EXHIBIT 1.1
2,750,000 SHARES
HYSEQ, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
____________, 1997
Xxxxxx Brothers Inc.
Xxxxx Xxxxxx Inc.
Xxxxxxxxxx & Co.,Inc.,
As Representatives of the several
Underwriters named in Schedule 1,
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Hyseq, Inc., a Nevada corporation (the "Company"), proposes to sell to
the several Underwriters named in Schedule 1 hereto (the "Underwriters")
2,750,000 shares (the "Firm Stock") of the Company's Common Stock, par value
$0.001 per share (the "Common Stock"). In addition, the Company proposes to
grant to the Underwriters an option to purchase up to an additional 412,500
shares of the Common Stock on the terms and for the purposes set forth in
Section 2 (the "Option Stock"). The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the "Stock." This is to confirm
the agreement concerning the purchase of the Stock from the Company by the
Underwriters.
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 (File No. 333-29091),
and any post-effective amendments thereto with respect to the Stock
(i) has been prepared by the Company in conformity with the
requirements of the United States Securities Act of 1933 (the
"Securities Act") and the rules and regulations (the "Rules and
Regulations") of the United States Securities and Exchange Commission
(the "Commission") thereunder, (ii) has been filed with the Commission
under the Securities Act, (iii) has become effective under the
Securities Act, and (iv) no stop order preventing or
suspending the effectiveness of the registration statement is in
effect nor are any proceedings for such purpose pending before or, to
the Company's knowledge, threatened by the Commission. Copies of such
registration statement and any post-effective amendments thereto have
been delivered by the Company to you as the representatives (the
"Representatives") of the Underwriters. As used in this Agreement,
"Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission; "Effective
Date" means the date of the Effective Time; "Preliminary Prospectus"
means each prospectus included in such registration statement, or
amendments thereof, before it became effective under the Securities
Act and any prospectus filed with the Commission by the Company with
the consent of the Representatives pursuant to Rule 424(a) of the
Rules and Regulations; "Registration Statement" means such
registration statement, as amended at the Effective Time, including
all information contained in the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations and
deemed to be a part of the registration statement as of the Effective
Time pursuant to paragraph (b) of Rule 430A of the Rules and
Regulations; and "Prospectus" means such final prospectus, as first
filed with the Commission pursuant to paragraph (1) or (4) of Rule
424(b) of the Rules and Regulations.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or
the Prospectus will, when they become effective or are filed with the
Commission, as the case may be, comply in all material respects to the
requirements of the Securities Act and the Rules and Regulations and
do not and will not, as of the applicable effective date (as to the
Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided
that no representation or warranty is made as to information contained
in or omitted from the Registration Statement or the Prospectus in
reliance upon and in conformity with written information furnished to
the Company through the Representatives by or on behalf of any
Underwriter specifically for inclusion therein.
(c) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business 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, and have all corporate power and
authority necessary to own or hold their respective properties and to
conduct the businesses as described in the Prospectus, except where
the failure to so qualify would not have a material adverse effect on
the condition (financial or otherwise), operating results, business or
prospects of the Company; and
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none of the subsidiaries of the Company is a "significant subsidiary,"
as such term is defined in Rule 405 of the Rules and Regulations.
(d) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description thereof
contained in the Prospectus and have been issued in compliance with
the registration or qualification requirements of applicable state and
federal securities laws, except for an aggregate of _______ shares of
_______ stock issued to an aggregate of _______ persons in the states
of _______; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(e) The unissued shares of the Stock to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued, fully paid and non-
assessable and the issuance thereof will not be subject to any
preemptive rights, rights of first refusal or similar rights; and the
Stock will conform to the descriptions thereof contained in the
Prospectus.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated
hereby 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 any other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such actions
result in any violation of any of the provisions of applicable law or
the articles of incorporation or bylaws of the Company or any of its
subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or
assets; and except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations,
registrations, orders, certificates, permits 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 Underwriters, no consent, approval, authorization, certificate,
permit or order of, or filing or registration with, any such court,
tribunal, self-regulatory organization or governmental agency or body
is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby.
(h) There are no contracts, agreements or understandings between
the Company and any person granting such person the right to require
the Company to include any securities in the securities registered
pursuant to the Registration Statement.
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Except as disclosed in the Registration Statement, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person, or to
require the Company to include such securities in any securities being
registered pursuant to any other registration statement filed by the
Company under the Securities Act, or such existing rights have been
duly and effectively waived; and except as set forth in the
Prospectus, the Company does not have outstanding any options to
purchase, or any preemptive rights or other rights to subscribe for or
to purchase, any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of its capital stock
or any such options, rights, convertible securities or obligations.
(i) Except as described in the Registration Statement, the
Company has not sold or issued any shares of Common Stock during the
six-month period preceding the date of the Prospectus, including any
sales pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act.
(j) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included 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 any of its subsidiaries 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
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown thereby,
at the dates and for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved.
(l) Ernst & Young LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus and
who have delivered the initial letter referred to in Section 7(h)
hereof, are independent public accountants as required by the
Securities Act and the Rules and Regulations.
