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1,600,000 UNITS, EACH UNIT CONSISTING OF ONE
SHARE OF COMMON STOCK AND
ONE REDEEMABLE WARRANT
OPHIDIAN PHARMACEUTICALS, INC.
UNDERWRITING AGREEMENT
New York, New York
__________, 1998
XXXXX & COMPANY, INC.
SECURITY CAPITAL TRADING INC.
As Representatives of the
Several Underwriters listed on Schedule A hereto
c/x Xxxxx & Company, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Ophidian Pharmaceuticals, Inc., a Wisconsin corporation (the "Company"),
confirms its agreement with Xxxxx & Company, Inc. ("Xxxxx") and Security
Capital Trading Inc. ("Security") and each of the underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 11), for
whom Xxxxx and Security are acting as representatives (in such capacity, Xxxxx
and Security shall hereinafter be referred to as "you" or the
"Representatives"), with respect to the sale by the Company and the purchase by
the Underwriters, acting severally and not jointly, of the respective number of
units ("Units") set forth in Schedule A hereto, each Unit consisting of one
share ("Shares") of the Company's Common Stock, $.0025 par value ("Common
Stock") and one warrant to acquire one additional share of Common Stock (the
"Redeemable Warrants"). The shares of Common Stock and Redeemable Warrants
comprising the Units will not be separately transferable for a period of three
months after the date hereof or such earlier date as shall be determined by the
Representatives and the Company (the "Separation Date"). The 1,600,000 Units
are hereafter referred to as the "Firm Securities." Each Redeemable Warrant is
exercisable
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commencing on _________, 1999 until __________, 2003, unless previously
redeemed by the Company, at an initial exercise price of $7.32 per share. The
Redeemable Warrants may be redeemed by the Company at a redemption price of
$.10 per Redeemable Warrant at any time after __________, 2000 on thirty (30)
days' prior written notice, provided that the closing sale price of the Common
Stock equals or exceeds $14.64 per share, for any twenty (20) trading days
within a period of thirty (30) consecutive trading days ending on the fifth
trading day prior to the date of the notice of redemption, all in accordance
with the terms and conditions of the Warrant Agreement (herein defined).
Upon your request, as provided in Section 2(b) of this Agreement, the
Company shall also issue and sell to the Underwriters, acting severally and not
jointly, up to an additional 240,000 Units for the purpose of covering
over-allotments, if any. Such 240,000 Units are hereinafter collectively
referred to as the "Option Securities." The Company also proposes to issue and
sell to you warrants (the "Representatives' Warrants") pursuant to the
Representatives' Warrant Agreement (the "Representatives' Warrant Agreement")
for the purchase of an additional 160,000 Units . The shares of Common Stock
and Redeemable Warrants issuable upon exercise of the Representatives' Warrants
are hereinafter referred to as the "Representatives' Securities." The Firm
Securities, the Option Securities, the Representatives' Warrants and the
Representatives' Securities (collectively, hereinafter referred to as the
"Securities") are more fully described in the Registration Statement and the
Prospectus referred to below.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters as of the
date hereof, and as of the Closing Date (as hereinafter defined) and each
Option Closing Date (as hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and an
amendment or amendments thereto, on Form S-1 (No. 333-33219), including any
related preliminary prospectus ("Preliminary Prospectus"), for the registration
of the Firm Securities, the Option Securities and the Representatives'
Securities under the Securities Act of 1933, as amended (the "Act"), which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act, and the rules and
regulations (the "Regulations") of the Commission under the Act. The Company
will promptly file a further amendment to said registration statement in the
form heretofore delivered to the Underwriters and will not file any other
amendment thereto to which the Underwriters shall have objected in writing
after having been furnished with a copy thereof. Except as the context may
otherwise require, such registration statement, as amended, on file with the
Commission at the time the registration statement becomes effective (including
the prospectus, financial statements, schedules, exhibits and all other
documents filed as a part thereof or incorporated therein (including, but not
limited to those documents or information incorporated by reference therein)
and all information deemed to be a part thereof as of such time pursuant to
paragraph (b) of Rule 430(A) of the Regulations), is hereinafter called the
"Registration Statement", and the form of prospectus in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations, is hereinafter
called the "Prospectus." For purposes hereof, "Rules and Regulations" mean the
rules and regulations
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adopted by the Commission under either the Act or the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as applicable.
(b) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any Preliminary
Prospectus, the Registration Statement or Prospectus or any part of any thereof
and no proceedings for a stop order suspending the effectiveness of the
Registration Statement or any of the Company's securities have been instituted
or are pending or threatened. Each of the Preliminary Prospectus, the
Registration Statement and Prospectus at the time of filing thereof conformed
with the requirements of the Act and the Rules and Regulations, and none of
the Preliminary Prospectus, the Registration Statement or Prospectus at the
time of filing thereof contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except that this representation and warranty does
not apply to statements made in reliance upon and in conformity with written
information furnished to the Company with respect to the Underwriters by or on
behalf of the Underwriters expressly for use in such Preliminary Prospectus,
Registration Statement or Prospectus or any amendment thereof or supplement
thereto.
(c) When the Registration Statement becomes effective and at all
times subsequent thereto up to the Closing Date (as defined herein) and each
Option Closing Date (as defined herein), if any, and during such longer period
as the Prospectus may be required to be delivered in connection with sales by
the Underwriters or a dealer, the Registration Statement and the Prospectus
will contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and will conform to the
requirements of the Act and the Rules and Regulations; neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto, will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
provided, however, that this representation and warranty does not apply to
statements made or statements omitted in reliance upon and in conformity with
information furnished to the Company in writing by or on behalf of any
Underwriter expressly for use in the Preliminary Prospectus, Registration
Statement or Prospectus or any amendment thereof or supplement thereto.
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the state of its incorporation.
Except as set forth in the Prospectus, the Company does not own an interest in
any corporation, partnership, trust, joint venture or other business entity.
The Company is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires such qualification or
licensing. The Company has all requisite power and authority (corporate and
other), and has obtained any and all necessary authorizations, approvals,
orders, licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies (including, without limitation,
those having jurisdiction over environmental or similar matters), to own or
lease its properties and conduct its business as described in the Prospectus;
the Company is and has been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises and
permits and all applicable federal, state, local and foreign laws, rules and
regulations; and the
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Company has not received any notice of proceedings relating to the revocation
or modification of any such authorization, approval, order, license,
certificate, franchise, or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the earnings,
position, prospects, value, operation, properties, business or results of
operations of the Company. The disclosures in the Registration Statement
concerning the effects of federal, state, local, and foreign laws, rules and
regulations on the Company's business as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading in light of the circumstances under which they
were made.
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus under "Capitalization" and
"Description of Securities" and will have the adjusted capitalization set forth
therein on the Closing Date and each Option Closing Date, if any, based upon
the assumptions set forth therein, and the Company is not a party to or bound
by any instrument, agreement or other arrangement providing for it to issue any
capital stock, rights, warrants, options or other securities, except for this
Agreement, the Warrant Agreement, the Representatives' Warrant Agreement and as
described in the Prospectus. The Securities and all other securities issued or
issuable by the Company conform or, when issued and paid for, will conform, in
all respects to all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and outstanding
securities of the Company have been duly authorized and validly issued and are
fully paid and non-assessable and the holders thereof have no rights of
rescission with respect thereto, and are not subject to personal liability by
reason of being such holders except as described in the Prospectus; and none of
such securities were issued in violation of the preemptive rights of any
holders of any security of the Company or similar contractual rights granted by
the Company. The Securities are not and will not be subject to any preemptive
or other similar rights of any stockholder, have been duly authorized and, when
issued, paid for and delivered in accordance with the terms hereof, will be
validly issued, fully paid and non-assessable and will conform to the
description thereof contained in the Prospectus; the holders thereof will not
be subject to any liability solely as such holders except as described in the
Prospectus; all corporate action required to be taken for the authorization,
issue and sale of the Securities has been duly and validly taken; and the
certificates representing the Securities will be in due and proper form. Upon
the issuance and delivery pursuant to the terms hereof of the Securities to be
sold by the Company hereunder, the Underwriters or the Representatives, as the
case may be, will acquire good and marketable title to such Securities free and
clear of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever.
(f) The financial statements of the Company, together with the
related notes and schedules thereto, included in the Registration Statement,
each Preliminary Prospectus and the Prospectus fairly present the financial
position, income, changes in cash flow, changes in stockholders' equity and the
results of operations of the Company at the respective dates and for the
respective periods to which they apply and such financial statements have been
prepared in conformity with generally accepted accounting principles and the
Rules and Regulations, consistently applied throughout the periods involved and
such financial statements as are audited have been examined by Ernst & Young
LLP, who are independent certified public accountants within the meaning of the
Act and the Rules and Regulations, as indicated in their reports filed
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therewith. There has been no adverse change or development involving a
prospective adverse change in the condition, financial or otherwise, or in the
earnings, position, prospects, value, operation, properties, business, or
results of operations of the Company, whether or not arising in the ordinary
course of business, since the date of the financial statements included in the
Registration Statement and the Prospectus and the outstanding debt, the
property, both tangible and intangible, and the business of the Company,
conform in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus. Financial information (including,
without limitation, any pro forma financial information) set forth in the
Prospectus under the headings "Summary Financial Information," "Selected
Financial Data," "Capitalization," and "Management's Discussion and Analysis
of Financial Condition and Results of Operations," fairly present, on the basis
stated in the Prospectus, the information set forth therein, and have been
derived from or compiled on a basis consistent with that of the audited
financial statements included in the Prospectus; and, in the case of pro forma
financial information, if any, the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein. The amounts shown
as accrued for current and deferred income and other taxes in such financial
statements are sufficient for the payment of all accrued and unpaid federal,
state, local and foreign income taxes, interest, penalties, assessments or
deficiencies applicable to the Company, whether disputed or not, for the
applicable period then ended and periods prior thereto; adequate allowance for
doubtful accounts has been provided for unindemnified losses due to the
operations of the Company; and the statements of income do not contain any
items of special or nonrecurring income not earned in the ordinary course of
business, except as specified in the notes thereto.
(g) The Company (i) has paid all federal, state, local, and foreign
taxes for which it is liable, including, but not limited to, withholding taxes
and amounts payable under Chapters 21 through 24 of the Internal Revenue Code
of 1986, as amended (the "Code"), and has furnished all information returns it
is required to furnish pursuant to the Code, (ii) has established adequate
reserves for such taxes which are not due and payable, and (iii) does not have
any tax deficiency or claims outstanding, proposed or assessed against it.
(h) No transfer tax, stamp duty or other similar tax arising under
federal or State of Wisconsin law is payable by or on behalf of the
Underwriters in connection with (i) the issuance by the Company of the
Securities, (ii) the purchase by the Underwriters of the Firm Securities and
the Option Securities from the Company and the purchase by the Representatives
of the Representatives' Warrants from the Company, (iii) the consummation by
the Company of any of its obligations under this Agreement, or (iv) resales of
the Firm Securities and the Option Securities in connection with the
distribution contemplated hereby.
(i) The Company maintains insurance policies, including, but not
limited to, general liability and property insurance, which insures each of the
Company and its employees, against such losses and risks generally insured
against by comparable businesses. The Company (A) has not failed to give
notice or present any insurance claim with respect to any matter, including but
not limited to the Company's business, property or employees, under any
insurance policy or surety bond in a due and timely manner, (B) does not have
any disputes or claims against any underwriter of such insurance policies
or surety bonds and has paid all premiums due and payable thereunder, and (C)
has complied with all conditions contained in such insurance
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policies and surety bonds. There are no facts or circumstances under any such
insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the Company.
