<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 6, 2000
REGISTRATION NO. 333-31932
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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TEXAS BIOTECHNOLOGY CORPORATION
(Exact name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 13-3532643
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
</TABLE>
<TABLE>
<S> <C>
7000 FANNIN, 20TH FLOOR DAVID B. MCWILLIAMS
HOUSTON, TEXAS 77030 PRESIDENT AND CHIEF EXECUTIVE OFFICER
(713) 796-8822 7000 FANNIN, 20TH FLOOR
(Address, Including Zip Code, and HOUSTON, TEXAS 77030
Telephone Number, Including Area Code, (713) 796-8822
of Registrant's Principal Executive Offices) (Name, Address, Including Zip Code and
Telephone Number, Including Area Code,
of Agent for Service)
</TABLE>
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COPIES TO:
<TABLE>
<S> <C>
ROBERT G. REEDY, ESQ. JI HOON HONG, ESQ.
PORTER & HEDGES, LLP SHEARMAN & STERLING
700 LOUISIANA, 35TH FLOOR 599 LEXINGTON AVENUE
HOUSTON, TEXAS 77002 NEW YORK, NEW YORK 10022
TELEPHONE: (713) 226-0674 TELEPHONE: (212) 848-4000
TELECOPY: (713) 226-0274 TELECOPY: (212) 848-7179
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date hereof.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 2 to the Registration Statement on Form S-3 (File No.
333-31932) of Texas Biotechnology Corporation is filed solely to file copies of
the exhibits listed in Item 16 hereto.
3
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses, all of which will be
borne by us, in connection with the sale and distribution of the securities
being registered, other than the underwriting discounts and commissions. All
amounts shown are estimates except for the Securities and Exchange Commission
registration fee, the NASD filing fee and the American Stock Exchange listing
fee.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 32,779
NASD Fee.................................................... 12,916
American Stock Exchange Listing Fee......................... 17,500
Transfer agent and Registrar fees........................... 5,000
Accounting fees and expenses................................ 100,000
Legal fees and expenses..................................... 175,000
Printing and mailing expenses............................... 150,000
Miscellaneous............................................... 75,305
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Total............................................. $568,500
========
</TABLE>
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All expenses are estimated except for the SEC registration fee, the NASD
fee and the American Stock Exchange listing fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware, commonly referred
to as the DGCL, permits a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action.
In an action brought to obtain a judgment in the corporation's favor,
whether by the corporation itself or derivatively by a stockholder, the
corporation may only indemnify for expenses, including attorney's fees, actually
and reasonably incurred in connection with the defense or settlement of such
action, and the corporation may not indemnify for amounts paid in satisfaction
of a judgment or in settlement of the claim. In any such action, no
indemnification may be paid in respect of any claim, issue or matter as to which
such person shall have been adjudged liable to the corporation except as
otherwise approved by the Delaware Court of Chancery or the court in which the
claim was brought. In any other type of proceeding, the indemnification may
extend to judgments, fines and amounts paid in settlement, actually and
reasonably incurred in connection with such other proceeding, as well as to
expenses (including attorneys' fees).
The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation and, in the
case of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful. There are additional limitations applicable to
criminal actions and to actions brought by or in the name of the corporation.
The determination as to whether a person seeking indemnification has met the
required standard of conduct is to be made (i) by a majority vote of a quorum of
disinterested members of the board of directors, (ii) by independent legal
counsel in a written opinion, if such a quorum does not exist or if the
disinterested directors so direct, or (iii) by the stockholders.
II-1
<PAGE> 4
As permitted by the DGCL, our By-laws provide that it will indemnify the
directors, officers, employees and agents of ours against certain liabilities
that they may incur in their capacities as directors, officers, employees and
agents. Furthermore, our Certificate of Incorporation, as amended, indemnifies
the directors, officers, employees, and our agents to the maximum extent
permitted by the DGCL. We have also entered into indemnification agreements with
its officers and directors providing for indemnification to the maximum extent
permitted under the DGCL. We have director and officer liability insurance
policies that provide coverage of up to $10.0 million.
ITEM 16. EXHIBITS
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<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
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<C> <S>
1.1(1) -- Form of Underwriting Agreement
4.1 -- Article Fourth and Ninth of the Certificate of
Incorporation, as amended (Incorporated by reference to
Exhibit 3.1 to our Form 10 (File No. 0-20117) effective
June 26, 1992, as amended.)
4.2 -- Article Fourth of the Amendment to the Certificate of
Incorporation dated November 30, 1993 (Incorporated by
reference to Exhibit 3.4 our Form 10-Q (File No. 0-20117)
filed with the Commission on November 14, 1994.)
4.3 -- Article Fourth of the Amendment to the Certificate of
Incorporation dated May 20, 1994 (Incorporated by
reference to Exhibit 3.5 to our Form 10-Q (File No.
0-20117) filed with the Commission on November 14, 1994.)
4.4 -- Article Fourth of the Certificate of Amendment of
Certificate of Incorporation (Incorporated by reference
to Exhibit 3.6 to our Form 10-Q (File No. 1-12574) for
the quarter ended June 30, 1996.)
4.5 -- Article II of the Amended and Restated By-laws
(Incorporated by reference to Exhibit 3.7 our Form 10-Q
(File No. 1-12574) for the quarter ended September 30,
1996.)
5.1(2) -- Opinion of Porter & Hedges, L.L.P. with respect to
legality of the securities, including consent.
23.1(2) -- Consent of KPMG LLP
23.2(2) -- Consent of Porter & Hedges, L.L.P. (included in Exhibit
5)
23.3(2) -- Consent of Rockey, Milnamow & Katz, Ltd.
24.1(2) -- Power of Attorney (contained in signature page)
27.1(2) -- Financial Data Schedule
</TABLE>
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(1) Filed herewith.
(2) Previously filed.
ITEM 17. UNDERTAKINGS
Item 512(b) of Regulation S-K
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in this Registration Statement shall
be deemed to be a new registration statement relating to the securities offered
therein and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
Item 512(h) of Regulation S-K
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the indemnification provisions described herein, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and
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<PAGE> 5
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer of controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issues.
Item 512(i) of Regulation S-K
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act will be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston and State of Texas on the 6th day of
April, 2000.
TEXAS BIOTECHNOLOGY CORPORATION
By: /s/ DAVID B. MCWILLIAMS
----------------------------------
David B. McWilliams
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
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<CAPTION>
SIGNATURE TITLE DATE
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<C> <S> <C>
* Director, Chairman of the Board April 6, 2000
- ----------------------------------------------------- of Directors
John M. Pietruski
/s/ DAVID B. MCWILLIAMS Director, President and Chief April 6, 2000
- ----------------------------------------------------- Executive Officer (Principal
David B. McWilliams Executive Officer)
* Director, Vice President, April 6, 2000
- ----------------------------------------------------- Research
Richard A. F. Dixon, Ph.D.
/s/ STEPHEN L. MUELLER Vice President, Finance and April 6, 2000
- ----------------------------------------------------- Administration, Secretary and
Stephen L. Mueller Treasurer (Principal Financial
and Accounting Officer)
* Director April 6, 2000
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Frank C. Carlucci
* Director April 6, 2000
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James T. Willerson, M.D.
* Director April 6, 2000
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Robert J. Cruikshank
* Director April 6, 2000
- -----------------------------------------------------
Suzanne Oparil, M.D.
* Director April 6, 2000
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James A. Thomson, Ph.D.
* By: /s/ STEPHEN L. MUELLER April 6, 2000
-----------------------------------------------
Stephen L. Mueller
individually and as attorney in fact
</TABLE>
II-4
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
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<C> <S>
1.1(1) -- Form of Underwriting Agreement
4.1 -- Article Fourth and Ninth of the Certificate of
Incorporation, as amended (Incorporated by reference to
Exhibit 3.1 to our Form 10 (File No. 0-20117) effective
June 26, 1992, as amended.)
4.2 -- Article Fourth of the Amendment to the Certificate of
Incorporation dated November 30, 1993 (Incorporated by
reference to Exhibit 3.4 our Form 10-Q (File No. 0-20117)
filed with the Commission on November 14, 1994.)
4.3 -- Article Fourth of the Amendment to the Certificate of
Incorporation dated May 20, 1994 (Incorporated by
reference to Exhibit 3.5 to our Form 10-Q (File No.
0-20117) filed with the Commission on November 14, 1994.)
4.4 -- Article Fourth of the Certificate of Amendment of
Certificate of Incorporation (Incorporated by reference
to Exhibit 3.6 to our Form 10-Q (File No. 1-12574) for
the quarter ended June 30, 1996.)
4.5 -- Article II of the Amended and Restated By-laws
(Incorporated by reference to Exhibit 3.7 our Form 10-Q
(File No. 1-12574) for the quarter ended September 30,
1996.)
5.1(2) -- Opinion of Porter & Hedges, L.L.P. with respect to
legality of the securities, including consent.
23.1(2) -- Consent of KPMG LLP
23.2(2) -- Consent of Porter & Hedges, L.L.P. (included in Exhibit
5)
23.3(2) -- Consent of Rockey, Milnamow & Katz, Ltd.
24.1(2) -- Power of Attorney (contained in signature page)
27.1(2) -- Financial Data Schedule
</TABLE>
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(1) Filed herewith.
(2) Previously filed.
<PAGE> 1
EXHIBIT 1.1
5,000,000 Shares
TEXAS BIOTECHNOLOGY CORPORATION
Common Stock
UNDERWRITING AGREEMENT
April __, 2000
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
FIRST UNION SECURITIES, INC.
SANDERS MORRIS HARRIS
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
Texas Biotechnology Corporation, a Delaware corporation (the
"Company"), proposes to sell an aggregate of 5,000,000 shares (the "Firm
Shares") of the Company's Common Stock, $.005 par value per share (the "Common
Stock"), to you and to the other underwriters named in Schedule I (collectively,
the "Underwriters"), for whom you are acting as representatives (the
"Representatives"). The Company and the persons named in Schedule I (the
"Selling Shareholders") have also agreed to grant to you and the other
Underwriters an option (the "Option") to purchase up to an additional 750,000
shares of Common Stock (the "Option Shares") on the terms and for the purposes
set forth in Section 1(b). The Firm Shares and the Option Shares are hereinafter
collectively referred to as the "Shares."
The initial public offering price per share for the Shares and
the purchase price per share for the Shares to be paid by the several
Underwriters shall be agreed upon by the Company, the Selling Shareholders and
the Representatives, acting on behalf of the several Underwriters, and such
agreement shall be set forth in a separate written instrument substantially in
the form of Exhibit A hereto (the "Price Determination Agreement"). The Price
Determination Agreement may take the form of an exchange of any standard form of
written telecommunication among the Company, the Selling Shareholders and the
Representatives and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares will be governed by this Agreement,
as supplemented by the Price Determination Agreement. From and after the date of
the execution and delivery of the Price Determination Agreement, this Agreement
shall be deemed to
<PAGE> 2
2
incorporate, and, unless the context otherwise indicates, all references
contained herein to "this Agreement" and to the phrase "herein" shall be deemed
to include the Price Determination Agreement.
Each Selling Shareholder has executed and delivered a Custody
Agreement in the form attached hereto as Attachment A and a Power of Attorney in
the form attached hereto as Exhibit B (collectively, the "Agreement and Power of
Attorney") pursuant to which each Selling Shareholder has placed his or her
Option Shares in custody and appointed the persons designated therein as an
Attorney-in-Fact (as defined therein) with authority to execute and deliver this
Agreement on behalf of such Selling Shareholder and to take certain other
actions with respect thereto and hereto.
The Company and the Selling Shareholders confirms as follows its
agreements with the Representatives and the several other Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Company agrees to sell to each Underwriter
named below, and each Underwriter, severally and not jointly, agrees to purchase
from the Company at the purchase price per share for the Firm Shares to be
agreed upon by the Representatives and the Company in accordance with Section
1(c) or 1(d) hereof and set forth in the Price Determination Agreement, the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I, plus such additional number of Firm Shares which such Underwriter
may become obligated to purchase pursuant to Section 8 hereof. Schedule I may be
attached to the Price Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement,
the Company and the Selling Shareholders grant the Option to the several
Underwriters to purchase, severally and not jointly, up to 750,000 Option Shares
from the Company and the Selling Shareholders at the same price per share as the
Underwriters shall pay for the Firm Shares. The Option may be exercised only to
cover over-allotments in the sale of the Firm Shares by the Underwriters and may
be exercised in whole or in part at any time (but not more than once) on or
before the 30th day after the date of this Agreement (or, if the Company has
elected to rely on Rule 430A, on or before the 30th day after the date of the
Price Determination Agreement), upon written or telegraphic notice (the "Option
Shares Notice") by the Representatives to the Company no later than 12:00 noon,
New York City time, at least two and no more than five business days before the
date specified for closing in the Option Shares Notice (the "Option Closing
Date") setting forth the aggregate number of Option Shares to be purchased and
the time and date for such purchase. On the Option Closing Date, the Company and
the Selling Shareholders will issue and sell to the Underwriters the number of
Option Shares set forth in the Option Shares Notice, and each Underwriter will
purchase such percentage of the Option
<PAGE> 3
3
Shares as is equal to the percentage of Firm Shares that such Underwriter is
purchasing, as adjusted by the Representatives in such manner as they deem
advisable to avoid fractional shares.
(c) The initial public offering price per share for the Firm
Shares and the purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be agreed upon and set forth in the Price
Determination Agreement, if the Company has elected to rely on Rule 430A. In the
event such price has not been agreed upon and the Price Determination Agreement
has not been executed by the close of business on the fourteenth business day
following the date on which the Registration Statement (as hereinafter defined)
becomes effective, this Agreement shall terminate forthwith, without liability
of any party to any other party except that Section 6 shall remain in effect.
(d) If the Company has elected not to rely on Rule 430A, the
initial public offering price per share for the Firm Shares and the purchase
price per share for the Firm Shares to be paid by the several Underwriters shall
be agreed upon and set forth in the Price Determination Agreement, which shall
be dated the date hereof, and an amendment to the Registration Statement
containing such per share price information shall be filed before the
Registration Statement becomes effective.
2. Delivery and Payment. Delivery of the Firm Shares shall be
made to the Representatives for the accounts of the Underwriters, credit to the
account of the Company with the Depository Trust Company, against payment of the
purchase price by wire transfer of Federal Funds or similar same day funds to an
account designated in writing by the Company to PaineWebber Incorporated at
least one business day prior to the Closing Date (as hereinafter defined). Such
payment shall be made at 10:00 a.m., New York City time, on the third business
day (or fourth business day, if the Price Determination Agreement is executed
after 4:30 p.m.) after the date on which the first bona fide offering of the
Shares to the public is made by the Underwriters or at such time on such other
date, not later than ten business days after such date, as may be agreed upon by
the Company and the Representatives (such date is hereinafter referred to as the
"Closing Date").
To the extent the Option is exercised, delivery of the Option
Shares against payment by the Underwriters (in the manner specified above) will
take place at the offices specified above for the Closing Date at the time and
date (which may be the Closing Date) specified in the Option Shares Notice.
