2,000,000 UNITS
ANTIVIRALS INC.
UNDERWRITING AGREEMENT
____________________, 1997
Xxxxxxx Investment Company, Inc.
Millenium Financial Group
First Colonial Securities Group, Inc.
As Representatives of the
Several Underwriters
c/x Xxxxxxx Investment Company, Inc.
000 XX Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Gentlemen:
AntiVirals Inc., an Oregon corporation (the "Company"), proposes to sell to
the several underwriters (the "Underwriters") named in Schedule I hereto for
whom you are acting as Representative (the "Representative") an aggregate of
2,000,000 Units (the "Firm Units"). Each Units will consist of one share of the
Company's Common Stock, $.0001 par value ("Common Stock"), and one Common Stock
Purchase Warrant substantially in the form filed as an exhibit to the
Registration Statement (hereinafter defined) (the "Warrants"). The respective
amounts of the Firm Units to be so purchased by the several Underwriters are set
forth opposite their names in Schedule I hereto. The Company also proposes to
grant to the Underwriters an option to purchase in the aggregate up to 225,000
additional Units (the "Option Units"), identical to the Firm Units, as set forth
below. The offer and sale of the Firm Units and the Option Units pursuant to
this Agreement is referred to as the "Offering."
As the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement for yourselves as Representatives and on
behalf of the several Underwriters, and (b) that the several Underwriters are
willing, acting severally and not jointly, to purchase the numbers of Firm Units
set forth opposite their respective names in Schedule I. The Firm Units and the
Option Units (to the extent the aforementioned option is exercised) are herein
collectively called the "Units."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
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1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Underwriters as
follows:
(a) A registration statement on Form SB-2 (File No. 333-20513)
with respect to the Units has been carefully prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and has been
filed with the Commission. Copies of such registration statement, including any
amendments thereto, the preliminary prospectuses (meeting the requirements of
the Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore been
delivered by the Company to you. Such registration statement, together with any
registration statement filed by the Company pursuant to Rule 462(b) of the Act,
herein referred to as the "Registration Statement," which shall be deemed to
include all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, has become effective under the
Act and no post-effective amendment to the Registration Statement has been filed
as of the date of this Agreement. "Prospectus" means (a) the form of prospectus
first filed with the Commission pursuant to Rule 424(b) or (b) the last
preliminary prospectus included in the Registration Statement filed prior to the
time it becomes effective or filed pursuant to Rule 424(a) under the Act that is
delivered by the Company to the Underwriters for delivery to purchasers of the
Units, together with the term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary
prospectus included in the Registration Statement prior to the time it becomes
effective is herein referred to as a "Preliminary Prospectus."
(b) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the state of Oregon, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. Except as described in the
Prospectus, the Company does not own and never has owned a controlling interest
in any corporation or other business entity that has or ever has had any
material assets, liabilities or operations. The Company is duly qualified to
transact business in all jurisdictions in which the conduct of its business
requires such qualification.
(c) The outstanding shares of Common Stock of the Company have
been duly authorized and validly issued and are fully paid and non-assessable
and have been issued and sold by the Company in compliance in all material
respects with applicable securities laws; the Common Stock and Warrants to be
included in the Units have been duly authorized and when issued and paid for as
contemplated herein will be validly issued, fully paid and non-assessable; and
no preemptive rights of stockholders exist with respect to any security of the
Company or the issue and sale thereof. Neither the filing of the Registration
Statement nor the offering or sale of the Units as contemplated by this
Agreement gives rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any shares of Common Stock or
other securities of the Company.
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(d) The information set forth under the caption "Capitalization"
in the Prospectus is true and correct. The Common Stock and the Warrants
conform to the description thereof contained in the Registration Statement. The
forms of certificates for the Common Stock and Warrants conform to the corporate
law of the jurisdiction of the Company's incorporation.
(e) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Units and has not instituted proceedings for that purpose. The Registration
Statement contains, and the Prospectus and any amendments or supplements thereto
will contain, all statements which are required to be stated therein by, and
will conform, to the requirements of the Act and the Rules and Regulations. The
Registration Statement and any amendment thereto do not contain, and will not
contain, any untrue statement of a material fact and do not omit, and will not
omit, to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus and any amendments
and supplements thereto do not contain, and will not contain, any untrue
statement of material fact; and do not omit, and will not omit, to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representations or
warranties as to information contained in or omitted from the Registration
Statement or the Prospectus, or any such amendment or supplement, in reliance
upon, and in conformity with, written information furnished to the Company by or
on behalf of any Underwriter through the Representative, specifically for use in
the preparation thereof.
(f) The financial statements of the Company, together with
related notes and schedules as set forth in the Registration Statement, present
fairly the financial position and the results of operations and cash flows of
the Company at the indicated dates and for the indicated periods. Such
financial statements and related schedules have been prepared in accordance with
generally accepted principles of accounting, consistently applied throughout the
periods involved, except as disclosed herein, and all adjustments necessary for
a fair presentation of results for such periods have been made. The summary
financial and statistical data of the Company included in the Registration
Statement present fairly the information shown therein and such data have been
compiled on a basis consistent with the financial statements presented therein
and the books and records of the Company.
(g) Xxxxxx Xxxxxxxx LLP, who have audited certain of the
financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and the
Rules and Regulations.
