Exhibit 1.1
1,850,000 Shares (1)
Ingenex, Inc.
Common Stock
UNDERWRITING AGREEMENT
, 1996
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XXXXXXX BROS., L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Ingenex, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell 1,850,000 shares (the "Firm Shares") of Common Stock of the
Company, $.001 par value (the "Common Stock"), to you (the "Underwriters") as
set forth on Schedule I hereto. In addition, the Company has agreed to grant to
you an option (the "Option") to purchase up to an additional 277,500 shares of
Common Stock (the "Option Shares") on the terms and for the purposes set forth
in Section 1(b) below. The Firm Shares and the Option Shares are referred to
collectively herein as the "Shares."
It is understood that, subject to the conditions hereinafter stated,
the Firm Shares will be sold to you. The Company confirms its agreement with
the Underwriters as follows:
1. AGREEMENT TO SELL AND PURCHASE
(a) On the basis of the representations, warranties and agreements herein
contained and subject to all the terms and conditions of this Agreement, (i)
the Company agrees to issue and sell the Firm Shares to the several
Underwriters and (ii) each of the Underwriters, severally and not jointly,
agrees to purchase from the Company the respective number of Firm Shares set
forth opposite that Underwriter's name in Schedule I hereto, at the purchase
price of $__ for each Firm Share.
(b) Subject to all the terms and conditions of this Agreement, the
Company grants the Option to the several Underwriters to purchase, severally
and not jointly, up to the maximum number of Option Shares at the same price
per share as the Underwriters shall pay for the Firm Shares. The Option may be
exercised only to cover over-allotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or
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(1) Plus an option to purchase up to an additional 277,500 shares to cover
over-allotments.
in part at any time and from time to time on or before the 30th day after the
date of this Agreement upon written or telegraphic notice (each, an "Option
Shares Notice") by the Underwriters to the Company no later than 12:00 noon,
New York City time, at least two and no more than three business days before
the date specified for closing in the Option Shares Notice (each, an "Option
Closing Date"), setting forth the aggregate number of Option Shares to be
purchased and the time and date for such purchase. On the Option Closing Date,
the Company will sell to the Underwriters the number of Option Shares set forth
in the Option Shares Notice, and each Underwriter will purchase such percentage
of the Option Shares as is equal to the percentage of the Firm Shares that such
Underwriter is purchasing, as adjusted by the Underwriters in such manner as
they deem advisable to avoid fractional shares.
(c) Subject to the terms and conditions herein set forth, on the Closing
Date (as defined below), the Company shall issue to Xxxxxxx Bros., L.P. in its
individual capacity, warrants in the form attached hereto as Exhibit A (the
"Representative's Warrants") to purchase 185,000 shares of Common Stock at an
exercise price equal to 120% of the price per Firm Share.
2. DELIVERY AND PAYMENT
Delivery of the Firm Shares shall be made to the Underwriters against
payment of the purchase price by certified or official bank check payable in
same day funds to the order of the Company at the offices of X'Xxxxxxxx Graev &
Karabell, LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m.,
New York Time, on the third (or, if the Firm Shares are priced, as contemplated
by Rule 15c6-1(c) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after 4:30 p.m. New York Time), the fourth full business day
following the commencement of the offering contemplated by this Agreement, or
at such time on such other date, not later than five business days after the
date of this Agreement, as may be agreed upon by the Company and the
Underwriters (such date is hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive form and shall
be registered in such names and in such denominations as the Underwriters shall
request at least two business days prior to the Closing Date or the Option
Closing Date, as the case may be, by written notice to the Company. For the
purpose of expediting the checking and packaging of certificates for the
Shares, the Company agrees to make such
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certificates available for inspection at least 24 hours prior to the Closing
Date or the Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Shares by the Company to the respective
Underwriters shall be borne by the Company. The Company will pay and save each
Underwriter and any subsequent holder of the Shares harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
Federal and state stamp and other transfer taxes, if any, which may be payable
or determined to be payable in connection with the original issuance or the
sale to such Underwriter of the Shares sold by such entity.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to each Underwriter that:
(a) A registration statement (Registration No. 33-95654) on Form SB-2
relating to the Shares, including a preliminary prospectus and such amendments
to such registration statement as may have been required to the date of this
Agreement, has been prepared by the Company under the provisions of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(collectively referred to as the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder; and has been filed with the
Commission. The term "preliminary prospectus" as used herein means a
preliminary prospectus as contemplated by Rule 430 or Rule 430A of the Rules
and Regulations included at any time as part of the registration statement.
Copies of such registration statement, amendments and exhibits thereto and of
each related preliminary prospectus have been delivered to the Representative.
If such registration statement has not become effective, a further amendment to
such registration statement, including a form of final prospectus, necessary to
permit such registration statement to become effective will be filed promptly
by the Company with the Commission. If the registration statement has become
effective, a final prospectus containing information permitted to be omitted at
the time of effectiveness by Rule 430A of the Rules and Regulations will be
filed promptly by the Company with the Commission in accordance with Rule
424(b) of the Rules and Regulations. The term "Registration Statement" means
the registration statement as amended at the time it becomes or became
effective (the "Effective Date"), including financial statements and schedules
and all exhibits and any information deemed to be included by Rule 430A. The
term "Prospectus" means (i) if the Company relies on Rule 434 of the Rules and
Regulations, the Term Sheet that is first filed pursuant to Rule 424(b)(7)
under the Act, together with the preliminary prospectus identified therein that
such Term Sheet supplements; (ii) if the Company does not rely on Rule 434 of
the Rules and Regulations,
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the prospectus first filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations; or (iii) if the Company does not rely on Rule 434 of the
Rules and Regulations and if no prospectus is required to be filed pursuant to
Rule 424(b) of the Rules and Regulations, the prospectus included in the
Registration Statement. The term "Term Sheet" means any term sheet that
satisfies the requirements of Rule 434 of the Rules and Regulations.
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus. When any Preliminary Prospectus was filed
with the Commission it complied in all material respects with the applicable
requirements of the Act and the Rules and Regulations and did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. On the
Effective Date, the date the Term Sheet, if utilized, is first filed with the
Commission pursuant to Rule 424(b), the date the Prospectus is first filed with
the Commission pursuant to Rule 424(b) (if required), at all times subsequent
to and including the Closing Date and, if later, the Option Closing Date and
when any post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed with the
Commission, the Registration Statement and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or supplement thereto), including the financial statements included in the
Prospectus, did and will comply with all applicable provisions of the Act and
the Rules and Regulations and did and will contain all statements required to
be stated therein in accordance with the Act and the Rules and Regulations. On
the Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, no part of the Registration Statement, the
Prospectus or any such amendment or supplement did or will contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. At the Effective Date, the date the Term Sheet, the Prospectus or
any amendment or supplement to the Prospectus is filed with the Commission and
at the Closing Date and, if later, the Option Closing Date, the Prospectus did
not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing
representations and warranties in this Section 3(b) do not apply to any
statements or omissions made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Company by the
Underwriters specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. The Company acknowledges
that the statements set forth in the first three paragraphs under the heading
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"Underwriting" in the Prospectus constitute the only information relating to
any Underwriter furnished in writing to the Company by the Underwriters
specifically for inclusion in the Registration Statement.