(m) The Company owns no real property. The Company and each of
its subsidiaries have good and marketable title to all personal
property owned by them, free and clear of all liens, encumbrances and
defects except such as are described in the
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Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be
made of such property by the Company and its subsidiaries; and all
real property and buildings held under lease by the Company and its
subsidiaries 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 subsidiaries.
(n) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in
which they are engaged; the Company has not been refused any insurance
coverage sought or applied for; and the Company has no reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or
operations of the Company, except as described in or contemplated by
the Prospectus.
(o) Except as described in the Prospectus, the Company owns or
possesses adequate licenses or other rights to use all patents,
copyrights, trademarks, service marks, trade names, technology and
know-how necessary to conduct its business in the manner described in
the Prospectus and, except as disclosed in the Prospectus, the Company
has not received any notice of infringement or conflict with asserted
rights of others with respect to any patents, copyrights, trademarks,
service marks, trade names, technology or know-how which would result
in any material adverse effect upon the Company and, except as
disclosed in the Prospectus, the discoveries, inventions, products or
processes of the Company referred to in the Prospectus do not infringe
or conflict with any right or patent of any third party, or any
discovery, invention, product or process which is the subject of a
patent application filed by any third party, known to the Company
which could have a material adverse effect on the Company.
(p) Except as described in the Prospectus, there are no legal or
governmental proceedings pending or threatened to which the Company or
any of its subsidiaries is a party or of which any property or assets
of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, might
have a material adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries; and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(q) There are no statutes, regulations, contracts or other
documents which are required to be described in the Prospectus or to
be filed as exhibits to the Registration Statement by the Securities
Act or by the Rules and Regulations which have not been described in
the Prospectus or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules and
Regulations.
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(r) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers,
stockholders, customers, service providers or suppliers of the Company
on the other hand, which is required to be described in the Prospectus
which is not so described.
(s) No labor disturbance by or dispute with the employees of the
Company exists or is threatened or, to the knowledge of the Company,
is imminent which might be expected to have a material adverse effect
on the consolidated financial position, stockholders' equity, results
of operations, business or prospects of the Company and its
subsidiaries.
(t) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and
each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification.
(u) The Company has timely filed all federal, state and local
income and franchise tax returns required to be filed through the date
hereof and has paid all taxes due thereon, and no tax deficiency has
been determined adversely to the Company or any of its subsidiaries
which has had, nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its
subsidiaries, might have a material adverse effect on the
consolidated financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries.
(v) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted
any securities (except pursuant to the exercise of outstanding options
and warrants), (ii) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (iii) entered into any transaction
not in the ordinary course of business or (iv) purchased any of its
outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock.
(w) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide
reasonable assurance that
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(A) transactions are executed in accordance with management's general
or specific authorizations, (B) transactions are recorded as necessary
to permit preparation of its financial statements in conformity with
generally accepted accounting principles consistently applied and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's general or specific
authorizations and (D) the recorded amount of its assets is compared
with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(x) Neither the Company nor any of its subsidiaries (i) is in
violation of its articles of incorporation or bylaws, (ii) is in
default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or assets is
subject or (iii) is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject or has failed to obtain any
material license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or
to the conduct of its business.
(y) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries, has used
any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is
in violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
(z) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes,
medical wastes, hazardous wastes or hazardous substances by the
Company or any of its subsidiaries (or, to the knowledge of the
Company, any of their predecessors in interest) at, upon or from any
of the property now or previously owned or leased by the Company or
its subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or
remedial action which would not have, or could not be reasonably
likely to have, singularly or in the aggregate with all such
violations and remedial actions, a material adverse effect on the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries; there
has been no material spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to
or caused by the
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Company or any of its subsidiaries or with respect to which the
Company or any of its subsidiaries have knowledge, except for any such
spill, discharge, leak, emission, injection, escape, dumping or
release which would not have or would not be reasonably likely to
have, singularly or in the aggregate with all such spills, discharges,
leaks, emissions, injections, escapes, dumpings and releases, a
material adverse effect on the general affairs, management, financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries; and the terms "hazardous wastes," "toxic
wastes," "hazardous substances" and "medical wastes" shall have the
meanings specified in any applicable local, state, federal and foreign
laws or regulations with respect to environmental protection.
(aa) All outstanding shares of Common Stock, and all securities
convertible into or exercisable or exchangeable for Common Stock, are
subject to valid, binding and enforceable agreements that restrict the
holders thereof from selling, granting any option for the purchase of,
or otherwise transferring or disposing of, any of such shares of
Common Stock, or any securities convertible into or exercisable or
exchangeable for Common Stock for a period of 180 days from the date
of the Prospectus.
(ab) Neither the Company nor any subsidiary is an "investment
company" or "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended, and the
rules and regulations of the Commission thereunder.
(ac) The Company has not at any time within the last five years
(i) made any unlawful contribution to any candidate for public office
or failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any federal or state government officer or
official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the
United States or any jurisdiction thereof.
(ad) The Company has complied with all provisions of Section
517.075, Florida Statues (Chapter 92-198, Laws of Florida), relating
to issuers doing business with the government of Cuba or with any
person or affiliate located in Cuba.