(j) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, pending or to the best of the Company's knowledge
threatened against (or circumstances that may give rise to the same), or
involving the properties or business of, the Company which (i) questions the
validity of the capital stock of the Company, this Agreement, the Warrant
Agreement or the Representatives' Warrant Agreement, or of any action taken or
to be taken by the Company pursuant to or in connection with this Agreement,
the Warrant Agreement or the Representatives' Warrant Agreement, (ii) is
required to be disclosed in the Registration Statement which is not so
disclosed (and such proceedings as are summarized in the Registration Statement
are accurately summarized in all material respects), or (iii) might materially
and adversely affect the condition, financial or otherwise, or the earnings,
position, prospects, stockholders' equity, value, operation, properties,
business or results of operations of the Company.
(k) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, enter into this Agreement,
the Warrant Agreement and the Representatives' Warrant Agreement and to
consummate the transactions provided for in this Agreement, the Warrant
Agreement and the Representatives' Warrant Agreement; and this Agreement, the
Warrant Agreement and the Representatives' Warrant Agreement have each been
duly and properly authorized, executed and delivered by the Company. Each of
this Agreement, the Warrant Agreement and the Representatives' Warrant
Agreement constitutes a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms except to the
extent the right to indemnification may be limited by applicable law and except
as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditor's rights generally or general equitable principles, and none of the
Company's issue and sale of the Securities, execution or delivery of this
Agreement, the Warrant Agreement or the Representatives' Warrant Agreement, its
performance hereunder and thereunder, its consummation of the transactions
contemplated herein and therein, conflicts with or will conflict with or
results or will result in any material breach or violation of any of the terms
or provisions of, or constitutes or will constitute a material default under,
or result in the creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity
of any kind whatsoever upon, any property or assets (tangible or intangible) of
the Company pursuant to the terms of (i) the amended and restated articles of
incorporation or amended and restated by-laws of the Company, (ii) any license,
contract, collective bargaining agreement, indenture, mortgage, deed of trust,
lease, voting trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the Company is a party
or by which the Company is or may be bound or to which its or assets (tangible
or intangible) is or may be subject, or any indebtedness, or (iii) any statute,
judgment, decree, order, rule or regulation applicable to the Company of any
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign,
having jurisdiction over the Company or any of its activities or properties.
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(l) No consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other body, domestic or
foreign, is required for the issuance of the Securities pursuant to the
Prospectus and the Registration Statement, the performance of this Agreement,
the Warrant Agreement and the Representatives' Warrant Agreement and the
transactions contemplated hereby and thereby, including without limitation, any
waiver of any preemptive, first refusal or other rights that any entity or
person may have for the issue and/or sale of any of the Securities, except such
as have been or may be obtained under the Act or may be required under state
securities or Blue Sky laws in connection with the Underwriters' purchase and
distribution of the Firm Securities and the Option Securities, and the
Representatives' Warrants to be sold by the Company hereunder.
(m) All executed agreements, contracts or other documents or copies
of executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company is a party or by which it or they
may be bound or to which its or their respective assets, properties or business
may be subject have been duly and validly authorized, executed and delivered by
the Company and constitute the legal, valid and binding agreements of the
Company, as the case may be, enforceable against it in accordance with their
terms except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditor's rights generally or general equitable principles. The
descriptions in the Registration Statement of agreements, contracts and other
documents are accurate and fairly present the information required to be shown
with respect thereto by Form S-1, and there are no contracts or other documents
which are required by the Act to be described in the Registration Statement or
filed as exhibits to the Registration Statement which are not described or
filed as required, and the exhibits which have been filed are complete and
correct copies of the documents of which they purport to be copies.
(n) Subsequent to the respective dates as of which information is set
forth in the Registration Statement and Prospectus, and except as may otherwise
be indicated or contemplated herein or therein, (i) the Company has not (a)
issued any securities or incurred any material liability or obligation, direct
or contingent, for borrowed money, (b) entered into any transaction other than
in the ordinary course of business, or (c) declared or paid any dividend or
made any other distribution on or in respect of its capital stock of any class,
and (ii) there has not been (a) any change in the capital stock, debt (long or
short term) or liabilities of the Company or (b) any material adverse change in
or affecting the general affairs, management, financial operations,
stockholders' equity or results of operations of the Company.
(o) No material default exists in the due performance and
observance of any term, covenant or condition of any license, contract,
collective bargaining agreement, indenture, mortgage, installment sale
agreement, lease, deed of trust, voting trust agreement, stockholders
agreement, partnership agreement, note, loan or credit agreement,
purchase order, or any other agreement or instrument evidencing an obligation
for borrowed money, or any other material agreement or instrument to which the
Company is a party or by which the Company may be bound or to which the
property or assets (tangible or intangible) of the Company is subject or
affected.
(p) The Company has generally enjoyed a satisfactory employer-
employee relationship with its employees and is in compliance with all federal,
state, local, and foreign
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laws and regulations respecting employment and employment practices, terms and
conditions of employment and wages and hours. There are no pending
investigations involving the Company by the U.S. Department of Labor, or any
other governmental agency responsible for the enforcement of such federal,
state, local, or foreign laws and regulations. There is no unfair labor
practice charge or complaint against the Company pending before the National
Labor Relations Board or any lockout, strike, picketing, boycott, dispute,
slowdown or stoppage pending or to the best knowledge of the Company,
threatened against or involving the Company, or any predecessor entity, and
none has ever occurred. No representation question exists respecting the
employees of the Company, and no collective bargaining agreement or
modification thereof is currently being negotiated by the Company. No
grievance or arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company. No labor dispute with the
employees of the Company exists, or, is imminent.
(q) Except as described in the Prospectus, the Company does not
maintain, sponsor or contribute to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") ("ERISA Plans"). The Company does not maintain or
contribute, now or at any time previously, to a defined benefit plan, as
defined in Section 3(35) of ERISA. No ERISA Plan (or any trust created
thereunder) has engaged in a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code, which could subject the
Company to any tax penalty on prohibited transactions and which has not
adequately been corrected. Each ERISA Plan is in material compliance with all
reporting, disclosure and other requirements of the Code and ERISA as they
relate to any such ERISA Plan. Determination letters have been received from
the Internal Revenue Service with respect to each ERISA Plan which is intended
to comply with Code Section 401(a), stating that such ERISA Plan and the
attendant trust are qualified thereunder. The Company has never completely or
partially withdrawn from a "multiemployer plan."
(r) Neither the Company, nor any of its employees, directors,
stockholders, partners, or affiliates (within the meaning of the Rules and
Regulations) of any of the foregoing has taken or to the best knowledge of the
Company, will take, directly or indirectly, any action designed to or which has
constituted or which might be expected to cause or result in, under the
Exchange Act, or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities or
otherwise.
(s) Except as otherwise disclosed in the Prospectus and to the
Company's knowledge, none of the patents, patent applications, trademarks,
service marks, trade names and copyrights, and licenses and rights to the
foregoing presently owned or held by the Company, are in dispute or are in any
conflict with the right of any other person or entity. The Company (i)
owns or has the right to use, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions or
equities of any kind whatsoever, all patents, trademarks, service marks, trade
names and copyrights, technology and licenses and rights with respect to the
foregoing, used in the conduct of its business as now conducted or proposed to
be conducted to the Company's knowledge, without infringing upon or otherwise
acting adversely to the right or claimed right of any person, corporation or
other entity under or with respect to any of the foregoing and (ii) is not
obligated or under any liability whatsoever to make any
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payment by way of royalties, fees or otherwise to any owner or licensee of, or
other claimant to, any patent, trademark, service xxxx, trade name, copyright,
know-how, technology or other intangible asset, with respect to the use thereof
or in connection with the conduct of its business or otherwise except pursuant
to license agreements entered into by the Company.
(t) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property
stated in the Prospectus to be owned or leased by it, free and clear of all
liens, charges, claims, encumbrances, pledges, security interests, defects, or
other restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus and liens for taxes not yet due and payable.
(u) Ernst & Young LLP, whose report is filed with the Commission as
a part of the Registration Statement, are independent certified public
accountants as required by the Act and the Rules and Regulations.
(v) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which each of the Company's officers,
directors and holders collectively of at least eighty-five percent (85%) or
more of the Common Stock of the Company or securities exchangeable or
exercisable for or convertible into shares of Common Stock, has agreed not to,
directly or indirectly, issue, offer, offer to sell, sell, grant any option for
the sale or purchase of, assign, transfer, pledge, hypothecate or otherwise
encumber or dispose of any shares of Common Stock or securities convertible
into, exercisable or exchangeable for or evidencing any right to purchase or
subscribe for any shares of Common Stock (either pursuant to Rule 144 of the
Rules and Regulations or otherwise) or dispose of any beneficial interest
therein for a period of not less than nine (9) months following the effective
date of the Registration Statement without the prior written consent of the
Representatives and the Company. During the nine (9) month period commencing
on the effective date of the Registration Statement, the Company shall not,
without the prior written consent of the Representatives, sell, contract or
offer to sell, issue, transfer, assign, pledge, distribute, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or any options,
rights or warrants with respect to any shares of Common Stock; provided,
however, that the Company and any subsidiaries may sell or offer for sale any
of their respective securities without the consent of the Representatives (i)
pursuant to the exercise of options and warrants issued and outstanding on the
date hereof and disclosed in the Prospectus; (ii) pursuant to incentive stock
or options granted to officers, directors, employees or consultants at not
less than eighty-five percent (85%) of the current market price of such
security on the date of the issuance of such incentive stock or options,
provided that such incentive stock or options are issued prior to the effective
date of the Registration Statement (for a period of nine (9) months thereafter,
such incentive stock or options may only be issued at the higher of (a) market
price of the Common Stock or (b) the initial public offering price of the Units
except for up to an aggregate 100,000 shares of stock or options issued to new
employees of the Company and/or to non-officer or director employees on a merit
basis); (iii) in connection with any bona fide merger, acquisition, joint
venture or similar corporate partnering transaction, equipment leasing
transaction or facilities construction transaction with Promega Corporation or
with any non-affiliate of the Company, and/or with Xxx Xxxxx and Company or
(iv) in connection with a follow-on offering of the Company's securities to the
public or in a private placement. The Company will cause the Transfer Agent (as
hereinafter defined) to xxxx an appropriate
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legend on the face of stock certificates representing all of such securities
and to place "stop transfer" orders on the Company's stock ledgers.
(w) To the Company's knowledge, there are no claims, payments,
issuances, arrangements or understandings, whether oral or written, for
services in the nature of a finder's or origination fee with respect to the
sale of the Securities hereunder or any other arrangements, agreements,
understandings, payments or issuance with respect to the Company, or any of its
officers, directors, stockholders, partners, employees or affiliates, that may
affect the Underwriters' compensation, as determined by the National
Association of Securities Dealers, Inc. ("NASD").
(x) The Units, Common Stock and Redeemable Warrants have been
approved for quotation on the Nasdaq SmallCap Market ("Nasdaq").
(y) None of the Company, nor to the Company's knowledge, any of its
officers, employees, agents or any other person acting on behalf of the Company
has, directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency (domestic or
foreign) or instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person
who was, is, or may be in a position to help or hinder the business of the
Company (or assist the Company in connection with any actual or proposed
transaction) which (a) might subject the Company, or any other such person to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (b) if not given in the past, might have had
a material adverse effect on the assets, business or operations of the Company,
or (c) if not continued in the future, might adversely affect the assets,
business, condition, financial or otherwise, earnings, position, properties,
value, operations or prospects of the Company. The Company's internal
accounting controls are sufficient to cause the Company to comply with the
Foreign Corrupt Practices Act of 1977, as amended.