(c) The Company is, and at the Closing Date and, if later, the Option
Closing Date will be a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. The Company has,
and at the Closing Date and, if later, the Option Closing Date will have, full
power and authority to conduct all the activities conducted by it, to own or
lease all the assets owned by or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus. The Company is, and
at the Closing Date and, if later, the Option Closing Date it will be, duly
licensed or qualified to do business and in good standing as a foreign
corporation in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it makes such
license or qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not materially and adversely affect
the Company, its business, properties, business prospects, condition (financial
or otherwise) or results of operations. The Company has no subsidiaries (as
defined in the Rules and Regulations) that are required to be listed as
subsidiaries in Exhibit 21 to the Registration Statement. Except as set forth
in the Prospectus, the Company (i) does not own, and at the Closing Date and,
if later, the Option Closing Date will not own, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any corporation, firm, partnership,
joint venture, association or other entity and (ii) is not, and at the Closing
Date and, if later, the Option Closing Date will not be, engaged in any
discussions or a party to any agreement or understanding, written or oral,
regarding the acquisition of an interest in any corporation, firm, partnership,
joint venture, association or other entity. Complete and correct copies of the
certificate of incorporation, the bylaws or other organizational documents of
the Company and all amendments thereto have been delivered to the
Representative, and no changes therein will be made subsequent to the date
hereof and prior to Closing Date or, if later, the Option Closing Date.
(d) The Company has authorized, issued and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus. All of the
outstanding shares of capital stock of the Company have been duly authorized
and validly issued, are fully paid and nonassessable, were issued in compliance
with all applicable state and Federal securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities and conform to the description thereof contained in
the Prospectus; the Shares have been duly authorized and when issued and paid
for as contemplated
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herein will be validly issued, fully paid and nonassessable and the Shares will
conform to the description thereof contained in the Prospectus; the shares of
Common Stock issuable by the Company upon the exercise of the Representative's
Warrants have been duly authorized, and, when issued and paid for in accordance
with, the terms of the Representative's Warrants, will be validly issued, fully
paid and nonassessable; and no preemptive rights or other rights to subscribe
for or purchase exist with respect to the issuance and sale of the Shares or
with respect to the Common Stock issuable upon the exercise of the
Representative's Warrants. The Company has reserved and will keep available for
the exercise of the Representative's Warrants such number of authorized but
unissued shares of Common Stock to permit the exercise in full of the
Representative's Warrants. The description of the capital stock of the Company
in the Registration Statement and the Prospectus is, and at the Closing Date
and, if later, the Option Closing Date will be, complete and accurate in all
respects. Except as set forth in the Prospectus, the Company does not have
outstanding, and at the Closing Date and, if later, the Option Closing Date
will not have outstanding, any options to purchase, or any rights or warrants
to subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of Common Stock, or any
such warrants, convertible securities or obligations. The description of the
Company's stock option and other stock plans or arrangements, and the options
or other rights granted or exercised thereunder, set forth in the Prospectus,
accurately and fairly presents the information required to be shown with
respect to such plans, arrangements, options and rights. No further approval or
authority of the stockholders or the Board of Directors of the Company will be
required for the issuance and sale of the Shares by the Company as contemplated
herein. No holder of any security of the Company has any right to require
registration of shares of Common Stock or any other security of the Company
because of the filing of the Registration Statement or consummation of the
transactions contemplated by this Agreement.
(e) The financial statements and schedules included in the Registration
Statement or the Prospectus present fairly the financial condition of the
Company as of the respective dates thereof and the results of operations,
changes in stockholders' equity and cash flows of the Company for the
respective periods covered thereby, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the entire
period involved. No other financial statements or schedules of the Company are
required by the Act or the Rules and Regulations to be included in the
Registration Statement or the Prospectus. Ernst & Young LLP, who has reported
on such financial statements and schedules, are independent accountants with
respect to the Company as required by the Act and the Rules and Regulations.
The summary financial and statistical data included in the Registration
Statement present fairly the
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information shown therein and have been compiled on a basis consistent with the
financial statements presented therein.
(f) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus and prior to the Closing Date
and, if later, the Option Closing Date, except as set forth in or contemplated
by the Registration Statement and the Prospectus, (i) there has not been and
will not have been any change in the capitalization of the Company (other than
in connection with the exercise of outstanding options to purchase the
Company's Common Stock granted pursuant to the Company's stock option plans
from the reserves as described in the Registration Statement, which shares
received upon exercise will be subject to the lock-up agreements described in
Section 5(i) below), or any material adverse change, or any development which
the Company reasonably believes could reasonably be expected to involve a
prospective material adverse change, in the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company arising for any reason whatsoever, (ii) the Company has not incurred
nor will it incur, except in the ordinary course of business as described in
the Prospectus, any material liabilities or obligations, direct or contingent,
nor has it entered into nor will it enter into, except in the ordinary course
of business as described in the Prospectus, any material transactions other
than pursuant to this Agreement and the transactions referred to herein, and
(iii) the Company has not and will not have paid or declared any dividends or
other distributions of any kind on any class of its capital stock.
(g) The Company is not an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
(h) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its officers in their capacity as such, nor any basis therefor, before or by
any Federal or state court, commission, regulatory body, administrative agency
or other governmental body, domestic or foreign, wherein an unfavorable ruling,
decision or finding would materially and adversely affect the Company or its
business, properties, business prospects, condition (financial or otherwise) or
results of operations.
(i) The Company has, and at the Closing Date and, if later, the Option
Closing Date will have, performed all its obligations required to be performed
by it as of such date, and the Company is not, and at the Closing Date and, if
later, the Option Closing Date will not be, nor with the passage of time or the
giving of notice or both would it be, in violation of any law, ordinance,
administrative or governmental rule or regulation
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applicable to the Company or of any judgment, order or decree of any court or
governmental agency or body or of any arbitrator having jurisdiction over the
Company or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any mortgage, loan agreement,
note, bond, debenture, credit agreement or any other evidence of indebtedness
to which it is a party or by which its property is bound or affected, which
violation or default might materially and adversely affect the Company or its
business, properties, business prospects, condition (financial or otherwise) or
results of operations. To the Company's best knowledge, no other party under
any contract or other instrument to which the Company is a party is in default
in any respect thereunder, which default would materially and adversely affect
the Company or its business, properties, business prospects, condition
(financial or otherwise) or results of operations. The Company is not, and at
the Closing Date and, if later, the Option Closing Date will not be, in
violation of any provision of its certificate of incorporation, bylaws or other
organizational documents.
(j) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for the
consummation by the Company of the transactions on its part contemplated herein
and in the Representative's Warrants, except such as have been obtained under
the Act or the Rules and Regulations and such as may be required under state
securities or Blue Sky laws or the bylaws and rules of the National Association
of Securities Dealers, Inc. (the "NASD") in connection with the purchase and
distribution by the Underwriters of the Shares.