(ae) All engagements and arrangements between the Company and an
investment bank or third party pursuant to which such investment bank
or third party would be entitled to receive a fee in the event of a
private placement of securities, public offering of securities or
merger or acquisition involving the Company have expired by their
terms, been duly terminated or satisfied in full and there are no
liabilities or obligations of the Company thereunder, except for (i)
the Company's payment obligations under the Company's letter agreement
with Xxxxxxxxx, Xxxxxx and Xxxxxxxx Securities Corporation dated July
22, 1996 relating to payment of a fee upon merger or acquisition of
the Company which expires on July 22,1997, (ii) the Company's payment
obligations under the Company's letter agreement with Xxxxxxxxxx &
Co., Inc.
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("Xxxxxxxxxx") dated July 24, 1996 relating to payment of a fee upon a
merger or acquisition of the Company which expires on July 24, 1997,
(iii) the right of first refusal granted to Xxxxxxxxxx for all
investment banking activities of the Company for a three year period
expiring April 3, 1999 pursuant to the Company's letter agreement with
Xxxxxxxxxx dated April 3, 1996 and (iv) any arrangements for which
fees are reflected in Item 13 of Part II of the Registration
Statement.
2. Purchase of the Stock by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 2,750,000 shares of
the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in Schedule 1 hereto. The respective
purchase obligations of the Underwriters with respect to the Firm Stock shall be
rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 412,500 shares of Option Stock. Such option is granted solely
for the purpose of covering over-allotments in the sale of Firm Stock and is
exercisable as provided in Section 4 hereof. Shares of Option Stock shall be
purchased severally for the account of the Underwriters in proportion to the
number of shares of Firm Stock set opposite the name of such Underwriters in
Schedule 1 hereto. The respective purchase obligations of each Underwriter with
respect to the Option Stock shall be adjusted by the Representatives so that no
Underwriter shall be obligated to purchase Option Stock other than in 100 share
amounts. The price of both the Firm Stock and any Option Stock shall be $_____
per share.
The Company shall not be obligated to deliver any of the Stock to
be delivered on the First Delivery Date or the Second Delivery Date (as
hereinafter defined), as the case may be, except upon payment for all the Stock
to be purchased on such Delivery Date as provided herein.
3. Offering of Stock by the Underwriters.
Upon authorization by the Representatives of the release of the
Firm Stock, the several Underwriters propose to offer the Firm Stock for sale
upon the terms and conditions set forth in the Prospectus.
It is understood that certain shares of the Firm Stock will be
offered and sold upon the terms and conditions set forth in the Prospectus and
in accordance with the rules and regulations of the National Association of
Securities Dealers, Inc. to employees and persons having business relationships
with the Company and its subsidiaries who have heretofore delivered to the
Representatives offers to purchase shares of Firm Stock in form satisfactory to
the Representatives, and that any allocation of such Firm Stock among such
persons will be made in accordance with timely directions received by the
Representatives from the Company; provided, that under no circumstances will the
Representatives or any Underwriter be liable to the Company or to any such
person for any action taken or omitted in good faith in connection with such
offering to employees and persons having business relationships with the Company
and its subsidiaries. It is further understood that any shares of such Firm
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Stock which are not purchased by such persons will be offered by the
Underwriters to the public upon the terms and conditions set forth in the
Prospectus.
4. Delivery of and Payment for the Stock. Delivery of and payment
for the Firm Stock shall be made at the office of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx
00000-0000 at 10:00 A.M., New York City time, on the [fourth] full business day
following the date of this Agreement or at such other date or place as shall be
determined by agreement between the Representatives and the Company. This date
and time are sometimes referred to as the "First Delivery Date." On the First
Delivery Date, the Company shall deliver or cause to be delivered certificates
representing the Firm Stock to the Representatives for the account of each
Underwriter against payment to or upon the order of the Company of the purchase
price by wire transfer or certified or official bank check in same day funds.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Firm Stock shall be registered in
such names and in such denominations as the Representatives shall request in
writing not less than two full business days prior to the First Delivery Date.
For the purpose of expediting the checking and packaging of the certificates for
the Firm Stock, the Company shall make the certificates representing the Firm
Stock available for inspection by the Representatives in New York, New York, not
later than 2:00 P.M., New York City time, on the business day prior to the First
Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 2 may be exercised by written notice
being given to the Company by the Representatives. Such notice shall set forth
the aggregate number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to be registered,
the denominations in which the shares of Option Stock are to be issued and the
date and time, as determined by the Representatives, when the shares of Option
Stock are to be delivered; provided, however, that this date and time shall not
be earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
fifth business day after the date on which the option shall have been exercised.
The date and time the shares of Option Stock are delivered are sometimes
referred to as the "Second Delivery Date" and the First Delivery Date and the
Second Delivery Date are sometimes each referred to as a "Delivery Date").