(z) To the Company's knowledge, except as set forth in the
Prospectus, no officer, director, 5% or greater securityholder or partner of
the Company, or any "affiliate" or "associate" (as these terms are defined in
Rule 405 promulgated under the Rules and Regulations) of any of the foregoing
persons or entities has or has had, either directly or indirectly, (i) an
interest in any person or entity which (A) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold
by the Company, or (B) purchases from or sells or furnishes to the Company any
goods or services, or (ii) a beneficiary interest in any contract or agreement
to which the Company is a party or by which it may be bound or affected.
Except as set forth in the Prospectus under "Certain Transactions," there are
no existing agreements, arrangements, understandings or transactions, or
proposed agreements, arrangements, understandings or transactions, between or
among the Company, and any officer, director, or 5% or greater securityholder
of the Company, or to the Company's knowledge, any partner, affiliate or
associate of any of the foregoing persons or entities.
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(aa) Any certificate signed by any officer of the Company, and
delivered to the Underwriters or to Underwriters' Counsel (as defined herein)
shall be deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
(bb) The minute books of the Company have been made available to the
Underwriters and contain a complete summary of all meetings and actions of the
directors (including committees thereof) and stockholders of the Company, since
the time of its incorporation, and reflect all transactions referred to in such
minutes accurately in all material respects.
(cc) Except and to the extent described in the Prospectus, no holders
of any securities of the Company or of any options, warrants or other
convertible or exchangeable securities of the Company have the right to include
any securities issued by the Company in the Registration Statement or any
registration statement to be filed by the Company or to require the Company to
file a registration statement under the Act and no person or entity other than
Xxx Xxxxx and Company, holds any anti-dilution rights with respect to any
securities of the Company.
(dd) The Company has as of the effective date of the Registration
Statement (i) entered into an employment agreement with each of Xxxxxxx X.
Xxxxxxxx, Ph.D., Xxxxxx X. Xxxxx Ph.D., and F. Xxxxxxx Xxxxxxx, Ph.D., in the
form filed as Exhibit 10.6, Exhibit 10.7, and Exhibit 10.8, respectively, to
the Registration Statement and (ii) purchased term key person insurance on the
life of Xx. Xxxxxxx X. Xxxxxxxx in the amount of $500,000 which policy names
the Company as the sole beneficiary thereof.
(ee) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus under the caption "Use of Proceeds"
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act").
(ff) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparations of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorizations; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(gg) The Company has entered into a warrant agreement substantially
in the form filed as Exhibit 4.4 to the Registration Statement (the "Warrant
Agreement") with Continental Stock Transfer and Trust Company, as Warrant
Agent, in form and substance satisfactory to the Representatives, with respect
to the Redeemable Warrants.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to
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sell to each Underwriter, and each Underwriter, severally and not jointly,
agrees to purchase from the Company at a price of $_____ per Unit [91% of
initial public offering price of the Units], that number of Firm Securities set
forth in Schedule A opposite the name of such Underwriter, subject to such
adjustment as the Representatives in its sole discretion shall make to
eliminate any sales or purchases of fractional shares, plus any additional
number of Firm Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 11 hereof.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase all or any part of an
additional 240,000 Units at a price of $_____ [91% of the initial public
offering price of the Units] per Unit. The option granted hereby will expire
forty-five (45) days after (i) the date the Registration Statement becomes
effective, if the Company has elected not to rely on Rule 430A under the Rules
and Regulations, or (ii) the date of this Agreement if the Company has elected
to rely upon Rule 430A under the Rules and Regulations, and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Firm Securities upon notice by the Representatives to the
Company setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment
and delivery for any such Option Securities. Any such time and date of
delivery (an "Option Closing Date") shall be determined by the Representatives,
but shall not be later than three (3) full business days after the exercise of
said option, nor in any event prior to the Closing Date, as hereinafter
defined, unless otherwise agreed upon by the Representatives and the Company.
Nothing herein contained shall obligate the Underwriters to make any
over-allotments. No Option Securities shall be delivered unless the Firm
Securities shall be simultaneously delivered or shall theretofore have been
delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates
for, the Firm Securities shall be made at the offices of the Representatives at
Xxxxx & Company, Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as shall be agreed upon by the Representatives and the Company.
Such delivery and payment shall be made at 10:00 a.m. (New York City time) on
_________, 1998 or at such other time and date as shall be agreed upon by the
Representatives and the Company, but not less than three (3) nor more than five
(5) full business days after the effective date of the Registration Statement
(such time and date of payment and delivery being herein called the "Closing
Date"). In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the
above-mentioned office of the Representatives or at such other place as shall
be agreed upon by the Representatives and the Company on each Option Closing
Date as specified in the notice from the Representatives to the Company.
Delivery of the certificates for the Firm Securities and the Option Securities,
if any, shall be made to the Underwriters against payment by the Underwriters,
severally and not jointly, of the purchase price for the Firm Securities and
the Option Securities, if any, to the order of the Company for the Firm
Securities and the Option Securities, if any, by New York Clearing House funds.
In the event such option is exercised, each of the Underwriters, acting
severally and not jointly, shall purchase that proportion of the total number
of Option Securities then being purchased which the number of Firm Securities
set
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forth in Schedule A hereto opposite the name of such Underwriter bears to
the total number of Firm Securities, subject in each case to such adjustments
as the Representatives in its discretion shall make to eliminate any sales or
purchases of fractional shares. Certificates for the Firm Securities and the
Option Securities, if any, shall be in definitive, fully registered form, shall
bear no restrictive legends and shall be in such denominations and registered
in such names as the Underwriters may request in writing at least two (2)
business days prior to the Closing Date or the relevant Option Closing Date, as
the case may be. The certificates for the Firm Securities and the Option
Securities, if any, shall be made available to the Representatives at such
office or such other place as the Representatives may designate for inspection,
checking and packaging no later than 9:30 a.m. on the last business day prior
to the Closing Date or the relevant Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Representatives Representatives' Warrants at a purchase price of $.0001 per
warrant, which Representatives' Warrants shall entitle the holders thereof to
purchase an aggregate of 160,000 Units. The Representatives' Warrants shall be
exercisable for a period of four (4) years commencing one (1) year from the
effective date of the Registration Statement at a price equaling one hundred
twenty percent (120%) of the initial public offering price of the Units. The
Representatives' Warrant Agreement and form of Warrant Certificate shall be
substantially in the form filed as Exhibit 4.3 to the Registration Statement.
Payment for the Representatives' Warrants shall be made on the Closing Date.
3. Public Offering of the Units. As soon after the Registration
Statement becomes effective as the Representatives deems advisable, the
Underwriters shall make a public offering of the Units (other than to residents
of or in any jurisdiction in which qualification of the Units is required
and has not become effective) at the price and upon the other terms set forth
in the Prospectus. The Representatives may from time to time increase or
decrease the respective public offering price after distribution of the Units
has been completed to such extent as the Representatives, in its sole
discretion deems advisable. The Underwriters may enter into one or more
agreements as the Underwriters, in each of their sole discretion, deem
advisable with one or more broker-dealers who shall act as dealers in
connection with such public offering.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with each of the Underwriters as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
practicable and will not at any time, whether before or after the effective
date of the Registration Statement, file any amendment to the Registration
Statement or supplement to the Prospectus or file any document under the Act or
Exchange Act before termination of the offering of the Units by the
Underwriters of which the Representatives shall not previously have been
advised and furnished with a copy, or to which the Representatives shall have
reasonably objected or which is not in compliance with the Act, the Exchange
Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof,
the Company will advise the Representatives and confirm the notice in writing
(i) when the Registration Statement, as amended, becomes effective, if the
provisions of Rule 430A
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promulgated under the Act will be relied upon, when the Prospectus has
been filed in accordance with said Rule 430A and when any post-effective
amendment to the Registration Statement becomes effective; (ii) of the issuance
by the Commission of any stop order or of the initiation, or the threatening,
of any proceeding suspending the effectiveness of the Registration Statement or
any order preventing or suspending the use of the Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto, or the institution of
proceedings for that purpose; (iii) of the issuance by the Commission or by any
state securities commission of any proceedings for the suspension of the
qualification of any of the Securities for offering or sale in any jurisdiction
or of the initiation, or the threatening, of any proceeding for that purpose;
(iv) of the receipt of any comments from the Commission; and (v) of any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information. If
the Commission or any state securities commission shall enter a stop order or
suspend such qualification at any time, the Company will make every effort to
obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representatives) or transmit the Prospectus by a means
reasonably calculated to result in filing with the Commission pursuant to Rule
424(b)(1) (or, if applicable and if consented to by the Representatives,
pursuant to Rule 424(b)(4)) not later than the Commission's close of business
on the earlier of (i) the second business day following the execution and
delivery of this Agreement and (ii) the fifth business day after the effective
date of the Registration Statement.
(d) The Company will give the Representatives notice of its
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes
for use by the Underwriters in connection with the offering of the Securities
which differs from the corresponding prospectus on file at the Commission at
the time the Registration Statement becomes effective, whether or not such
revised prospectus is required to be filed pursuant to Rule 424(b) of the Rules
and Regulations), and will furnish the Representatives with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such prospectus to
which the Representatives or Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP ("Underwriters'
Counsel") shall object.
(e) The Company shall endeavor in good faith, in cooperation with the
Representatives, at or prior to the time the Registration Statement becomes
effective, to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as the Representatives may designate to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution, and shall make such applications, file such
documents and furnish such information as may be required for such purpose;
provided, however, the Company shall not be required to qualify as a foreign
corporation or file a general or limited consent to service of process in any
such jurisdiction. In each jurisdiction where such qualification shall be
effected, the Company will, unless the Representatives agrees that such action
is not at the time necessary or advisable, use all reasonable efforts to file
and make such statements or reports at such times as are or may reasonably be
required by the laws of such jurisdiction to continue such qualification.
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(f) During the time when a prospectus is required to be delivered
under the Act, the Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act and the Exchange Act, as now and
hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Prospectus, or
any amendments or supplements thereto. If at any time when a prospectus
relating to the Securities is required to be delivered under the Act, any event
shall have occurred as a result of which, in the opinion of counsel for the
Company or Underwriters' Counsel, the Prospectus, as then amended or
supplemented, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify the Representatives promptly
and prepare and file with the Commission an appropriate amendment or supplement
in accordance with Section 10 of the Act, each such amendment or supplement to
be reasonably satisfactory to Underwriters' Counsel, and the Company will
furnish to the Underwriters copies of such amendment or supplement as soon as
available and in such quantities as the Underwriters may request.
(g) As soon as practicable, but in any event not later than forty-
five (45) days after the end of the 12-month period beginning on the day after
the end of the fiscal quarter of the Company during which the effective date of
the Registration Statement occurs (ninety (90) days in the event that the end
of such fiscal quarter is the end of the Company's fiscal year), the Company
shall make generally available to its security holders, in the manner
specified in Rule 158(b) of the Rules and Regulations, and to the
Representatives, an earnings statement which will be in the detail required by,
and will otherwise comply with, the provisions of Section 11(a) of the Act and
Rule 158(a) of the Rules and Regulations, which statement need not be audited
unless required by the Act, covering a period of at least twelve (12)
consecutive months after the effective date of the Registration Statement.
(h) During a period of five (5) years after the date hereof, the
Company will furnish to its stockholders, as soon as practicable, annual
reports (including financial statements audited by independent public
accountants) and unaudited quarterly reports of earnings, and will deliver to
the Representatives:
i. concurrently with furnishing such quarterly reports to its
stockholders, statements of income of the Company for each quarter in the
form furnished to the Company's stockholders and certified by the
Company's principal financial or accounting officer;
ii. concurrently with furnishing such annual reports to its
stockholders, a balance sheet of the Company as at the end of the
preceding fiscal year, together with statements of operations,
stockholders' equity, and cash flows of the Company for such fiscal
year, accompanied by a copy of the certificate thereon of independent
certified public accountants;
iii. as soon as they are available, copies of all reports (financial
or other) mailed to stockholders;
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iv. as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, the NASD
or any securities exchange;
v. every press release and every material news item or article of
interest to the financial community in respect of the Company, or its
affairs, which was released or prepared by or on behalf of the Company;
and
vi. any additional information of a public nature concerning the
Company (and any future subsidiary) or its businesses which the
Representatives may request.