The cost of original issue tax stamps, if any, in connection with
the issuance and delivery of the Firm Shares and Option Shares by the Company
shall be borne by the Company. The cost of tax stamps, if any, in connection
with the sale of the Option Shares by Selling Shareholders shall be borne by the
Selling Shareholders. The Company will pay and save each Underwriter and any
subsequent holder of the Firm Shares and Option Shares harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
Federal and state stamp and other transfer taxes, if any, which may be payable
or determined to be payable in connection with the original issuance or sale to
such Underwriter of the Firm and Option Shares. The Selling
<PAGE> 4
4
Shareholders will pay and save each Underwriter and any subsequent holder of the
Option Shares harmless from any and all liabilities with respect to or resulting
from any failure or delay in paying Federal and state stamp and other transfer
taxes, if any, which may be payable or determined to be payable in connection
with the sale to such Underwriter of the Option Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. 333-31932) on Form S-3 relating to the
Shares, including a preliminary prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company under the provisions of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (collectively
referred to as the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. The term "preliminary prospectus" as used herein means a preliminary
prospectus as contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules
and Regulations included at any time as part of the registration statement.
Copies of such registration statement and amendments and of each related
preliminary prospectus have been delivered to the Representatives. The term
"Registration Statement" means the registration statement as amended at the time
it becomes or became effective (the "Effective Date"), including financial
statements and all exhibits and any information deemed to be included by Rule
430A or Rule 434 of the Rules and Regulations. If the Company files a
registration statement to register additional shares of Common Stock and relies
on Rule 462(b) of the Rules and Regulations for such registration statement to
become effective upon filing with the Commission (the "Rule 462 Registration
Statement"), then any reference to the "Registration Statement" shall be deemed
to include the Rule 462 Registration Statement, as amended from time to time.
The term "Prospectus" means the prospectus as first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or, if no such filing is
required, the form of final prospectus included in the Registration Statement at
the Effective Date. Any reference herein to the Registration Statement, 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
which were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the Effective Date or the date of such preliminary
prospectus or the Prospectus, as the case may be. Any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to refer
to and include the filing of any document under the Exchange Act after the
Effective Date, or the date of any preliminary prospectus or the Prospectus, as
the case may be, and deemed to be incorporated therein by reference.
(b) On the Effective Date, the date the Prospectus is first filed
with the Commission pursuant to Rule 424(b) (if required), at all times
subsequent to and including the Closing Date and, if later, the Option Closing
Date and when any post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed
<PAGE> 5
5
with the Commission, the Registration Statement and the Prospectus (as amended
or as supplemented if the Company shall have filed with the Commission any
amendment or supplement thereto), including the financial statements included or
incorporated by reference in the Prospectus, did or will comply in all material
respects with the applicable provisions of the Act, the Exchange Act, the rules
and regulations thereunder (the "Exchange Act Rules and Regulations") and the
Rules and Regulations and will contain all statements required to be stated
therein in accordance with the Act, the Exchange Act, the Exchange Act Rules and
Regulations and the Rules and Regulations. On the Effective Date and when any
post-effective amendment to the Registration Statement becomes effective, no
part of the Registration Statement or any such amendment did or will contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading. At the Effective Date, the date the Prospectus or any amendment or
supplement to the Prospectus is filed with the Commission and at the Closing
Date and, if later, the Option Closing Date, the Prospectus did not or will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The foregoing representations and
warranties in this Section 3(b) do not apply to any statements or omissions made
in reliance on and in conformity with information relating to any Underwriter
furnished in writing to the Company by the Representatives specifically for
inclusion in the Registration Statement or Prospectus or any amendment or
supplement thereto. The Company has not distributed any offering material in
connection with the offering or sale of the Shares other than the Registration
Statement, the preliminary prospectus, the Prospectus or any other materials, if
any, permitted by the Act.
(c) The documents which are incorporated by reference in the
preliminary prospectus and the Prospectus or from which information is so
incorporated by reference, when they become effective or were filed with the
Commission, as the case may be, complied in all material respects with the
requirements of the Act or the Exchange Act, as applicable, the Exchange Act
Rules and Regulations and the Rules and Regulations; and any documents so filed
and incorporated by reference subsequent to the Effective Date shall, when they
are filed with the Commission, conform in all material respects with the
requirements of the Act and the Exchange Act, as applicable, the Exchange Act
Rules and Regulations and the Rules and Regulations.
(d) The only Subsidiary (as defined in the Rules and Regulations)
of the Company is the Subsidiary listed on Exhibit 21 to the Registration
Statement (the "Subsidiary"). The Company and its Subsidiary are, and at the
Closing Date will be, corporations duly organized, validly existing and in good
standing under the laws of their jurisdiction of incorporation. The Company and
its Subsidiary have, and at the Closing Date will have, full power and authority
to conduct all the activities conducted by it, to own or lease all the assets
owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus. The Company and its Subsidiary are,
and at the Closing Date will be, duly licensed or qualified to do business and
in good standing as a foreign corporation in all jurisdictions in which the
nature of the activities conducted by it or the character of the assets owned or
leased by it makes such licensing or qualification
<PAGE> 6
6
necessary. All of the outstanding shares of capital stock of the Subsidiary have
been duly authorized and validly issued and are fully paid and non-assessable
and are owned by the Company free and clear of all liens, encumbrances and
claims whatsoever. Except for the stock of the Subsidiary and as disclosed in
the Registration Statement, the Company does not own, and at the Closing Date
will not own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity. Complete and
correct copies of the certificate of incorporation and of the by-laws of the
Company and its Subsidiary and all amendments thereto have been delivered to the
Representatives, and no changes therein will be made subsequent to the date
hereof and prior to the Closing Date or, if later, the Option Closing Date.
(e) The outstanding shares of Common Stock have been, and the
Shares to be issued and sold by the Company upon such issuance will be, duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to any preemptive or similar right. The description of the Common Stock in the
Registration Statement and the Prospectus is, and at the Closing Date will be,
complete and accurate in all respects. Except as set forth in the Prospectus,
the Company does not have outstanding, and at the Closing Date will not have
outstanding, any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of Common Stock, any shares of capital
stock of any Subsidiary or any such warrants, convertible securities or
obligations.
(f) The financial statements and schedules included or
incorporated by reference in the Registration Statement or the Prospectus
present fairly the consolidated financial condition of the Company as of the
respective dates thereof and the consolidated results of operations and cash
flows of the Company for the respective periods covered thereby, and have been
prepared in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the entire period involved, except as
otherwise disclosed in the Prospectus. No other financial statements or
schedules of the Company are required by the Act, the Exchange Act or the Rules
and Regulations to be included in the Registration Statement or the Prospectus.
KPMG LLP (the "Accountants") who have reported on such financial statements and
schedules, are independent accountants with respect to the Company as required
by the Act and the Rules and Regulations. The statements included in the
Registration Statement with respect to the Accountants pursuant to Rule 509 of
Regulation S-K of the Rules and Regulations are true and correct in all material
respects.
(g) The Company maintains a system of internal accountings
control sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
<PAGE> 7
7
(h) Neither the Company nor its Subsidiary has sustained, since
the date of the latest audited financial statements included or incorporated by
reference in the Prospectus, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus; and,
since such date, there has not been any change in the capital stock or long-term
debt of the Company or its Subsidiary or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity or results
of operations of the Company and its Subsidiary, and, since such date, the
Company has not entered into any material transactions or paid or declared any
dividends or other distributions of any kind on any class of its capital stock,
other than as set forth or contemplated in the Prospectus.
(i) Neither the Company nor its Subsidiary is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
(j) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or threatened
against or affecting the Company or its Subsidiary or any of their respective
officers in their capacity as such, before or by any Federal or state court,
commission, regulatory body, administrative agency or other governmental body,
domestic or foreign, wherein an unfavorable ruling, decision or finding might
materially and adversely affect the Company or its Subsidiary or its business,
properties, business prospects, condition (financial or otherwise) or results of
operations.
(k) The Company and its Subsidiary have, and at the Closing Date
will have, (i) all governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to carry on their business as contemplated in
the Prospectus, (ii) complied in all material respects with all laws,
regulations and orders applicable to them or their business and (iii) performed
all their obligations required to be performed by them, and are not, and at the
Closing Date will not be, in default, under any indenture, mortgage, deed of
trust, voting trust agreement, loan agreement, bond, debenture, note agreement,
lease, contract or other agreement or instrument (collectively, a "contract or
other agreement") to which they are a party or by which their property is bound
or affected. To the best knowledge of the Company and its Subsidiary, no other
party under any contract or other agreement to which they are a party is in
default in any respect thereunder. Neither the Company nor its Subsidiary are,
nor at the Closing Date will either of them be, in violation of any provision of
their certificate of incorporation or by-laws.
(l) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
in connection with the authorization, issuance, transfer, sale or delivery of
the Shares by the Company, in connection with the execution, delivery and
performance of this Agreement by the Company or in connection with the taking by
the Company of any action contemplated hereby, except such as have been obtained
under the Act or
<PAGE> 8
8
the Rules and Regulations and such as may be required under state securities or
Blue Sky laws or the by-laws and rules of the National Association of Securities
Dealers, Inc. (the "NASD") in connection with the purchase and distribution by
the Underwriters of the Shares.
(m) The Company has full corporate power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with the terms
hereof. The performance of this Agreement and the consummation of the
transactions contemplated hereby and the application of the net proceeds from
the offering and sale of the Shares in the manner set forth in the Prospectus
under "Use of Proceeds" will not result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets of the Company or its
Subsidiary pursuant to the terms or provisions of, or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or give any other party a right to terminate any of its obligations under, or
result in the acceleration of any obligation under, the certificate of
incorporation or by-laws of the Company or its Subsidiary, any contract or other
agreement to which the Company or its Subsidiary is a party or by which the
Company or any of its Subsidiary or any of its properties is bound or affected,
or violate or conflict with any judgment, ruling, decree, order, statute, rule
or regulation of any court or other governmental agency or body applicable to
the business or properties of the Company or its Subsidiary.
(n) The Company and its Subsidiary have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
its Subsidiary; and all real property and buildings held under lease by the
Company and its Subsidiary 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 and its Subsidiary.
(o) There is no document or contract of a character required to
be described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required. All such contracts to which the Company or its Subsidiary are parties
have been duly authorized, executed and delivered by the Company or such
Subsidiary, constitute valid and binding agreements of the Company or such
Subsidiary and are enforceable against the Company or such Subsidiary in
accordance with the terms thereof.
(p) No statement, representation, warranty or covenant made by
the Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representatives was or will be, when made,
inaccurate, untrue or incorrect.
<PAGE> 9
9
(q) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.
(r) Except to the extent expressly waived prior to the date
hereof, no holder of securities of the Company has rights to the registration of
any securities of the Company because of the filing of the Registration
Statement.
(s) The Common Stock of the Company is quoted on the American
Stock Exchange and the Shares are duly authorized for listing, subject to
official notice of issuance, on the American Stock Exchange.
(t) The Company and its Subsidiary are in compliance in all
material respects with all applicable federal, state and local employment and
labor laws, including, but not limited to, laws relating to non-discrimination
in hiring, promotion and pay of employees; no labor dispute with the employees
of the Company or its Subsidiary exists or, to the knowledge of the Company, is
imminent or threatened; and the Company is not aware of any existing, imminent
or threatened labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors that could result in a material adverse
effect on the condition (financial or otherwise) or on the earnings, business,
properties, business prospects or operations of the Company and its Subsidiary,
taken as a whole.
(u) Except as described in the Prospectus, the Company and its
Subsidiary own, or are licensed or otherwise have the full exclusive right to
use, the material patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
services marks and trade names (collectively, "patent and proprietary rights")
presently employed by them or which are necessary in connection with the conduct
of the business now operated by them, and neither the Company nor its Subsidiary
have received any written notice or otherwise has actual knowledge of any
infringement of or conflict with asserted rights of others or any other claims
with respect to any patent or proprietary rights, or of any basis for rendering
any patent and proprietary rights invalid or inadequate to protect the interest
of the Company or its Subsidiary.
(v) Neither the Company nor its Subsidiary nor, to the Company's
knowledge, any employee or agent of the Company or its Subsidiary have made any
payment of funds of the Company or its Subsidiary or received or retained any
funds in violation of any law, rule or regulation or of a character required to
be disclosed in the Prospectus.
(w) The Company has complied, and until the completion of the
distribution of the Shares will comply, with all of the provisions of
(including, without limitation, filing all forms
<PAGE> 10
10
required by) Section 517.075 of the Florida Securities and Investor Protection
Act and Regulation 3E-900.001 issued thereunder with respect to the offering and
sale of the Shares.
(x) The Company and its Subsidiary (i) are in compliance in all
material respects with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or imposing liability or standards of conduct concerning any
Hazardous Material (as hereinafter defined) ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate result in a material adverse effect on the
condition (financial or otherwise) or on the earnings, business, properties,
business prospects or operations of the Company and its Subsidiary, taken as a
whole. The term "Hazardous Material" means (A) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or contaminant
or hazardous, dangerous, or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law.
(y) In the ordinary course of its business, the Company conducts
a periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its Subsidiary, in the course of
which it identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties). Except as set forth in the Registration
Statement and the Prospectus there are no costs and liabilities associated with
or arising in connection with Environmental Laws as currently in effect
(including, without limitation, costs of compliance therewith) which would,
singly or in the aggregate have a material adverse effect on the condition
(financial or otherwise) or on the earnings, business, properties, business
prospects or operations of the Company and its Subsidiary, taken as a whole.
(z) Except as described in the Prospectus, the Company and it
Subsidiary maintain insurance with respect to their properties and business of
the types and in amounts generally deemed adequate for their business and
consistent with insurance coverage maintained by similar companies and
businesses, all of which insurance is in full force and effect.
(aa) The Company has filed all material federal, state and
foreign income and franchise tax returns and has paid all taxes shown as due
thereon, other than taxes which are being contested in good faith and for which
adequate reserves have been established in accordance with GAAP; and the Company
has no knowledge of any tax deficiency which has been or might be
<PAGE> 11
11
asserted or threatened against the Company and if determined adversely to the
Company or its Subsidiary would result in a material adverse effect on the
condition (financial or otherwise) or on the earnings, business, properties,
business prospects or operations of the Company and its Subsidiary, taken as a
whole. There are no tax returns of the Company or any of its Subsidiary that are
currently being audited by state, local or federal taxing authorities or
agencies (and with respect to which the Company or its Subsidiary has received
notice), where the findings of such audit, if adversely determined, would result
in a material adverse effect on the condition (financial or otherwise) or on the
earnings, business, properties, business prospects or operations of the Company
and its Subsidiary, taken as a whole.
(bb) With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained or contributed to by the Company, or with
respect to which the Company could incur any liability under ERISA
(collectively, the "Benefit Plans"), no event has occurred and, to the best
knowledge of the Company, there exists no condition or set of circumstances, in
connection with which the Company could be subject to any liability under the
terms of such Benefit Plan, applicable law (including, without limitation, ERISA
and the Internal Revenue Code of 1986, as amended) or any applicable agreement
that could materially adversely affect the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company and its Subsidiary, taken as a whole.
(cc) The Company has reviewed its operations and those of its
Subsidiary to evaluate the extent to which the business or operations of the
Company or its Subsidiary have been or will be affected by the Year 2000 Problem
(as defined below); as a result of such review, (A) the Company has identified
and resolved all Year 2000 problems, except where the failure to do so would not
have a Material Adverse Effect; and (B) the Company believes that the suppliers,
vendors, customers or other material third parties used or served by the Company
and its Subsidiary have adequately addressed the Year 2000 Problem, except to
the extent that a failure to do so would not have a Material Adverse Effect.