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 4
(or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time, on the
Second Delivery Date. On the Second Delivery Date, the Company shall deliver or
cause to be delivered the certificates representing the Option Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer or certified or
official bank check in same day funds. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligation of each Underwriter hereunder. Upon delivery, the
Option Stock shall be registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Stock, the Company shall make the certificates representing the Option Stock
available for inspection by the Representatives in New
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York, New York, not later than 2:00 P.M., New York City time, on the business
day prior to the Second Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than Commission's close of business
on the second business day following the execution and delivery of
this Agreement or, if applicable, such earlier time as may be required
by Rule 430A(a)(3) under the Securities Act; to make no further
amendment or any supplement to the Registration Statement or to the
Prospectus except as permitted herein; to advise the Representatives,
promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with
copies thereof; to advise the Representatives, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request:
(i) conformed copies of the Registration Statement as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits other than this Agreement and the computation of per share
earnings) and (ii) each Preliminary Prospectus, the Prospectus and any
amended or supplemented Prospectus; and, if the delivery of a
prospectus is required at any time after the Effective Time in
connection with the offering or sale of the Stock or any other
securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary to amend or supplement the
Prospectus in order to comply with the Securities Act, to notify the
Representatives and, upon their request, to prepare and
-11-
furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus which will
correct such statement or omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 or Rule 462 of the Rules and
Regulations, to furnish a copy thereof to the Representatives and
counsel for the Underwriters and obtain the consent of the
Representatives to the filing, which consent shall not be unreasonably
withheld;
(f) As soon as practicable after the Effective Date (it being
understood that the Company shall have until at least 410 days after
the end of the Company's current fiscal quarter), to make generally
available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158);
(g) For a period of five years following the Effective Date, to
furnish to the Representatives copies of all materials furnished by
the Company to its shareholders and all public reports and all reports
and financial statements furnished by the Company to the principal
national securities exchange upon which the Common Stock may be listed
pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for
offering and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Stock provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or
file a general consent to service of process in any jurisdiction;
(i) For a period of 180 days from the date of the Prospectus, not
to offer, pledge, sell, contract to sell, engage in any short sale,
sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or exchangeable for
Common Stock (other than the Stock and options and shares issued
pursuant to employee benefit plans,
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qualified stock option plans or other employee compensation plans
existing on the date hereof and described in the Prospectus or
pursuant to currently outstanding options, warrants or rights or
agreements described in the Prospectus), without the prior written
consent of Xxxxxx Brothers Inc.; and to cause each officer and
director of the Company to furnish to the Representatives, prior to
the First Delivery Date, a letter or letters, in form and substance
satisfactory to counsel for the Underwriters, pursuant to which each
such person shall agree not to, directly or indirectly, offer for
sale, sell or otherwise dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares of
Common Stock for a period of 180 days from the date of the Prospectus,
without the prior written consent of Xxxxxx Brothers Inc.;
(j) Prior to the Effective Date, to apply for the listing of the
Stock on the Nasdaq National Market and to use its best efforts to
complete that listing, subject only to official notice of issuance,
prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of the Stock being
sold by the Company as set forth in the Prospectus; and
(l) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment
company" within the meaning of such term under the Investment Company
Act of 1940 and the rules and regulations of the Commission
thereunder.
6. Expenses. The Company agrees to pay (a) the costs incident to
the authorization, issuance, sale and delivery of the Stock and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Prospectus,
all as provided in this Agreement; (d) the costs of producing and distributing
this Agreement and any other related documents in connection with the offering,
purchase, sale and delivery of the Stock; (e) the filing fees incident to
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of sale of the Stock; (f) any applicable Nasdaq National
Market listing or other fees; (g) the fees and expenses of qualifying the Stock
under the securities laws of the several jurisdictions as provided in Section
5(h) and of preparing, printing and distributing a Blue Sky Memorandum; (h) all
costs and expenses of the Underwriters, including the fees and disbursements of
counsel for the Underwriters, incident to the offer and sale of shares of the
Stock by the Underwriters to employees and persons having business relationships
with the Company and its subsidiaries, as described in Section 3; and (i) all
other costs and expenses incident to the performance of the obligations of the
Company under this Agreement; provided that, except as provided in this Section
6 and in Section 11, the Underwriters shall pay their own costs and expenses,
including the costs and expenses of their counsel, any transfer taxes on the
Stock which they may sell and the expenses of advertising any offering of the
Stock made by the Underwriters.
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7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied
with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the
Underwriters, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Stock, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby
shall be reasonably satisfactory in all material respects to counsel
for the Underwriters, and the Company shall have furnished to such
counsel all documents and information that they may reasonably request
to enable them to pass upon such matters.