During such five-year period, if the Company has an active subsidiary, the
foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiary(ies) are consolidated, and
will be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(i) The Company will maintain a transfer agent and warrant agent
("Transfer Agent") and, if necessary under the jurisdiction of incorporation of
the Company, a Registrar (which may be the same entity as the Transfer Agent)
for its Common Stock and Redeemable Warrants.
(j) The Company will furnish to the Representatives or on the
Representatives' order, without charge, at such place as the Representatives
may designate, copies of each Preliminary Prospectus, the Registration
Statement and any pre-effective or post-effective amendments thereto (two of
which copies will be signed and will include all financial statements and
exhibits), the Prospectus, and all amendments and supplements thereto,
including any prospectus prepared after the effective date of the Registration
Statement, in each case as soon as available and in such quantities as the
Representatives may request.
(k) On or before the effective date of the Registration Statement,
the Company shall provide the Representatives with true original copies of duly
executed, legally binding and enforceable agreements pursuant to which, for a
period of nine (9) months from the effective date of the Registration
Statement, each of the Company's officers, directors and holders collectively
of eighty-five percent (85%) or more of the Common Stock of the Company or
securities exchangeable or exercisable for or convertible into shares of Common
Stock agrees that it or he or she will not, directly or indirectly, issue,
offer to sell, sell, grant an option for the sale or purchase of, assign,
transfer, pledge, hypothecate or otherwise encumber or dispose of any shares of
Common Stock or securities convertible into, exercisable or exchangeable for or
evidencing any right to purchase or subscribe for any shares of Common Stock
(either pursuant to Rule 144 of the Rules and Regulations or otherwise) or
dispose of any beneficial interest therein without the prior consent of the
Representatives (collectively, the "Lock-up Agreements"). During the 9 month
period commencing on the effective date of the Registration Statement, the
Company shall not, without the prior written consent of the Representatives,
sell, contract or offer to sell, issue, transfer, assign, pledge, distribute,
or otherwise dispose of, directly or indirectly, any shares of Common Stock or
any options, rights or warrants with respect to any shares of Common Stock;
provided, however, that the Company and any subsidiaries may sell or offer for
sale any of their respective securities without the consent of the
Representatives (i) pursuant to the exercise of options and warrants issued and
outstanding on the
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date hereof and disclosed in the Prospectus; (ii) pursuant to incentive stock
or options granted to officers, directors, employees or consultants at not less
than eighty-five percent (85%) of the current market price of such security on
the date of the issuance of such incentive stock or options, provided that
such incentive stock or options are issued prior to the effective date of the
Registration Statement (for a period of nine (9) months thereafter, such
incentive stock or options may only be issued at the higher of (a) market price
of the Common Stock or (b) the initial public offering price of the Units
except for up to an aggregate 100,000 shares of stock or options issued to new
employees of the Company and/or to non-officer or director employees on a merit
basis); (iii) in connection with any bona fide merger, acquisition, joint
venture or similar corporate partnering transaction, equipment leasing
transaction or facilities construction transaction with Promega Corporation or
with any non-affiliate of the Company, and/or with Xxx Xxxxx & Company, or (iv)
in connection with a follow-on offering of the Company's securities to the
public or in a private placement. On or before the Closing Date, the Company
shall deliver instructions to the Transfer Agent authorizing it to place
appropriate legends on the certificates representing the securities subject to
the Lock-up Agreements and to place appropriate stop transfer orders on the
Company's ledgers. The Company further covenants that it will not file a
registration statement with the Commission during the nine (9) month period
commencing on the effective date of the Registration Statement.
(l) None of the Company, nor to the best knowledge of the Company,
any of its officers, directors, stockholders, nor any of its affiliates (within
the meaning of the Rules and Regulations) will take, directly or indirectly,
any action designed to, or which might in the future reasonably be expected
to cause or result in, stabilization or manipulation of the price of any
securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, set forth under "Use
of Proceeds" in the Prospectus. No portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by the Company.
(n) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to, a Form SR as may
be required pursuant to Rule 463 under the Act) from time to time, under the
Act, the Exchange Act, and the Rules and Regulations, and all such reports,
forms and documents filed will comply as to form and substance with the
applicable requirements under the Act, the Exchange Act, and the Rules and
Regulations.
(o) The Company shall furnish to the Representatives as early as
practicable prior to each of the date hereof, the Closing Date and each Option
Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than sixty (60)
days prior to the date of the Registration Statement) which have been read by
the Company's independent public accountants, as stated in their letters to be
furnished pursuant to Sections 6(l) and 6(m) hereof.
(p) The Company shall cause the Units and the underlying Common
Stock and Redeemable Warrants to be listed on Nasdaq and, for a period of five
(5) years from the date
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hereof, use its best efforts to maintain the Nasdaq listing of the Units prior
to their delisting and Common Stock and the Redeemable Warrants to the extent
outstanding.
(q) For a period of three (3) years from the Closing Date, the
Company shall furnish to the Representatives at the Representatives' reasonable
request and the Company's sole expense, (i) daily consolidated transfer sheets
relating to the Units, Common Stock and Redeemable Warrants and (ii) the list
of holders of all of the Company's securities.
(r) As soon as practicable, (i) but in no event more than five (5)
business days before the effective date of the Registration Statement, file a
Form 8-A with the Commission providing for the registration under the Exchange
Act of the Securities and (ii) but in no event more than thirty (30) days after
the effective date of the Registration Statement, take all necessary and
appropriate actions to be included in Standard and Poor's Corporation
Descriptions and Xxxxx'x OTC Manual and to continue such inclusion for a period
of not less than five (5) years.
(s) The Company hereby agrees that, except as set forth above in
Section 4(k) and the 975,000 shares reserved for future issuance under the
Company's 1990 Incentive Stock Option Plan and 1992 Employee Stock Option Plan
as amended and the Company's 1997 Incentive Stock Option Plan (collectively,
"Stock Option Plans"), it will not, for a period of nine (9) months from the
effective date of the Registration Statement, adopt, propose to adopt or
otherwise permit to exist any employee, officer, director, consultant or
compensation plan or similar arrangement, permitting (i) the grant, issue,
sale or entry into any agreement to grant, issue or sell any option, warrant or
other contract right (x) at an exercise price that is less than the greater of
the public offering price of the Shares set forth herein and the fair market
value on the date of grant or sale or (y) to any of its executive officers or
directors or to any holder of 5% or more of the Common Stock; (ii) the maximum
number of shares of Common Stock or other securities of the Company purchasable
at any time pursuant to options or warrants issued by the Company to exceed
such 975,000 shares reserved for future issuance under the Company's Stock
Option Plans plus warrants to purchase up to 114,290 shares of Common Stock and
an option to purchase 100,000 shares of Common Stock as described in the
Prospectus; (iii) the payment for such securities with any form of
consideration other than cash; or (iv) the existence of stock appreciation
rights, phantom options or similar arrangements. Furthermore, the Company
agrees that for a period of nine (9) months from the effective date of the
Registration Statement, the Company will not amend any material employment
agreement or option agreement or other agreement providing compensation to any
executive officer, director or 5% or greater stockholder, without the prior
written consent of the Representatives.
(t) Until the completion of the distribution of the Securities, the
Company shall not, without the prior written consent of the Representatives and
Underwriters' Counsel, issue, directly or indirectly, any press release or
other communication or hold any press conference with respect to the Company or
its activities or the offering contemplated hereby, other than trade releases
issued in the ordinary course of the Company's business consistent with past
practices with respect to the Company's operations.
(u) For a period equal to the lesser of (i) seven (7) years from the
date hereof, and (ii) the sale to the public of the Representatives'
Securities, the Company will use its best
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efforts to not take any action or actions which may prevent or disqualify the
Company's use of Form S-1 (or other appropriate form) for the registration
under the Act of the Representatives' Securities. The Company further agrees
to use its best efforts to file such post-effective amendments to the
Registration Statement, as may be necessary, in order to maintain its
effectiveness and to keep such Registration Statement effective while any of
the Redeemable Warrants remain outstanding.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date and
the Option Closing Date (to the extent not paid at the Closing Date) all
expenses and fees (other than Representatives' due diligence expenses and fees
of Underwriters' Counsel, except as provided in (iv) below) incident to the
performance of the obligations of the Company under this Agreement, the Warrant
Agreement and the Representatives' Warrant Agreement, including, without
limitation, (i) the fees and expenses of accountants and counsel for the
Company, (ii) all costs and expenses incurred in connection with the
preparation, duplication, printing (including mailing and handling charges),
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the Prospectus and any amendments
and supplements thereto and the printing, mailing (including the payment of
postage with respect thereto) and delivery of this Agreement, the Warrant
Agreement, the Representatives' Warrant Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreements, and related documents, including
the cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments thereof or supplements thereto supplied to the
Underwriters and such dealers as the Underwriters may request, in quantities as
hereinabove stated, (iii) the printing, engraving, issuance and delivery of the
Securities including, but not limited to, (x) the purchase by the Underwriters
of the Firm Securities and the Option Securities and the purchase by the
Representatives of the Representatives' Warrants from the Company, (y) the
consummation by the Company of any of its obligations under this Agreement, the
Warrant Agreement and the Representatives' Warrant Agreement, and (z) resale of
the Firm Securities and the Option Securities by the Underwriters in connection
with the distribution contemplated hereby, (iv) the qualification of the
Securities under state or foreign securities or "Blue Sky" laws and
determination of the status of such securities under legal investment laws,
including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum", the "Supplemental Blue Sky Memorandum" and "Legal Investments
Survey," if any, and disbursements, filing fees and fees of counsel in
connection therewith, (v) reasonable advertising costs and expenses, including
but not limited to costs and expenses in connection with the "road show",
information meetings and presentations, bound volumes and prospectus
memorabilia and "tombstone" advertisement expenses, (vi) fees and expenses of
the Transfer Agent and registrar and all issue and transfer taxes, if any,
(vii) applications for assignment of a rating of the Securities by qualified
rating agencies, (viii) the fees payable to the Commission and the NASD, and
(x) the fees and expenses incurred in connection with the quotation of the
Securities on Nasdaq and any other exchange.
(b) If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 6 (except Sections 6(c), 6(k) and
6(o)) or Section 12, the Company shall reimburse and indemnify the
Representatives for all of their actual out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters (less
amounts previously paid pursuant to Section 5(c) hereof), provided that the
total of such out-of-pocket
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expenses payable to the Underwriters shall not exceed $100,000 and further
provided that the Company shall reimburse and indemnify Underwriters Counsel
for all of their Blue Sky counsel fees, filing fees and disbursements. In
addition, the Representatives agrees to return to the Company any unaccounted
for portion of funds advanced by the Company to them as disclosed in Section
5(c) hereof.
(c) The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 5, it will pay to the
Representatives on the Closing Date by deduction from the proceeds of the
offering of the Firm Securities, a non-accountable expense allowance equal to
2% of the gross proceeds received by the Company from the sale of the Firm
Securities, $50,000 of which has been paid to date. In the event the
Representatives elects to exercise the overallotment option described in
Section 2(b) hereof, the Company further agrees to pay to the Representatives
on each Option Closing Date by deduction from the proceeds of the Option
Securities purchased on such Option Closing Date, a non-accountable expense
allowance equal to 2- 1/2% of the gross proceeds received by the Company from
the sale of such Option Securities.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date and each Option Closing Date, if any, as if they had
been made on and as of the Closing Date or each Option Closing Date, as the
case may be; the accuracy on and as of the Closing Date or Option Closing Date,
if any, of the statements of the officers of the Company made pursuant to the
provisions hereof; and the performance by the Company on and as of the Closing
Date and each Option Closing Date, if any, of its covenants and obligations
hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not later
than 9:30 a.m., New York time, on the date of this Agreement or such later date
and time as shall be consented to in writing by the Representatives, and, at
the Closing Date and each Option Closing Date, if any, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or shall be pending
or contemplated by the Commission and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
satisfaction of Underwriters' Counsel. If the Company has elected to rely upon
Rule 430A of the Rules and Regulations, the price of the Units and any
price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period and, prior to the Closing Date, the Company
shall have provided evidence satisfactory to the Representatives of such timely
filing, or a post-effective amendment providing such information shall have
been promptly filed and declared effective in accordance with the requirements
of Rule 430A of the Rules and Regulations.