"Year 2000 Problem" means any significant risk that the Company's computer
hardware or software applications and those of its Subsidiary (or of any
suppliers, vendors, customers or other material third parties) will not, in the
case of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
4. Representations and Warranties of each of the Selling
Shareholders. Each Selling Shareholder, severally and not jointly, represents,
warrants and covenants to each Underwriter that:
(a) Such Selling Shareholder has full power and authority to
enter into this Agreement and the Agreement and Power of Attorney. All
authorizations and consents necessary for the execution and delivery by such
Selling Shareholder of the Agreement and Power of Attorney,
<PAGE> 12
12
and for the execution of this Agreement on behalf of such Selling Shareholder,
have been given. Each of the Agreement and Power of Attorney and this Agreement
has been duly executed and delivered by or on behalf of such Selling Shareholder
and constitutes a valid and binding agreement of such Selling Shareholder and is
enforceable against such Selling Shareholders in accordance with the terms
thereof and hereof.
(b) Such Selling Shareholder now has, and at the time of delivery
thereof hereunder will have, (i) good and marketable title to the Option Shares
to be sold by such Selling Shareholder hereunder, free and clear of all liens,
encumbrances and claims whatsoever (other than pursuant to the Agreement and
Power of Attorney), and (ii) full legal right and power, and all authorizations
and approvals required by law, to sell, transfer and deliver such Option Shares
to the Underwriters hereunder and to make the representations, warranties and
agreements made by such Selling Shareholder herein. Upon the delivery of and
payment for such Option Shares hereunder, such Selling Shareholder will deliver
good and marketable title thereto, free and clear of all liens, encumbrances and
claims whatsoever.
(c) On the Closing Date or the Option Closing Date, as the case
may be, all stock transfer or other taxes (other than income taxes) which are
required to be paid in connection with the sale and transfer of the Option
Shares to be sold by such Selling Shareholder to the several Underwriters
hereunder will have been fully paid or provided for by such Selling Shareholder
and all laws imposing such taxes will have been fully complied with.
(d) The performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in the creation or imposition
of any lien, charge or encumbrance upon any of the assets of such Selling
Shareholder pursuant to the terms or provisions of, or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the acceleration of any obligation under, if such Selling
Shareholder is a corporation or partnership, the organizational documents of
such Selling Shareholder, or, as to all such Selling Shareholders, any contract
or other agreement to which such Selling Shareholder is a party or by which such
Selling Shareholder or any of its property is bound or affected, or under any
ruling, decree, judgment, order, statute, rule or regulation of any court or
other governmental agency or body having jurisdiction over such Selling
Shareholder or the property of such Selling Shareholder.
(e) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
for the consummation by such Selling Shareholder of the transactions on its part
contemplated herein and in the Agreement and Power of Attorney, except such as
have been obtained under the Act or the Rules and Regulations and such as may be
required under state securities or Blue Sky laws or the by-laws and rules of the
NASD in connection with the purchase and distribution by the Underwriters of the
Option Shares to be sold by such Selling Shareholder.
<PAGE> 13
13
(f) Such Selling Shareholder has no knowledge of any material
fact or condition not set forth in the Registration Statement or the Prospectus
which has adversely affected, or may adversely affect, the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of the Company, and the sale of the Option Shares proposed to be sold by such
Selling Shareholder is not prompted by any such knowledge.
(g) All information with respect to such Selling Shareholder
contained in the Registration Statement and the Prospectus (as amended or
supplemented, if the Company shall have filed with the Commission any amendment
or supplement thereto) complied and will comply with all applicable provisions
of the Act and the Rules and Regulations, contains and will contain all
statements required to be stated therein in accordance with the Act and the
Rules and Regulations, and does not 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 in order to make the statements therein not misleading.
(h) Other than as permitted by the Act and the Rules and
Regulations, such Selling Shareholder has not distributed and will not
distribute any preliminary prospectus, the Prospectus or any other offering
material in connection with the offering and sale of the Option Shares. Such
Selling Shareholder has not taken, directly or indirectly, any action intended,
or which might reasonably be expected, to cause or result in, under the Act or
otherwise, or which has caused or resulted in, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Option Shares.
(i) Certificates in negotiable form for the Option Shares to be
sold hereunder by such Selling Shareholder have been placed in custody, for the
purpose of making delivery of such Option Shares under this Agreement, under the
Agreement and Power of Attorney which appoints David McWilliams and Steve
Mueller as custodian (the "Custodian") for each Selling Shareholder. Such
Selling Shareholder agrees that the Option Shares represented by the
certificates held in custody for him or it under the Agreement and Power of
Attorney are for the benefit of and coupled with and subject to the interest
hereunder of the Custodian, the Attorneys-in-Fact, the Underwriters, each other
Selling Shareholder and the Company, that the arrangements made by such Selling
Shareholder for such custody and the appointment of the Custodian and the
Attorneys-in-Fact by such Selling Shareholder are irrevocable, and that the
obligations of such Selling Shareholder hereunder shall not be terminated by
operation of law, whether by the death, disability, incapacity or liquidation of
any Selling Shareholder or the occurrence of any other event. If any Selling
Shareholder should die, become disabled or incapacitated or be liquidated or if
any other such event should occur before the delivery of the Option Shares
hereunder, certificates for the Option Shares shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement and
actions taken by the Attorneys-in-Fact and the Custodian pursuant to the
Agreement and Power of Attorney shall be as valid as if such death, liquidation,
incapacity or other event had not occurred, regardless of whether or not the
Custodian or the Attorneys-in-Fact, or either of them, shall have received
notice thereof.
<PAGE> 14
14
(j) Such Selling Shareholder has, and at the Option Closing Date
will have, full right, power and authority to hold and transfer its interests in
its security entitlement (within the meaning of Section 8-501 of the NYUCC) with
respect to the Option Shares to be sold by such Selling Shareholder hereunder.
Upon the payment of the purchase price for the Option Shares and the crediting
by DTC of the Option Shares to the securities accounts of the several
Underwriters with DTC, each of the Underwriters will acquire a valid security
entitlement (within the meaning of Section 8-501 of the NYUCC) in respect of the
Option Shares to be purchased by it, and no action (whether framed in
conversion, replevin, constructive trust, equitable lien, or other theory) based
on an adverse claim to such Option Shares may be asserted against the
Underwriters.
5. Agreements of the Company. The Company agrees with the several
Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective, and will notify the Representatives
promptly, and will confirm such advice in writing, (1) when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective, (2) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (3) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose or the threat thereof, (4) of the happening of any
event during the period mentioned in the second sentence of Section 4(e) that in
the judgment of the Company makes any statement made in the Registration
Statement or the Prospectus untrue or that requires the making of any changes in
the Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading
and (5) of receipt by the Company or any representative or attorney of the
Company of any other communication from the Commission relating to the Company,
the Registration Statement, any preliminary prospectus or the Prospectus. If at
any time the Commission shall issue any order suspending the effectiveness of
the Registration Statement, the Company will make every reasonable effort to
obtain the withdrawal of such order at the earliest possible moment. The Company
will use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to Rule 430A and to notify the
Representatives promptly of all such filings.
(c) The Company will furnish to the Representatives, without
charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including
<PAGE> 15
15
financial statements and schedules, and all exhibits thereto (including any
document filed under the Exchange Act and deemed to be incorporated by reference
into the Prospectus) and will furnish to the Representatives, without charge,
for transmittal to each of the other Underwriters, a copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the
Company will deliver to each of the Underwriters, without charge, as many copies
of the Prospectus or any amendment or supplement thereto as the Representatives
may reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the several Underwriters and by all dealers
to whom the Shares may be sold, both in connection with the offering or sale of
the Shares and for any period of time thereafter during which the Prospectus is
required by law to be delivered in connection therewith. If during such period
of time any event shall occur which in the judgment of the Company or counsel to
the Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was made,
not misleading, or if it is necessary to supplement or amend the Prospectus to
comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver to
each of the Underwriters, without charge, such number of copies thereof as the
Representatives may reasonably request. The Company shall not file any document
under the Exchange Act before the termination of the offering of the Shares by
the Underwriters if such document would be deemed to be incorporated by
reference into the Prospectus which is not approved by the Representatives after
reasonable notice thereof.
(f) Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Representatives and counsel to
the Underwriters in connection with the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may request; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
general service of process in any jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the Effective
Date, the Company will furnish to the Representatives and each other Underwriter
who may so request copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock, and will furnish to the
Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
<PAGE> 16
16
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but shall
be in reasonable detail) for a period of 12 months ended commencing after the
Effective Date, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(i) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Representatives, all costs and expenses incident to
the performance of the obligations of the Company under this Agreement,
including but not limited to costs and expenses of or relating to (1) the
preparation, printing and filing of the Registration Statement and exhibits to
it, each preliminary prospectus, the Prospectus and any amendment or supplement
to the Registration Statement or the Prospectus, (2) the preparation and
delivery of certificates representing the Shares, (3) the word processing,
printing and reproduction of this Agreement, the Agreement Among Underwriters,
any Dealer Agreements and any Underwriters' Questionnaire, (4) furnishing
(including costs of shipping, mailing and courier) such copies of the
Registration Statement, the Prospectus and any preliminary prospectus, and all
amendments and supplements thereto, as may be requested for use in connection
with the offering and sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold, (5) the listing of the Shares on the American Stock
Exchange, (6) any filings required to be made by the Underwriters with the NASD,
and the fees, disbursements and other charges of counsel for the Underwriters in
connection therewith, (7) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 4(f), including the fees, disbursements and other
charges of counsel to the Underwriters in connection therewith, and the
preparation and printing of preliminary, supplemental and final Blue Sky
memoranda, (8) counsel to the Company, (9) the transfer agent for the Shares and
(10) the Accountants.
(j) If this Agreement shall be terminated by the Company pursuant
to any of the provisions hereof (otherwise than pursuant to Section 8) or if for
any reason the Company shall be unable to perform its obligations hereunder, the
Company will reimburse the several Underwriters for all out-of-pocket expenses
(including the fees, disbursements and other charges of counsel to the
Underwriters) reasonably incurred by them in connection herewith.
(k) The Company will not at any time, directly or indirectly,
take any action intended, or which might reasonably be expected, to cause or
result in, or which will constitute, stabilization of the price of the shares of
Common Stock to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering and
sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds."
<PAGE> 17
17
(m) During the period of 90 days commencing at the Closing Date,
the Company will not, without the prior written consent of PaineWebber
Incorporated, directly or indirectly, sell, offer to sell, grant any option for
the sale of, or otherwise dispose of, any Common Stock or securities convertible
into Common Stock, other than to the Underwriters pursuant to this Agreement and
other than pursuant to employee benefit plans.
(n) The Company will not, and will cause each of its executive
officers and directors to enter into agreements with the Representatives in the
form set forth in Exhibit C to the effect that they will not, for a period of 90
days after the commencement of the public offering of the Shares, without the
prior written consent of PaineWebber Incorporated, sell, contract to sell or
otherwise dispose of any shares of Common Stock or rights to acquire such shares
(other than pursuant to employee stock option plans or in connection with other
employee incentive compensation arrangements).
6. Conditions of the Obligations of the Underwriters. In addition
to the execution and delivery of the Price Determination Agreement, the
obligations of each Underwriter hereunder are subject to the following
conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Representatives not later than 5:00 p.m., New
York City time, on the date of this Agreement or at such later date and time as
shall be consented to in writing by the Representatives and all filings required
by Rule 424 of the Rules and Regulations and Rule 430A shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Representatives and the Representatives did
not object thereto in good faith, and the Representatives shall have received
certificates, dated the Closing Date and the Option Closing Date and signed by
the Chief Executive Officer or the Chairman of the Board of Directors of the
Company and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) there shall not have been,
and no development shall have occurred
<PAGE> 18
18
which could reasonably be expected to result in, a material adverse change in
the general affairs, business, business prospects, properties, management,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiary, taken as a whole, whether or not arising from transactions in
the ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus and (ii) neither
the Company nor its Subsidiary shall have sustained any material loss or
interference with its business or properties from fire, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor dispute
or any court or legislative or other governmental action, order or decree, which
is not set forth in the Registration Statement and the Prospectus, if in the
judgment of the Representatives any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares by the
Underwriters at the initial public offering price.
(d) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or its Subsidiary
or any of their respective officers or directors in their capacities as such,
before or by any Federal, state or local court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, in which
litigation or proceeding an unfavorable ruling, decision or finding would
materially and adversely affect the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiary taken as a whole.
(e) Each of the representations and warranties of the Company and
the Selling Shareholders contained herein shall be true and correct in all
material respects at the Closing Date, and with respect to the Option Shares, at
the Option Closing Date, as if made at the Closing Date and, with respect to the
Option Shares, at the Option Closing Date, and all covenants and agreements
herein contained to be performed on the part of the Company and the Selling
Shareholders and all conditions herein contained to be fulfilled or complied
with by the Company and the Selling Shareholders at or prior to the Closing Date
and, with respect to the Option Shares, at or prior to the Option Closing Date,
shall have been duly performed, fulfilled or complied with.
(f) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
and satisfactory in form and substance to counsel for the Underwriters, from
Porter & Hedges, L.L.P., counsel to the Company, to the effect set forth in
Exhibit D.
(g) The Representatives shall have received an opinion with
respect to the Option Shares, dated the Option Closing Date, and satisfactory in
form and substance to counsel for the Underwriters, from Porter & Hedges L.L.P.,
counsel to the Selling Shareholders, to the effect set forth in Exhibit E.
(h) The Representatives shall have received an opinion, dated the
Closing Date and the Option Closing Date, from Shearman & Sterling, counsel to
the Underwriters, with respect
<PAGE> 19
19
to the Registration Statement, the Prospectus and this Agreement, which opinion
shall be satisfactory in all respects to the Representatives.
(i) On the date of the Prospectus, the Accountants shall have
furnished to the Representatives a letter, dated the date of its delivery,
addressed to the Representatives and in form and substance satisfactory to the
Representatives, confirming that they are independent accountants with respect
to the Company as required by the Act and the Rules and Regulations and stating
the conclusions and findings of such Accountants with respect to the financial
and other statistical and numerical information contained in the Registration
Statement or incorporated by reference therein. At the Closing Date and, as to
the Option Shares, the Option Closing Date, the Accountants shall have furnished
to the Representatives a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures set forth in
the letter from the Accountants, that nothing has come to their attention during
the period from the date of the letter referred to in the prior sentence to a
date (specified in the letter) not more than five days prior to the Closing Date
and the Option Closing Date which would require any change in their letter dated
the date of the Prospectus, if it were required to be dated and delivered at the
Closing Date and the Option Closing Date.