(k) The Company has full corporate power and authority to enter into this
Agreement and the Representative's Warrants. Each of this Agreement and the
Representative's Warrants has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms. The performance
of this Agreement and the Representative's Warrants and the consummation of the
transactions contemplated hereby and thereby will not, with or without notice,
the passage of time or both, result in the imposition of any lien, charge or
encumbrance upon any of the assets of the Company pursuant to the terms or
provisions of, or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or give any party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under the certificate of incorporation, bylaws or other
organizational documents of the Company, any indenture, mortgage, deed of
trust, voting trust agreement, loan agreement, bond, debenture, note agreement
or other evidence of indebtedness, lease, contract or other agreement or
instrument to which the Company is a party or by which the Company or any of
its properties is bound or affected, or violate or conflict with any judgment,
ruling,
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decree, order, statute, rule or regulation of any court or other governmental
agency or body applicable to the business or properties of the Company
presently in effect, a breach or violation of which, a default under which, a
termination of which, an acceleration under which or a conflict with which
would materially and adversely affect the Company or its business, properties,
business prospects, condition (financial or otherwise) or results of
operations.
(l) The Company has good and marketable title to all properties and
assets described in the Prospectus as owned by it, free and clear of all liens,
charges, encumbrances or restrictions, except such liens, charges, encumbrances
or restrictions as are described in the Prospectus and those which,
individually and in the aggregate, are not material in amount or which,
individually and in the aggregate, do not adversely affect the use made or
proposed to be made of such properties and assets by the Company. The Company,
as lessee, has valid, subsisting and enforceable leases for the properties
described in the Prospectus as leased by it. The agreements to which the
Company is a party described in the Prospectus are valid agreements,
enforceable by the Company, except as the enforcement thereof may be limited by
bankruptcy and laws relating to the rights and remedies of creditors generally
or by the availability of general equitable remedies. Except as otherwise
described in the Prospectus, the Company owns or leases all such properties as
are necessary to its operations as now conducted or as proposed to be
conducted.
(m) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required. All such contracts to which the Company is a party have been duly
authorized, executed and delivered by the Company, constitute valid and binding
agreements of the Company and are enforceable against the Company and by the
Company against the other parties thereto in accordance with the terms thereof,
except as to (i) bankruptcy and laws relating to the rights and remedies of
creditors generally and (ii) the availability of equitable remedies.
(n) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
Section 5 of this Agreement to be delivered to the Underwriters was or will be,
when made, inaccurate, untrue or incorrect.
(o) Neither the Company nor any of its directors, officers or controlling
persons has taken, directly or indirectly, any action designed, or which might
reasonably be expected, to cause or result, under the Act or otherwise, in, or
which has constituted, stabilization or manipulation of the price
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of any security of the Company to facilitate the sale or resale of the Shares.
(p) No holder of securities of the Company has rights to the registration
of any securities of the Company because of the filing of the Registration
Statement, which rights have not been waived by the holder or otherwise
satisfied as of the date hereof.
(q) The Common Stock is listed and duly admitted to trading on the Nasdaq
National Market (the "Nasdaq/NMS"), and the Company has received notification
that the quotation by the Nasdaq/NMS of the Shares has been approved, subject
to official notice of issuance of the Shares.
(r) (i) The Company owns and possesses all right, title and interest in,
or has duly licensed from third parties a valid and enforceable right to use,
all trademarks, trade names, patent rights, copyrights, licenses, inventions,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) or other rights
or interests in intellectual property (collectively, "Intellectual Property
Rights") necessary for the conduct of its business as described in the
Prospectus, except where the failure to have any such right would not have a
material and adverse effect on the Company or its business, properties,
business prospects, condition (financial or otherwise) or results of
operations; (ii) the Company is not infringing any Intellectual Property Rights
of others where such infringement would have a material and adverse effect on
the Company or its business, properties, business prospects, condition
(financial or otherwise) or results of operations; and (iii) no claim has been
made against the Company regarding infringement of Intellectual Property Rights
which would have a material and adverse effect on the Company or its business,
properties, business prospects, condition (financial or otherwise) or results
of operations.
(s) The Company has filed all Federal, state and foreign income tax
returns which have been required to be filed, which returns are complete and
correct in all material respects, and has paid all taxes and assessments
received by it to the extent that such taxes or assessments have become due.
The Company has no tax deficiency which has been or might be asserted or
threatened against the Company which could have a material and adverse effect
on the Company or its business, properties, business prospects, condition
(financial or otherwise) or results of operations.
(t) The Company owns or possesses all authorizations, approvals, orders,
licenses, registrations, certificates and permits of and from, and has made all
declarations and filings with, all governmental regulatory officials and bodies
necessary
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to conduct its business as contemplated in the Prospectus, except where the
failure to own or possess all such authorizations, approvals, orders, licenses,
registrations, certificates and permits or make such declarations and filings
would not materially and adversely affect the Company or its business,
properties, business prospects, condition (financial or otherwise) or results
of operations. There is no proceeding pending or, to the knowledge of the
Company, threatened, or any basis therefor known to the Company, which may
cause or allow any such authorization, approval, order, license, registration,
certificate or permit to be revoked, withdrawn, canceled, suspended or not
renewed or result in any material impairment of the rights thereunder; and the
Company is conducting its business in compliance with all laws, rules and
regulations applicable thereto, except where any such failure to comply would
not have a material adverse effect on the Company or its business, properties,
business prospects, condition (financial or otherwise) or results of
operations. None of such authorizations, approvals, orders, licenses,
registrations, certificates or permits contains any restriction that is
materially burdensome to the Company.
(u) The Company maintains insurance of the types and in the amounts
generally deemed adequate for its business, including, but not limited to,
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect. The Company has not been refused any insurance coverage sought or
applied for; and the Company has no reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a material adverse effect
on the Company or its business, properties, business prospects, condition
(financial or otherwise) or results of operations.
(v) The Company is (i) in compliance with any and all applicable foreign,
Federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) has received
all permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (iii) is in compliance with all
terms and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a material adverse effect on the Company or its business, properties,
business prospects, condition (financial or otherwise) or results of
operations.
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(w) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on its business, operations
and properties of the Company in the course of which it identifies and
evaluates associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or in
the aggregate, have a material adverse effect on the Company or its business,
properties, business prospects, condition (financial or otherwise) or results
of operations.
(x) Neither the Company nor, to the Company's knowledge, any of its
employees or agents have at any time during the last five years (i) made any
unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment
to any Federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
(y) The Company has not distributed and, prior to the later to occur of
(i) the Closing Date or (ii) completion of the distribution of the Shares, will
not distribute without the prior written consent of the Underwriters any
offering material in connection with the offering and sale of the Shares other
than the Registration Statement, any Preliminary Prospectus, the Prospectus or
other materials, if any, permitted by the Act and the Rules and Regulations.
The Company is not involved in any labor dispute and, to the knowledge of the
Company, no such dispute is threatened.
(z) Neither the Company nor any of its officers, directors, employees or
agents has taken or will take, directly or indirectly, (i) any action designed
to cause or to result in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares, or (ii)
since the filing of the Registration Statement, except in connection with the
sale of the Shares, (A) sold, bid for, purchased, attempted to induce any
person to purchase or paid anyone any compensation for soliciting purchase of
the Shares or (B) paid or agreed to pay any person any compensation for
soliciting another to purchase any other securities of the Company.
(aa) The Company has obtained from the holders of an aggregate of
________ shares of Common Stock and ________ options and warrants to purchase
Common Stock (including, without
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limitation, each director, officer, Scientific Advisory Board member and
principal stockholder), written agreements (collectively, the "Lockup
Agreements"), in form and substance satisfactory to counsel for the
Underwriters, that, for a period of 360 days from the date of the Prospectus,
he, she or it will not, without Xxxxxxx Bros., L.P.'s prior written consent,
offer, sell, contract to sell, grant any option for the sale of or otherwise
dispose of, directly or indirectly, any shares of Common Stock or any security
convertible into, or exchangeable or exercisable for, shares of Common Stock or
other securities of the Company.