(b) The Representatives shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representatives' opinion, is material, or omits to state
a fact which, in the Representatives' opinion, is material and is required to
be stated therein or is necessary to make the statements therein not
misleading, or that the Prospectus, or any supplement thereto, contains an
untrue
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statement of fact which, in the Representatives' opinion, is material, or omits
to state a fact which, in the Representatives' opinion, is material and is
required to be stated therein or is necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(c) On or prior to each of the Closing Date and each Option Closing
Date, if any, the Representatives shall have received from Underwriters'
Counsel, such opinion or opinions with respect to the organization of the
Company, the validity of the Securities, the Registration Statement, the
Prospectus and other related matters as the Representatives may request and
Underwriters' Counsel shall have received such papers and information as they
request and as are reasonably necessary to enable them to pass upon such
matters.
(d) At the Closing Date, the Underwriters shall have received the
favorable opinion of XxXxxxxxxx & Xxxxxxx, counsel to the Company, dated the
Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
i. the Company (A) has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of Wisconsin,
(B) is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires such qualification
or licensing, and (C) has all requisite corporate power and authority, and
has obtained any and all necessary authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies (including, without
limitation, those having jurisdiction over environmental or similar
matters)(other than the United States Food and Drug Administration ("FDA")
with respect to which Xxxxxx and Xxxxxxx, patent counsel to the Company,
will give its opinion), to own or lease its properties and conduct its
business as described in the Prospectus; to counsel's knowledge, the
Company is and has been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises and
permits and all federal, state and local laws, rules and regulations; and,
to counsel's knowledge, the Company has not received any notice of
proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially adversely affect the
business, operations, condition, financial or otherwise, or the earnings,
business affairs, position, prospects, value, operation, properties,
business or results of operations of the Company. The disclosures in the
Registration Statement concerning the effects of federal, state and local
laws, rules and regulations on the Company's business (other than with
respect to the FDA, to which Xxxxxx and Xxxxxxx, patent counsel to the
Company, will give its opinion) as currently conducted and as contemplated
are correct in all material respects and do not omit to state a fact
required to be stated therein or necessary to make the statements
contained therein not misleading in light of the circumstances in which
they were made;
ii. except as described in the Prospectus, the Company does not own an
interest in any other corporation, partnership, joint venture, trust or
other business entity;
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iii. the Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and any amendment or
supplement thereto, under "CAPITALIZATION", and the Company is not a party
to or bound by any instrument, agreement or other arrangement providing
for it to issue, sell, transfer, purchase or redeem any capital stock,
rights, warrants, options or other securities, except for this Agreement,
the Warrant Agreement and the Representatives' Warrant Agreement and as
described in the Prospectus. The Securities and all other securities
issued or issuable by the Company conform in all material respects to all
statements with respect thereto contained in the Registration Statement
and the Prospectus. All issued and outstanding securities of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission with
respect thereto, and are not subject to personal liability solely by
reason of being such holders, except as described in the Prospectus; and
none of such securities were issued in violation of the preemptive rights
of any holders of any security of the Company or any similar rights
granted by the Company. The Securities to be sold by the Company
hereunder and under the Warrant Agreement and the Representatives' Warrant
Agreement are not and will not be subject to any preemptive or other
similar rights of any stockholder, have been duly authorized and, when
issued, paid for and delivered in accordance with the terms hereof, will
be validly issued, fully paid and non-assessable and conform to the
description thereof contained in the Prospectus; the holders thereof will
not be subject to any liability solely as such holders, except as
described in the Prospectus; all corporate action required to be taken for
the authorization, issue and sale of the Securities has been duly and
validly taken; and the certificates representing the Securities are in due
and proper form. The Representatives' Warrants and the Redeemable
Warrants constitute valid and binding obligations of the Company to issue
and sell, upon exercise thereof and payment therefor, the number and type
of securities of the Company called for thereby. Upon the issuance and
delivery pursuant to this Agreement of the Firm Securities and the Option
Securities and the Representatives' Warrants to be sold by the Company,
the Underwriters and the Representatives, respectively, will acquire good
and marketable title to the Firm Securities and the Option Securities and
the Representatives' Warrants free and clear of any pledge, lien, charge,
claim, encumbrance, pledge, security interest, or other restriction or
equity of any kind whatsoever. No transfer tax imposed by the federal
government or by the State of Wisconsin is payable by or on behalf of the
Underwriters in connection with (A) the issuance by the Company of the
Securities, (B) the purchase by the Underwriters of the Firm Securities
and the Option Securities from the Company, and the purchase by the
Representatives of the Representatives' Warrants from the Company (C) the
consummation by the Company of any of its obligations under this
Agreement, the Warrant Agreement or the Representatives' Warrant
Agreement, or (D) resales of the Firm Securities and the Option Securities
in connection with the distribution contemplated hereby.
iv. the Registration Statement is effective under the Act, and, if
applicable, filing of all pricing information has been timely made in the
appropriate form under Rule 430A, and no stop order suspending the use of
the Preliminary Prospectus, the Registration Statement or Prospectus or
any part of any thereof or suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
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purpose have been instituted or are pending or, to the best of such
counsel's knowledge, threatened or contemplated under the Act;
v. each of the Preliminary Prospectus, the Registration Statement, and
the Prospectus and any amendments or supplements thereto (other than the
financial statements and other financial and statistical data included
therein, as to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the Rules and
Regulations.
vi. to the best of such counsel's knowledge, (A) there are no
agreements, contracts or other documents required by the Act to be
described in the Registration Statement and the Prospectus and filed as
exhibits to the Registration Statement other than those described in the
Registration Statement (or required to be filed under the Exchange Act if
upon such filing they would be incorporated, in whole or in part, by
reference therein) and the Prospectus and filed as exhibits thereto, and
the exhibits which have been filed are correct copies of the documents of
which they purport to be copies; (B) the descriptions in the Registration
Statement and the Prospectus and any supplement or amendment thereto of
contracts and other documents to which the Company is a party or by which
it is bound, including any document to which the Company is a party or by
which it is bound, incorporated by reference into the Prospectus and any
supplement or amendment thereto, are accurate and fairly represent the
information required to be shown by Form S-1; (C) there is not pending or
threatened against the Company any action, arbitration, suit, proceeding,
inquiry, investigation, litigation, governmental or other proceeding
(including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, pending or
threatened against (or circumstances that may give rise to the same), or
involving the properties or business of the Company which (x) is required
to be disclosed in the Registration Statement which is not so disclosed
(and such proceedings as are summarized in the Registration Statement are
accurately summarized in all respects), (y) questions the validity of the
capital stock of the Company or this Agreement, the Warrant Agreement or
the Representatives' Warrant Agreement, or of any action taken or to be
taken by the Company pursuant to or in connection with any of the
foregoing; (D) no statute or regulation or legal or governmental
proceeding required to be described in the Prospectus is not described as
required; and (E) there is no action, suit or proceeding pending or
threatened against or affecting the Company before any court or arbitrator
or governmental body, agency or official (or any basis thereof known to
such counsel) in which there is a reasonable possibility of a decision
which may result in a material adverse change in the condition, financial
or otherwise, or the earnings, position, prospects, stockholders' equity,
value, operation, properties, business or results of operations of the
Company, which could adversely affect the present or prospective ability
of the Company to perform its obligations under this Agreement, the
Warrant Agreement or the Representatives' Warrant Agreement or which in
any manner draws into question the validity or enforceability of this
Agreement, the Warrant Agreement or the Representatives' Warrant
Agreement;
vii. the Company has full legal right, power and authority to enter
into each of this Agreement, the Warrant Agreement and the
Representatives' Warrant Agreement,
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and to consummate the transactions provided for therein; and each of this
Agreement, the Warrant Agreement and the Representatives' Warrant
Agreement has been duly authorized, executed and delivered by the Company.
Each of this Agreement, the Warrant Agreement and the Representatives'
Warrant Agreement, assuming due authorization, execution and delivery by
each other party thereto constitutes a legal, valid and binding agreement
of the Company enforceable against the Company in accordance with its
terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and the application of equitable principles in any action, legal or
equitable, and except as rights to indemnity or contribution may be
limited by applicable law), and none of the Company's execution or
delivery of this Agreement, the Warrant Agreement and the Representatives'
Warrant Agreement, its performance hereunder or thereunder, its
consummation of the transactions contemplated herein or therein,
conflicts with or will conflict with or results or will result in any
material breach or violation of any of the terms or provisions of, or
constitutes or will constitute a material default under, or result in the
creation or imposition of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of any kind
whatsoever upon, any property or assets (tangible or intangible) of the
Company pursuant to the terms of, (A) the articles of incorporation or
by-laws of the Company, (B) any license, contract, collective bargaining
agreement, indenture, mortgage, deed of trust, lease, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any
other material agreement or instrument to which the Company is a party or
by which it is or may be bound or to which any of its properties or assets
(tangible or intangible) is or may be subject, or any indebtedness, or (C)
any statute, judgment, decree, order, rule or regulation applicable to the
Company of any arbitrator, court, regulatory body or administrative agency
or other governmental agency or body (including, without limitation, those
having jurisdiction over environmental or similar matters), domestic or
foreign, having jurisdiction over the Company or any of its respective
activities or properties.