(d) Xxxxxxxx & Xxxxxx, Ltd. shall have furnished to the
Representatives its written opinion, as counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in form
and substance reasonably satisfactory to the Representatives, to the
effect that:
(i) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation,
except where the failure to so qualify would not have a material
adverse effect on the condition (financial or otherwise), operating
results, business or prospects of the Company, are duly qualified to
do business 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 and have all power and authority necessary to own or
hold their respective properties and conduct the businesses in which
they are engaged;
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(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company (including the shares of Stock being delivered on such
Delivery Date upon payment therefor as provided in this Agreement) and
have been duly and validly authorized and issued, are fully paid and
non-assessable, conform to the description thereof contained in the
Prospectus and have been issued in compliance with all applicable
federal and state securities laws, except for an aggregate of
__________ shares of __________ Stock issued to an aggregate of ____
persons in the States of __________; and all of the issued shares of
capital stock of each subsidiary of the Company have been duly and
validly authorized and issued and are fully paid, non-assessable and,
to such counsel's knowledge (except for directors' qualifying shares)
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims;
(iii) There are no preemptive or other rights to subscribe
for or to purchase, nor any restriction upon the voting or transfer
of, any shares of the Stock pursuant to the Company's articles of
incorporation or bylaws or, to such counsel's knowledge any agreement
or other instrument;
(iv) To such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is
a party or of which any property or assets of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, might have a material adverse
effect on the consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(v) The Registration Statement was declared effective under
the Securities Act as of the date and time specified in such opinion,
the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) of the Rules and Regulations specified in
such opinion on the date specified therein and no stop order
suspending the effectiveness of the Registration Statement has been
issued and, to the knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the Commission;
(vi) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to
such Delivery Date (other than the financial statements and related
schedules therein and other financial and statistical information
derived from the financial statements, as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the Securities Act and the Rules and Regulations
(other than the financial statements and related schedules therein and
other financial and statistical information derived from
-15-
the financial statements, as to which such counsel need express no
opinion), when they were filed with the Commission;
(vii) To such counsel's knowledge, there are no contracts
or other documents which are required under the Rules and Regulations
to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described or filed as exhibits to the
Registration Statement or incorporated therein by reference as
permitted by the Rules and Regulations;
(viii) This Agreement has been duly authorized, executed
and delivered by the Company;
(ix) The issue and sale of the shares of Stock being
delivered on such Delivery Date by the Company and the compliance by
the Company with all of the provisions of this Agreement and the
consummation of the transactions contemplated hereby 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 such counsel to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any violation
of the provisions of the articles of incorporation or bylaws of the
Company or any of its subsidiaries or, to such counsel's knowledge,
any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties or assets; and,
except for the registration of the Stock under the Securities Act and
such consents, approvals, 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 Underwriters, 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 this Agreement by the Company and the
consummation of the transactions contemplated hereby; and
(x) To such counsel's knowledge, there are no contracts,
agreements or understandings between the Company and any person
granting such person the right (other than rights which have been
waived or satisfied) to require the Company to include any securities
in the securities registered pursuant to the Registration Statement.
Except as disclosed in the Registration Statement, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to
require the Company to include such securities in any securities being
registered pursuant to any other registration statement filed by the
Company under the Securities Act.
-16-
In rendering such opinion, such counsel may (i) state that its opinion
is limited to matters governed by the Federal laws of the United States of
America, the laws of the State of Illinois and the General Corporation Law of
the State of Nevada and that such counsel is not admitted in the State of
Nevada; (ii) rely (to the extent such counsel deems proper and specifies in its
opinion), as to matters involving the application of the laws of the State of
Nevada upon the opinion of other counsel of good standing, provided that such
other counsel is satisfactory to counsel for the Underwriters and furnishes a
copy of its opinion to the Representatives; and in respect of matters of fact,
upon certificates of officers of the Company or its subsidiaries, provided that
such counsel shall state that it believes that both the Underwriters and it are
justified in relying upon such opinions and certificates. Such counsel shall
also have furnished to the Representatives a written statement, addressed to the
Underwriters and dated such Delivery Date, in form and substance satisfactory to
the Representatives, to the effect that (x) such counsel has acted as counsel to
the Company on a regular basis (although the Company is also represented with
respect to certain patent prosecution and litigation matters and certain other
matters, by other outside counsel), has acted as counsel to the Company in
connection with previous financing transactions and has acted as counsel to the
Company in connection with the preparation of the Registration Statement, and
(y) based on the foregoing, no facts have come to the attention of such counsel
which lead it to believe that the Registration Statement, as of the Effective
Date, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading except such counsel
need not express any view as to financial statements and related schedules and
other financial and statistical information derived from the financial
statements. The foregoing opinion and statement may be qualified by a statement
to the effect that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus except for the statements made in the
Prospectus under the captions "Description of Capital Stock," "Risk Factors--
Shares Eligible for Future Sale," Business--Collaborative and Other
Arrangements" and "Shares Eligible for Future Sale," insofar as such statements
relate to the Stock and concern legal matters.