(h) There is no action, suit, claim or proceeding pending or, to
the knowledge of the Company, threatened against the Company before any court or
administrative agency or otherwise which if determined adversely to the Company
might result in any material adverse change in the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company or
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to prevent the consummation of the transactions contemplated hereby, except
as set forth in the Registration Statement.
(i) The Company has good and marketable title to all of the
properties and assets reflected in the financial statements (or as described in
the Registration Statement) hereinabove described, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except those reflected in such
financial statements (or as described in the Registration Statement) or which
are not material in amount. The Company occupies its leased properties under
valid and binding leases conforming in all material respects to the description
thereof set forth in the Registration Statement.
(j) The Company has filed all federal, state, local and foreign
income tax returns which have been required to be filed and has paid all taxes
indicated by said returns and all assessments received by it to the extent that
such taxes have become due and are not being contested in good faith. All tax
liabilities have been adequately provided for in the financial statements of the
Company.
(k) Since the respective dates as of which information is given
in the Registration Statement, as it may be amended or supplemented, there has
not been any material adverse change or any development involving a prospective
material adverse change in or affecting the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise), or
prospects of the Company, whether or not occurring in the ordinary course of
business, and there has not been any material transaction entered into or any
material transaction that is probable of being entered into by the Company,
other than transactions in the ordinary course of business and changes and
transactions described in the Registration Statement, as it may be amended or
supplemented. The Company has no material contingent obligations which are not
disclosed in the Company's financial statements included in the Registration
Statement or elsewhere in the Prospectus.
(l) The Company is not, nor, with the giving of notice or lapse
of time or both, will it be, in violation of or in default under its articles of
incorporation or bylaws or under any agreement, lease, contract, indenture or
other instrument or obligation to which it is a party or by which it, or any of
its properties, is bound and which default is of material significance in
respect of the condition, financial or otherwise of the Company or the business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company. The execution and delivery of this
Agreement and the consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the Company is
a party, or of the articles of incorporation or bylaws of the Company or any
order, rule or regulation applicable to the Company of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction.
(m) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in
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connection with the execution and delivery by the Company of this Agreement
and the consummation of the transactions herein contemplated (except such
additional steps as may be required by the Commission, the National
Association of Securities Dealers, Inc. (the "NASD") or such additional steps
as may be necessary to qualify the Units for public offering by the
Underwriters under state securities or Blue Sky laws) has been obtained or
made and is in full force and effect.
(n) The Company holds all material patents, patent rights
trademarks, trade names, copyrights, trade secrets and licenses of any of the
foregoing (collectively, "Intellectual Property Rights") that are necessary to
the conduct of its business; there is no claim pending or, to the best knowledge
of the Company, threatened against the Company alleging any infringement of
Intellectual Property Rights, or any violation of the terms of any license
relating to Intellectual Property Rights, nor does the Company know of any basis
for any such claim. The Company knows of no material infringement by others of
Intellectual Property Rights owned by or licensed to the Company. The Company
has obtained, is in compliance in all material respects with and maintains in
full force and effect all material licenses, certificates, permits, orders or
other, similar authorizations granted or issued by any governmental agency
(collectively, "Government Permits") required to conduct its business as it is
presently conducted. All applications for additional Government Permits
described in the Prospectus as having been made by the Company have been
properly and effectively made in accordance with the applicable laws and
regulations with respect thereto and such applications constitute, in the best
judgment of the Company's management, those reasonably required to have been
made in order to carry out the Company's business plan as described in the
Prospectus. No proceeding to revoke, limit or otherwise materially change any
Government Permit has been commenced or, to the Company's best knowledge, is
threatened against the Company or any supplier to the Company with respect to
materials supplied to the Company, and the Company has no reason to anticipate
that any such proceeding will be commenced against the Company or any such
supplier. Except as disclosed or contemplated in the Prospectus, the Company
has no reason to believe that any pending application for a Government Permit
will be denied or limited in a manner inconsistent with the Company's business
plan as described in the Prospectus.
(o) The Company is in all material respects in compliance with
all applicable Environmental Laws. The Company has no knowledge of any past,
present or, as anticipated by the Company, future events, conditions,
activities, investigation, studies, plans or proposals that (i) would interfere
with or prevent compliance with any Environmental Law by the Company or
(ii) could reasonably be expected to give rise to any common law or other
liability, or otherwise form the basis of a claim, action, suit, proceeding,
hearing or investigation, involving the Company and related in any way to
Hazardous Substances or Environmental Laws. Except for the prudent and safe use
and management of Hazardous Substances in the ordinary course of the Company's
business, (i) no Hazardous Substance is or has been used, treated, stored,
generated, manufactured or otherwise handled on or at any Facility and (ii) to
the Company's best knowledge, no Hazardous Substance has otherwise come to be
located in, on or under any Facility. No Hazardous Substances are stored at any
Facility except in quantities necessary to satisfy the reasonably anticipated
use or consumption
Page 5 of 27
by the Company. No litigation, claim, proceeding or governmental
investigation is pending regarding any environmental matter for which the
Company has been served or otherwise notified or, to the knowledge of the
Company threatened or asserted against the Company, or the officers or
directors of the Company in their capacities as such, or any Facility or the
Company's business. There are no orders, judgments or decrees of any court
or of any governmental agency or instrumentality under any Environmental Law
which specifically apply to the Company, any Facility or any of the Company's
operations. The Company has not received from a governmental authority or
other person (i) any notice that it is a potentially responsible person for
any Contaminated site or (ii) any request for information about a site
alleged to be Contaminated or regarding the disposal of Hazardous Substances.