viii. no consent, approval, authorization or order, and no filing
with, any court, regulatory body, government agency or other body (other
than such as may be required under Blue Sky laws, as to which no
opinion need be rendered) is required in connection with the issuance of
the Firm Securities and the Option Securities pursuant to the Prospectus
and the Registration Statement, the issuance of the Representatives'
Warrants, the performance of this Agreement, the Warrant Agreement and the
Representatives' Warrant Agreement, and the transactions contemplated
hereby and thereby;
ix. the properties (other than the intellectual property, with
respect to which Xxxxxx and Xxxxxxx, patent counsel to the Company, will
give its opinion) conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus; and
the Company has good and marketable title to, or valid and enforceable
leasehold estates in, all items of real and personal property stated
(other than the intellectual property, with respect to which Xxxxxx and
Xxxxxxx, patent counsel to the Company, will give its opinion) in the
Prospectus to be owned or leased by it, in each case free and clear of all
liens, charges, claims, encumbrances, pledges, security interests,
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defects or other restrictions or equities of any kind whatsoever, other
than those referred to in the Prospectus and liens for taxes not yet due
and payable;
x. (other than obligations of the Company relating to intellectual
property , to which Xxxxxx and Xxxxxxx, patent counsel to the Company,
will give its opinion), to the best of counsel's knowledge, the Company is
not in material breach of, or in material default under, any term or
provision of any license, contract, collective bargaining agreement,
indenture, mortgage, installment sale agreement, deed of trust, lease,
voting trust agreement, stockholders' agreement, partnership agreement,
note, loan or credit agreement or any other agreement or instrument
evidencing an obligation for borrowed money, or any other agreement or
instrument to which the Company is a party or by which the Company may be
bound or to which the properties or assets (tangible or intangible) of the
Company is subject or affected; and the Company is not in violation of any
term or provision of its Amended and Restated Articles of Incorporation or
Amended and Restated By-Laws or in violation of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation;
xi. the statements in the Prospectus under "RISK FACTORS," "THE
COMPANY," "BUSINESS," "MANAGEMENT," "PRINCIPAL STOCKHOLDERS," "CERTAIN
TRANSACTIONS," "DESCRIPTION OF SECURITIES," and "SHARES ELIGIBLE FOR
FUTURE SALE" have been reviewed by such counsel, and insofar as they refer
to statements of law, descriptions of statutes, licenses, rules or
regulations or legal conclusions, are correct in all material respects
(other than matters related to intellectual property and FDA regulation,
as to which Xxxxxx and Xxxxxxx, patent counsel to the Company, will give
its opinion);
xii. the Securities have been accepted for quotation on Nasdaq;
xiii. the persons listed under the caption "PRINCIPAL STOCKHOLDERS" in
the Prospectus are the respective "beneficial owners" (as such phrase is
defined in regulation 13d--3 under the Exchange Act) of the securities set
forth opposite their respective names thereunder as and to the extent set
forth therein;
xiv. to such counsel's knowledge, none of the Company nor any of its
officers, stockholders, employees or agents, nor any other person acting
on behalf of the Company has, directly or indirectly, given or agreed to
give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency or instrumentality of any
government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who is or may be in a
position to help or hinder the business of the Company (or assist it in
connection with any actual or proposed transaction) which (A) might
subject the Company to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (B) if not given in the past, might
have had an adverse effect on the assets, business or operations of the
Company, as reflected in any of the financial statements contained in the
Registration Statement, or (C) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the
Company;
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xv. except as described in the Prospectus, no person, corporation,
trust, partnership, association or other entity has the right to include
and/or register any securities of the Company in the Registration
Statement, require the Company to file any registration statement or, if
filed, to include any security in such registration statement;
xvi. to such counsel's knowledge, except as described in the
Prospectus, there are no claims, payments, issuances, arrangements or
understandings for services in the nature of a finder's or origination fee
with respect to the sale of the Securities hereunder or financial
consulting arrangements or any other arrangements, agreements,
understandings, payments or issuances that may affect the Underwriters'
compensation, as determined by the NASD;
xvii. Intentionally omitted.
xviii. except as described in the Prospectus, the Company does not (A)
maintain, sponsor or contribute to any ERISA Plans, (B) maintain or
contribute, now or at any time previously, to a defined benefit plan, as
defined in Section 3(35) of ERISA, and (C) has never completely or
partially withdrawn from a "multiemployer plan";
xix. the minute books of the Company have been made available to the
Underwriters and to such counsel's knowledge, contain a complete summary
of all meetings and actions of the directors and stockholders of the
Company since the time of its incorporation and reflect all transactions
referred to in such minutes accurately in all material respects;
xx. except as set forth in the Prospectus and to the best
knowledge of such counsel, no officer, director or stockholder of the
Company, or any "affiliate" or "associate" (as these terms are defined in
Rule 405 promulgated under the Rules and Regulations) of any of the
foregoing persons or entities has or has had, either directly or
indirectly, (A) an interest in any person or entity which (x) furnishes or
sells services or products which are furnished or sold or are proposed to
be furnished or sold by the Company, or (y) purchases from or sells or
furnishes to the Company any goods or services, or (B) a beneficial
interest in any contract or agreement to which the Company is a party or
by which it may be bound or affected. Except as set forth in the
Prospectus under "CERTAIN TRANSACTIONS," there are no existing agreements,
arrangements, understandings or transactions, or proposed agreements,
arrangements, understandings or transactions, between or among the
Company, and any officer, director, or 5% or greater securityholder of the
Company, or to such counsel's knowledge, any affiliate or associate of any
such person or entity;
xxi. to the best of such counsel's knowledge, after due inquiry,
there is no action, suit, proceeding, inquiry, investigation, litigation
or governmental proceeding, domestic or foreign, pending or threatened (or
circumstances that may give rise to the same) involving the Company's
production, use, testing, manufacturing or marketing of any products or
services, which (i) questions the authority of the Company to produce,
use, test, manufacture or market any products or services as described in
the Prospectus, (ii) questions the completeness or accuracy of data
generated by any trials, tests or studies
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being conducted by or on behalf of the Company, (iii) is required to be
disclosed in the Prospectus which is not so disclosed, or (iv) might
materially and adversely affect the condition, financial or otherwise, or
the earnings, prospects, value, operations or business of the Company.
xxii. none of the Company nor any of its affiliates shall be subject
to the requirements of or shall be deemed an "Investment Company,"
pursuant to and as defined under, respectively, the Investment Company
Act.
Such counsel shall state that such counsel has participated in conferences
with officers and other representatives of the Company, and representatives of
the independent public accountants for the Company, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Preliminary Prospectus, the Registration
Statement, the Prospectus, and related matters and, although such counsel is
not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Preliminary
Prospectus, the Registration Statement and Prospectus, on the basis of the
foregoing, no facts have come to the attention of such counsel which lead them
to believe that either the Registration Statement or any amendment thereto, at
the time such Registration Statement or amendment became effective or the
Preliminary Prospectus or Prospectus or amendment or supplement thereto as of
the date of such opinion contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or the Prospectus). Such counsel shall
further state that its opinions may be relied upon by Underwriters' Counsel in
rendering its opinion to the Underwriters.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel if requested. The
opinion of such counsel for the Company shall state that the opinion of any
such other counsel is in form satisfactory to such counsel and that the
Representatives, Underwriters' Counsel and they are each justified in relying
thereon. Any opinion of counsel for the Company shall not state that it is to
be governed or qualified by, or that it is otherwise subject to, any treatise,
written policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991)
or any comparable state accord.
(e) At the Closing Date, the Underwriters shall have received the
favorable opinion of Xxxxxx and Xxxxxxx, patent counsel to the Company, dated
the Closing Date, addressed to the Underwriters in substantially the form
attached hereto as Schedule B.
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(f) At each Option Closing Date, if any, the Underwriters shall have
received the favorable opinions of each of XxXxxxxxxx & Sinykin, counsel to the
Company, and Xxxxxx and Xxxxxxx, patent counsel to the Company dated such
Option Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel confirming as of such Option Closing Date
the statements made by each of XxXxxxxxxx & Sinykin and Xxxxxx and Xxxxxxx in
their respective opinions delivered on the Closing Date.
(g) On or prior to each of the Closing Date and each Option Closing
Date, if any, Underwriters' Counsel shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions of the
Company, or herein contained.
(h) Prior to each of the Closing Date and each Option Closing Date,
if any, (i) there shall have been no material adverse change nor development
involving a prospective material adverse change in the condition, financial or
otherwise, earnings, position, value, properties, results of operations,
prospects, stockholders' equity or the business activities of the Company,
whether or not in the ordinary course of business, from the latest dates as of
which such condition is set forth in the Registration Statement and Prospectus;
(ii) there shall have been no transaction, not in the ordinary course of
business, entered into by the Company, from the latest date as of which the
financial condition of the Company is set forth in the Registration Statement
and Prospectus which is materially adverse to the Company; (iii) the Company
shall not be in material default under any provision of any instrument relating
to any outstanding indebtedness; (iv) the Company shall not have issued any
securities (other than the Securities) other than as contemplated in the
Prospectus or declared or paid any dividend or made any distribution in respect
of its capital stock of any class and there has not been any change in the
capital stock or any material change in the debt (long or short term) or
liabilities or obligations of the Company (contingent or otherwise); (v) no
material amount of the assets of the Company shall have been pledged or
mortgaged, except as set forth in the Registration Statement and Prospectus;
(vi) no action, suit or proceeding, at law or in equity, shall have been
pending or to the Company's knowledge threatened (or circumstances giving rise
to same) against the Company, or affecting any of its respective properties or
businesses before or by any court or federal, state or foreign commission,
board or other administrative agency wherein an unfavorable decision, ruling or
finding may materially adversely affect the business, operations, earnings,
position, value, properties, results of operations, prospects or financial
condition or income of the Company; and (vii) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated,
threatened or contemplated by the Commission.
(i) At each of the Closing Date and each Option Closing Date, if any,
the Underwriters shall have received a certificate of the Company signed by the
principal executive officer and by the chief financial or chief accounting
officer of the Company, dated the Closing Date or Option Closing Date, as the
case may be, to the effect that each of such persons has carefully examined the
Registration Statement, the Prospectus and this Agreement, and that:
i. The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date
or the Option Closing Date, as
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the case may be, and the Company has complied with all agreements and
covenants and satisfied all conditions contained in this Agreement on
its part to be performed or satisfied at or prior to such Closing Date or
Option Closing Date, as the case may be;
ii. No stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued, and no proceedings for that
purpose have been instituted or are pending or, to the best of each of
such person's knowledge, are contemplated or threatened under the Act;
iii. The Registration Statement and the Prospectus and, if any, each
amendment and each supplement thereto, contain all statements and
information required to be included therein, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto includes
any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements the
rein not misleading and neither the Preliminary Prospectus or any
supplement thereto included any untrue statement of a material fact or
omitted to state any 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; and
iv. Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (a) the Company
has not incurred up to and including the Closing Date or the Option
Closing Date, as the case may be, other than in the ordinary course of its
business, any material liabilities or obligations, direct or contingent;
(b) the Company has not paid or declared any dividends or other
distributions on its capital stock; (c) the Company has not entered
into any material transactions not in the ordinary course of business; (d)
there has not been any change in the capital stock or long-term debt or
any increase in the short-term borrowings (other than any increase in the
short-term borrowings in the ordinary course of business) of the Company;
(e) the Company has not sustained any material loss or damage to its
properties or assets, whether or not insured; (f) there is no litigation
which is pending or threatened (or circumstances giving rise to same)
against the Company or any affiliated party which is required to be set
forth in an amended or supplemented Prospectus which has not been set
forth; and (g) there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this subsection
(i) are to such documents as amended and supplemented at the date of such
certificate.
(j) By the Closing Date, the Underwriters will have received clearance
from the NASD as to the amount of compensation allowable or payable to the
Underwriters, as described in the Registration Statement.
(k) At the time this Agreement is executed, the Underwriters shall have
received a letter, dated such date, addressed to the Underwriters in form and
substance satisfactory (including the non-material nature of the changes or
decreases, if any, referred to in clause (iii) below) in all respects to the
Underwriters and Underwriters' Counsel, from Ernst & Young LLP:
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i. confirming that they are independent certified public accountants with
respect to the Company within the meaning of the Act and the applicable Rules
and Regulations;
ii. stating that it is their opinion that the financial statements and
supporting schedules of the Company included in the Registration Statement
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations thereunder and that the
Representatives may rely upon the opinion of Ernst & Young LLP with respect to
the financial statements and supporting schedules included in the Registration
Statement;
iii. stating that, on the basis of a limited review which included a
reading of the latest available unaudited interim financial statements of the
Company, a reading of the latest available minutes of the stockholders and
board of directors and the various committees of the board of directors of the
Company, consultations with officers and other employees of the Company
responsible for financial and accounting matters and other specified procedures
and inquiries, nothing has come to their attention which would lead them to
believe that (A) the unaudited financial statements and supporting schedules of
the Company included in the Registration Statement do not comply as to form in
all material respects with the applicable accounting requirements of the Act
and the Rules and Regulations or are not fairly presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements of the Company
included in the Registration Statement, or (B) at a specified date not more
than five (5) days prior to the effective date of the Registration Statement,
there has been any change in the capital stock or long-term debt of the
Company, or any decrease in the stockholders' equity or net current assets or
net assets of the Company as compared with amounts shown in the December 31,
1997 balance sheet included in the Registration Statement, other than as set
forth in or contemplated by the Registration Statement, or, if there was any
change or decrease, setting forth the amount of such change or decrease, and
(C) during the period from December 31, 1997 to a specified date not more than
five (5) days prior to the effective date of the Registration Statement, there
was any decrease in net revenues, net earnings or increase in net earnings per
common share of any of the Company or the Subsidiaries, in each case as
compared with the corresponding period beginning December 31, 1996, other than
as set forth in or contemplated by the Registration Statement, or, if there was
any such decrease, setting forth the amount of such decrease;
iv. setting forth, at a date not later than five (5) days prior to the
date of the Registration Statement, the amount of liabilities of the Company
and the Subsidiaries taken as a whole (including a break-down of commercial
paper and notes payable to banks);
v. stating that they have compared specific dollar amounts, numbers of
shares, percentages of revenues and earnings, statements and other financial
information pertaining to the Company set forth in the Prospectus in each case
to the extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records, including work
sheets, of the Company and excluding any
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questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries and
other appropriate procedures (which procedures do not constitute an
examination in accordance with generally accepted auditing standards) set
forth in the letter and found them to be in agreement;
vi. statements as to such other matters incident to the transaction
contemplated hereby as the Representatives may request.