(j) At the Closing Date and, as to the Option Shares, the Option
Closing Date, there shall be furnished to the Representatives an accurate
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance satisfactory to the Representatives, to the effect that:
(i) Each signer of such certificate has carefully examined
the Registration Statement and the Prospectus (including any documents
filed under the Exchange Act and deemed to be incorporated by reference
into the Prospectus) and (A) as of the date of such certificate, such
documents are true and correct in all material respects and do not omit
to state a material fact required to be stated therein or necessary in
order to make the statements therein not untrue or misleading and (B)
since the Effective Date, no event has occurred as a result of which it
is necessary to amend or supplement the Prospectus in order to make the
statements therein not untrue or misleading in any material respect and
there has been no document required to be filed under the Exchange Act
and the Exchange Act Rules and Regulations that upon such filing would
be deemed to be incorporated by reference into the Prospectus that has
not been so filed;
(ii) Each of the representations and warranties of the
Company contained in this Agreement were, when originally made, and are,
at the time such certificate is delivered, true and correct in all
material respects;
(iii) Each of the covenants required herein to be
performed by the Company on or prior to the delivery of such certificate
has been duly, timely and fully
<PAGE> 20
20
performed and each condition herein required to be complied with by the
Company on or prior to the date of such certificate has been duly,
timely and fully complied with; and
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (A) there has
not been, and no development has occurred which could reasonably be
expected to result in, a material adverse change in the general affairs,
business, business prospects, properties, management, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiary, taken as a whole, whether or not arising from transactions
in the ordinary course of business, in each case other than as set forth
in or contemplated by the Registration Statement and the Prospectus and
(B) neither the Company nor any of its Subsidiary has sustained any
material loss or interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or any court or legislative or other
governmental action, order or decree, which is not set forth in the
Registration Statement and the Prospectus,
and such other matters as the Representatives may reasonably request.
(k) At the Option Closing Date, there shall have been furnished
to the Representatives an accurate certificate, dated the date of its delivery,
signed by the Attorneys-in-Fact on behalf of each of the Selling Shareholders,
in form and substance satisfactory to the Representatives, to the effect that
the representations and warranties of each of the Selling Shareholders contained
herein are true and correct in all material respects on and as of the date of
such certificate as if made on and as of the date of such certificate, and each
of the covenants and conditions required herein to be performed or complied with
by the Selling Shareholders on or prior to the date of such certificate has been
duly, timely and fully performed or complied with.
(l) On or prior to the Closing Date, the Representatives shall
have received the executed agreements referred to in Section 5(n).
(m) The Shares shall be qualified for sale in such states as the
Representatives may reasonably request, each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
and the Option Closing Date.
(n) Prior to the Closing Date, the Shares shall have been duly
authorized for listing by the American Stock Exchange upon official notice of
issuance.
(o) The National Association of Securities Dealers, Inc. shall
have approved the underwriting terms and arrangements and such approval shall
not have been withdrawn or limited.
(p) The Company and the Selling Shareholders shall have furnished
to the Representatives such certificates, in addition to those specifically
mentioned herein, as the
<PAGE> 21
21
Representatives may have reasonably requested as to the accuracy and
completeness at the Closing Date and the Option Closing Date of any statement in
the Registration Statement or the Prospectus or any documents filed under the
Exchange Act and deemed to be incorporated by reference into the Prospectus, as
to the accuracy at the Closing Date and the Option Closing Date of the
representations and warranties of the Company and the Selling Shareholders
herein, as to the performance by the Company and the Selling Shareholders of
their obligations hereunder, or as to the fulfillment of the conditions
concurrent and precedent to the obligations hereunder of the Representatives.
(q) On the Closing Date and the Option Closing Date, there shall
have been furnished to the Representatives the written opinion of Dressler,
Rockey, Minamow & Katz, Ltd., intellectual property counsel the Company,
addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives and their counsel, to
the effect of the form of opinion appearing as Schedule 2 hereof.
7. Indemnification.
(a) Each of the Company and the Selling Shareholders, jointly and
severally, will indemnify and hold harmless each Underwriter, the directors,
officers, employees and agents of each Underwriter and each person, if any, who
controls each Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act from and against any and all losses, claims, liabilities,
expenses and damages (including, but not limited to, any and all investigative,
legal and other expenses reasonably incurred in connection with, and any and all
amounts paid in settlement of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between any indemnified
party and any third party, or otherwise, or any claim asserted), as and when
incurred, to which any Underwriter, or any such person, may become subject under
the Act, the Exchange Act or other Federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, liabilities,
expenses or damages arise out of or are based on (i) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus or in any documents
filed under the Exchange Act and deemed to be incorporated by reference into the
Prospectus, or in any application or other document executed by or on behalf of
the Company or based on written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Shares under the
Securities Laws thereof or filed with the Commission, (ii) the omission or
alleged omission to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading or (iii) any act
or failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Shares or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, liability, expense or damage arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall not be
liable under this clause (iii) to the extent it is finally judicially determined
by a court of competent jurisdiction that such loss, claim, liability, expense
or damage resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such
<PAGE> 22
22
underwriter through its gross negligence or willful misconduct); provided that
the Company will not be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Shares in the public offering to
any person by an Underwriter and is based on an untrue statement or omission or
alleged untrue statement or omission of a material fact made in reliance on and
in conformity with information relating to any Underwriter furnished in writing
to the Company by the Representatives on behalf of any Underwriter expressly for
inclusion in the Registration Statement, any preliminary prospectus or the
Prospectus. This indemnity agreement will be in addition to any liability that
the Company or any Selling Shareholder might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Company, the Selling Shareholders, each person, if any, who controls the Company
or the Selling Shareholders within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, each director of the Company and each officer of
the Company who signs the Registration Statement to the same extent as the
foregoing indemnity from the Company and the Selling Shareholders to each
Underwriter, but only insofar as losses, claims, liabilities, expenses or
damages arise out of or are based on any untrue statement or omission or alleged
untrue statement or omission of a material fact made in reliance on and in
conformity with information relating to any Underwriter furnished in writing to
the Company by the Representatives on behalf of such Underwriter expressly for
use in the Registration Statement, the Preliminary Prospectus or the Prospectus.
This indemnity will be in addition to any liability that each Underwriter might
otherwise have; provided, however, that in no case shall any Underwriter be
liable or responsible for any amount in excess of the underwriting discounts and
commissions received by such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section 6 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 7 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel satisfactory to the indemnified party, and after notice
from the indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing
<PAGE> 23
23
by the indemnifying party, (2) the indemnified party has reasonably concluded
(based on advice of counsel) that there may be legal defenses available to it or
other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict exists
(based on advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed counsel to assume
the defense of such action within a reasonable time after receiving notice of
the commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm (in addition to local counsel)
admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld). No indemnifying party shall, without the prior written consent of
each indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding relating to
the matters contemplated by this Section 7 (whether or not any indemnified party
is a party thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding. Notwithstanding any
other provision of this Section 7 (c), if at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it shall be liable
for any settlement effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 6 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company, the Selling Shareholders,
or the Underwriters, the Company, the Selling Shareholders and the Underwriters
will contribute to the total losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted, but after deducting any contribution received
by the Company or the Selling Shareholders from persons other than the
Underwriters, such as persons who control the Company or the Selling
Shareholders, officers of the Company who signed the Registration Statement and
directors of the Company, who also may be liable for contribution) to which the
Company or the Selling Shareholders and any one or more of the Underwriters may
be subject in such proportion as shall be appropriate to reflect the relative
<PAGE> 24
24
benefits received by the Company and the Selling Shareholders, on the one hand
and the Underwriters on the other. The relative benefits received by the Company
and the Selling Shareholders 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 (before deducting expenses) received by the Company and the Selling
Shareholders bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of contribution
shall be made in such proportion as is appropriate to reflect not only the
relative benefits referred to in the foregoing sentence but also the relative
fault of the Company and the Selling Shareholders, on the one hand, and the
Underwriters, on the other, with respect to the statements or omissions which
resulted in such loss, claim, liability, expense or damage, or action in respect
thereof, as well as any other relevant equitable considerations with respect to
such offering. Such relative fault shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Representatives on behalf of the Underwriters, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company, the Selling Shareholders and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 7(d) were to be determined by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 7(d) shall be deemed to
include, for purpose of this Section 7(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7(d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions received by it and no
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) will be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this Section 7(d) are several in
proportion to their respective underwriting obligations and not joint. For
purposes of this Section 7(d), any person who controls a party to this Agreement
within the meaning of the Act will have the same rights to contribution as that
party, and each officer of the Company who signed the Registration Statement
will have the same rights to contribution as the Company, subject in each case
to the provisions hereof. Any party entitled to contribution, promptly after
receipt of notice of commencement of any action against such party in respect of
which a claim for contribution may be made under this Section 7(d), will notify
any such party or parties from whom contribution may be sought, but the omission
so to notify will not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 7(d).
Except for a settlement entered into pursuant to the last sentence of Section
7(c) hereof, no party will be liable for contribution with respect to any action
or claim settled without its written consent (which consent will not be
unreasonably withheld).
<PAGE> 25
25
(e) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company contained and
the Selling Shareholders in this Agreement shall remain operative and in full
force and effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) in the case of the Company, acceptance of the Shares and
payment therefor, (iii) in the case of the Selling Shareholder, acceptance of
the Option Shares and payment therefor or (iv) any termination of this
Agreement.
8. Termination. The obligations of the several Underwriters under
this Agreement may be terminated at any time on or prior to the Closing Date
(or, with respect to the Option Shares, on or prior to the Option Closing Date),
by notice to the Company from the Representatives, without liability on the part
of any Underwriter to the Company or the Selling Shareholders, if, prior to
delivery and payment for the Shares (or the Option Shares, as the case may be),
in the sole judgment of the Representatives, (i) there has been, since the
respective dates as of which information is given in the Registration Statement,
any material adverse change in the Company's business, properties, business
prospects, condition (financial or otherwise) or results of operations, (ii)
trading in any of the equity securities of the Company shall have been suspended
by the Commission, the NASD, by an exchange that lists the Shares or by the
Nasdaq Stock Market, (iii) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq Stock Market shall have been
suspended or limited or minimum or maximum prices shall have been generally
established on such exchange or over the counter market, or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by such exchange or by
order of the Commission or the NASD or any court or other governmental
authority, (iv) a general banking moratorium shall have been declared by either
Federal or New York State authorities or (v) any material adverse change in the
financial or securities markets in the United States or in political, financial
or economic conditions in the United States or any outbreak or material
escalation of hostilities or declaration by the United States of a national
emergency or war or other calamity or crisis shall have occurred the effect of
any of which is such as to make it, in the sole judgment of the Representatives,
impracticable or inadvisable to market the Shares on the terms and in the manner
contemplated by the Prospectus.
9. Substitution of Underwriters. If any one or more of the
Underwriters shall fail or refuse to purchase any of the Firm Shares which it or
they have agreed to purchase hereunder, and the aggregate number of Firm Shares
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of Firm Shares,
the other Underwriters shall be obligated, severally, to purchase the Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase, in the proportions which the number of Firm Shares which
they have respectively agreed to purchase pursuant to Section 1 bears to the
aggregate number of Firm Shares which all such non-defaulting Underwriters have
so agreed to purchase, or in such other proportions as the Representatives may
specify; provided that in no event shall the maximum number of Firm Shares which
any Underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 9 by more
<PAGE> 26
26
than one-ninth of the number of Firm Shares agreed to be purchased by such
Underwriter without the prior written consent of such Underwriter. If any
Underwriter or Underwriters shall fail or refuse to purchase any Firm Shares and
the aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase exceeds one-tenth of the
aggregate number of the Firm Shares and arrangements satisfactory to the
Representatives and the Company for the purchase of such Firm Shares are not
made within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company for the
purchase or sale of any Shares under this Agreement. In any such case either the
Representatives or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in any
other documents or arrangements may be effected. Any action taken pursuant to
this Section 9 shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
10. Miscellaneous. Notice given pursuant to any of the provisions
of this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, 7000
Fannin, 20th floor, Houston, Texas 77030 Attention:______________, or (b) if to
the Underwriters, to the Representatives at the offices of PaineWebber
Incorporated, 1285 Avenue of the Americas, New York, New York 10019, Attention:
Corporate Finance Department. Any such notice shall be effective only upon
receipt. Any notice under Section 8 or 9 may be made by telex or telephone, but
if so made shall be subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the
several Underwriters and the Company, the Selling Shareholders and of the
controlling persons, directors and officers referred to in Section 7, and their
respective successors and assigns, and no other person shall acquire or have any
right under or by virtue of this Agreement. The term "successors and assigns" as
used in this Agreement shall not include a purchaser, as such purchaser, of
Shares from any of the several Underwriters.
All representations, warranties and agreements of the Company and
the Selling Shareholders contained herein or in certificates or other
instruments delivered pursuant hereto, shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
Underwriter or any of its controlling persons and shall survive delivery of and
payment for the Shares hereunder.
Any action required or permitted to be taken by the
Representatives under this Agreement may be taken by them jointly or by
PaineWebber Incorporated.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE.
<PAGE> 27
27
This Agreement may be signed in two or more counterparts with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
In case any provision in this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company, the Selling Shareholders and the Underwriters each
hereby irrevocably waive any right they may have to a trial by jury in respect
of any claim based upon or arising out of this Agreement or the transactions
contemplated hereby.
This Agreement may not be amended or otherwise modified or any
provision hereof waived except by an instrument in writing signed by the
Representatives and the Company.
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Shareholders and the several
Underwriters.
<PAGE> 28
Very truly yours,
TEXAS BIOTECHNOLOGY CORPORATION
By: _____________________
Title:
THE SELLING SHAREHOLDERS NAMED IN
SCHEDULE I ATTACHED HERETO
By: The Attorneys-in-Fact
By: _____________________
28
<PAGE> 29
Confirmed as of the date first
above mentioned:
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
FIRST UNION SECURITIES, INC.
SANDERS MORRIS HARRIS
Acting on behalf of
themselves and as the
Representatives of the
other several Underwriters
named in Schedule I hereof.
By: PAINEWEBBER INCORPORATED
By: ____________________________
Title:
By: PRUDENTIAL SECURITIES INCORPORATED
By: ___________________________________
Title:
By: FIRST UNION SECURITIES, INC.
By: ___________________________________
Title:
By: SANDERS MORRIS HARRIS
By: ___________________________________
Title:
29
<PAGE> 30
SCHEDULE I
UNDERWRITERS
<TABLE>
<CAPTION>
Number of
Name of Firm Shares
Underwriters to Be Purchased
- ------------ ---------------
<S> <C>
PaineWebber Incorporated
Prudential Securities Incorporated
First Union Securities, Inc.
Sanders Morris Harris
Total ____________________
====================
</TABLE>
<PAGE> 31
ATTACHMENT A
TEXAS BIOTECHNOLOGY CORPORATION
CUSTODY AGREEMENT
David McWilliams
Steve Mueller
Texas Biotechnology Corporation
7000 Fannin Street, 20th Floor
Houston, Texas 77030
Gentlemen:
Texas Biotechnology Corporation, a Delaware corporation (the "Company"),
filed a Registration Statement on Form S-3, file no. 333-31932 (the
"Registration Statement"), with the Securities and Exchange Commission to
register for sale to the public under the Securities Act of 1933, as amended
(the "Act"), shares of the Company's common stock, $.005 par value per share
(the "Common Stock").
The shares to be covered by the Registration Statement shall consist of
(a) up to 5,000,000 shares of Common Stock to be sold by the Company and (b) up
to 750,000 shares of Common Stock to be sold by the Company and the Selling
Shareholders, of which _______ shares are being offered by the undersigned (the
"Selling Shareholder"). The _______ shares of Common Stock to be sold by the
Selling Shareholder are referred to herein as the "Shares".