(ab) The Company has complied with all provisions of Florida Statutes,
517,075, relating to issuers doing business with Cuba.
(ac) The Company has no liability or obligation of any nature (absolute,
accrued, contingent or otherwise) that is not fully reflected or adequately
reserved against in the balance sheet at March 31, 1996, except for liabilities
(A) incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected on the balance sheet,
(B) incurred since March 31, 1996 in the ordinary course of business and
consistent with past practice or (C) described in the Prospectus. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in accordance with
management's general or specific authorizations, (B) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accounting for assets,
(C) access to assets is permitted only in accordance with management's general
or specific authorization, (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences and (E) reserves for obsolete
inventory, bad debts and sales returns and allowances are adequate.
Any certificate signed by an officer of the Company and delivered to
the Underwriters or counsel for the Underwriters at a closing hereunder shall
be deemed a representation and warranty of the Company to each Underwriter as
to the matters covered thereby as of the date thereof.
4. AGREEMENTS OF THE COMPANY
The Company agrees with the several Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or
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supplement to the Registration Statement or the Prospectus, unless a copy
thereof shall first have been submitted to the Underwriters within a reasonable
period of time prior to the filing thereof and the Underwriters shall not have
objected thereto in good faith.
(b) The Company will use its best efforts to cause the Registration
Statement to become effective, and will notify the Underwriters and will
confirm such advice in writing, (i) when the Registration Statement has become
effective and when any post-effective amendment thereto becomes effective, (ii)
of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (iii)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose or the threat thereof, (iv) of the happening of
any event during the period mentioned in the third sentence of Section 4(e)
that makes any statement made in the Registration Statement or the Prospectus
untrue or that requires the making of any changes in the Registration Statement
or the Prospectus in order to make the statements therein not misleading and
(v) of receipt by the Company or any representative or attorney of the Company
of any other communication from the Commission relating to the Company, the
Registration Statement, any preliminary prospectus or the Prospectus. If at any
time the Commission shall issue any order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible moment. If the Company
has omitted any information from the Registration Statement pursuant to Rule
430A of the Rules and Regulations, the Company will use its best efforts to
comply with the provisions of, and make all requisite filings with the
Commission pursuant to, said Rule 430A and, if a Term Sheet is used, Rule 434
and to notify the Underwriters promptly of all such filings.
(c) The Company will furnish to the Underwriters without charge, three
signed copies of the Registration Statement and of any post-effective amendment
thereto, including financial statements and schedules, and all exhibits
thereto, and will furnish to the Underwriters, without charge, for transmittal
to each of the other Underwriters, a copy of the Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
but without exhibits.
(d) The Company will comply with all the provisions of any undertakings
contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the Company
will deliver to each of the Underwriters, without charge, as many copies of the
Prospectus or any amendment or supplement thereto as the Representative may
reasonably request. The Company consents, subject to the provisions of the
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following sentence, to the use of the Prospectus or any amendment or supplement
thereto by the several Underwriters and by all dealers to whom the Shares may
be sold, both in connection with the offering or sale of the Shares and for any
period of time thereafter during which the Prospectus is required by law to be
delivered in connection therewith. If during the nine month period referred to
in Section 10(a)(3) of the Act any event shall occur which in the judgment of
the Company or counsel to the Underwriters should be set forth in the
Prospectus in order to make any statement therein, in light of the
circumstances under which it was made, not misleading, or if it is necessary to
supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement
or amendment thereto, and will deliver to each of the Underwriters, without
charge, such number of copies of such supplement or amendment to the Prospectus
as the Representative may reasonably request and, in case any Underwriter is
required to deliver a prospectus after such nine month period, the Company upon
request, but at the expense of such Underwriter, will promptly prepare such
amendment or amendments to the Registration Statement and Prospectus as may be
necessary to permit compliance with the requirements of Section 10(a)(3) of the
Act.
(f) Prior to any public offering of the Shares, the Company will
cooperate with the Underwriters and counsel to the Underwriters in connection
with the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Underwriters may
request; provided that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any jurisdiction
where it is not now so subject.
(g) During the period of five years commencing on the Effective Date, the
Company will furnish to the Representative, and each other Underwriter who may
so request, copies of such financial statements and other periodic and special
reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock, and will furnish to the
Representative, and each other Underwriter who may so request, a copy of each
annual or other report it shall be required to file with the Commission.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last
day of the fifteenth full calendar month following the calendar quarter in
which the Effective Date falls, an earnings statement (which need not be
audited but shall be in reasonable detail) for the applicable 12-month period
after the Effective Date, satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
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(i) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company will pay, or reimburse
if paid by the Underwriters all costs and expenses incident to the performance
of the obligations of the Company under this Agreement, including but not
limited to costs and expenses of or relating to (i) any experts retained by the
Company, (ii) the preparation, printing and filing with the Commission of the
Registration Statement and exhibits to it, each preliminary prospectus,
Prospectus and any amendment or supplement to the Registration Statement or
Prospectus, (iii) the preparation and delivery of certificates representing the
Shares, (iv) the printing of this Agreement, the Agreement among Underwriters,
any Selected Dealer Agreements and any Underwriters' Questionnaires and Powers
of Attorney, (v) furnishing (including costs of shipping and mailing) such
copies of the Registration Statement, the Prospectus and any preliminary
prospectus, and all amendments and supplements thereto, as may be requested for
use in connection with the offering and sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold, (vi) the listing of the Shares on the
Nasdaq/NMS, (vii) any filings required to be made by the Underwriters with the
NASD and the fees, disbursements and other charges of counsel for the
Underwriters in connection therewith, (viii) the registration or qualification
of the Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions designated pursuant to Section 4(f), including the fees,
disbursements and other charges of counsel to the Underwriters in connection
therewith, and the preparation and printing of preliminary, supplemental and
final Blue Sky memoranda, (ix) fees, disbursements and other charges of counsel
to the Company (but not those of counsel for the Underwriters, except as
otherwise provided herein), (x) the transfer agent for the Shares, (xi) the
"tombstone" advertisement in the Wall Street Journal and two other newspapers
as reasonably requested by the Representative with respect to the Shares and
(xii) the "road show" or any other selling efforts. In addition to the
Company's responsibility for payment of the foregoing expenses, the Company
shall pay to the Underwriters a non-accountable expense allowance equal to two
percent (2%) of the gross proceeds of the offering ($25,000 of which has been
paid to date), including in such amount the proceeds from any sale of the
Option Shares. The non-accountable expense allowance due shall be paid at the
Closing Date and any Option Closing Date, as applicable. If the offering is not
consummated, the Underwriters will be entitled to reimbursement for actual
out-of-pocket expenses, on an accountable basis only, up to $50,000, inclusive
of the amount paid to date.
(j) If this Agreement shall be terminated by the Company pursuant to any
of the provisions hereof (otherwise than pursuant to Section 8 hereof) or if
for any reason the Company shall be unable to perform its obligations
hereunder, the Company will reimburse the several Underwriters for all
reasonable out-of-pocket expenses (including the fees, disbursements and
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other charges of counsel to the Underwriters) reasonably incurred by them in
connection herewith.