(l) At the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received from Ernst & Young LLP a letter, dated as of
the Closing Date or the Option Closing Date, as the case may be, to the effect
that they reaffirm that statements made in the letter furnished pursuant to
subsection (k) of this Section, except that the specified date referred to
shall be a date not more than five (5) days prior to the Closing Date or the
Option Closing Date, as the case may be, and, if the Company has elected to
rely on Rule 430A of the Rules and Regulations, to the further effect that they
have carried out procedures as specified in clause (v) of subsection (k) of
this Section with respect to certain amounts, percentages and financial
information as specified by the Representatives and deemed to be a part of the
Registration Statement pursuant to Rule 430A(b) and have found such amounts,
percentages and financial information to be in agreement with the records
specified in such clause (v).
(m) On each of the Closing Date and each Option Closing Date, if any,
there shall have been duly tendered to the Representatives for the several
Underwriters' accounts the appropriate number of Securities.
(n) No order suspending the sale of the Securities in any
jurisdiction designated by the Representatives pursuant to subsection (e) of
Section 4 hereof shall have been issued on either the Closing Date or the
Option Closing Date, if any, and no proceedings for that purpose shall have
been instituted or shall be contemplated.
(o) On or before the Closing Date, the Company shall have executed
and delivered to the Representatives, (i) the Representatives' Warrant
Agreement substantially in the form filed as Exhibit 4.3 to the Registration
Statement, in final form and substance satisfactory to the Representatives,
and (ii) the Representatives' Warrants in such denominations and to such
designees as shall have been provided to the Company.
(p) On or before the Closing Date, the Firm Securities and Option
Securities shall have been duly approved for listing on Nasdaq, subject to
official notice of issuance.
(q) On or before the Closing Date, there shall have been delivered
to the Representatives all of the Lock-up Agreements, in form and substance
satisfactory to Underwriters' Counsel.
(r) On or before the Closing Date, the Company shall have executed
and delivered to the Representatives and the Transfer Agent the Warrant
Agreement substantially in the form filed as Exhibit 4.4 to the Registration
Statement, in final form and substance satisfactory to the Representatives.
If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the
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Closing Date or the relevant Option Closing Date, as the case may be, is not so
fulfilled, the Representatives may terminate this Agreement or, if the
Representatives so elects, it may waive any such conditions which have not been
fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of the
Underwriters (for purposes of this Section 7 "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the
Underwriter, including specifically each person who may be substituted for an
Underwriter as provided in Section 11 hereof), and each person, if any, who
controls the Underwriter ("controlling person") within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, from and against any and
all losses, claims, damages, expenses or liabilities, joint or several (and
actions, proceedings, investigations, inquiries, suits and litigation in
respect thereof), whatsoever (including but not limited to any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any such claim, action, proceeding, investigation, inquiry, suit or litigation,
commenced or threatened, or any claim whatsoever), as such are incurred, to
which the Underwriter or such controlling person may become subject under the
Act, the Exchange Act or any other statute or at common law or otherwise or
under the laws of foreign countries, arising out of or based upon (A) any
untrue statement or alleged untrue statement of a material fact contained (i)
in any Preliminary Prospectus, the Registration Statement or the Prospectus (as
from time to time amended and supplemented); (ii) in any post-effective
amendment or amendments or any new registration statement and prospectus in
which is included securities of the Company issued or issuable upon exercise of
the Securities; or (iii) in any application or other document or written
communication (in this Section 7 collectively called "application") executed by
the Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any state securities commission or
agency, Nasdaq or any other securities exchange; (B) the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case of the
Prospectus, in the light of the circumstances under which they were made), or
(C) any breach of any representation, warranty, covenant or agreement of the
Company contained herein or in any certificate by or on behalf of the Company
or any of its officers delivered pursuant hereto, unless, in the case of clause
(A) or (B) above, such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company with respect to
any Underwriter by or on behalf of such Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or Prospectus, or any
amendment thereof or supplement thereto, or in any application, as the case may
be. The indemnity agreement in this subsection (a) shall be in addition to any
liability which the Company may have at common law or otherwise.
The foregoing indemnity with respect to any untrue statement contained in
or omission from a Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, liability, claim, damage or expense purchased any of
the Securities which are the subject thereof if (1) the Company shall sustain
the burden of proving that such asserting person did not receive a copy of the
Prospectus (or the Prospectus as amended or supplemented) at or prior to the
written confirmation of the sale of such Securities to such person and the
untrue statement contained in
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or omitted from such Preliminary Prospectus was corrected in the Prospectus (or
the Prospectus as amended or supplemented); and (2) the Company shall have
complied with its covenant pursuant to Section 4(f) of this Agreement.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each other person, if
any, who controls the Company within the meaning of the Act, to the same extent
as the foregoing indemnity from the Company to the Underwriters but only with
respect to statements or omissions, if any, made in any Preliminary Prospectus,
the Registration Statement or Prospectus or any amendment thereof or supplement
thereto or in any application made in reliance upon, and in strict conformity
with, written information furnished to the Company with respect to any
Underwriter by such Underwriter expressly for use in such Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof
or supplement thereto or in any such application, provided that such written
information or omissions only pertain to disclosures in the Preliminary
Prospectus, the Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriters in connection with this Offering.
The Company acknowledges that the statements with respect to the public
offering of the Firm Securities and the Option Securities set forth under the
heading "Underwriting" and the stabilization legend in the Prospectus have been
furnished by the Underwriters expressly for use therein and constitute the only
information furnished in writing by or on behalf of the Underwriters for
inclusion in the Prospectus. The indemnity agreement in this subsection (b)
shall be in addition to any liability which the Underwriters may have at common
law or otherwise.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any claim, action, suit,
investigation, inquiry, proceeding or litigation, such indemnified party shall,
if a claim in respect thereof is to be made against one or more indemnifying
parties under this Section 7, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may have
otherwise). In case any such claim, action, suit, investigation, inquiry,
proceeding or litigation is brought against any indemnified party, and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of thereof at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense thereof within a
reasonable time after notice of commencement thereof, or (iii) such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct
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34
the defense thereof on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel shall be borne by
the indemnifying parties. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one claim, action, suit, investigation, inquiry, proceeding
or litigation or separate but similar or related claims, actions, suits,
investigations, inquiries, proceedings or litigation in the same jurisdiction
arising out of the same general allegations or circumstances. Anything in this
Section 7 to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim, action, suit, investigation, inquiry,
proceeding or litigation effected without its written consent; provided,
however, that such consent was not unreasonably withheld. An indemnifying
party will not, without the prior written consent of the indemnified parties,
settle, compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit, investigation, inquiry, proceeding
or litigation 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, action, suit, investigation, inquiry, proceeding or
litigation), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit, investigation, inquiry, proceeding or litigation
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in any
case in which (i) an indemnified party makes claim for indemnification pursuant
to this Section 7, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) (A) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified on the other hand, from the offering of
the Firm Securities and the Option Securities or (B) if the allocation provided
by clause (A) 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 each of the contributing parties, on
the one hand, and the party to be indemnified on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages,
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35
expenses or liabilities, as well as any other relevant equitable
considerations. In any case where the Company is the contributing party and
the Underwriters are the indemnified party, the relative benefits received by
the Company on the one hand, and the Underwriters, on the other, shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Firm Securities and the Option Securities (before deducting expenses)
bear to the total underwriting discounts received by the Underwriters
hereunder, in each case as set forth in the table on the Cover Page of the
Prospectus. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company, or by the Underwriters, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, expenses or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), the Underwriters shall not be required to contribute any amount
in excess of the underwriting discount applicable to the Firm Securities and
the Option Securities purchased by the Underwriters hereunder. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this Section 7, each
person, if any, who controls the Company or the Underwriter within the meaning
of the Act, each officer of the Company who has signed the Registration
Statement, and each director of the Company shall have the same rights to
contribution as the Company or the Underwriter, as the case may be, subject in
each case to this subsection (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may
be made against another party or parties under this subsection (d), notify such
party or parties from whom contribution may be sought, but the omission so to
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this subsection (d), or to the extent that such party or
parties were not adversely affected by such omission. The contribution
agreement set forth above shall be in addition to any liabilities which any
indemnifying party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto,
shall be deemed to be representations, warranties and agreements at the Closing
Date and the Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the indemnity agreements contained
in Section 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, the
Company, any controlling person of any Underwriter or the Company, and shall
survive termination of this Agreement or the issuance and delivery of the
Securities to the Underwriters and the Representatives, as the case may be.
9. Effective Date. This Agreement shall become effective at 10:00 a.m.,
New York City time, on the next full business day following the date hereof, or
at such earlier time after the Registration Statement becomes effective as the
Representatives, in its discretion, shall release the Securities for sale to
the public; provided, however, that the provisions of Sections 5, 7 and 10 of
this Agreement shall at all times be effective. For purposes of this Section
9, the Securities to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Representatives of telegrams to
securities dealers releasing such securities for offering or the release by the
Representatives for publication of the first newspaper advertisement which is
subsequently published relating to the Securities.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the Representatives
shall have the right to terminate this Agreement, (i) if any domestic or
international event or act or occurrence has materially adversely disrupted, or
in the Representatives' opinion will in
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the immediate future materially adversely disrupt, the financial markets; or
(ii) if any material adverse change in the financial markets shall have
occurred; or (iii) if trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange, the NASD, the Commission or any governmental authority
having jurisdiction over such matters; or (iv) if trading of any of the
securities of the Company shall have been suspended, or any of the securities
of the Company shall have been delisted, on any exchange or in any
over-the-counter market; (v) if the United States shall have become involved in
a war or major hostilities, or if there shall have been an escalation in an
existing war or major hostilities or a national emergency shall have been
declared in the United States; or (vi) if a banking moratorium has been
declared by a state or federal authority; or (vii) if a moratorium in foreign
exchange trading has been declared; or (viii) if the Company shall have
sustained a loss material or substantial to the Company by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in the
Representatives' opinion, make it inadvisable to proceed with the offering,
sale and/or delivery of the Securities; or (ix) if there shall have been such a
material adverse change in the conditions or prospects of the Company, or such
material adverse change in the general market, political or economic
conditions, in the United States or elsewhere, that, in each case, in the
Representatives' judgment, would make it inadvisable to proceed with the
offering, sale and/or delivery of the Securities or (x) if either Xx. Xxxxxxx
X. Xxxxxxxx or Xx. Xxxxxx X. Xxxxx shall no longer serve the Company in his
present capacity.
(b) If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 10(a) the Company shall promptly
reimburse and indemnify the Representatives for all of its actual out-of-pocket
expenses in an amount not to exceed $100,000, including the fees and
disbursements of counsel for the Underwriters (less amounts previously paid
pursuant to Section 5(c) above). In addition, the Company shall remain liable
for all Blue Sky counsel fees and disbursements, expenses and filing fees. The
Representatives agrees to return to the Company any unaccounted for portion of
funds advanced by the Company as disclosed in Section 5(c) hereof.