Delivered to both of you and each of you herewith as custodian
(individually, "Custodian" and collectively, the "Custodians") is a copy of the
correspondence between the Selling Shareholder and the Bank of New York (the
"Transfer Agent") evidencing the transfer of a certificate received by the
Transfer Agent in negotiable form representing the Shares, registered in the
name of the Selling Shareholder. Each Custodian is hereby empowered to determine
in its sole discretion the time or times when, and the purposes for and the
manner in which, any power herein conferred upon it shall be exercised and the
conditions, provisions or covenants by him pursuant hereto, and it is understood
that each Custodian may in its sole and absolute discretion determine that such
action is in the best interests of the Selling Shareholder.
The Selling Shareholder intends to enter into an underwriting agreement
(the "Underwriting Agreement"), a draft of which has been delivered to you, with
the Company and the several underwriters ("Underwriters") to be named therein,
for whom PaineWebber Incorporated, Prudential Vector Healthcare, First Union
Securities, Inc., and Sanders Morris Harris are to act as the representatives
(the "Representatives"), relating to, among other things, the sale of the Shares
by the
<PAGE> 32
2
several Underwriters. The Underwriting Agreement is supplemented by a Price
Determination Agreement, which sets forth the initial public offering price per
share for the Shares and the purchase price per share for the Shares to be paid
by the Underwriters (the "Pricing Determination Agreement"). All references
contained herein to the "Underwriting Agreement" shall be deemed to include the
Price Determination Agreement. The Selling Shareholder understands that the
Underwriting Agreement is subject to revisions before execution, and that the
Registration Statement has not been declared effective under the Securities Act
and is subject to amendment.
Concurrently, the Selling Shareholder has delivered a copy of a duly
executed Selling Shareholder's Power of Attorney ("Power of Attorney") naming
the individuals specified therein, and either of them, as attorneys-in-fact
("Attorneys-In-Fact") for certain purposes, including the execution, delivery
and performance of this Custody Agreement in his name, place and stead, causing
the transfer of the Shares to the Representatives upon the completion of the
transactions contemplated by the Underwriting Agreement, and taking certain
other actions on behalf of the Selling Shareholder.
In connection with the foregoing, the Selling Shareholder hereby
appoints the Custodians to act as his agents as provided herein, and the
Custodians hereby accept such appointment. The Custodians shall act in
accordance with the instructions set forth in this Custody Agreement and any
further instructions given to it by written instrument signed by the
Underwriters and by the Selling Shareholder acting on his own behalf or through
the Attorneys-In-Fact.
As Custodian, you are hereby authorized and instructed to provide the
Transfer Agent with the appropriate authorizations on behalf of the Selling
Shareholder regarding the Selling Shareholder's custodial account maintained at
the Transfer Agent upon the following terms and conditions.
11. Until payment for the Shares to be sold by the Selling Shareholder
is made or this Custody Agreement is otherwise terminated in accordance with the
provisions of Paragraph 12, no instruction shall be given to the Transfer Agent
authorizing a transfer of the Shares to the Representatives; provided, however,
that the Selling Shareholder shall be entitled to exercise all voting rights
pertaining to its Shares and to receive all dividends and distributions thereon.
12. At the Closing Date specified in the Option Shares Notice (as
defined in the Underwriting Agreement), at the place referred to in Section 2 of
the Underwriting Agreement you shall (i) cause the Shares to be sold to the
Underwriters, against payment by the Underwriters to you of the total purchase
price for the Shares, which shall be equal to the number of Shares multiplied by
the purchase price per Share specified in the Underwriting Agreement, for the
account of the Selling Shareholder; and (ii) give receipt for such payment.
13. You shall disburse the payment by the Underwriters in the following
manner: (i) to itself, as agent for the Selling Shareholders, a reserve amount
to be designated in writing by
<PAGE> 33
3
Attorneys-In-Fact from which amount the Custodian shall pay, as soon as
reasonably practicable, (A) the Selling Shareholders' proportionate share of all
expenses of the offering and sale of the Shares as provided in the Underwriting
Agreement by and among the Company, the Selling Shareholders and the
Representatives, (B) its reasonable charges and disbursements for acting
hereunder with respect to the sale of the Shares and (C) any applicable stock
transfer taxes; and (ii) to each Selling Shareholder, pursuant to the written
instructions of Attorneys-In-Fact, (A) on the Closing Date, a sum equal to the
share of the proceeds to which such Selling Shareholder is entitled, as
determined by Attorneys-In-Fact, less the reserve amount designated by any
Attorney-In-Fact, and (B) promptly after all proper charges, disbursements,
costs and expenses shall have been paid, any remaining balance of the amount
reserved under clause (i) above. Before making any payment from the amount
reserved under clause (i) above, except payments made pursuant to subclause (B)
of clause (ii) above, the Custodian shall request and receive the written
approval of Attorneys-In-Fact. To the extent the expenses referred to in
subclause (A) of clause (i) above exceed the amount reserved, the Selling
Shareholders shall remain liable for their proportionate share of such expenses.
14. You shall not be bound in any way by any other agreement or contract
to which the Company, the Selling Shareholder or the Underwriters are a party
other than the Power-of-Attorney (whether or not you have knowledge thereof) and
your only duties or responsibilities shall be to direct the transfer of the
Shares to the Representatives as Custodian in accordance with the terms of this
Custody Agreement.
15. These instructions may be altered or amended only with your consent
and the consent of the Company, the Selling Shareholder (individually or through
his Attorney-In-Fact) and the Representatives. Should any attempt be made to
change this Custody Agreement in a manner that would either increase your duties
or responsibilities, or which in your sole and absolute discretion you deem
undesirable, you may resign as Custodian by notifying the Selling Shareholder in
writing and, until a successor Custodian is appointed by the Selling Shareholder
and accepts such appointment, your only duty shall be to hold the Shares,
pending delivery thereof to such successor Custodian, accompanied by an
assignment or stock power transferring such Shares to such successor Custodian
without recourse or warranty.
16. Any notice or other communication or delivery required or permitted
to be given or made by you under this Custody Agreement shall be delivered or
made by messenger, or forwarded by registered or certified mail, as follows:
(a) if to the Selling Shareholder:
-------------------------------
-------------------------------
-------------------------------
<PAGE> 34
4
(b) if to the Representatives:
PaineWebber Incorporated
Prudential Vector Healthcare
First Union Securities, Inc.
Sanders Morris Harris
as Representatives of the several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Attention: Corporate Finance Department
Any notice to you will be addressed to your office as set forth on the first
page hereof and will be delivered by messenger or registered or certified mail.
17. You shall be entitled to act and rely upon any statement, request or
notice arising from this Custody Agreement given to you on behalf of the Selling
Shareholder if the same shall have been made or given to you by either of the
Attorneys-In-Fact; provided, however, that any statement or notice to you with
respect to the Closing Time under the Underwriting Agreement or with respect to
the non-effectiveness or termination of the Underwriting Agreement must be
confirmed in writing to you by the Representatives.
18. You hereby agree to act as Custodian for the Selling Shareholder as
provided herein without compensation, but you shall be reimbursed for any
reasonable expenses or disbursements incurred by you in performing your duties
hereunder, including, but not limited to, actual costs for legal services should
you deem it necessary to retain an attorney. You may exercise any of your duties
hereunder by or through agents or employees and shall be entitled to retain
counsel regarding all matters pertaining to your duties hereunder. You shall not
be liable for any action, taken or omitted to be taken by you hereunder, except
for your willful misconduct or gross negligence.
19. The Selling Shareholder represents and warrants to you that: (a) the
Shares deposited by such Selling Shareholder have been duly and validly
authorized and issued and are fully paid and nonassessable; (b) such Selling
Shareholder has valid and marketable title to the Shares, free and clear of all
pledges, liens, security interests, charges, claims, equities and encumbrances
of any kind, and has full right, power and authority to sell, transfer and
deliver the Shares pursuant to the Underwriting Agreement; (c) by delivery of a
certificate or certificates therefor the Selling Shareholder will transfer to
the Underwriters who have purchased the Shares pursuant to the Underwriting
Agreement (without notice of any defect in the title of the Selling Shareholder
and who are otherwise bona fide purchasers for purposes of the Uniform
Commercial Code) valid and marketable title to the Shares, free and clear of any
pledge, lien, security interest, charge, claim, equity or encumbrance of any
kind; (d) the execution, delivery and performance of the Underwriting Agreement
and the Power of Attorney and this Custody Agreement and the sale and delivery
of the
<PAGE> 35
5
Shares and the consummation of the transactions contemplated in the Underwriting
Agreement and in the Registration Statement and compliance by the Selling
Shareholder with his obligations under the Underwriting Agreement have been duly
authorized by all necessary action on the part of the Selling Shareholder and do
not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under or
result in the creation or imposition of any tax, lien, charge or encumbrance
upon the Shares or any property or assets of the Selling Shareholder pursuant
to, any contract indenture, mortgage, deed of trust, loan or credit agreement,
note, license, lease or other instrument or agreement to which the Selling
Shareholder is a party or by which he may be bound, or to which any of the
property or assets of the Selling Shareholder may be subject, nor will such
action result in any violation of the provisions of any law, administrative
regulation, judgment or order of any governmental agency or body or any
administrative or court decree having jurisdiction over the Selling Shareholder
or any of his properties, including the Act; (e) such Selling Shareholder has,
and at the time of delivery of the Shares will have, the full right, power and
authority to enter into this Custody Agreement, the Power of Attorney and the
Underwriting Agreement and to sell, transfer and deliver the Shares pursuant to
the Underwriting Agreement; and (f) no filing with, or consent, approval,
authorization, license, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign, is necessary or
required to be obtained by the Selling Shareholder for the performance by the
Selling Shareholder of his obligations under the Underwriting Agreement or in
the Power of Attorney and this Custody Agreement, or in connection with the
offer, sale or delivery of the Shares. The Selling Shareholder agrees that until
payment in full has been made for his Shares or until the Underwriting Agreement
has been terminated, such Selling Shareholder will not give, sell, pledge,
hypothecate, grant any lien on, transfer, deal with or contract with respect to,
the Shares, or any interest therein except in accordance with the Underwriting
Agreement.
20. The Selling Shareholder agrees that: (a) your obligations and duties
with respect to the Shares are confined to those specifically enumerated in this
Custody Agreement; (b) you shall not be responsible for obtaining the Shares
from wherever they may be held as pledge, in safekeeping, or for any other
purpose; (c) you shall not be liable or responsible for the sufficiency,
correctness, genuineness or validity of any instruments deposited with the
Transfer Agent, or the form of execution thereof or the identity, authority or
rights of any person executing or depositing them; (d) you are under no
obligation to ascertain the terms or conditions of any such instruments or to
comply in any respect with the terms thereof; and (e) you shall not be liable
for any loss which may occur by reason of forgeries, false representations, your
own negligence, or the exercise of discretion by you in any particular manner,
or for any other reason except gross negligence or willful misconduct. The
Selling Shareholder further agrees to indemnify and hold you harmless against
all costs, damages, attorneys' fees, expenses and liabilities, which you may
incur or sustain in connection with this Custody Agreement or any claim or court
action arising hereunder, and will pay such items upon demand.
21. The Selling Shareholder agrees that: (a) the Shares deposited with
the Transfer Agent are subject to the interests of the Underwriters under the
Underwriting Agreement; (b) the
<PAGE> 36
6
arrangements made by such Selling Shareholder for such custodial account and the
appointment by such Selling Shareholder of the Attorneys-In-Fact by the Power of
Attorney are to that extent irrevocable; (c) the obligations of such Selling
Shareholder under this Custody Agreement and under the Underwriting Agreement
shall not be terminated by operation of law or the occurrence of any event,
including the death or incapacity of such Selling Shareholder, or the
termination of any trust or estate for which the undersigned is acting as a
fiduciary; and (d) if any such event should occur before the delivery of the
Shares as provided in the Underwriting Agreement, the transfer of the Shares
shall be authorized by you as Custodian in accordance with the terms and
conditions of the Underwriting Agreement, and the actions taken by any of the
Attorneys-In-Fact pursuant to the Power of Attorney shall be as valid as if such
event had not occurred, regardless of whether or not you or any of the
Attorneys-In-Fact shall have received notice of such event.
22. The Selling Shareholder hereby authorizes and consents to the
reliance by Porter & Hedges, L.L.P., counsel to the Company, on the
representations, warranties and covenants of such Selling Shareholder contained
in this Custody Agreement for purposes of rendering an opinion to the
Underwriters or otherwise.
23. If the Option Closing Date (as defined in the Underwriting
Agreement) does not occur before the 31st day after the date of the Price
Determination Agreement (as defined in the Underwriting Agreement), or if prior
thereto you have received notice from the Representatives that: (a) in
accordance with the Underwriting Agreement, the Shares were not sold, or (b) the
transactions contemplated in the Underwriting Agreement have been abandoned by
mutual consent of the Company, the Selling Shareholder and the Representatives,
then the custodial account established upon the delivery of the Shares to the
Transfer Agent thereupon and this Custody Agreement shall terminate and you
shall instruct the Transfer Agent to return to the Selling Shareholder all
certificates and other documents deposited by the Selling Shareholder along with
any necessary stock powers for the transfer of the Shares to the Selling
Shareholder; provided, however, that the Selling Shareholder shall be liable to
you for the payment of your reasonable expenses and disbursements as Custodian
hereunder.
24. This Custody Agreement and the rights and duties of the parties
hereto shall be governed by the laws of the State of Texas without regard to
principles of conflict of laws.
25. This Custody Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective personal representatives,
successors and assigns.
26. This Custody Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
<PAGE> 37
7
Please acknowledge your acceptance hereof as Custodian, and receipt of
the certificate(s) deposited with you hereunder, by executing and returning to
the undersigned the enclosed copy hereof.
Dated: April ___, 2000.
Name and Address: Very truly yours,
*
- ------------------------------- -----------------------------
[Name]
- -------------------------------
- ------------------------------- Signature guaranteed by:
-----------------------------
By:
--------------------------
(Note: The signature must be
guaranteed by a U.S.
commercial bank (but not a
savings and loan association)
or trust company or by a
broker which is a member firm
of the American or New York
Stock Exchange. A notary
public is not sufficient.)
- ----------------------------
* To be signed in exactly the same manner as the shares are registered.
Please call if you do not know the exact name that appears on your certificate.
<PAGE> 38
8
Instruction: If you are married, please have your spouse complete this
form:
SPOUSAL CONSENT
I am the spouse of ____________________. On behalf of myself, my heirs
and legatees, I hereby join in and consent to the terms of the foregoing Custody
Agreement and agree to the sale of the shares of the Common Stock of Texas
Biotechnology Corporation, registered in the name of my spouse or otherwise
registered, which my spouse proposes to sell pursuant to the Underwriting
Agreement (as defined therein).
Dated: April ______, 2000.
By:
--------------------------------------
[Name]
<PAGE> 39
9
PAYMENT INSTRUCTIONS
Please choose one of the methods of payment described below and provide
the requested information as indicated.