There is no litigation or proceeding against any other person by the Company
regarding any environmental matter. The Company has disclosed in the
Prospectus or made available to the Underwriters and their counsel true,
complete and correct copies of any reports, studies, investigations, audits,
analysis, tests or monitoring in the possession of or initiated by the
Company pertaining to any environmental matter relating to the Company, its
past or present operations or any Facility.
For the purposes of the foregoing paragraph, "Environmental Laws" means any
applicable federal, state or local statute, regulation, code, rule, ordinance,
order, judgment, decree, injunction or common law pertaining in any way to the
protection of human health or the environment, including without limitation, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Toxic Substances Control Act, the
Clean Air Act, the Federal Water Pollution Control Act and any similar or
comparable state or local law; "Hazardous Substance" means any hazardous, toxic,
radioactive or infectious substance, material or waste as defined, listed or
regulated under any Environmental Law; "Contaminated" means the actual existence
on or under any real property of Hazardous Substances, if the existence of such
Hazardous Substances triggers a requirement to perform any investigatory,
remedial, removal or other response action under any Environmental Laws or if
such response action legally could be required by any governmental authority;
"Facility" means any property currently owned, leased or occupied by the
Company.
(p) Neither the Company, nor to the Company's best knowledge,
any of its affiliates, has taken or intends to take, directly or indirectly, any
action designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of the
Units.
(q) The Company is not an "investment company" within the
meaning of such term under the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules and regulations of the Commission thereunder.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as
Page 6 of 27
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(s) The Company carries, or is covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of its business
and the value of its properties and as is customary for companies engaged in
similar industries.
(t) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Section 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or by failure to act, which would cause the loss
of such qualification.
(u) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-198,
AN ACT RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA, and the Company
further agrees that if it commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the Commission or
with the Florida Department of Banking and Finance (the "Department"), whichever
date is later, or if the information reported or incorporated by reference in
the Prospectus, if any, concerning the Company's business with Cuba or with any
person or affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as appropriate,
in a form acceptable to the Department.
(v) The Company is in material compliance with all laws, rules,
regulations, orders of any court or administrative agency, operating licenses or
other requirements imposed by any governmental body applicable to it, including,
without limitation, all applicable laws, rules, regulations, licenses or other
governmental standards applicable to the industry in which the Company operates;
and the conduct of the business of the Company, as described in the Prospectus,
will not cause the Company to be in violation of any such requirements.
(w) The Warrants have been authorized for issuance to the
various purchasers of the Units and will, when issued, possess rights,
privileges, and characteristics
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as represented in the most recent form of Warrants filed as an exhibit to the
Registration Statement; the securities to be issued upon exercise of the
Warrants, when issued and delivered against payment therefor in accordance
with the terms of the Warrants, will be duly and validly issued, fully paid,
nonassessable and free of preemptive rights, and all corporate action
required to be taken for the authorization and issuance of the Warrants, and
the securities to be issued upon their exercise, has validly and sufficiently
taken.
(x) The Representatives' Warrants (as defined in Paragraph
(d) of Section 2 hereof) have been authorized for issuance to the
Representatives and will, when issued, possess rights, privileges, and
characteristics as represented in the most recent form of Representatives'
Warrants filed as an exhibit to the Registration Statement; the securities to
be issued upon exercise of the Representatives' Warrants, when issued and
delivered against payment therefor in accordance with the terms of the
Representative's Warrants, will be duly and validly issued, fully paid,
nonassessable and free of preemptive rights, and all corporate action
required to be taken for the authorization and issuance of the
Representatives' Warrants, and the securities to be issued upon their
exercise, have been validly and sufficiently taken.
(y) Except as disclosed in the Prospectus, neither the Company
nor any of its officers, directors or affiliates have caused any person, other
than the Underwriters, to be entitled to reimbursement of any kind, including,
without limitation, any compensation that would be includable as underwriter
compensation under the NASD's Corporate Financing Rule with respect to the
offering of the Units, as a result of the consummation of such offering based on
any activity of such person as a finder, agent, broker, investment adviser or
other financial service provider.
2. PURCHASE, SALE AND DELIVERY OF THE UNITS.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set forth, the
Company agrees to sell to the Underwriters and each Underwriter agrees,
severally and not jointly, to purchase, at a price of $__________ per Unit, the
number of Firm Units set forth opposite the name of each Underwriter in Schedule
I hereof, subject to adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Units to be sold hereunder is to be
made in New York Clearing House funds and, at the option of the
Representatives, by certified or bank cashier's checks drawn to the order of
the Company or bank wire to an account specified by the Company against
either uncertificated delivery of Firm Units or of certificates therefor
(which delivery, if certificated, shall take place in such location in New
York, New York as may be specified by the Representatives) to the
Representatives for the several accounts of the Underwriters. Such payment
is to be made at the offices of the Representatives at the address set forth
on the first page of this Agreement, or at such other place as you and the
Company shall designate, at 7:00 a.m., Pacific time, on the third business
day after the date of this Agreement or at such other time and date not later
than five business days after as you and the Company shall agree upon, such
time and date being herein referred to as the "Closing
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Date." (As used herein, "business day" means a day on which the New York
Stock Exchange is open for trading and on which banks in New York are open
for business and not permitted by law or executive order to be closed.)