(k) The Company will not at any time, directly or indirectly, take any
action designed, or which might reasonably be expected, to cause or result in,
or which will constitute, stabilization of the price of the shares of Common
Stock to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering and sale of
the Shares in the manner set forth in the Prospectus under "Use of Proceeds,"
and shall file such reports with the Commission with respect to the sale of the
Shares and the application of the proceeds therefrom as may be required in
accordance with Rule 463 under the Act.
(m) During the period of 360 days from the date of the Prospectus,
without the prior written consent of Xxxxxxx Bros., L.P., which consent may be
withheld in Xxxxxxx Bros., L.P.'s sole discretion and other than pursuant to
the exercise of outstanding warrants and stock options or otherwise pursuant to
the Company's stock option plans disclosed in the Prospectus, the Company will
not issue, offer, sell, grant options to purchase or otherwise dispose of any
of the Company's equity securities or any other securities convertible into or
exchangeable for its Common Stock or other equity security. During a period of
360 days from the date of the Prospectus, the Company will not file a
registration statement for the purpose of registering any securities of the
Company without the prior written consent of Xxxxxxx Bros., L.P., which consent
may be withheld in their sole discretion. The Company will not, for a period of
two years from the date hereof, without the prior written approval of Xxxxxxx
Bros., L.P., propose or enter into any arrangement not existing on the date
hereof, for the granting or awarding of stock options.
5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS
The obligations of each Underwriter hereunder are subject to the
following conditions:
(a) Notification that the Registration Statement has become effective
shall be received by the Underwriters not later than 5:00 p.m., New York City
time, on the date of this Agreement or at such later date and time as shall be
consented to in writing by the Underwriters and all filings required by Rule
424, Rule 430A and Rule 434 of the Rules and Regulations shall have been made.
(b) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for the purpose shall be
pending or threatened by the Commission, (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or
registration of
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the Shares under the securities or Blue Sky laws of any jurisdiction shall be
in effect and no proceeding for such purpose shall be pending before or
threatened or contemplated by the Commission or the authorities of any such
jurisdiction, (iii) any request for additional information on the part of the
staff of the Commission or any such authorities shall have been complied with
to the satisfaction of the staff of the Commission or such authorities and (iv)
after the date hereof no amendment or supplement to the Registration Statement
or the Prospectus shall have been filed unless a copy thereof was first
submitted to the Underwriters and the Underwriters do not object thereto in
good faith, and the Underwriters shall have received certificates, dated the
Closing Date and the Option Closing Date and signed by the Chief Executive
Officer and the Controller of the Company (who may, as to proceedings
threatened, rely upon the best of their knowledge), to the effect of clauses
(i), (ii) and (iii) of this Section 5(b).
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change, or any development involving a prospective material
adverse change, in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company, whether or not arising from transactions in the
ordinary course of business, in each case other than as described in or
contemplated by the Registration Statement and the Prospectus, and (ii) the
Company shall not have sustained any material loss or interference with its
business or properties from fire, explosion, flood, earthquake or other
casualty, whether or not covered by insurance, or from any labor dispute or any
court of legislative or other governmental action, order or decree, which is
not described in the Registration Statement and the Prospectus, if in the
judgment of the Underwriters any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares by the
Underwriters at the public offering price.
(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted or threatened against the Company or any of its
officers or directors in their capacities as such, before or by any Federal,
state or local court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, in which litigation or proceeding
an unfavorable ruling, decision or finding would materially and adversely
affect the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company.
(e) Each of the representations and warranties of the Company contained
herein shall be true and correct in all material respects at the Closing Date
and, with respect to the
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Option Shares, at the Option Closing Date, and all covenants and agreements
contained herein to be performed on the part of the Company and all conditions
contained herein to be fulfilled or complied with by the Company at or prior to
the Closing Date and, with respect to the Option Shares, at or prior to the
Option Closing Date, shall have been duly performed, fulfilled or complied
with.
(f) The Underwriters shall have received an opinion, dated the Closing
Date and, with respect to the Option Shares, the Option Closing Date,
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters, from Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP, counsel to the
Company, covering the following matters:
(i) the Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification;
(ii) to such counsel's knowledge, the Company does not have any
subsidiaries or own or control any other corporation, association or other
business entity;
(iii) the authorized capital stock of the Company conforms to the
description thereof contained in the Prospectus;
(iv) the authorized, issued and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus as of the date therein; the shares of Common Stock outstanding
prior to the issuance of the Firm Shares (or, with respect to the opinion
to be delivered on the Option Closing Date, prior to the issuance of the
Option Shares) have been duly authorized and are validly issued, fully paid
and nonassessable, have been issued pursuant to exemptions from the
registration and qualification requirements of federal and applicable state
securities laws, were not issued in violation of or subject to any
preemptive rights or, to the best of such counsel's knowledge, other rights
to subscribe for or purchase any securities, and conform to the description
thereof contained in the Prospectus;
(v) the form of certificate evidencing the Shares is in due and
proper form under Delaware law; the Shares have been duly authorized and,
when the certificates evidencing the Shares have been issued and delivered
in accordance with
-19-
the terms of this Agreement, the Shares will be validly issued, fully paid
and nonassessable; and the issuance of such Shares is not subject to any
preemptive rights or, to the best of such counsel's knowledge, other rights
to subscribe for or purchase securities;
(vi) the Representative's Warrants have been duly authorized,
executed and delivered by the Company and the Company has all requisite
corporate power and authority to execute the Representative's Warrants; the
Representative's Warrants are enforceable against the Company in accordance
with their terms; the shares of Common Stock issuable upon the exercise of
the Representative's Warrants have been reserved for such issuance and,
when issued in accordance with the terms of the Representative's Warrants,
will be duly authorized validly issued, fully paid and nonassessable and
free of preemptive rights or, to the best of such counsel's knowledge,
other rights to subscribe for or purchase securities; and the
Representative's Warrants conform in all material respects to the
description thereof contained in the Prospectus;
(vii) the Registration Statement has become effective under the Act,
and no stop order suspending the effectiveness of the Registration
Statement or preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending or, to the
best of such counsel's knowledge, threatened by the Commission; any
required filing of the Prospectus and any supplement thereto pursuant to
Rule 424(b) or Rule 434 of the Rules and Regulations has been made in the
manner and within the time period required by such Rule 424(b) and Rule
434;
(viii) the Registration Statement and the Prospectus and any
supplements or amendments thereto (except for financial statements,
schedules and financial information included therein, as to which such
counsel need not express any opinion) comply as to form in all material
respects with the Act and the Rules and Regulations;
(ix) this Agreement has been duly authorized, executed and
delivered by the Company, and the Company has all requisite corporate power
and authority to enter into this Agreement and consummate the transactions
contemplated hereby;
(x) this Agreement is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as to (A) rights to indemnity and contribution thereunder which may
be limited by applicable law, (B) bankruptcy and laws relating to the
rights and remedies of creditors generally and (C) the
-20-
availability of equitable remedies; the execution and delivery by the