1. ______ Wire funds to the following bank. Wiring instructions
are enclosed (you must contact your bank to make sure they can accept
wire transfers and to obtain any other information they may require as
to accepting wire transfers):
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
2. ______ Cashier's check to be mailed or otherwise delivered in
my name to:
_______________ Directly to me at the following address:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
Instructions: Indicate how you wish to receive payment for the shares
sold to the Underwriters. Please note that if you are selling shares held by a
corporation or other association or in the name of a trust, payment will be made
only to the corporation or other association or trust. A wire transfer can be
made only to an account standing in exactly the same name as the person or
entity, including trusts, corporations or other associations, holding the shares
being sold.
<PAGE> 40
10
CUSTODIAN'S ACKNOWLEDGMENT AND RECEIPT
______________________, as Custodian, acknowledges acceptance of the duties of
Custodian under the foregoing Letter of Transmittal and Custody Agreement.
Dated: April _____, 2000.
By:
--------------------------
David McWilliams
DO NOT DETACH FROM CUSTODY AGREEMENT
<PAGE> 41
11
CUSTODIAN'S ACKNOWLEDGMENT AND RECEIPT
______________________, as Custodian, acknowledges acceptance of the
duties of Custodian under the foregoing Letter of Transmittal and Custody
Agreement.
Dated: April _____, 2000.
By:
--------------------------
Steve Mueller
DO NOT DETACH FROM CUSTODY AGREEMENT
<PAGE> 42
EXHIBIT A
5,000,000 Shares
TEXAS BIOTECHNOLOGY CORPORATION
Common Stock
PRICE DETERMINATION AGREEMENT
April , 2000
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
FIRST UNION SECURITIES, INC.
SANDERS MORRIS HARRIS
As Representatives of the several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Sirs:
Reference is made to the Underwriting Agreement, dated ______,
2000 (the "Underwriting Agreement"), among Texas Biotechnology Corporation, a
Delaware corporation (the "Company") and the several Underwriters named in
Schedule I thereto or hereto (the "Underwriters"), for whom PaineWebber
Incorporated is acting as representative (the "U.S. Representative"). The
Underwriting Agreement provides for the purchase by the Underwriters from the
Company, subject to the terms and conditions set forth therein, of an aggregate
of 5,000,000 shares (the "Firm Shares") of the Company's common stock, par value
$0.005 per share. This Agreement is the Price Determination Agreement referred
to in the Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the
undersigned agree with the Representative as follows:
The initial public offering price per share for the Firm Shares
shall be $_______.
The purchase price per share for the Firm Shares to be paid by
the several Underwriters shall be $_______ representing an amount equal to the
initial public offering price set forth above, less $______ per share.
A-1
<PAGE> 43
The Company represents and warrants to each of the Underwriters
that the representations and warranties of the Company set forth in Section 3 of
the Underwriting Agreement are accurate as though expressly made at and as of
the date hereof.
As contemplated by the Underwriting Agreement, attached as
Schedule I is a completed list of the several Underwriters, which shall be a
part of this Agreement and the Underwriting Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
If the foregoing is in accordance with your understanding of the
agreement among the Underwriters and the Company, please sign and return to the
Company a counterpart hereof, whereupon this instrument along with all
counterparts and together with the Underwriting Agreement shall be a binding
agreement among the Underwriters and the Company in accordance with its terms
and the terms of the Underwriting Agreement.
A-2
<PAGE> 44
Very truly yours,
TEXAS BIOTECHNOLOGY CORPORATION
By: ___________________________
Title:
THE SELLING SHAREHOLDERS NAMED
IN SCHEDULE I ATTACHED HERETO
By:
By: ___________________________
A-3
<PAGE> 45
Confirmed as of the date first
above mentioned:
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
FIRST UNION SECURITIES, INC.
SANDERS MORRIS HARRIS
Acting on behalf of
themselves and as the
Representatives of the
other several Underwriters
named in Schedule I hereof.
By: PAINEWEBBER INCORPORATED
By:
---------------------------
Title:
By: PRUDENTIAL SECURITIES INCORPORATED
By:
-------------------------------
Title:
By: FIRST UNION SECURITIES, INC.
By:
-------------------------------
Title:
By: SANDERS MORRIS HARRIS
By:
-------------------------------
Title:
<PAGE> 46
EXHIBIT B
TEXAS BIOTECHNOLOGY CORPORATION
SELLING SHAREHOLDER'S POWER OF ATTORNEY
Texas Biotechnology Corporation
7000 Fannin Street, 20th Floor
Houston, Texas 77030
Attention: Mr. David McWilliams
Mr. Steve Mueller
Dear Sirs:
The undersigned stockholder understands that Texas Biotechnology
Corporation, a Delaware corporation (the "Company"), has filed a registration
statement (the "Registration Statement") on Form S-3 (File No. 333-31932) under
the Securities Act of 1933, as amended (the "Securities Act"), in connection
with the proposed sale by the undersigned and the Company of shares of common
stock, par value $.005 per share ("Common Stock"), of the Company to certain
underwriters (the "Underwriters"), represented by PaineWebber Incorporated,
Prudential Vector Healthcare, First Union Securities, Inc., and Sanders Morris
Harris, pursuant to the Underwriting Agreement referred to below and that the
Underwriters propose to offer and sell such shares to the public. The
Underwriting Agreement is supplemented by a Price Determination Agreement, which
sets forth the initial public offering price per share for the Shares and the
purchase price per share for the Shares to be paid by the Underwriters (the
"Pricing Determination Agreement"). All references contained herein to the
"Underwriting Agreement" shall be deemed to include the Price Determination
Agreement.
The shares of Common Stock that the undersigned desires to sell (the
"Shares") are designated in the accompanying Information Statement and the
Shares are issued and outstanding shares of Common Stock represented by a stock
certificate registered in the undersigned's name.
Concurrently with the execution and delivery of this Power of Attorney,
the undersigned is also executing and delivering to you a Custody Agreement (the
"Custody Agreement").
1. In connection with the foregoing, the undersigned hereby irrevocably
constitutes and appoints David McWilliams and Steve Mueller, and each of them,
as attorneys-in-fact of the undersigned, with full power and authority to act
together or alone, with full power of substitution (individually, each an
"Attorney-in-Fact", and collectively, the "Attorneys-in-Fact"), in the name of
and for and on behalf of the undersigned with respect to all matters arising in
connection with the
B-1
<PAGE> 47
sale of the Shares by the undersigned including, but not limited to, the power
and authority to take any and all of the following actions:
(a) To sell, assign and transfer to the Underwriters the shares
of Common Stock represented by the certificate deposited by the
undersigned with the Bank of New York (the "Transfer Agent");
(b) To take all necessary action in respect to the Company's
Registration Statement, covering the offering and sale of Common Stock
referred to therein, and all amendments thereto, including the execution
of all such documents, letters and consents as may be necessary or
desirable in connection therewith, including, without limitation,
requests that such Registration Statement be declared effective by the
Securities and Exchange Commission;
(c) For the purpose of effecting such sale, to make, execute,
deliver and perform the undersigned's obligations under a Underwriting
Agreement, by and among the Company, the undersigned and the
Underwriters, substantially in the form of the draft which is attached
hereto, receipt of which is hereby acknowledged, with such changes as
the Attorney-in-Fact or Attorneys-in-Fact may deem necessary and
appropriate (the "Underwriting Agreement"), and to execute such
Underwriting Agreement on behalf of the undersigned, as well as any
other documents, agreements, certificates, stock powers or other
instruments contemplated by the Underwriting Agreement or, in the
opinion of the Attorney-in-Fact or Attorneys-in-Fact, necessary to
consummate the sale of the Common Stock and any other transactions
contemplated by the Underwriting Agreement, including, without
limitation, endorsing any certificates representing the shares, it being
specifically understood that the Underwriting Agreement shall provide
that the undersigned shall indemnify the Underwriters (including each
person, if any, who controls any such Underwriter within the meaning of
Section 15 of the Securities Act) against certain liabilities under such
Act to the extent provided in the Underwriting Agreement referred to
above;
(d) To cause the Transfer Agent to endorse, transfer and deliver
a certificate(s) for the Shares to or on the order of the Underwriters
or to their nominee or nominees, pursuant to the Underwriting Agreement,
and to give such orders and instructions to the Transfer Agent as the
Attorney-in-Fact or Attorneys-in-Fact may in his or their sole
discretion determine with respect to (i) the transfer of the Shares to
be sold by the undersigned in order to effect such sale (including the
names in which new certificates for such shares are to be issued and the
denominations thereof), (ii) the delivery to or for the account of the
Underwriters of the certificates for such Shares against receipt by the
Custodian of the purchase price to be paid therefor, (iii) the
remittance to the undersigned of the proceeds from any sale of Shares to
be sold by the undersigned and (iv) the return to the undersigned of
certificates representing the number of shares, if any, deposited with
the custodian but not sold by the undersigned under the Registration
Statement for any reason;
B-2
<PAGE> 48
(e) To retain Porter & Hedges, L.L.P., who are also counsel to
the Company, as legal counsel to act for the undersigned in connection
with any and all matters referred to herein;
(f) To make, execute, acknowledge and deliver all such other
contracts, orders, receipts, notices, requests, instructions,
certificates, powers of attorney, letters and other writings (including
to the Securities and Exchange Commission), including without
limitation, amendments to the Custody Agreement, to take action to
facilitate the qualification of the Shares under the blue sky or
securities laws of the jurisdictions in which the Underwriters propose
to offer the Shares, and in general to do all things and to take all
action that the Attorney-In-Fact or Attorneys-in-Fact in his or their
sole discretion may consider necessary or proper in connection with or
to carry out the aforesaid sale of the Shares to the Underwriters, as
fully as could the undersigned if personally present and acting;
(g) To make, acknowledge, verify and file on behalf of the
undersigned, such applications, consents to service of process and such
other undertakings or reports as may be required by law with state
commissioners or officers administering state securities laws; and
(h) to take any and all other actions necessary or advisable to
accomplish any of the foregoing and to consummate the Offering.
2. This Power of Attorney and all authority conferred hereby is granted
and conferred subject to and in consideration of the interests of the Company
and the Underwriters and this Power of Attorney, and for the purpose of
completing the transactions contemplated by the Underwriting Agreement and this
Power of Attorney. This Power of Attorney and all authority conferred hereby is
coupled with an interest and shall be irrevocable and shall not be terminated by
any act of the undersigned or by operation of law, whether by the death or
incapacity of the undersigned or by the occurrence of any other event or events
(including, without limiting the foregoing, the termination of any trust or
estate for which the undersigned is acting as a fiduciary or fiduciaries or the
dissolution or liquidation of any corporation or partnership). If after the
execution hereof the undersigned should die or become incapacitated, or if any
trust or estate should be terminated, or if any corporation or partnership
should be dissolved or liquidated, or if any other such event or events shall
occur before the completion of the transactions contemplated by the Underwriting
Agreement and this Power of Attorney, the Attorney-in-Fact or Attorneys-in-Fact
shall nevertheless be authorized and directed to complete all such transactions
as if such death, incapacity, termination, dissolution, liquidation, or other
event or events had not occurred and regardless of whether or not the Custodian,
Attorneys-in-Fact, Underwriters, or any one of them, shall have received notice
thereof.
Notwithstanding the foregoing, if the Underwriting Agreement
shall not be entered into prior to April 20, 2000, then from and after such date
the undersigned shall have the power to revoke all authority herein conferred by
giving written notice to the Attorneys-in-Fact, in care of the
B-3
<PAGE> 49
Custodian, that this Power of Attorney has been terminated; subject, however, to
all lawful action done or performed by the Attorneys-in-Fact or any
Attorney-in-Fact pursuant to this Power of Attorney prior to actual receipt of
such notice.
3. The Attorneys-in-Fact or any Attorney-in-Fact shall have full power
to make and substitute any Attorney-in-Fact in his or their place and stead, and
the undersigned hereby ratifies and confirms all that the Attorneys-in-Fact or
substitute or substitutes have done consistently with the provisions of this
Power of Attorney and all that the Attorneys-in-Fact or substitute or
substitutes shall do by virtue of the presents. All actions hereunder may be
taken by any one of the persons named herein as Attorney-in-Fact or his
substitute. In the event of the death or incapacity of any Attorney-in-Fact, the
remaining Attorney-in-Fact shall appoint a substitute therefor. The term
"Attorney[s]-in-Fact" as used herein shall include their respective substitutes.
4. The undersigned hereby represents, warrants and agrees that:
(a) All information furnished to the Company by or on behalf of
the undersigned for the use in connection with the preparation of the
Registration Statement, including all information contained in the
Information Statement accompanying this Power of Attorney, is and will
be true and correct in all material respects on the date hereof, on the
effective date of the Registration Statement, and on the date[s] of
delivery referred to in the Underwriting Agreement (the "Closing Date")
and does not and will not omit any material fact necessary to make such
information not misleading;
(b) The undersigned, having full right, power and authority to do
so, has duly executed and delivered this Power of Attorney, appointing
the Attorneys-in-Fact as attorney-in-fact for the undersigned, to
execute and deliver the Custody Agreement and the Underwriting Agreement
and otherwise to act as specified in this Power of Attorney on behalf of
the undersigned in connection with the transactions contemplated by the
Underwriting Agreement. This Power of Attorney, the Custody Agreement
and the Underwriting Agreement are valid and binding agreements of the
undersigned, enforceable against the undersigned in accordance with
their terms, except as the enforceability of such agreements may be
subject to, or limited by, bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights
generally and general equitable principles.