Except to the extent uncertificated Firm Units are delivered at closing, the
certificates for the Firm Units will be delivered in such denominations and
in such registrations as the Representative request in writing not later than
the second full business day prior to the Closing Date, and will be made
available for inspection by the Representatives at least one business day
prior to the Closing Date.
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Representatives to
purchase the Option Units at the price per Unit as set forth in the first
paragraph of this Section 2. The option granted hereby may be exercised in
whole or in part by giving written notice (i) at any time before the Closing
Date and (ii) only once thereafter within 45 days after the date of this
Agreement, by the Representatives to the Company setting forth the number of
Option Units as to which the Representatives is exercising the option, the
names and denominations in which the Option Units are to be registered and
the time and date at which certificate representing such Units are to be
delivered. The time and date at which certificates for Option Units are to
be delivered shall be determined by the Representatives but shall not be
earlier than three nor later than 10 full business days after the exercise of
such option, nor in any event prior to the Closing Date (such time and date
being herein referred to as the "Option Closing Date"). If the date of
exercise of the option is three or more days before the Closing Date, the
notice of exercise shall set the Closing Date as the Option Closing Date.
The option with respect to the Option Units granted hereunder may be
exercised only to cover over-allotments in the sale of the Firm Units by the
Underwriters. The Representatives may cancel such option at any time prior to
its expiration by giving written notice of such cancellation to the Company.
To the extent, if any, that the option is exercised, payment for the Option
Units shall be made on the Option Closing Date in New York Clearing House
funds and, at the option of the Representatives, by certified or bank
cashier's check drawn to the order of the Company for the Option Units to be
sold by the Company or bank wire to an account specified by the Company
against delivery of certificates therefor at the offices of Xxxxxxx
Investment Company, Inc. set forth on the first page of this Agreement.
(d) In addition to the sums payable to the Representative as
provided elsewhere herein, the Representatives shall be entitled to receive at
the Closing, for itself alone and not as Representatives of the Underwriters, as
additional compensation for their services, a purchase warrant (the
"Representatives' Warrant") for the purchase of up to __________ Units at a
price of $__________ per Unit, upon the terms and subject to adjustment and
conversion as described in the form of Representatives' Warrant filed as an
exhibit to the Registration Statement.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Units as soon as the Representatives deem it advisable to
do so. The Firm Units
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are to be initially offered to the public at the initial public offering
price set forth in the Prospectus. The Representatives may from time to time
thereafter change the public offering price and other selling terms. To the
extent, if at all, that any Option Units are purchased pursuant to Section 2
hereof, the Representatives will offer them to the public on the foregoing
terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Units in accordance with an
Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters that:
(a) The Company will (i) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A
of the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a
form approved by the Representatives containing information previously
omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A of the Rules and Regulations, and (ii) not file any
amendment to the Registration Statement or supplement to the Prospectus of
which the Representatives shall not previously have been advised and
furnished with a copy or to which the Representatives shall have reasonably
objected in writing or which is not in compliance with the Rules and
Regulations.
(b) The Company will advise the Representatives promptly (i)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (ii) of receipt of any comments from the Commission,
(iii) of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop
order preventing or suspending the use of the Prospectus and to obtain as
soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with the Representatives in
endeavoring to qualify the Units for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in
writing and will make such applications, file such documents, and furnish
such information as may be reasonably required for that purpose, provided the
Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction where it is not
now so qualified or required to file such a consent. The Company will, from
time to time, prepare and file such statements, reports, and other documents,
as are or may be required to continue such qualifications in effect for so
long a period as the Representatives may reasonably request for distribution
of the Units.
Page 10 of 27
(d) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period when
delivery of a Prospectus is required under the Act, as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representatives may reasonably request. The Company will deliver to the
Representatives at or before the Closing Date, four signed copies of the
Registration Statement and all amendments thereto including all exhibits
filed therewith, and will deliver to the Representatives such number of
copies of the Registration Statement (including such number of copies of the
exhibits filed therewith that may reasonably be requested), and of all
amendments thereto, as the Representatives may reasonably request.
(e) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder, so as to
permit the completion of the distribution of the Units as contemplated in this
Agreement and the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in the reasonable
opinion of the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the law.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made available.
(g) The Company will, for a period of five years from the
Closing Date, deliver to the Representatives copies of annual reports and
copies of all other documents, reports and information furnished by the
Company to its stockholders or filed with any securities exchange pursuant to
the requirements of such exchange or with the Commission pursuant to the Act
or the Exchange Act. The Company will deliver to the Representatives similar
reports with respect to significant subsidiaries, as that term is defined in
the Rules and Regulations, which are not consolidated in the Company's
financial statements.
(h) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company or other securities convertible into or
exchangeable or
Page 11 of 27
exercisable for shares of Common Stock or derivative of Common Stock (or
agreement for such) will be made for a period of one year after the date of
this Agreement, directly or indirectly, by the Company otherwise than
hereunder or with the prior written consent of the Representative, which
consent will not be unreasonably withheld.
(i) The Company will use its best efforts to list the Common
Stock and the Warrants, subject to notice of their issuance, on The Nasdaq Stock
Market.