(e) McCutchen, Doyle, Xxxxx & Xxxxxxx LLP ("XxXxxxxxx"), outside
patent counsel for the Company, shall have expertised the statements
set forth in the Prospectus under the captions "The Company," "Risk
Factors--Dependence on Proprietary Rights; Rights of Infringement" and
"Business--Patents and Proprietary Technology" (collectively, the
"Intellectual Property Portion"). In addition, the Representatives
shall have received on the Delivery Date and on any later date on
which Option Stock are purchased, as the case may be, a written
opinion of XxXxxxxxx, dated the Delivery Date or such later date on
which Option Stock are purchased, addressed to the Underwriters and
with reproduced copies or signed counterparts thereof for each of the
Underwriters, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
(i) Such counsel represents the Company in certain matters
relating to intellectual property, including patents, trade secrets,
copyrights, trademarks and intellectual property litigation;
-17-
(ii) The Company is the Assignee of record, and, to such
counsel's knowledge, the owner, of U.S. Patent Nos. 5,202,231,
5,492,806 and 5,525,464;
(iii) To such counsel's knowledge, except for the
litigation with Affymetrix, Inc. (Hyseq, Inc. v. Affymetrix, Inc.,
Case No. C 97-20188 RMW ENE, U.S. District Court for the Northern
District of California (the "Affymetrix Case")), there are no (A)
actions, suits, proceedings, claims or other legal actions or
governmental proceedings of which the Company has received notice,
relating to (1) any patents, trade secrets, trademarks, service marks,
trade names or copyrights (collectively, "Intellectual Property
Rights") owned or licensed by the Company pending against the Company
or any licensor of the Company, or (2) any third party Intellectual
Property Rights pending against the Company, or (B) claims asserted in
writing against the Company that the Company infringes the
Intellectual Property Rights of a third party or that a third party
has a right to use Intellectual Property Rights claimed by the
Company;
(iv) The description of the Affymetrix Case in the "Risk
Factors--Certain Litigation" and "Business--Litigation" portions of
the Prospectus is a fair and accurate summary thereof;
(v) To such counsel's knowledge, the Company's claims of
infringement against Affymetrix, Inc. in the Affymetrix Case are based
on the Company's good faith belief that Affymetrix, Inc. infringes the
patents named in the complaint filed by the Company;
(vi) Based upon the matters set forth in such counsel's
opinions to the Company, and subject to the limitations stated
therein, that the claims listed under U.S. Patent Nos. 4,883,750
(Detection of Specific Sequences in Nucleic Acids) and 5,242,794
(Detection of Specific Sequences in Nucleic Acids) are invalid as
anticipated and/or obvious;
(vii) Such counsel is not aware of any material defect of
form in the preparation or filing for U.S. Patent Nos. 5,202,231,
5,492,806, or 5,5525,464, or for U.S. Patent Application Serial Nos.
07/723,712 (issued as '231 patent), 08/045,912 (issued as '806
patent), 07/576,559, 08/048,152, or 08/203,582 (issued as '464
patent); and
(viii) Such counsel is acting in accordance with the
Company's instructions to actively prosecute the U.S. Patent
Application Serial Nos. 08/461,106 (now allowed), 08/460,853 (now
allowed), 08/353,554, 08/784,747, 08/801,174, Unassigned, filed
03/04/97, Unassigned, filed 03/19/97, and Unassigned, filed 03/19/97,
and that none of the foregoing applications is currently abandoned.
-18-
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Prospectus and related matters were discussed, and although they
have not verified the accuracy or completeness of the statements contained in
the Prospectus, nothing has come to the attention of such counsel which leads
such counsel to believe that, the Intellectual Property Information in the
Prospectus and any amendment or supplement thereto (other than financial
statements including supporting schedules and other financial and statistical
information derived therefrom, as to which such counsel need express no comment)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or the Intellectual Property Information in the
Prospectus, and any amendment or supplement thereto, (except aforesaid) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(f) The Representatives shall have received on the Delivery Date
and on any later date on which Option Shares are purchased, as the case may
be, a written opinion of Trial & Technology Law Group, A Professional
Corporation, dated the Delivery Date or such later date on which Option
Shares are purchased, addressed to the Underwriters and with reproduced
copies or signed counterparts thereof for each of the Underwriters, in form
and substance reasonably satisfactory to the Representatives, to the effect
that:
(i) U.S. Patent No. 5,202,231 assigned to the Company would
probably be held valid and enforceable by a court of competent jurisdiction
based upon such counsel's review of the prior art of record cited during
the patent's prosecution and the additional prior art brought to the
attention of the U.S. Patent and Trademark Office by subsequently filed
patent applications relying on the parent application for priority, the
interference action declared by the U.S. Patent and Trademark Office with
U.S. Patent No. 5,002,867 by Macevicz and successfully dismissed, and third
party filings related to and prior art searched performs by counsel for the
Company in preparation to file an opposition to a European Application No.
EP-B-0373203 assigned to Isis Innovation Limited; and
(ii) The facts which strengthen the presumption of validity and
enforceability of U.S. Patent No. 5,202,231 include that (A) the prior art
cited by the applicants and examiners was extensive and consistent in the
prosecution of each of the applications, (B) the examiners' arguments were
sound on both a technical and legal basis; (C) the arguments presented by
the applicants during the prosecution of the application were consistent,
and (D) subsequent searches performed by the applicants relating to the
Macevicz interference action and the opposition of the European Application
No. EP-B-0373203 were extensive and provided no prior art that was more
relevant or material than what was considered by the examiners in the
prosecution of the applications.
-19-
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Prospectus and related matters were discussed, and although they
have not verified the accuracy or completeness of the statements contained in
the Prospectus, nothing has come to the attention of such counsel which leads
such counsel to believe that, the Intellectual Property Information in the
Prospectus and any amendment or supplement thereto (other than financial
statements including supporting schedules and other financial and statistical
information derived therefrom, as to which such counsel need express no comment)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or the Intellectual Property Information in the
Prospectus, and any amendment or supplement thereto, (except aforesaid) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(g) The Representatives shall have received from Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the
Underwriters, such opinion or opinions, dated such Delivery Date, with
respect to the issuance and sale of the Stock, the Registration
Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they reasonably request
for the purpose of enabling them to pass upon such matters.
(h) At the time of execution of this Agreement, the
Representatives shall have received from Ernst & Young LLP a letter,
in form and substance satisfactory to the Representatives, addressed
to the Underwriters and dated the date hereof (i) confirming that they
are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior to
the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings.