(c) The undersigned has and, on the Closing Date will have, good,
valid and unencumbered title to the shares of Common Stock represented
by the certificates deposited on behalf of the undersigned with the
Transfer Agent, free and clear of any and all pledges, liens, security
interests, charges, claims, equities, and encumbrances, with full legal
right, power and authority to sell, assign, transfer and deliver the
same; the undersigned has, and on the Closing Date will have, full legal
right, power and authority and all authorizations, consents, orders and
approvals required by law to enter into the Underwriting Agreement and
to carry out all the terms and provisions thereof to be carried out by
the undersigned; such
B-4
<PAGE> 50
Underwriting Agreement, when properly executed, delivered and made
effective in accordance with its terms, will be a valid and binding
agreement of the undersigned; the certificate for Common Stock delivered
on behalf of the undersigned to the Transfer Agent in connection with
the sale of the Shares, as contemplated in the Underwriting Agreement,
is genuine and the undersigned has no knowledge of any fact which would
impair the validity of such certificate; upon the delivery of any
payment for the Shares being sold by the undersigned, as contemplated by
the Underwriting Agreement, the several Underwriters will receive good,
valid and unencumbered title to the Shares purchased from the
undersigned free and clear of any and all liens, encumbrances, equities,
security interests and claims whatsoever, including any liability for
estate or inheritance taxes, or any liability to or claims of any
creditor, devisee, legatee or beneficiary of the undersigned; such
shares on the Closing Date will be validly issued, fully paid and
nonassessable;
(d) The performance of the Underwriting Agreement by the
undersigned and the consummation of the transactions contemplated
therein will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage,
loan agreement, bond, debenture, will, deed of trust, trust, agreement
or other instrument, if any, to which the undersigned is a party or by
which the undersigned is, or the shares of Common Stock represented by
the certificates specified in the accompanying Information Statement
are, bound, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental body applicable to the
undersigned or, to the best knowledge of the undersigned, to such Common
Stock;
(e) The undersigned has carefully reviewed the Registration
Statement and will carefully review each amendment thereto upon receipt
thereof from the Company and will promptly advise you in writing if:
(i) The name and address of the undersigned, if set forth
in any preliminary prospectus (the "Preliminary Prospectus")
contained in the Registration Statement or the prospectus (the
"Prospectus") deemed to be part of the Registration Statement at
the time it becomes effective, is not properly set forth;
(ii) Except as set forth in the Preliminary Prospectus,
(A) either the undersigned or any of the undersigned's
associates** has an interest adverse to the Company or its
subsidiaries* in any pending legal proceeding, (B) either the
undersigned or any of the undersigned's associates is a party to
any contract with the Company or its subsidiaries, except a
contract which has been disclosed and the material terms of which
have been fully and accurately described in the Preliminary
- ---------------------------
** See Exhibit A attached hereto for certain definitions.
B-5
<PAGE> 51
Prospectus, (C) either the undersigned or any of the
undersigned's associates has a material relationship* with the
Company or any of its officers or directors, (D) the undersigned
has any information pertaining to underwriting compensation and
arrangements or any dealings between any "underwriter or related
person"*, "member"* of the National Association of Securities
Dealers, Inc. ("NASD") or a "person associated with the member"*
and the Company or any parent, subsidiary or controlling
shareholder thereof, other than information relating to the
proposed Underwriting Agreement, or (E) the undersigned is a
member of the NASD, a person associated with a member or an
underwriter or related person with respect to the proposed
offering;
(iii) The undersigned has reason to believe that (A) any
information furnished to the Company by or on behalf of the
undersigned for use in connection with the Registration Statement
or the Prospectus or any Preliminary Prospectus is not true and
complete; (B) each Preliminary Prospectus filed as part of the
Registration Statement as originally filed or as part of any
amendment thereto did not comply when so filed in all material
respects with the Securities Act of 1933, as amended (the
"Securities Act") and the applicable rules and regulations
thereunder; (C) the Registration Statement and any amendments
thereto do not comply in all material respects with the
Securities Act and the applicable rules and regulations
thereunder or contain any untrue statement of a material* fact or
omit to state any material* fact required to be stated therein or
necessary to make the statements therein not misleading; or (D)
any Preliminary Prospectus, the Prospectus and any supplements
thereto will contain any untrue statement of a material* fact or
omit to state any material* fact required to be stated therein or
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
except that these representations and warranties do not apply to
statements or omissions in the Registration Statement or the
Prospectus or any amendments or supplements thereto or any
Preliminary Prospectus based upon information furnished to the
Company in writing by any Underwriter;
(iv) The undersigned knows of any material* adverse
information with regard to the current or prospective operations
of the Company or its subsidiaries which is not disclosed in the
Preliminary Prospectus; or
(v) Except as indicated in the Preliminary Prospectus, the
undersigned knows of any arrangements made by or to be made by
any person or of any transaction already effected, (A) to limit
or restrict the sale of shares of Common Stock during the period
of the public distribution, (B) to stabilize the market for the
Common Stock, or (C) for withholding commissions, or otherwise to
hold the Underwriters or anyone else responsible for the
distribution of the undersigned's participation;
B-6
<PAGE> 52
(f) In connection with the offering of the Shares as contemplated
in the Underwriting Agreement, the undersigned has not taken and will
not take, directly or indirectly, any action designed to, or which might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of the Shares;
(g) The undersigned has not distributed and will not distribute
any prospectus or other offering material in connection with the
offering and sale of the Shares other than a Preliminary Prospectus and
the Prospectus, as appropriate, or other material permitted by the
Securities Act;
(h) The undersigned will notify the Company in writing
immediately of any changes in the foregoing information which should be
made as a result of developments occurring after the date hereof and
prior to the Closing Date, and you may consider that there has not been
any such development unless advised to the contrary;
(i) The undersigned has carefully reviewed the representations,
warranties, statements and agreements to be made by the undersigned as a
Selling Stockholder in the Underwriting Agreement and the indemnity and
contribution agreements contained therein and does hereby represent,
warrant and agree that (i) such representations, warranties, statements
and agreements, insofar as they relate to the undersigned are true and
correct as of the date hereof and will be true and correct at all times
through the Closing Date under the Underwriting Agreement and (ii) such
agreements, insofar as they relate to the undersigned, have been
complied with as of the date hereof and will be complied with on and
after the Closing Date;
(j) Without having undertaken to determine independently the
accuracy or completeness of the representations and warranties of the
Company contained in the Underwriting Agreement or the information
contained in the Registration Statement (except as such representations,
warranties and information relate to the undersigned), to the
undersigned's knowledge, the undersigned is not aware that any of the
representations and warranties as set forth in Section 3 of the
Underwriting Agreement is untrue or inaccurate in any material respect.
(k) All representations and warranties of the undersigned herein
and in Section 4 of the Underwriting Agreement will survive the
termination of the Underwriting Agreement and the delivery of and
payment for the Shares.
(l) Except as indicated in the accompanying Information
Statement, the undersigned has not sold during the last six (6) months
any Common Stock of the Company at a price varying from that at which
the Common Stock of the Company is proposed to be offered to the general
public pursuant to the offering;
B-7
<PAGE> 53
(m) Upon request of any Attorney-in-Fact, the Representatives or
their counsel, the undersigned, if a partnership, corporation,
custodian, trustee and/or guardian, will supply the Attorney-in-Fact
with all documentation demonstrating the undersigned's authority to
enter into and be bound by this Power of Attorney and the Custody
Agreement (e.g., appropriate corporate resolutions, By-laws and
Certificate of Incorporation; partnership agreements; trust agreements;
etc.); and
(n) Upon request of any Attorney-in-Fact or the Representatives
or their counsel, the undersigned will supply the Underwriters with an
opinion of the undersigned's counsel (which must allow reliance thereon
by) to the effect set forth in the Underwriting Agreement.
5. The representations, warranties and agreements of the undersigned in
this Power of Attorney and those of the undersigned contained in the
Underwriting Agreement, are made for the benefit of, and may be relied upon by,
the Attorneys-in-Fact, the Company, the Underwriters and the Representatives,
agents and counsel, the Custodian and Porter & Hedges, L.L.P., as counsel to the
Company.
6. The Attorneys-in-Fact shall be entitled to act and rely upon any
statement, request, notice or instructions respecting this Power of Attorney
given by the undersigned, not only as to the authorization, validity and
effectiveness thereof, but also as to the truth and acceptability of any
information therein contained; provided, however, that any statement or notice
to the Attorneys-in-Fact with respect to the Closing Date under the Underwriting
Agreement or with respect to the noneffectiveness or termination of the
Underwriting Agreement, or advice that the Underwriting Agreement has not been
executed and delivered, shall have been confirmed in writing to the
Attorneys-in-Fact by the Representatives. In acting hereunder, the
Attorneys-in-Fact may also rely on the representations and agreements of the
undersigned made in the Custody Agreement.
It is understood that the Attorneys-in-Fact assume no
responsibility or liability to any person other than to deal with the
certificates deposited with the Transfer Agent and the proceeds from the sale of
securities represented thereby in accordance with the provisions hereof. The
Attorneys-in-Fact (in such a capacity), make no representations with respect to
and shall have no responsibility for the Registration Statement or the
Prospectus nor, except as herein expressly provided, for any aspect of the
offering of Common Stock, and the Attorneys-in-Fact shall not be liable for any
error of judgment or for any act done or omitted or for any mistake of fact or
law except for the Attorneys-in-Fact's own gross negligence or bad faith. The
undersigned agrees to indemnify the Attorneys-in-Fact for and to hold the
Attorneys-in-Fact harmless against any loss, liability or expense incurred by or
on behalf of the Attorneys-in-Fact arising out of or in connection with acting
as Attorneys-in-Fact under this Power of Attorney, as well as the cost and
expenses of defending against any claim of liability in the premises, and not
due to the Attorneys-in-Fact's own gross negligence or bad faith. The
undersigned agrees that the Attorneys-in-Fact may consult with counsel of their
own choice (who may be counsel for the Company) and the Attorneys-in-Fact shall
have full and complete authorization and protection for any action taken or
suffered by the Attorneys-in-Fact hereunder in good faith and in accordance with
the opinion of such counsel.
B-8
<PAGE> 54
7. The undersigned has deposited with the Transfer Agent, certificates
in negotiable form for the Shares, duly endorsed in blank by the undersigned,
for delivery to the Underwriters under the Underwriting Agreement, upon the
authorization of the Custodian under the Custody Agreement.
8. The undersigned does not have any preemptive right, co-sale right or
right of first refusal or other similar right to purchase any of the Shares that
are to be sold by the Company to the Underwriters pursuant to the Underwriting
Agreement; and the undersigned does not own any warrants, options or similar
rights to acquire, and does not have any right or arrangement to acquire, any
capital stock, rights, warrants, options or other securities from the Company
other than those described in the Registration Statement and the Prospectus.
9. The undersigned will cooperate to the extent necessary to cause the
Registration Statement to become effective at the earliest possible time.
10. The undersigned will pay all federal and other taxes, if any, on the
transfer or sale of the Shares being sold by the undersigned to the
Underwriters.
11. This Power of Attorney, the Custody Agreement, the certificate(s)
representing Shares pursuant to the Custody Agreement, and all authority
conferred hereby and thereby, are granted, in consideration of the Company's
inclusion in the Registration Statement of the Shares that may be sold by the
undersigned and made and conferred subject to and in consideration of the
interests of each Attorney-In-Fact, the Custodians under the Custody Agreement,
the Underwriters and the Company, for the purpose of completing the transactions
contemplated by this Power of Attorney, by the Custody Agreement and by the
Underwriting Agreement; and each Attorney-In-Fact is hereby further vested with
an estate, right, title and interest in and to the Shares deposited with the
Transfer Agent, pursuant to the Custody Agreement for the purpose of irrevocably
empowering and securing to him authority sufficient to consummate said
transactions at the time of purchase. The undersigned agrees that the Shares
represented by the certificates held in custody are subject to the interests of
the Underwriters under the Custody Agreement and the Underwriting Agreement, and
the arrangements made by the undersigned and for such custody are, except as
specifically provided herein, irrevocable, and that the obligations of the
undersigned under this Power of Attorney, the Custody Agreement and the
Underwriting Agreement shall not be terminated by any act of the undersigned or
by operation of law, whether by the death or incapacity of any selling
stockholder (including the undersigned) or the occurrence of any other event. If
the undersigned should die or be incapacitated or if any other event shall occur
before completion of the transactions contemplated by the Underwriting
Agreement, this Power of Attorney and the Custody Agreement, the
Attorney-In-Fact nevertheless shall be authorized and directed to complete such
transactions in accordance with the terms and conditions of this Power of
Attorney, the Custody Agreement and the Underwriting Agreement as if such death,
incapacity or other event had not occurred, regardless of whether or not the
Attorney-In-Fact, the Custodian or any Underwriter shall have received notice of
such death, incapacity or other event.
B-9
<PAGE> 55
12. It is understood that the Attorneys-in-Fact shall serve entirely
without compensation but shall be entitled to reimbursement for all reasonable
out-of-pocket expenses incurred by them in the discharge of their
responsibilities hereunder.
13. This Power of Attorney shall be governed by, and construed in
accordance with, the laws of the State of Texas, without regard to principles of
conflicts of laws.
Dated: April ___, 2000 Very truly yours,
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
[Name & Address]
Signature guaranteed:**
- ------------------------------------
By:
---------------------------------
* To be signed in exactly the same manner as the shares are registered.
** The signature must be guaranteed by a commercial bank or trust company (but
not by a savings and loan association) or by a broker which is a member firm
of the American or New York Stock Exchange.
SPOUSAL CONSENT
I am the spouse of _______________________. On behalf of myself, my
heirs and legatees, I hereby join in and consent to the terms of the foregoing
Custody Agreement and agree to the sale of the shares of the Common Stock of
Texas Biotechnology Corporation, registered in the name of my spouse or
otherwise registered, which my spouse proposes to sell pursuant to the
Underwriting Agreement (as defined therein).
Dated: April ___, 2000.
By:______________________________
[Name]
B-10
<PAGE> 56
EXHIBIT A
Definitions
For purposes of the representations made in the Power of Attorney, the
following definitions shall be applicable:
"Associate" means (a) any corporation or organization (other than the
Company or any of its majority-owned subsidiaries) of which the party executing
the Power of Attorney is an officer or partner or of which such party is,
directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities, (b) any trust or other estate in which such party has a
substantial beneficial interest or as to which such party serves as trustee or
in a similar capacity, (c) the party's spouse, any relative of the party's
spouse or any relative of the party who has the same home as such party or who
is a director or officer or executive of the Company or any of its parents or
subsidiaries, and (d) any partner, syndicate member or person with whom such
party has agreed to act in concert with respect to the acquisition, holding,
voting or disposition of shares of the Company's securities.
"Beneficial," when used in connection with the ownership of securities,
means (a) any interest in a security which entitles a party to any of the rights
or benefits of ownership even though such party may not be the owner of record
or (b) securities owned by such party or which such party has a right to acquire
on or before March 1, 2000 directly or indirectly, including those held by him
for his own benefit (regardless of how registered) and securities held by others
for his benefit (regardless of how registered), such as by custodians, brokers,
nominees, pledges, etc., and including securities held by an estate or trust in
which such party has an interest as legatee or beneficiary, securities owned by
a partnership of which such party is a partner, securities held by a personal
holding company of which such party is a stockholder, etc., and securities held
in the name of such party's spouse, minor children and any relative (sharing the
same home). A "beneficial owner" of a security includes any person who, directly
or indirectly, through any contract, arrangement, understanding, relationship or
otherwise has or shares:
(a) voting power which includes the power to vote, or to direct
the voting of, such security; and/or
(b) investment power which includes the power to dispose, or to
direct the disposition, of such security.
"Control" (including the correlative terms "controlling,""controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting securities, by contract or
otherwise.
"Family Relationship" means any relationship by blood, marriage or
adoption, not more remote than first cousin.
B-11
<PAGE> 57
"Material," when used to qualify a requirement for the furnishing of
information as to any subject, limits the information required to those matters
to which there is a substantial likelihood that a reasonable investor would
attach importance in determining whether to purchase the Common Stock of the
Company.
"Material Relationship" has not been defined by the Securities and
Exchange Commission. However, the Commission has given indications that it will
probably construe as a "material relationship" any relationship which tends to
prevent arm's-length bargaining in dealings with a company, whether arising from
a close business connection or family relationship, a relationship of control or
otherwise. It seems prudent, therefore, to consider that a party would have such
a relationship, for example, with any organization of which he is an officer,
director, trustee or partner or in which he owns, directly or indirectly, 10% or
more of the outstanding voting stock or equity interest, in which he has some
other substantial interest, or which he may Control, and with any person or
organization with whom he has, or with whom any relative or spouse (or any other
person or organization as to which he has any of the foregoing other
relationships) has, a contractual relationship.
The NASD defines a "Member" as any broker or dealer admitted to
membership in the NASD.
The NASD defines a "Person Associated with a Member" as being every sole
proprietor, partner, officer, director or branch manager of any member, or any
natural person occupying a similar status or performing similar functions, or
any natural person engaged in the investment banking or securities business who
is directly or indirectly controlling or controlled by such member (for example,
any employee), whether or not any such person is registered or exempt from
registration with the NASD.