(j) The Company has caused each officer and director and each
person who owns, beneficially or of record, 1% or more of the Common Stock
outstanding immediately prior to this offering (the "Insiders") to furnish to
you, on or prior to the date of this Agreement, a letter or letters, in form and
substance satisfactory to the Underwriters (the "Insider Lockup Agreements"),
pursuant to which each Insider shall agree not to offer to sell, sell, contract
to sell, sell short or otherwise dispose of any shares of Common Stock or other
capital stock of the Company, or any other securities convertible, exchangeable
or exercisable for Common Stock or derivatives of Common Stock owned by such
Insider, or request the registration for the offer or sale of any of the
foregoing (or as to which such Insider has the right to direct the disposition
of), for a period of one year after the date of this Agreement, directly or
indirectly, except with the prior written consent of the Representatives, which
consent shall not be unreasonably withheld. In addition, the Company has caused
persons (the "Non-insiders") who own in the aggregate at least 85% of the Common
Stock outstanding immediately prior to this offering remaining after subtracting
the shares owned by those who have executed Insider Lockup Agreements to enter
into a letter or letters, in form and substance satisfactory to the Underwriters
(the "Other Lockup Agreements"), pursuant to which each such Non-insider shall
agree not to offer to sell, sell, contract to sell, sell short or otherwise
dispose of any shares of Common Stock or other capital stock of the Company, or
any other securities convertible, exchangeable or exercisable for Common Stock
or derivatives of Common Stock owned by such Non-insider, or request the
registration for the offer or sale of any of the foregoing (or as to which such
Non-insider has the right, to direct the disposition of) for a period of one
year after the date of this Agreement, directly or indirectly, except with the
prior written consent of the Representatives, which consent shall not be
unreasonably withheld, provided, however, that notwithstanding the foregoing, a
Non-insider may sell or otherwise dispose of up to 50% of the shares of Common
Stock or other capital stock of the Company held by such person during the
period beginning six months and ending one year after the date of this
Agreement. The Insider Lockup Agreements and the Other Lockup Agreements shall
also provide that the holder shall give the Representatives prior notice with
respect to any offers to sell, sales, contracts to sell, short sales or other
dispositions of Common Stock pursuant to Rule 144 under the Act or any similar
provisions enacted subsequent to the date of this Agreement, for as long as you
are a market maker in the Common Stock or for a period of five years from the
date of this Agreement, whichever period is shorter.
(k) The Company shall apply the net proceeds of its sale of the
Units as set forth in the Prospectus and shall file such reports with the
Commission with respect to the
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sale of the Units and the application of the proceeds therefrom as may be
required in accordance with Rule 463 under the Act.
(l) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Units in such a manner as would
require the Company or any of the subsidiaries to register as an investment
company under the 1940 Act.
(m) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Common Stock.
(n) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
5. COSTS AND EXPENSES.
(a) The Representative shall be entitled to receive from
the Company, for themselves alone and not as Representative of the
Underwriters, a nonaccountable expense allowance equal to 2% of the aggregate
public offering price of Units sold to the Underwriters in connection with
the Offering. The Representatives shall be entitled to withhold this
allowance on the Closing Date (less the $35,000 advance against such amount
that has been paid by the Company) with respect to Units delivered on the
Closing Date and to require the Company to make payment of this allowance on
the Option Closing Date with respect to Units delivered on the Option Closing
Date.
(b) In addition to the payment described in Paragraph (a) of
this Section 5, the Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Company under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses,
the Prospectus, this Agreement, the Underwriters' Selling Memorandum, the
Underwriters' Invitation Letter, the Listing Application, the Blue Sky Survey
and any supplements or amendments thereto; the filing fees of the Commission;
the filing fees incident to securing any required review by the NASD of the
terms of the sale of the Units; the Listing Fee of The Nasdaq Stock Market;
reasonable costs of a due diligence investigation of the principals of the
Company by a firm acceptable to the Representatives; and the expenses,
including the fees and disbursements of counsel for the Underwriters,
incurred in connection with the qualification of the Units under state
securities or Blue Sky laws. Any transfer taxes imposed on the sale of the
Units to the several Underwriters will be paid by the Company. The Company
shall not, however, be required to pay for any of the Underwriters' expenses
(other than those related to qualification under NASD regulation and state
securities or Blue Sky
Page 13 of 27
laws) except that, if this Agreement shall not be consummated, then the
Company shall reimburse the several Underwriters for reasonable accountable
out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and proposing
to market the Units or in contemplation of performing their obligations
hereunder (less the $35,000 advance that has been paid by the Company); but
the Company shall not in any event be liable to any of the several
Underwriters for damages on account of loss of anticipated profits from the
sale by them of the Units.
