to our knowledge, did not (i)
constitute or give rise to a default under any Identified Agreement, (ii)
constitute or give rise to a violation of the provisions of (A) the Certificate
of Incorporation or By-laws of the Company, (B) the GCL and those laws, rules
and regulations of the United States of America and the State of New York, in
each case which in our experience are applicable to the transactions of the type
contemplated by the Elan Agreement and the Elan Joint Venture ("Elan Applicable
Law"), or (C) those court orders, decrees and judgments, if any, specifically
identified by the Company and set forth on Schedule C hereto, except where such
violation would not reasonably be expected to result in a Material Adverse
Effect or (iii) require the consent, approval, authorization, order,
registration, qualification of or with any court or governmental agency or body
of the State of New York or the United States of America responsible for the
administration of Elan Applicable Law, or any similar body responsible for the
administration of the GCL, except for such consents, approvals, authorizations,
approvals, authorizations, orders, registrations or qualifications which have
been obtained or the failure of which to obtain would not reasonably be expected
to result in a Material Adverse Effect.
14. The Lilly Agreement was duly authorized, executed and delivered
by, and approved by all requisite actions of, the Company and, to our knowledge,
did not (i) constitute or give rise to a default under any Identified Agreement,
(ii) constitute or give rise to a violation of the provisions of (A) the
Certificate of Incorporation or By-laws of the Company, (B) the GCL and those
laws, rules and regulations of the United States of America and the State of New
<PAGE>
York, in each case which in our experience are applicable to the transactions of
the type contemplated by the Lilly Agreement ("Lilly Applicable Law"), or (C)
those court orders, decrees and judgments, if any, specifically identified by
the Company and set forth on Schedule C hereto, except where such violation
would not reasonably be expected to result in a Material Adverse Effect or (iii)
require the consent, approval, authorization, order, registration, qualification
of or with any court or governmental agency or body of the State of New York or
the United States of America responsible for the administration of Lilly
Applicable Law, or any similar body responsible for the administration of the
GCL, except for such consents, approvals, authorizations, approvals,
authorizations, orders, registrations or qualifications which have been obtained
or the failure of which to obtain would not reasonably be expected to result in
a Material Adverse Effect.
We have been orally advised by the Commission that the Registration
Statement has become effective under the Act and, to our knowledge, no stop
order suspending the effectiveness of the Registration Statement has been issued
and no proceedings therefor are pending or have been initiated or threatened by
the Commission.
We have participated in the preparation of the Registration
Statement and the Prospectus and are familiar with the documents incorporated by
reference therein, and although we have not undertaken to investigate or verify
independently, and do not assume responsibility for, the accuracy or
completeness of the statements contained therein (other than as explicitly
stated in paragraphs 2 and 9 above), based upon such participation (and relying,
as to materiality, to a large extent on officers and employees of the Company),
no facts have come to our attention to lead us to believe that, as of its
effective date, the Registration Statement (except for the financial statements,
financial statement schedules and other financial data appearing therein or
omitted therefrom, as to which we express no such belief) contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that, as of its date, the Prospectus (except for the financial statements,
financial statement schedules and other financial data appearing therein or
omitted therefrom, as to which we express no such belief) contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or that either the Registration Statement
or the Prospectus (other than the financial statements, financial statement
schedules and other financial data appearing therein or omitted therefrom, as to
which we express no such belief) contains an untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made not misleading. In
<PAGE>
addition, no facts have come to our attention that lead us to believe that any
of the documents incorporated by reference in the Prospectus (except for the
financial statements, financial statement schedules and other financial data
appearing therein or omitted therefrom, as to which we express no such belief),
when such documents became effective or were filed with the Commission, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such documents were
so filed, not misleading.
We do not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement or required to
be incorporated by reference into the Prospectus or required to be described in
the Registration Statement or the Prospectus which are not filed or incorporated
by reference or described as required.
In rendering our opinions set forth in paragraphs 6, 11 and 12, we
express no opinion as to any possible violation of Section 10(b) of the Exchange
Act or Rule 10b-5 promulgated thereunder or any securities disclosure law
similar in substance to Section 10(b) of the Exchange Act and Rule 10b-5
promulgated thereunder.
<PAGE>
Annex II(c)
Form of Darby & Darby Opinion
i) Insofar as the statements in the Registration Statement and
the Prospectus under the caption "Risk Factors - Dependence on Patents and
Proprietary Rights" and under the caption "Business - Patents" and the
statements in the Form 8-K dated July __, 1997, in the section entitled "Recent
Developments" at paragraphs 3 and 4 thereof, constitute summaries of matters of
intellectual property law, they are accurate statements or summaries of the
matters set forth therein;
ii) Based on the information available to us as patent counsel
for the Company, but without having conducted a formal investigation, no facts
have come to our attention that would form a basis for our believing that the
above described portions of the Registration Statement and the Prospectus
contain any untrue statement of a material fact with respect to the patent
portfolio of the Company, or omit to state any material fact relating to the
patent portfolio of the Company, which is necessary in order to make the
statements contained therein not misleading.
iii) Based on the information available to us as patent counsel
for the Company, we have no knowledge of any facts that would cause us to
believe that the Company lacks adequate intellectual property rights or licenses
to conduct the business that is proposed to be conducted in the United States by
the Company as described in the Prospectus and in the Registration Statement.
iv) Based on the information available to us as patent counsel
for the Company but without having conducted a formal investigation (a) no facts
have come to our attention that cause us to believe that any of the United
States patents identified in Schedule A (which are shown by the assignment
records of the United States and Trademark Office to be owned by the Company) is
unenforceable or invalid; and (b) we are not presently aware of any patent
claims of others that are or would be infringed by specific, current or
proposed, products or processes referred to in the Prospectus and in the
Registration Statement in such manner as to materially and aversely affect the
Company.
v) Based on the information available to us as patent counsel
for the Company, we have no knowledge of any pending or threatened action, suit,
proceeding or claim by others that the Company is infringing any patent which,
in our opinion, if adversely determined, could result in any material adverse
effect on the Company.