(i) With respect to the letter of Ernst & Young LLP referred to
in the preceding paragraph and delivered to the Representatives
concurrently with the execution of this Agreement (the "initial
letter"), the Company shall have furnished to the Representatives a
letter (the "bring-down letter") of such accountants, addressed to the
Underwriters and dated such Delivery Date (i) confirming that they are
independent public accountants within the meaning of the Securities
Act and are in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission, (ii) stating, as of the date of the bring-down letter
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(or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior to
the date of the bring-down letter), the conclusions and findings of
such firm with respect to the financial information and other matters
covered by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter.
(j) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its President or a Vice
President and its chief financial officer stating that:
(i) The representations and warranties of the Company in
Section 1 are true and correct as of such Delivery Date; the Company
has complied with all its agreements contained herein; and the
conditions set forth in Sections 7(a) and 7(k) have been fulfilled;
and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in the Company's opinion (A) as of
the Effective Date, the Registration Statement and Prospectus did not
include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) since the
Effective Date no event has occurred which should have been set forth
in a supplement or amendment to the Registration Statement or the
Prospectus.
(k) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any 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; or (ii) since such date there shall
not have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of the
Representatives, so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery of
the Stock being delivered on such Delivery Date on the terms and in
the manner contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices shall have been
-21-
established on any such exchange or such market by the Commission, by
such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have
been declared by Federal or state authorities, (iii) the United States
shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall
have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the
United States shall be such) as to make it, in the judgment of a
majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the
Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(m) The Nasdaq National Market shall have approved the Stock for
listing, subject only to official notice of issuance and evidence of
satisfactory distribution.
(n) The Representatives shall have received on the Delivery Date
and on any later date on which the Option Shares are purchased, as the case
may be, a written opinion of Xxxxxx Xxxxx & Xxxxxx, P.C., dated the
Delivery Date or such later date on which Option Shares are purchased
addressed to the Underwriters and with reproduced copies or signed
counterparts thereof for each of the Underwriters, in form and substance
reasonably satisfactory to the Representatives, to the effect that the
claims made by plaintiff, Sands Brothers & Co., Ltd. in Sands Brothers &
Co., Ltd. v. Hyseq, Inc. (96 Civ. 3469, S.D.N.Y.) are without merit.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who
controls any Underwriter within the meaning of the Securities Act,
from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases
and sales of Stock), to which that Underwriter, officer, employee or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (B) in any blue sky application or
other document prepared or executed by the Company (or based upon any
written information furnished by the Company) specifically for the
purpose of qualifying any or all of the Stock under the securities
laws of any state or other jurisdiction (any such
-22-
application, document or information being hereinafter called a "Blue
Sky Application"), (ii) the omission or alleged omission to state in
any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any amendment or supplement thereto, or in any Blue
Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, (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
Stock or the offering contemplated hereby and which is included as
part of or referred to in any loss, claim, damage, liability or action
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 that it is determined in a final judgment by a
court of competent jurisdiction that such loss, claim, damage,
liability or action resulted directly from any such acts or failures
to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), or (iv) any liability or
obligation pursuant to any agreement or arrangement with any
investment bank or third party providing for any fee or other
compensation to such party relating to any private placement or public
offering of securities, or merger or acquisition of the Company or any
first refusal rights or other similar rights granted to such persons,
including but not limited to (A) the Company's letter agreements with
Sands Brothers, Inc. ("Sands") dated February 19, 1996 and February
29, 1996, (B) the Company's Selected Dealer Agreement with Sands dated
March 11, 1996 and (C) the Company's letter agreement with Xxxxxxx,
White & Xxxx dated December 8, 1995, and shall reimburse each
Underwriter and each such officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably
incurred by that Underwriter, officer, employee or controlling person
in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not
be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any such amendment or supplement,
or in any Blue Sky Application, in reliance upon and in conformity
with written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein. The foregoing indemnity agreement
is in addition to any liability which the Company may otherwise have
to any Underwriter or to any officer, employee or controlling person
of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify
and hold harmless the Company, its officers and employees, each of its
directors, and each person, if any, who controls the Company within
the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect
thereof, to which the Company or any such director, officer or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary
Prospectus,
-23-
the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (ii) the
omission or alleged omission to state in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact
required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company
through the Representatives by or on behalf of that Underwriter
specifically for inclusion therein, and shall reimburse the Company
and any such director, officer or controlling person for any legal or
other expenses reasonably incurred by the Company or any such
director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any
liability which any Underwriter may otherwise have to the Company or
any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under
this Section 8 except to the extent it has been materially prejudiced
by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for
any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Representatives
shall have the right to employ counsel to represent jointly the
Representatives and those other Underwriters and their respective
officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may
be sought by the Underwriters against the Company under this Section 8
if, in the written opinion of independent counsel for the
Underwriters, joint representation of the indemnified and indemnifying
party would present counsel with a conflict or if there are differing
defenses available, the fees and expenses of one separate counsel (and
one local counsel) for all indemnified parties in each jurisdiction
shall be paid by the Company. No indemnifying party shall (i) without
the prior written consent of the indemnified
-24-
parties (which consent shall not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or
(ii) be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party
or if there be a final judgment of the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of
such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall
for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred
to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the
other from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault
of the Company on the one hand and the Underwriters on the other with
respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the
other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Stock
purchased under this Agreement (before deducting expenses) received by
the Company, on the one hand, and the total underwriting discounts and
commissions received by the Underwriters with respect to the shares of
the Stock purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the shares of the Stock
under this Agreement, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault shall be determined
by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or 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 and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8 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, damage or liability,
or action in respect
-25-
thereof, referred to above in this Section shall be deemed to include,
for purposes of this Section 8(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 8(d), no Underwriter shall be required
to contribute any amount in excess of the amount by which the total
price at which the Stock underwritten by it and distributed to the
public was offered to the public exceeds the amount of any damages
which such Underwriter has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall 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 8(d) are several in proportion
to their respective underwriting obligations and not joint.