Company of, and the performance by the Company of its obligations under,
this Agreement and the Representative's Warrants do not contravene any
provision of applicable law, statute, rule or regulation or the certificate
of incorporation, bylaws or other organizational documents of the Company
or any agreement or other instrument binding upon the Company that is filed
as an exhibit to the Registration Statement or, to the best of such
counsel's knowledge, any agreement or other instrument that is otherwise
material to the Company or, to the best of such counsel's knowledge, any
judgment or decree of any governmental body, agency or court having
jurisdiction over the Company presently in effect and a breach or violation
of which, a default under which, a termination of which, an acceleration
under which or a conflict with which would materially and adversely affect
the Company or its business, properties, business prospects, financial
condition or results of operations, and no consent, approval or
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations
under this Agreement and the Representative's Warrants, except such as may
have been obtained under the Act and such as required by the securities or
Blue Sky laws of the various states in connection with the offer and sale
of the Shares by the Underwriters;
(xi) the statements in the Prospectus under the captions "Risk
Factors -- Dependence on License and Sponsored Research Agreements," "Risk
Factors -- Uncertainty Relating to Patents and Proprietary Technology,"
"Risk Factors -- Government Regulation," "Risk Factors -- Dependence on Key
Employees," "Risk Factors -- Guarantees of Obligations of Others," "Risk
Factors -- Control by Existing Stockholder; Relationship to Titan," "Risk
Factors -- Shares Eligible for Future Sale; Registration Rights," "Risk
Factors -- Anti-takeover Effects of Restated Certificate of Incorporation,
Bylaws and Delaware Law," "Business -- Product Research and Development,"
"Business -- Proprietary Rights," "Business -- Government Regulation,"
"Business -- Relationship to Titan Pharmaceuticals, Inc.," "Management,"
"Certain Transactions," "Description of Capital Stock" and "Shares Eligible
for Future Sale" and in the Registration Statement in Item 14 and Item 15,
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 of law;
(xii) to such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened to which the Company is a party or to
which any of the properties of
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the Company is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described;
(xiii) to such counsel's knowledge, no holder of securities of the
Company has rights which have not been waived to require the Company to
register with the Commission shares of Common Stock or other securities as
part of the offering contemplated hereby;
(xiv) 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 Prospectus or any supplements or
amendments thereto which are not so filed and described as required, and
each description of such contracts and documents as is contained in the
Registration Statement and Prospectus fairly presents in all material
respects the information required under the Act and the Rules and
Regulations; and
(xv) as of the Effective Date, the Shares were duly authorized for
quotation on the Nasdaq/NMS subject to official notice of issuance.
Such counsel shall also state that such counsel has participated in conferences
with representatives of the Underwriters, officers and representatives of the
Company and representatives of the independent certified public accountants of
the Company, at which conferences the contents of the Registration Statement
and the Prospectus and related matters were discussed and that, 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
Registration Statement and the Prospectus (except as set forth in Section
5(f)(xi)), on the basis of the foregoing, nothing has come to the attention of
such counsel that leads them to believe that (except for financial statements,
schedules and financial information, as to which such counsel need not express
any belief), the Registration Statement, at the time that it became effective,
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 and the Prospectus, as of the date it was filed pursuant
to the Rules and Regulations and as of the Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
In rendering the foregoing opinion, counsel may rely, to the extent they
deem such reliance proper, on the opinions (in form and substance reasonably
satisfactory to Underwriters' counsel) of other counsel reasonably acceptable
to Underwriters' counsel as to matters governed by patent laws and laws
governing
-22-
the testing, manufacturing, marketing and labeling of pharmaceutical products,
and as to matters of fact, upon certificates of officers of the Company and of
government officials; provided that such counsel shall state that the opinion
of any other counsel is in form satisfactory to such counsel and, in such
counsel's opinion, such counsel and the Underwriters are justified in relying
on such opinions of other counsel. Copies of all such opinions and certificates
shall be furnished to counsel to the Underwriters on the Closing Date.
(g) The Underwriters shall have received an opinion, dated the Closing
Date and, with respect to the Option Shares, the Option Closing Date, from
Xxxxxx & Xxxxxxx, patent counsel to the Company, satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
(h) The Underwriters shall have received from the Company the duly
executed Representative's Warrants.
(i) The Underwriters shall have received an opinion, dated the Closing
Date and, with respect to the Option Shares, the Option Closing Date, from
X'Xxxxxxxx Graev & Karabell, LLP, counsel to the Underwriters, with respect to
the Registration Statement, the Prospectus and this Agreement, which opinion
shall be satisfactory in all respects to the Underwriters.
(j) The Lockup Agreements shall remain in full force and effect.
(k) At the Effective Date and concurrently with the execution and
delivery of this Agreement, Ernst & Young LLP shall have furnished to the
Underwriters a letter, dated the date of its delivery, addressed to the
Underwriters and in form and substance satisfactory to the Underwriters
confirming that they are independent accountants with respect to the Company as
required by the Act and the Rules and Regulations and with respect to certain
financial and other statistical and numerical information contained in the
Registration Statement. At the Closing Date, and, as to the Option Shares, the
Option Closing Date, Ernst & Young LLP shall have furnished to the Underwriters
a letter, dated the date of its delivery, which shall confirm, on the basis of
a review in accordance with the procedures set forth in the letter from each
accountant, that nothing has come to their attention during the period from the
date of each letter referred to in the prior sentence to a date (specified in
each letter) not more than five days prior to the Closing Date and the Option
Closing Date, as the case may be, which would require any change in their
letter dated the date hereof if it were required to be dated and delivered at
the Closing Date and the Option Closing Date, as the case may be.
(l) At the Closing Date and, with respect to the Option Shares, the
Option Closing Date, there shall be furnished to the
-23-
Underwriters a certificate, dated the date of its delivery, signed by the Chief
Executive Officer and the Controller of the Company, in form and substance
satisfactory to the Underwriters, to the effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus and (A) as of the date of such
certificate, the Registration Statement and the Prospectus do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading and (B) in the case of the certificate delivered at
the Closing Date and the Option Closing Date, since the Effective Date, no
event has occurred as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect.
(ii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct.
(iii) Each of the covenants required to be performed by the Company
herein on or prior to the date of such certificate has been duly, timely
and fully performed and each condition herein required to be satisfied or
fulfilled on or prior to the date of such certificate has been duly, timely
and fully satisfied or fulfilled.
(m) The Shares shall be qualified for sale in such jurisdictions as the
Underwriters may, pursuant to the provisions of Section 4(f), reasonably
request, and each such qualification shall be in effect and not subject to any
stop order or other proceeding on the Closing Date or the Option Closing Date.
(n) Prior to the Closing Date, the Shares shall have been duly authorized
for listing on the Nasdaq/NMS, subject to official notice of issuance.
(o) The Company shall have furnished to the Underwriters such
certificates, in addition to those specifically mentioned herein, as the
Underwriters may have reasonably requested as to the accuracy and completeness
at the Closing Date and the Option Closing Date of any statement in the
Registration Statement or the Prospectus, as to the accuracy at the Closing
Date and the Option Closing Date of the representations and warranties of the
Company herein, as to the performance by the Company of its obligations
hereunder or as to the fulfillment of the conditions concurrent and precedent
to the obligations hereunder of the Underwriters or as to such other matters
related to the execution, delivery and performance of this Agreement as the
Underwriters may have reasonably requested.