An "Underwriter or a Related Person" with respect to a proposed offering
includes the underwriters, underwriter's counsel, financial consultants and
advisors, finders, members of the selling or distribution group, and any and all
other persons associated with or related to any of such persons.
B-12
<PAGE> 58
INFORMATION STATEMENT
<TABLE>
<CAPTION>
NUMBER OF
SHARES NUMBER OF
COMMON STOCK DEPOSITED WITH SHARES TO BE
CERTIFICATE NUMBER TRANSFER AGENT REGISTERED IN NAME OF SOLD
================== ============== ===================== ============
<S> <C> <C> <C>
</TABLE>
B-13
<PAGE> 59
EXHIBIT C
_________, 2000
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
FIRST UNION SECURITIES, INC.
SANDERS MORRIS HARRIS
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Sirs:
In consideration of the agreement of the several Underwriters,
for which PaineWebber Incorporated, Prudential Vector Healthcare, First Union
Securities, Inc. and Sanders Morris Harris (the "Representatives") intend to act
as Representatives to underwrite a proposed public offering (the "Offering") of
5,000,000 shares of Common Stock, par value $0.005 per share (the "Common
Stock") of Texas Biotechnology Corporation, a Delaware corporation, as
contemplated by a registration statement with respect to such shares filed with
the Securities and Exchange Commission on Form S-3 (Registration No. 333-31932),
the undersigned hereby agrees that the undersigned will not, for a period of 90
days after the commencement of the public offering of such shares, without the
prior written consent of PaineWebber Incorporated, offer to sell, sell, contract
to sell, grant any option to sell, or otherwise dispose of, or require the
Company to file with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933 to register any shares of Common
Stock or securities convertible into or exchangeable for Common Stock or
warrants or other rights to acquire shares of Common Stock of which the
undersigned is now, or may in the future become, the beneficial owner within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934) (other than
pursuant to employee stock option plans or in connection with other employee
incentive compensation arrangements).
Very truly yours,
By:
----------------------------
Print Name:
--------------------
C-1
<PAGE> 60
EXHIBIT D
Form of Opinion of
Counsel to the Company
(a) The Company and its Subsidiary are corporations duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of their incorporation and have full corporate power and authority
to conduct all the activities conducted by them and are in good standing as
foreign corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires such
qualification except where the failure to be so licensed or qualified would not
have a material adverse effect on the condition (financial or other), results of
operations, business or prospects of the Company and have full corporate power
and authority to own or lease all the assets owned or leased by them and to
conduct their business as described in the Registration Statement and the
Prospectus. The Company is the sole record owner and, to our knowledge, the sole
beneficial owner of all of the capital stock of its Subsidiary.
(b) All of the outstanding shares of Common Stock have been, and
the Shares, when paid for by the Underwriters in accordance with the terms of
the Agreement, will be, duly authorized, validly issued, fully paid and
nonassessable and will not be subject to any preemptive or similar right under
(i) the statutes, judicial and administrative decisions, and the rules and
regulations of the governmental agencies of the State of Delaware, (ii) the
Company's certificate of incorporation or by-laws or (iii) any instrument,
document, contract or other agreement referred to in the Registration Statement
or any instrument, document, contract or agreement filed as an exhibit to, or
incorporated as an exhibit by reference in, the Registration Statement. Except
as described in the Registration Statement or the Prospectus, to the best of our
knowledge, there is no commitment or arrangement to issue, and there are no
outstanding options, warrants or other rights calling for the issuance of, any
share of capital stock of the Company or any Subsidiary to any person or any
security or other instrument that by its terms is convertible into, exercisable
for or exchangeable for capital stock of the Company.
(c) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
in connection with the authorization, issuance, transfer, sale or delivery of
the Shares by the Company, in connection with the execution, delivery and
performance of the Agreement by the Company or in connection with the taking by
the Company of any action contemplated thereby or, if so required, all such
consents, approvals, authorizations and orders, have been obtained and are in
full force and effect, except such as have been obtained under the Act and the
Rules and Regulations and such as may be required under state securities or
"Blue Sky" laws or by the by-laws and rules of the NASD in connection with the
purchase and distribution by the Underwriters of the Shares to be sold by the
Company. All references in this opinion to the Agreement shall include the Price
Determination Agreement.
D-1
<PAGE> 61
(d) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Registration Statement and the Prospectus under
the caption "Capitalization." The description of the Common Stock contained in
the Prospectus is complete and accurate in all material respects.
(e) The Registration Statement, including any Rule 462(b)
Registration Statement and all post-effective amendments thereto, if any, have
been declared effective under the Securities Act and the Prospectus was filed
with the Commission pursuant to the subparagraph of Rule 424(b) of the Rules and
Regulations. The Registration Statement, including any 424(b) Registration
Statement, and the Prospectus (including any documents incorporated by reference
into the Prospectus, at the time they were filed) comply or complied in all
material respects as to form with the requirements of the Act, the Exchange Act,
the Exchange Act Rules and Regulations and the Rules and Regulations (except
that we express no opinion as to financial statements, schedules and other
financial data contained in, the Registration Statement or the Prospectus or
incorporated by reference therein).
(f) To the best of our knowledge, any instrument, document,
lease, license, contract or other agreement (collectively, "Documents") required
to be described or referred to in the Registration Statement or the Prospectus
has been properly described or referred to therein and any Document required to
be filed as an exhibit to the Registration Statement has been filed as an
exhibit thereto or has been incorporated as an exhibit by reference in the
Registration Statement; and no default exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any Document filed or required to be filed as an exhibit to the
Registration Statement.
(g) To the best of our knowledge, except to the extent expressly
waived, as disclosed in the Registration Statement or the Prospectus, no person
or entity has the right to require the registration under the Act of shares of
Common Stock or other securities of the Company by reason of the filing or
effectiveness of the Registration Statement.
(h) To the best of our knowledge, the Company is not in violation
of, or in default with respect to, any law, rule, regulation, order, judgment or
decree, except as may be described in the Prospectus or such as in the aggregate
do not now have and will not in the future have a material adverse effect upon
the operations, business or assets of the Company and its Subsidiary, taken as a
whole.
(i) To our knowledge, there are no legal or governmental
proceedings pending or threatened against the Company or any of respective
properties or assets which are required to be described in the Prospectus but
are not so described.
(j) The Company has full corporate power and authority to enter
into the Agreement, and the Agreement has been duly authorized, executed and
delivered by the Company. The Agreement is a valid and binding agreement of the
Company and, except for the indemnification
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and contribution provisions thereof, as to which we express no opinion, is
enforceable against the Company in accordance with the terms thereof.
(k) The execution and delivery by the Company of, and the
performance by the Company of its agreements in, the Agreement do not and will
not (i) violate the certificate of incorporation or by-laws of the Company or
its Subsidiary, (ii) breach or result in a default under, cause the time for
performance of any obligation to be accelerated under, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the assets of the
Company or its Subsidiary pursuant to the terms of, (x) any indenture, mortgage,
deed of trust, loan agreement, bond, debenture, note agreement, capital lease or
other evidence of indebtedness of which we have knowledge, (y) any voting trust
arrangement or any contract or other agreement to which the Company or its
Subsidiary is a party that restricts the ability of the Company to issue
securities and of which we have knowledge or (z) any Document filed as an
exhibit to, or incorporated as an exhibit by reference in, the Registration
Statement or (iii) breach or otherwise violate any existing obligation of the
Company or its Subsidiary under any court or administrative order, judgment or
decree of which we have knowledge.
(l) Delivery of certificates for the Shares will transfer valid
and marketable title thereto to each Underwriter that has purchased such Shares
in good faith and without notice of any adverse claim with respect thereto.
(m) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
(n) The Shares have been duly authorized for listing by the
American Exchange upon official notice of issuance.
(o) We hereby confirm to you that we have been advised by the
Commission that the Registration Statement has become effective under the Act
and that no order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been instituted or is
pending, threatened or contemplated.
(p) The issue and sale of the shares of Stock being delivered on
the date hereof by the Company and the compliance by the Company with all of the
provisions of the Underwriting Agreement and the consummation of the
transactions contemplated thereby 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 known to us to which the Company is a party or by which the
Company is bound or to which any of the properties or assets of the Company is
subject, which violation would have a material adverse effect on the condition
(financial or other), results of operations, business or prospects of the
Company, nor will such actions result in any violation of the provisions of (i)
the charter or by-laws of the Company or (ii) any statute or any order, rule or
regulation known to us of any court or governmental agency or body having
jurisdiction over the Company or any of its properties or assets which
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violation, in the case of clause (ii), would have a material adverse effect on
the condition (financial or other), results of operations, business or prospects
of the Company; and, except for the registration of the Stock under the Act,
such consents, approval, authorizations, registrations or qualifications as may
be required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the Underwriter
and approval for listing of the Stock by the American Stock Exchange, no
consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of the Underwriting Agreement by the Company and the
consummation of the transactions contemplated hereby.
(q) We have participated in the preparation of the Registration
Statement and the Prospectus and, without assuming any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or in any document incorporated by reference into the Prospectus, and
except for the statements under the caption "Businesses - Licenses and Patents"
and "Risk Factors - Risks Relating to Intellectual Property" in the Registration
Statement and the Prospectus, insofar as such statements constitute a summary or
the legal matters or documents referred to therein, which correctly summarize
such legal matters and documents, nothing has come to our attention that causes
us to believe that, both as of the Effective Date and as of the Closing Date and
the Option Closing Date, the Registration Statement or any amendment thereto
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that any Prospectus or any
amendment or supplement thereto including any documents incorporated by
reference into the Prospectus, at the time such Prospectus was issued, at the
time any such amended or supplemented Prospectus was issued and at the Closing
Date, contained or contains any untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances in which they were made, not
misleading (except that we express no opinion as to financial statements,
schedules and other financial data contained in the Registration Statement or
the Prospectus or incorporated by reference therein).
(r) The foregoing opinion is subject to the qualification that
the enforceability of the Agreement may be: (i) subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally; and (ii) subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding at law or in
equity) including principles of commercial reasonableness or conscionability and
an implied covenant of good faith and fair dealing.
(s) This letter is furnished by us solely for your benefit in
connection with the transactions referred to in the Agreement and may not be
circulated to, or relied upon by, any other person, except that this letter may
be relied upon by your counsel in connection with the opinion letter to be
delivered to you pursuant to Section 6(g) of the Agreement.
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EXHIBIT E
Form of Opinion
of Counsel to the
Selling Shareholders
Each of the Selling Shareholders has full power to enter into the
Agreement and the Agreement and Power of Attorney and to sell, transfer and
deliver such Shares pursuant to the Agreement and the Agreement and Power of
Attorney. All authorizations and consents necessary for the execution and
delivery of the Agreement and the Agreement and Power of Attorney on behalf of
each of the Selling Shareholders has been given. The delivery of the Shares on
behalf of the Selling Shareholders pursuant to the terms of the Agreement and
payment therefor by the Underwriters will transfer good and marketable title to
the Shares to the several Underwriters purchasing the Shares, free and clear of
all liens, encumbrances and claims whatsoever.
Each of the Agreement and the Agreement and Power of Attorney has
been duly executed and delivered by or on behalf of each of the Selling
Shareholders, is a valid and binding agreement of each Selling Shareholder and,
except for the indemnification and contribution provisions of the Agreement and
the Agreement and Power of Attorney are enforceable against the Selling
Shareholders in accordance with the terms thereof.
To the best of our knowledge, no consent, approval, authorization
or order of, or any filing or declaration with, any court or governmental agency
or body is required in connection with the authorization, issuance, transfer,
sale or delivery of the Shares by or on behalf of the Selling Shareholders, in
connection with the execution, delivery and performance of the Agreement*** and
the Agreement and Power of Attorney by or on behalf of the Selling Shareholders
or in connection with the taking by or on behalf of the Selling Shareholders of
any action contemplated thereby or, if so required, all such consents,
approvals, authorizations and orders have been obtained and are in full force
and effect, except such as have been obtained under the Act or the Rules and
Regulations and such as may be required under state securities or "Blue Sky"
laws or by the by-laws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Shares to be sold by the Selling
Shareholders.
To the best of our knowledge, the execution and delivery by the
Selling Shareholders of, and the performance by the Selling Shareholders of
their agreements in, the Agreement and the Agreement and Power of Attorney, do
not and will not (i) breach or result in a default under, cause the time for
performance of any obligation to be accelerated under, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the assets of any
Selling Shareholders
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(1) All references in this opinion to the Agreement shall include the Price
Determination Agreement.
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pursuant to the terms of (x) any indenture, mortgage, deed of trust, loan
agreement, bond, debenture, note agreement, capital lease or other evidence of
indebtedness of which we have knowledge, (y) any voting trust arrangement or any
contract or other agreement to which any Selling Shareholders is a party that
restricts the ability of any such Selling Shareholders to sell such securities
and of which we have knowledge or (2) any other contract or other agreement, or
(ii) breach or otherwise violate any existing obligation of any Selling
Shareholders under any court or administrative order, judgment or decree of
which we have knowledge.
To the best of our knowledge, there are no transfer or similar
taxes payable in connection with the sale and delivery of the Shares by the
Selling Shareholders to the several Underwriters.
The foregoing opinion is subject to the qualification that the
enforceability of the Agreement and the Agreement and Power of Attorney may be
(i) subject to bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally; and (ii) subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity), including principles of commercial
reasonableness or conscionability and an implied covenant of good faith and fair
dealing.
This letter is furnished by us solely for your benefit in
connection with the transactions referred to in the Agreement and may not be
circulated to, or relied upon by, any other person, except with our prior
written consent.
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EXHIBIT F
Form of Opinion of
Dressler, Rockey, Milnamow & Katz, Ltd.
To the best of our knowledge, the Company owns, or possesses
adequate and enforceable rights to use, the Patents and all other intangibles
necessary for the conduct of its business as now being conducted and as
described in the Registration Statement and Prospectus. To the best of our
knowledge, neither the Company nor any of its subsidiaries has infringed, is
infringing or has received any notice of infringement of or conflict with any
intangibles of any other person that we believe will have a material adverse
effect on the conduct of its business as now being conducted and as described in
the Registration Statement and Prospectus. Nothing herein shall be construed as
a representation that any infringement searching or investigation has been
conducted to discover unknown intangibles of third parties.
Except for the proceedings involving processing and examination
of patent and trademark applications and patents before governmental bodies,
there is no litigation or governmental or other proceeding relating to the
Patents or any other intangibles necessary for the conduct of the Company's
business as now being conducted and as described in the Registration Statement
and Prospectus before any court or before or by any public body or board pending
to which the Company or its subsidiaries is a party or threatened against the
Company or any of its subsidiaries; neither the Company nor its subsidiaries has
given notice to any third party of any claim of infringement of its patents or
any intangibles.
The statements in the Registration Statement and Prospectus under
"Business --Licenses and Patents," and "Risk Factors--Risks Relating to
Intellectual Property" insofar as they purport to summarize the provisions of
statutes, regulations, contracts, agreements, patents, patent applications or
other documents therein described, have been prepared or reviewed by us and
accurately reflect the provisions purported to be summarized and are correct in
all material respects.
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