(e) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public offering
of the Stock by the Underwriters set forth in the last paragraph on
the cover page of, the legend concerning market stabilization
activities on the inside front cover page of and the concession and
reallowance figures appearing in the first paragraph under the table
of Underwriters and the information contained in the last paragraph
under the caption "Underwriting" in, the Prospectus are correct and
constitute the only information concerning such Underwriters furnished
in writing to the Company by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement and the
Prospectus.
9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining non-
defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total number
of shares of the Stock which the defaulting Underwriter or Underwriters agreed
but failed to purchase on such date exceeds 9.09% of the total number of shares
of the Stock to be purchased on such Delivery Date, and any remaining non-
defaulting Underwriter shall not be obligated to purchase more than 110% of the
number of shares of the Stock which it agreed to purchase on such Delivery Date
pursuant to the terms of Section 2. If the foregoing maximums are exceeded, the
remaining non-defaulting Underwriters, or those other underwriters satisfactory
to the Representatives who so agree, shall have the right, but shall not be
obligated, to purchase, in such proportion as may be agreed upon among them, all
the Stock to be purchased on such Delivery Date. If the remaining Underwriters
or other underwriters satisfactory to the Representatives do not elect to
purchase the shares which the defaulting Underwriter or Underwriters agreed but
failed to purchase on such Delivery Date, this Agreement (or, with respect to
the Second
-26-
Delivery Date, the obligation of the Underwriters to purchase, and of the
Company to sell, the Option Stock) shall terminate without liability on the part
of any non-defaulting Underwriter or the Company, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Sections 6 and 11. As used in this Agreement, the term "Underwriter" includes,
for all purposes of this Agreement unless the context requires otherwise, any
party not listed in Schedule 1 hereto who, pursuant to this Section 9, purchases
Firm Stock which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Stock of a defaulting
or withdrawing Underwriter, either the Representatives or the Company may
postpone the Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 7(k) or 7(l), shall have occurred
or if the Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement.
11. Reimbursement of Underwriters' Expenses. If (a) the Company
shall fail to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or (b) because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Stock, and upon demand the Company shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 9 by
reason of the default of one or more Underwriters, the Company shall not be
obligated to reimburse any defaulting Underwriter on account of those expenses.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Xxxxxx Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 000-000-0000), with a copy, in the case of any notice
pursuant to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Xxxxxx Brothers Inc., Three World Xxxxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000;
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(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in
the Registration Statement, Attention: President (Fax: 000-000-0000);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Xxxxxx Brothers Inc. on behalf of the
Representatives.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, and
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control any Underwriter within the meaning of Section 15 of
the Securities Act and (B) the indemnity agreement of the Underwriters contained
in Section 8(b) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within the meaning
of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 13, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
15. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York.
17. Consent to Jurisdiction. Each party irrevocably agrees that any
legal suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated hereby ("Related Proceedings") may be instituted
in the federal courts of the United States of America located in the City of New
York or the courts of the State of New York in each case located in the Borough
of Manhattan in the City of New York (collectively, the "Specified Courts"), and
irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment
-28-
of any such court (a "Related Judgment"), as to which such jurisdiction is non-
exclusive) of such courts in any such suit, action or proceeding. The parties
further agree that service of any process, summons, notice or document by mail
to such party's address set forth above shall be effective service of process
for any lawsuit, action or other proceeding brought in any such court. The
parties hereby irrevocably and unconditionally waive any objection to the laying
of venue of any lawsuit, action or other proceeding in the Specified Courts, and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such lawsuit, action or other proceeding
brought in any such court has been brought in an inconvenient forum.
18. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
-29-
If the foregoing correctly sets forth the agreement between the Company and
the Underwriters, please indicate your acceptance in the space provided for that
purpose below.
Very truly yours,
Hyseq, Inc.
a Nevada corporation
By:
--------------------------------
Xxxxx X. Xxxxxx,
President and Chief Executive Officer
Accepted:
Xxxxxx Brothers Inc.
Xxxxx Xxxxxx Inc.
Xxxxxxxxxx & Co., Inc.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By: Xxxxxx Brothers Inc.
By:
-----------------------------------
Authorized Representative
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SCHEDULE 1
NUMBER OF
UNDERWRITERS SHARES
--------------------------------------------- ------------
Xxxxxx Brothers Inc. ........................
Xxxxx Xxxxxx Inc. ...........................
Xxxxxxxxxx & Co. Inc. .......................
Total:
============