(c) In the event the Company elects to redeem the Warrants
at any time commencing one year after the date of this Agreement, the Company
shall retain Xxxxxxx Investment Company, Inc. as the Company's solicitation
agent (the "Warrant Solicitation Agent"). The Company shall pay to the
Warrant Solicitation Agent for its services a solicitation fee equal to 2% of
the total amount paid by the holders of the Warrants whom the Warrant
Solicitation Agent solicits to exercise the Warrants. The exercise will be
presumed to be unsolicitated unless the customer states in writing that the
transaction was solicited by the Warrant Solicitation Agent and designates in
writing the registered representative of the Warrant Solicitation Agent
entitled to receive compensation for the exercise. The fee shall not be
payable for the exercise of any Warrant held by the Warrant Solicitation
Agent in a discretionary account at the time of exercise, unless the Warrant
Solicitation Agent receives from the customer prior specific written approval
of such exercise.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm Units
on the Closing Date and the Option Units, if any, on the Option Closing Date are
subject to the accuracy, as of the Closing Date or the Option Closing Date, as
the case may be, of the representations and warranties of the Company contained
herein, and to the performance by the Company of their covenants and obligations
hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective and any and all filings
required by Rule 424 and Rule 430A of the Rules and Regulations shall have
been made, and any request of the Commission for additional information (to
be included in the Registration Statement or otherwise) shall have been
disclosed to the Representatives and complied with to their reasonable
satisfaction. No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been taken or, to the knowledge of
the Company, shall be contemplated by the Commission and no injunction,
restraining order, or order of any nature by a federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance of the Units.
(b) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of Ater
Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx, LLP, counsel for the Company, dated the
Closing Date or the Option Closing Date, as the
Page 14 of 27
case may be, addressed to the Underwriters (and stating that it may be relied
upon by counsel to the Underwriters) to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the state of
Oregon, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; the Company is
duly qualified to transact business in all jurisdictions in which the conduct of
its business requires such qualification, or in which the failure to qualify
would have a materially adverse effect upon the business of the Company.
(ii) The Company has authorized and outstanding capital
stock as set forth under the caption "Capitalization" in the Prospectus; the
authorized shares of the Company's Common Stock have been duly authorized; the
outstanding shares of the Company's Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable; all of the securities of
the Company conform to the description thereof contained in the Prospectus; the
certificates for the Common Stock and Warrants, assuming they are in the form
filed with the Commission, are in due and proper form; the shares of Common
Stock to be sold by the Company pursuant to this Agreement, including shares of
Common Stock to be sold as a part of the Option Units have been duly authorized
and, upon issuance and delivery thereof as contemplated in this Agreement and
the Registration Statement, will be validly issued, fully paid and non-
assessable; no preemptive rights of stockholders exist with respect to any of
the Common Stock of the Company or the issuance or sale thereof pursuant to any
applicable statute or the provisions of the Company's charter documents or, to
such counsel's best knowledge, pursuant to any contractual obligation. The
Warrants and the Representatives' Warrants have been authorized for issuance to
the purchasers of Units or the Representatives, as the case may be, and will,
when issued, possess rights, privileges, and characteristics as represented in
the most recent form of Warrants or Representatives' Warrants, as the case may
be, filed as an exhibit to the Registration Statement; the securities to be
issued upon exercise of the Representatives' Warrants, when issued and delivered
against payment therefor in accordance with the terms of the Representatives'
Warrants, will be duly and validly issued, fully paid, nonassessable and free of
preemptive rights, and all corporate action required to be taken for the
authorization and issuance of the Warrants, the Representatives' Warrants, and
the securities to be issued upon their exercise, has been validly and
sufficiently taken.
(iii) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company
and there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any
Page 15 of 27
of the Units or the right to have any Common Stock or other securities of the
Company included in the Registration Statement or the right, as a result of
the filing of the Registration Statement, to require registration under the
Act of any shares of Common Stock or other securities of the Company.
(iv) The Registration Statement has become effective under
the Act and, to the best of the knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending or
threatened under the Act.
(v) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects with
the requirements of the Act and the applicable rules and regulations thereunder
(except that such counsel need express no opinion as to the financial statements
and related schedules therein).
(vi) The statements under the captions "Shares Eligible for
Future Sale" and "Description of Securities" in the Prospectus and in Item 24 of
the Registration Statement, insofar as such statements constitute a summary of
documents referred to therein or matters of law, fairly summarize in all
material respects the information called for with respect to such documents and
matters.
(vii) Such counsel does not know of any contracts or
documents required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus which are not so
filed or described as required, and such contracts and documents as are
summarized in the Registration Statement or the Prospectus are fairly
summarized in all material respects.
(viii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or bylaws of the
Company, or any agreement or instrument known to such counsel to which the
Company is a party or by which the Company may be bound.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated (other than as may be required by the NASD or as required by state
securities and Blue Sky laws as to which such counsel need express no opinion)
except such as have been obtained or made, specifying the same.
Page 16 of 27
(xii) The Company is not, and will not become, as a
result of the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
In rendering such opinion, such counsel may rely as to matters
governed by the laws of states other than Oregon or federal laws on local
counsel in such jurisdictions, provided that in each case such counsel shall
state that they believe that they and the Underwriters are justified in relying
on such other counsel. In addition to the matters set forth above, the opinion
of Ater Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx shall also include a statement to the
effect that nothing has come to the attention of such counsel that has caused
them to believe that (i) the Registration Statement, at the time it became
effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the Closing
Date or the Option Closing Date, as the case may be, 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, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements, in the light of
the circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein).