Notwithstanding any contrary provision contained in this Agreement, any
election hereunder or any termination of this Agreement (including, without
limitation, pursuant to Sections 6, 10, 11 and 12 hereof), and whether or not
this Agreement is otherwise carried out, the provisions of Section 5 and
Section 7 shall not be in any way affected by such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
11. Substitution of the Underwriters. If one or more of the Underwriters
shall fail (otherwise than for a reason sufficient to justify the termination
of this Agreement under the provisions of Section 6, Section 10 or Section 12
hereof) to purchase the Securities which it or they are obligated to purchase
on such date under this Agreement (the "Defaulted Securities"), the
Representatives shall have the right, within 24 hours thereafter, to make
arrangement for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:
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(a) if the number of Defaulted Securities does not exceed 10% of the
total number of Firm Securities to be purchased on such date, the
non-defaulting Underwriters shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total
number of Firm Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriters (or, if such
default shall occur with respect to any Option Securities to be purchased
on an Option Closing Date, the Underwriters may at the Representatives'
option, by notice from the Representatives to the Company, terminate the
Underwriters' obligation to purchase Option Securities from the Company on
such date).
No action taken pursuant to this Section 11 shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement.
In the event of any such default which does not result in a termination of
this Agreement, the Representatives shall have the right to postpone the
Closing Date for a period not exceeding seven (7) days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements.
12. Default by the Company. If the Company shall fail at the Closing
Date or at any Option Closing Date, as applicable, to sell and deliver the
number of Securities which it is obligated to sell hereunder on such
date, then this Agreement shall terminate (or, if such default shall occur with
respect to any Option Securities to be purchased on an Option Closing Date, the
Underwriters may at the Representatives' option, by notice from the
Representatives to the Company, terminate the Underwriters' obligation to
purchase Option Securities from the Company on such date) without any liability
on the part of any non-defaulting party other than pursuant to Section 5,
Section 7 and Section 10 hereof. No action taken pursuant to this Section 12
shall relieve the Company from liability, if any, in respect of such default.
13. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representatives Xxxxx & Company, Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxx Xxxxx, President, with a copy to Xxxxxx, Xxxxxxxxxx &
Xxxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx
X. Xxxxxx, Esq. Notices to the Company shall be directed to the Company at
0000 Xxxx Xxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxx 00000, Attention: Xx. Xxxxxxx X.
Xxxxxxxx, President and Chief Executive Officer, with a copy to: XxXxxxxxxx &
Xxxxxxx, Xxx Xxxx Xxxx Xxxxxx, Xxxx Xxxxxx Xxx 0000, Xxxxxxx, Xxxxxxxxx,
00000-0000, Attention: Xxxxxxx X. Xxxxxxxx, Esq.
14. Parties. This Agreement shall inure solely to the benefit of and
shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal representatives and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any
provisions herein contained. No
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purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
17. Entire Agreement; Amendments. This Agreement, the Warrant Agreement
and the Representatives' Warrant Agreement constitute the entire agreement of
the parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing, signed by the Representatives
and the Company.
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If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
among us.
Very truly yours,
OPHIDIAN PHARMACEUTICALS, INC.
By:______________________________________
Xxxxxxx X. Xxxxxxxx, Ph.D.
President and Chief Executive Officer
Confirmed and accepted as of
the date first above written.
XXXXX & COMPANY, INC.
SECURITY CAPITAL TRADING INC.
By: Xxxxx & Company, Inc.
Acting on its own behalf and as the
Representatives of the several Underwriters
named in Schedule A hereto.
By:______________________________
Name:
Title:
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SCHEDULE A
NUMBER OF
FIRM SECURITIES
NAME OF UNDERWRITERS TO BE PURCHASED
-------------------- ---------------
Xxxxx & Company, Inc.........
Security Capital Trading Inc.
Total........................ 1,600,000
=========
A-1
41
_____________________, 1998
SCHEDULE B
[FORM OF INTELLECTUAL PROPERTY OPINION]
___________________, 1998
XXXXX & COMPANY, INC.
SECURITY CAPITAL TRADING INC.
As Representatives of the several
Underwriters named in Schedule A
to the Underwriting Agreement
% 000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Initial Public Offering of 1,600,000 Units, each Unit consisting of
One Share of Common Stock and One Redeemable Warrant of
Ophidian Pharmaceuticals, Inc.
-------------------------------------------------------------------
Gentlemen:
We have acted as special counsel to Ophidian Pharmaceuticals, Inc., a
Wisconsin corporation (the "Company"), in connection with the entering into by
the Company of that certain Underwriting Agreement by and between Xxxxx &
Company, Inc. and Security Capital Trading Inc. (as representatives of the
several underwriters named therein) (the "Representatives") and the Company,
dated _______________, 1998 (the "Underwriting Agreement"). This opinion is
provided to you pursuant to Section 6(e) of the Underwriting Agreement.
For the purpose of rendering the opinions set forth below we have reviewed
the following (collectively, the "Documents"):
(i) the Underwriting Agreement;
B-1
42
___________________, 1998
(ii) that certain Form S-1 as filed by the Company
with the Securities and Exchange Commission on ______, 1998,
together with any and all exhibits and schedules and all
heretofore filed amendments thereto (collectively, the
"Registration Statement");
(iii) the Company's prospectus dated _______________,
1998 (the "Prospectus");
(iv) a search of the United States Patent and
Trademark Office records relevant to ownership of any and all:
patents and patent applications (including, without
limitation, the patents and patent applications listed on
Schedule A annexed hereto and hereby incorporated by
reference herein (collectively, the "Patents")), and
trademarks, trademark applications, service marks and service
xxxx applications (collectively, the "Marks") (including,
without limitation, the Marks listed on Schedule B annexed
hereto and hereby incorporated by reference herein
(collectively, the "Trademarks")),
owned, purportedly owned or licensed by either the Company or
the Subsidiary (including, those patents, patent applications and
Marks licensed, without limitation, pursuant to the licenses listed
on Schedule C annexed hereto and hereby incorporated by reference
herein (collectively, the "Licenses")), conducted by
______________________________ and certified as true and correct as
of _______________________, 1998 (no earlier than 5 days prior to
the effective date of the Registration Statement);
(v) a search of the United States Copyright Office
records relevant to ownership of any and all copyrighted
material (including, without limitation, the copyright in, or
license permitting the Company's actual use of, the material
licensed or otherwise distributed by either the Company and
listed on Schedule D annexed hereto and hereby incorporated by
reference herein (collectively, the "Copyrighted Material")),
owned, purportedly owned or licensed by the Company conducted
by _____________________ and certified as true and correct as
of __________________, 1998 (no earlier than 5 days prior to
the effective date of the Registration Statement);
(vi) an intellectual property litigation search with
respect to all Patents, Trademarks, Licenses and Copyrighted
Material, listed on Schedules A, B, C and D, respectively;
(vii) a search of the Uniform Commercial Code ("UCC")
recordation office, in the following jurisdiction: --
Wisconsin, with respect to the following two categories of
general intangibles:
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_____________, 1998
(a) the intellectual property general intangibles of the
Company, including, without limitation, the Company's patents,
patent applications, inventions, know how, trademarks, service
marks, copyrights, service and trade names, intellectual property
licenses and other rights, and
(b) the intellectual property general intangibles licensed to
the Company, including, without limitation, the patents, patent
applications, inventions, know how, trademarks, service marks,
copyrights, service and trade names and other intellectual property
rights licensed to the Company pursuant to the Licenses (listed on
Schedule C),
said search certified to us as complete and accurate by
________________ and current through ________________________, 1998
(no earlier than 5 days prior to the effective date of the
Registration Statement) and said jurisdictions being the only
jurisdictions in which filing of UCC financing statements or other
documents may be filed to effectively evidence a security or other
interest in said general intangibles; and
(viii) any and all records, documents, instruments and agreements
in our possession or under our control relating to the
Company.
We have also examined such corporate records, documents, instruments
and agreements, and inquired into such other matters, as we have deemed
necessary or appropriate as a basis for the opinions set forth herein.
Whenever our opinion herein is qualified by the phrase "to the best of our
knowledge" or "to the best of our knowledge, after due inquiry," such language
means that, based upon (i) our inquiries of officers of the Company, (ii) our
review of the Documents, and (iii) our review of such other corporate records,
documents, instruments and agreements described in the first sentence of this
paragraph, we believe that such opinions are factually correct.
To the best of our knowledge, as to all matters of fact represented
to you by the Company, we advise you that nothing has come to our attention
that would cause us to believe that such facts are incorrect, incomplete or
misleading or that reliance thereon is not warranted under the circumstances.
We call to your attention that our opinion is limited to such facts as they
exist on the date hereof and do not take into account any change of
circumstances, fact or law subsequent thereto.
Based upon and subject to the foregoing, we are of the opinion that:
1. To the best of our knowledge, after due inquiry, except as
described in the Prospectus, the Company owns or has the right to
use, free and clear of all liens, encumbrances, pledges, security
interests, defects or other restrictions or equities of any kind
whatsoever,
(i) all patents and patent applications
(including, without limitation, the Patents),
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________________, 1998
(ii) all trademarks and service marks
(including, without limitation, the Trademarks),
(iii) all copyrights (including, without
limitation, the Copyrighted Material),
(iv) all service and trade names, and
(v) all intellectual property licenses
(including, without limitation, the Licenses),
used in, or required for, the conduct of the Company's respective
business.
2. To the best of our knowledge, after due inquiry, the
Company possesses all material intellectual property licenses or
rights used in, or required for, the conduct of its respective
business (including, the Licenses and without limitation, any such
licenses or rights described in the Prospectus as being owned,
possessed or licensed by the Company) and such licenses and rights
are in full force and effect.
3. To the best of our knowledge, after due inquiry, there is
no claim or action, pending, threatened or potential, which affects
or could affect the rights of the Company with respect to any
trademarks, service marks, copyrights, service names, trade names,
patents, patent applications or licenses used in, or required for,
the conduct of the Company's business.
4. To the best of our knowledge, after due inquiry, there is no
intellectual property based claim or action, pending, threatened or
potential, which affects or could affect the rights of the Company
with respect to any products, services, processes or licenses,
including, without limitation, the Licenses used in the conduct of
the Company's business.
5. To the best of our knowledge, after due inquiry, except as
described in the Prospectus, the Company is not under any obligation
to pay royalties or fees to any third party with respect to any
material, technology or intellectual properties developed, employed,
licensed or used by the Company.
6. To the best of our knowledge, after due inquiry, the
statements in the Prospectus under the headings, "Risk Factors -
Uncertainty Regarding Patents and Proprietary Rights," and "Business
- Patents and Proprietary Technology", are accurate in all material
respects, fairly represent the information disclosed therein and do
not omit to state any fact necessary to make the statements made
therein complete and accurate.
7. To the best of our knowledge, after due inquiry, the
statements in the Registration Statement and Prospectus do not
contain any untrue statement of
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____________________, 1998
a material fact with respect to the intellectual property position of
the Company, or omit to state any material fact relating to the
intellectual property position of the Company which is required to be
stated in the Registration Statement and the Prospectus or is
necessary to make the statements therein not misleading.
We call your attention to the fact that the members of this firm are
licensed to practice law in the State of ______________ and before the United
States Patent and Trademark Office as Registered Patent Attorneys.
Accordingly, we express no opinion with respect to the laws, rules and
regulations of any jurisdictions other than the State of ___________ and the
United States of America.
The opinions expressed herein are for the sole benefit of, and may be
relied upon only by, the several Underwriters named in Schedule A to the
Underwriting Agreement and Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP.
Very truly yours,
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