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6. INDEMNIFICATION
(a) The Company will indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person,
if any, who controls, within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, each Underwriter from and against any and all losses,
claims, liabilities, expenses and damages (including any and all investigative,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim asserted) to
which they, or any of them, may become subject under the Act, the Exchange Act
or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or damages (i)
arise out of or are based on any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus, or the omission or alleged omission to state in
such document a material fact required to be stated in it or necessary to make
the statements in it not misleading, (ii) arise out of or are based in whole or
in part on any inaccuracy in the representations and warranties of the Company
contained herein or (iii) arise out of or are based upon any failure of the
Company to perform its obligations hereunder or under law in connection with
the transactions contemplated hereby; provided that the Company will not be
liable to the extent that such loss, claim, liability, expense or damage arises
from the sale of the Shares in the public offering to any person by an
Underwriter and is based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Company expressly for
inclusion in the Registration Statement, the preliminary prospectus or the
Prospectus, or any amendment or supplement thereto. The Company acknowledges
that the statements set forth in the first three paragraphs under the heading
"Underwriting" in the preliminary prospectus and the Prospectus constitute the
only information relating to any Underwriter furnished in writing to the
Company expressly for inclusion in the Registration Statement, the preliminary
prospectus or the Prospectus. This indemnity will be in addition to any
liability that the Company might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, and
each director of the Company and each officer of the Company who signs the
Registration Statement and each person, if any, who controls, within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, the Company
to the same extent as the foregoing indemnity from the Company to each
Underwriter, as set forth in Section 6(a), but only insofar as losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or
-25-
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to any Underwriter furnished in writing to
the Company expressly for use in the Registration Statement, the preliminary
prospectus or the Prospectus, or any amendment or supplement thereto. The
Company acknowledges that the statements set forth in the first three
paragraphs under the heading "Underwriting" in the preliminary prospectus and
the Prospectus constitute the only information relating to any Underwriter
furnished in writing to the Company by the Underwriters expressly for inclusion
in the Registration Statement, the preliminary prospectus or the Prospectus.
This indemnity will be in addition to any liability that each Underwriter might
otherwise have.
(c) Any party that proposes to assert the right to be indemnified under
this Section 6 shall, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 6, notify each such
indemnifying party in writing of the commencement of such action, enclosing
with such notice a copy of all papers served, but the omission so to notify
such indemnifying party will not relieve it from any liability that it may have
to any indemnified party under the foregoing provisions of this Section 6
unless, and only to the extent that, such omission results in the loss of
substantive rights or defenses by the indemnifying party. If any such action is
brought against any indemnified party and it notifies the indemnifying party of
its commencement, the indemnifying party will be entitled to participate in
and, to the extent that it elects by delivering written notice to the
indemnified party promptly after receiving notice of the commencement of the
action from the indemnified party, jointly with any other indemnifying party
similarly notified, to assume the defense of the action, with counsel
reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified
party in connection with the defense. The indemnified party will have the right
to employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(i) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) there are legal defenses available to
it or other indemnified parties that are different from or in addition to those
available to the indemnifying party, (iii) the indemnified party has reasonably
concluded that a conflict or potential conflict exists (based on advice of
counsel to the indemnified party) between the indemnified party and the
indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (iv) the indemnifying party has not in
-26-
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be
at the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one separate firm admitted
to practice in such jurisdiction at any one time for all such indemnified party
or parties. All such fees, disbursements and other charges will be reimbursed
by the indemnifying party promptly as they are incurred. Any indemnifying party
will not be liable for any settlement of any action or claim effected without
its written consent (which consent will not be unreasonably withheld).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 6 is applicable in accordance with its terms, but
for any reason is held to be unavailable from the Company or the Underwriters,
the indemnifying party will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and
directors of the Company, who also may be liable for contribution) to which the
Company and any one or more of the Underwriters may be subject in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company and the Underwriters. The relative benefits received by the Company
and the Underwriters shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by the
Company and 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. If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of contribution
shall be made in such proportion as is appropriate to reflect not only the
relative benefits referred to in the foregoing sentence, but also the relative
fault of the Company and the Underwriters with respect to the statements or
omissions which resulted in such loss, claim, liability, expense or damage, or
action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Underwriters, the intent of the
parties and their relative knowledge, access to
-27-
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 6(d) were to be determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense or
damage, or action in respect thereof, referred to above in this Section 6(d)
shall be deemed to include, for purpose of this Section 6(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no Underwriter shall be required to contribute
any amount in excess of the underwriting discounts and commissions received by
it and no person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) will be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 6(d) are
several in proportion to their respective underwriting obligations and not
joint. For purposes of this Section 6(d), any person who controls a party to
this Agreement within the meaning of the Act will have the same rights to
contribution as that party, and each officer of the Company who signed the
Registration Statement will have the same rights to contribution as the
Company, subject in each case to the provisions hereof. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action
against any such party in respect of which a claim for contribution may be made
under this Section 6(d), will notify any such party or parties from whom
contribution may be sought from any other obligation it or they may have under
this Section 6(d). No party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will not be
unreasonably withheld).
(e) The indemnity and contribution agreements contained in this Section 6
and the representations and warranties of the Company contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any investigation made by or on behalf of the Underwriters, (ii) acceptance of
any of the Shares and payment therefor or (iii) any termination of this
Agreement.
7. REIMBURSEMENT OF CERTAIN EXPENSES
In addition to its other obligations under Section 6(a) of this
Agreement, the Company hereby agrees to reimburse on a quarterly basis the
Underwriters for all reasonable legal and other expenses incurred in connection
with investigating or defending any claim, action, investigation, inquiry or
other proceeding arising out of or based upon in whole or part, (i) as
-28-
described in Section 6(a), any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus, or the omission or alleged omission to state in
such document a material fact required to be stated in it or necessary to make
the statements in it not misleading, (ii) any inaccuracy in the representations
and warranties of the Company contained herein or (iii) any failure of the
Company to perform its obligations hereunder or under law in connection with
the transactions contemplated hereby, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 7 and the possibility that such payment might later be held to be
improper; provided, however, that, to the extent any such payment is ultimately
held to be improper, the persons receiving such payments shall promptly refund
them.
8. Termination
The obligations of the several Underwriters under this Agreement may be
terminated at any time on or prior to the Closing Date (or, with respect to the
Option Shares, on or prior to the Option Closing Date), by notice to the
Company from the Underwriters, without liability on the part of any Underwriter
to the Company if, prior to delivery and payment for the Firm Shares or Option
Shares, as the case may be, in the sole judgment of the Underwriters, (a)
trading in any of the equity securities of the Company shall have been
suspended by the Commission or by the Nasdaq/NMS, (b) trading in securities
generally on the New York Stock Exchange or the Nasdaq/NMS shall have been
suspended or limited or minimum or maximum prices shall have been generally
established on such exchange, or additional material governmental restrictions,
not in force on the date of this Agreement, shall have been imposed upon
trading in securities generally by such exchange or by order of the Commission
or any court or other governmental authority, (c) a general banking moratorium
shall have been declared by either Federal or New York State authorities, (d)
any material adverse change in the financial or securities markets in the
United States, or in political, financial or economic conditions in the United
States or any outbreak or material escalation of hostilities or other calamity
or crises, shall have occurred, the effect of which is such as to make it, in
the sole judgment of the Underwriters, impracticable to market the Shares, (e)
there shall have been a material adverse change since the respective dates as
of which information is given in the Registration Statement and the Prospectus
in the general affairs, business, business prospects, properties, management,
condition (financial or otherwise) or results of operations of the Company,
whether or not arising from transactions in the ordinary course of business, in
each case other than as described in or contemplated by the Registration
Statement and the Prospectus, or (f) the Company shall have
-29-
sustained any material loss or interference with its business or properties
from fire, explosion, flood, earthquake or other casualty, whether or not
covered by insurance, or from any labor dispute or any court or legislative or
other government action, order or decree, which is not described in the
Registration Statement and the Prospectus, if in the judgment of the
Underwriters any such development makes it impracticable or inadvisable to
consummate the sale and delivery of the Shares by the Underwriters at the
public offering price.