(c) The Representatives shall have received from Weiss,
Jensen, Xxxxx & Xxxxxx, counsel for the Underwriters, an opinion dated the
Closing Date or the Option Closing Date, as the case may be, substantially to
the effect specified in subparagraphs (i), (iv) and (v) of Paragraph (b) of
this Section 6. In rendering such opinion Weiss, Jensen, Xxxxx & Xxxxxx may
rely as to all matters governed other than by the laws of the State of Oregon
or federal laws on the opinion of counsel referred to in Paragraph (b) of
this Section 6. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to the
attention of such counsel that has caused them to believe that (i) the
Registration Statement, or any amendment thereto, as of the time it became
effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the
Closing Date or the Option Closing Date, as the case may be, 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, and
(ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the
Option Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact, necessary in order to make
the statements, in the light of the circumstances under which they are made,
not misleading (except that such counsel need express no view as to financial
statements, schedules and statistical information therein). With respect to
such statement, Weiss, Jensen,
Page 17 of 27
Xxxxx & Xxxxxx may state that their belief is based upon the procedures set
forth therein, but is without independent check and verification.
(d) The Representatives shall have received at the Closing Date
or the Option Closing Date, as the case may be, the opinion of Xxxxx Xxxxxxxxx &
Associates, patent counsel to the Company, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters (and stating
that it may be relied upon by counsel to the Underwriters) related to the
Company's patents and substantially in the form attached hereto as Schedule II
hereto.
(e) The Representatives shall have received at or prior to the
Closing Date from Weiss, Jensen, Xxxxx & Xxxxxx a memorandum or summary, in
form and substance satisfactory to the Representatives, with respect to the
qualification for offering and sale by the Underwriters of the Units under
the state securities or Blue Sky laws of such jurisdictions as the
Representatives may reasonably have designated to the Company.
(f) The Representatives, on behalf of the several Underwriters,
shall have received, on each of the dates hereof, the Closing Date and the
Option Closing Date, as the case may be, a letter dated the date hereof, the
Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to the Representatives, of Xxxxxx Xxxxxxxx LLP confirming
that they are independent public accountants within the meaning of the Act and
the applicable published Rules and Regulations thereunder and stating that in
their opinion the financial statements and schedules examined by them and
included in the Registration Statement comply in form in all material respects
with the applicable accounting requirements of the Act and the related published
Rules and Regulations and containing such other statements and information as
are ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
(g) The Representatives shall have received on the Closing Date
or the Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Chief Financial Officer of the Company to
the effect that, as of the Closing Date or the Option Closing Date, as the case
may be, each of them severally represents as follows:
(i) The Registration Statement has become effective under
the Act and no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have been taken
or are, to his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be;
Page 18 of 27
(iii) All filings required to have been made pursuant to
Rule 424 or Rule 430A under the Act have been made;
(iv) He or she has carefully examined the Registration
Statement and the Prospectus and, in his or her opinion, as of the effective
date of the Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and Prospectus
did not omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and since the effective date of the
Registration Statement, no event has occurred which should have been set forth
in a supplement to or an amendment of the Prospectus which has not been so set
forth in such supplement or amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company,
whether or not arising in the ordinary course of business.
(h) The Company shall have furnished to the Representative such
further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Representative may reasonably have requested.
(i) The Common Stock and Warrants have been approved for
designation on The Nasdaq Stock Market upon notice of issuance.
(j) The Lockup Agreements described in Section 4(j) are in full
force and effect.
(k) The Company shall have fully completed a rescission offer to
certain purchasers of the Company's Common Stock offering them the right to
rescind their prior acquisition of Common Stock as described in the
registration statement filed with the Commission on Form S-4 (File No.
333-20511) and declared effective by the Commission on May __, 1997.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Weiss, Jensen,
Xxxxx & Xxxxxx, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the
Page 19 of 27
Company of such termination in writing or by telegram at or prior to the
Closing Date or the Option Closing Date, as the case may be.
In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the
Units required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities to which
such Underwriter or any such controlling person may become subject under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse each Underwriter and
each such controlling person upon demand for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental inquiry
related to the offering of the Units, whether or not such Underwriter or
controlling person is a party to any action or proceeding; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly will indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in
Page 20 of 27
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made; and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding; provided, however, that
each Underwriter will be liable in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Company by or
through the Representatives specifically for use in the preparation thereof.
This indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of the
provisions of Section 8(a) or (b). In case any such proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own counsel
at its own expense. Notwithstanding the foregoing, the indemnifying party shall
pay as incurred (or within 30 days of presentation) the fees and expenses of the
counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them or (iii) the
indemnifying party shall have failed to assume the defense and employ counsel
acceptable to the indemnified party within a reasonable period of time after
notice of commencement of the action. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm for all such indemnified parties. Such firm shall be
designated in writing by
Page 21 of 27
you in the case of parties indemnified pursuant to Section 8(a) and by the
Company in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. In addition, the indemnifying party
will not, without the prior written consent of the indemnified party, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding of which indemnification may be sought
hereunder (whether or not any indemnified party is an actual or potential
party to such claim, action or proceeding) unless such settlement, compromise
or consent includes an unconditional release of each indemnified party from
all liability arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Units. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bears to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to above in this Section 8(d) shall be deemed to include any legal or other
expenses
Page 22 of 27
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Units purchased by such Underwriter, and (ii) 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. The Underwriters' obligations
in this Section 8(d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this Section 8
hereby consents to the jurisdiction of any court having jurisdiction over any
other contributing party, agrees that process issuing from such court may be
served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join
him or it as an additional defendant in any such proceeding in which such other
contributing party is a party.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Units and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may
be, any Underwriter shall fail to purchase and pay for the portion of the
Units which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company), you, as
Representatives of the Underwriters, shall use your reasonable efforts to
procure within 36 hours thereafter one or more of the other Underwriters, or
any others, to purchase from the Company such amounts as may be agreed upon
and upon the terms set forth herein, the Firm Units or Option Units, as the
case may be, which the defaulting Underwriter or Underwriters failed to
purchase. If during such 36 hours you, as such Representatives, shall not
have procured such other Underwriters, or any others, to purchase the Firm
Units or Option Units, as the case may be, agreed to be purchased by the
defaulting Underwriter or Underwriters, then (a) if the aggregate number of
Units with respect to which such default shall occur does not exceed 10% of
the Firm
Page 23 of 27
Units or Option Units, as the case may be, covered hereby, the other
Underwriters shall be obligated, severally, in proportion to the respective
numbers of Firm Units or Option Units, as the case may be, which they are
obligated to purchase hereunder, to purchase the Firm Units or Option Units,
as the case may be, which such defaulting Underwriter or Underwriters failed
to purchase, or (b) if the aggregate number of Firm Units or Option Units, as
the case may be, with respect to which such default shall occur equals or
exceeds 10% of the Firm Units or Option Units, as the case may be, covered
hereby, the Company or you as the Representative of the Underwriters will
have the right, by written notice given within the next 36-hour period to the
parties to this Agreement, to terminate this Agreement without liability on
the part of the non-defaulting Underwriters or of the Company except to the
extent provided in Section 8 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section 9, the Closing Date
or Option Closing Date, as the case may be, may be postponed for such period,
not exceeding seven days, as you, as Representative, may determine in order
that the required changes in the Registration Statement or in the Prospectus
or in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting Underwriter.
Any action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter
under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to Xxxxxxx Investment
Company, Inc., 000 XX Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000, Attention: Xxxxxxx
X.X. Xxxxxxx; with a copy to Weiss, Jensen, Xxxxx & Xxxxxx, 2300 U.S. Bancorp
Tower, 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000, Attention: Xxxx X. xxx Xxxxxx;
if to the Company, to AntiVirals Inc., Xxx X.X. Xxxxxxxx, Xxxxx 0000, Xxxxxxxx,
Xxxxxx 00000, Attention: Xxxxx X. Xxxxxx, Ph.D.; with a copy to Ater Xxxxx
Xxxxxx Xxxxxx & Xxxxxxxx, LLP, Suite 1800, 000 XX Xxxxxxxx, Xxxxxxxx, Xxxxxx
00000-0000, Attention: Xxxxx X. Xxxxxxxx.
11. TERMINATION.
This Agreement may be terminated by you by notice to the Company as
follows:
(a) at any time prior to the earlier of (i) the time the Units
are released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m.
on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company and its
subsidiaries taken as a whole or the earnings, business, management,
Page 24 of 27
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and its subsidiaries taken as a whole, whether or
not arising in the ordinary course of business, (ii) any outbreak or
escalation of hostilities or declaration of war or national emergency or
other national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, escalation, declaration,
emergency, calamity, crisis or change on the financial markets of the United
States would, in your reasonable judgment, make it impracticable to market
the Units or to enforce contracts for the sale of the Units, (iii) the Dow
Xxxxx Industrial Average shall have fallen by 15 percent or more from its
closing price on the day immediately preceding the date that the Registration
Statement is declared effective by the Commission, (iv) suspension of trading
in securities generally on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers
of days of trading) for securities on either such Exchange, (v) the
enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which
in your opinion materially and adversely affects or may materially and
adversely affect the business or operations of the Company, (vi) declaration
of a banking moratorium by United States or New York State authorities, (vii)
any downgrading in the rating of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Exchange Act); (viii) the suspension of
trading of the Common Stock by the Commission on The Nasdaq Stock Market or
(ix) the taking of any action by any governmental body or agency in respect
of its monetary or fiscal affairs which in your reasonable opinion has a
material adverse effect on the securities markets in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Units from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in any Prospectus or the Registration Statement consists of the
information set forth in the last paragraph on the front cover page (insofar as
such information relates to the Underwriters), legends required by Item 502(d)
of Regulation S-B under the Act and the information under the caption
"Underwriting" in the Prospectus.
14. MISCELLANEOUS.
Page 25 of 27
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Units under
this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the state of Oregon. All disputes relating to this Underwriting
Agreement shall be adjudicated before a court located in Multnomah County,
Oregon to the exclusion of all other courts that might have jurisdiction.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
ANTIVIRALS INC.
By:
---------------------------
Xxxxx X. Xxxxxx, Ph.D.
Chief Executive Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written.
XXXXXXX INVESTMENT COMPANY, INC.
MILLENIUM FINANCIAL GROUP
FIRST COLONIAL SECURITIES GROUP, INC.
As Representatives of the several
Underwriters listed on Schedule I
By: Xxxxxxx Investment Company, Inc.
By:
----------------------------------
Authorized Officer
Page 26 of 27
SCHEDULE I
SCHEDULE OF UNDERWRITERS
NUMBER OF FIRM
UNITS
UNDERWRITER TO BE PURCHASED
------------------------------------------------- -----------------
Xxxxxxx Investment Company, Inc.
Millenium Financial Group
First Colonial Securities Group, Inc.
Total: 2,000,000
-----------------
-----------------
Schedule I