9. SUBSTITUTION OF UNDERWRITERS
If any one or more of the Underwriters shall fail or refuse to purchase
the Shares which it or they have agreed to purchase hereunder, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares, the other Underwriters shall be obligated,
severally, to purchase the Shares that such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase, in the proportions which
the number of Shares that they have respectively agreed to purchase pursuant to
Section I bears to the aggregate number of Shares that all such nondefaulting
Underwriters have so agreed to purchase, or in such other proportions as the
Underwriters may specify, provided that in no event shall the maximum number of
Shares which any Underwriter has become obligated to purchase pursuant to
Section 1 be increased pursuant to this Section 9 by more than one-ninth of
such number of Shares without the prior written consent of such Underwriter. If
any Underwriter or Underwriters shall fail or refuse to purchase any Shares and
the aggregate number of Shares that such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase exceeds one-tenth of the aggregate
number of the Shares and arrangements satisfactory to the Underwriters and the
Company for the purchase of such Shares are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
nondefaulting Underwriter or the Company for the purchase or sale of any Shares
under this Agreement. In any such case, either the Underwriters or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Any action taken pursuant to this Section 9 shall
not relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
10. REPRESENTATIVE'S OBSERVER RIGHTS
For a period of three years from the Closing Date, the Representative
shall have the right, but not the obligation, to designate a representative
(the "Observer") whom the Company shall permit to attend as an observer at all
meetings of the
-30-
Board of Directors of the Company; provided, however, that the
Observer shall have no right to vote on any action to be taken by the Board of
Directors of the Company. The Company shall give the Observer notice of all
meetings of the Board of Directors in the same manner in which notice of such
meetings is duly given to the directors and shall provide the Observer with a
copy of all written materials and other information given to directors in
connection with such meetings at the same time and in the same manner such
materials and information are provided to the directors of the Company. If the
Board of Directors proposes to take any action by written consent in lieu of a
meeting of the Board of Directors, the Company shall give actual notice thereof
to the Observer prior to the effective date of such consent describing in
reasonable detail the nature and substance of such action. The Company shall
pay or reimburse all reasonable travel expenses and other out-of-pocket
disbursements incurred by the Observer in connection with attending meetings of
the Board of Directors.
11. MISCELLANEOUS
Notice given pursuant to any of the provisions of this Agreement shall be
in writing and, unless otherwise specified, shall be mailed or delivered (a) if
to the Company, at the offices of the Company, 0000 X'Xxxxx Xxxxx, Xxxxx X,
Xxxxx Xxxx, Xxxxxxxxxx 00000, Attention: President, with a copy to Shereff,
Friedman, Xxxxxxx & Xxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, Attention: Xxxxxxx X. Xxxxxxxx, Esq., and (b) if to the
Underwriters, c/o Kaufman Bros., L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Corporate Finance Department, with a copy to Xxxxx X. Xxxxx,
Esq., X'Xxxxxxxx Graev & Karabell, LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000. Any such notice shall be effective only upon receipt. Any notice
may be made by telex or telephone, but if so made shall be subsequently
confirmed in writing.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company and the controlling persons, directors and officers
referred to in Section 6, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement shall
not include a purchaser, as such, of Shares from any of the several
Underwriters.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
entirely within such State.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
-31-
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Please confirm that the foregoing correctly sets forth the Agreement
among the Company and the several Underwriters.
Very truly yours,
INGENEX, INC.
By:
---------------------------
Title:
------------------------
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
XXXXXXX BROS., L.P.
By:
-------------------------------
Title:
----------------------------
-32-
SCHEDULE I
SCHEDULE OF UNDERWRITERS
NUMBER OF
FIRM SHARES
TO BE
UNDERWRITERS PURCHASED
------------ ---------
Xxxxxxx Bros., L.P. ..................................
-------------
Total .......................... 1,850,000
=========
EXHIBIT A
[REPRESENTATIVE'S WARRANT]
WARRANT
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON [insert date of sixth
anniversary of closing], 2002, OR IF NOT A BUSINESS DAY, AS
DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT
FOLLOWING BUSINESS DAY.
WARRANT TO PURCHASE
[ ]
SHARES OF COMMON STOCK
OF INGENEX, INC.
No. W-___
This certifies that, for and in consideration of services rendered and
in connection with the initial public offering of Common Stock of the Company
named below (the "Offering") and other good and valuable consideration, Xxxxxxx
Bros., L.P. and its registered, permitted assigns (collectively, the
"Warrantholder"), is entitled to purchase from Ingenex, Inc., a corporation
incorporated under the laws of the State of Delaware (the "Company"), subject
to the terms and conditions hereof, at any time on or after 9:00 a.m., New York
time, on [insert first anniversary of date of closing], 1997 and before 5:00
p.m., New York time on [insert date of sixth anniversary at closing], 2002 (or,
if such day is not a Business Day, at or before 5:00 p.m., New York time, on
the next following Business Day), up to 185,000 fully paid and nonassessable
shares of Common Stock of the Company at the Exercise Price (as defined
herein). The Exercise Price and the number of shares purchasable hereunder are
subject to adjustment from time to time as provided in Article 3 hereof.
A-1
ARTICLE 1
DEFINITION OF TERMS
As used in this Warrant, the following capitalized terms shall have the
following respective meanings:
(a) Business Day: A day other than a Saturday, Sunday or other day on
which banks in the State of New York are authorized by law to remain closed.
(b) Common Stock: Common Stock, $.001 par value, of the Company.
(c) Common Stock Equivalents: Securities that are convertible into or
exercisable for shares of Common Stock.
(d) Demand Registration: See Section 6.2.
(e) Exchange Act: The Securities Exchange Act of 1934, as amended.
(f) Exercise Price: $__ per Warrant Share, equal to 120% of the initial
price to public in the offering as set forth on the cover page of the
prospectus, dated _____, 1996, with respect to the initial public offering of
the Company's Common Stock, as such price may be adjusted from time to time
pursuant to Article 3 hereof.
(g) Expiration Date: 5:00 p.m., New York time, on [sixth anniversary of
closing], 2002, or if such day is not a Business Day, the next succeeding day
which is a Business Day.
(h) Holder: A Holder of Registrable Securities.
(i) NASD: National Association of Securities Dealers, Inc.
(j) Net Issuance Exercise Date: See Section 2.3.
(k) Net Issuance Right: See Section 2.3.
(l) Net Issuance Warrant Shares: See Section 2.3.
(m) Original Issuance Date: [closing date], 1996.
(n) Person: An individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or agency
thereof.
(o) Piggyback Registration: See Section 6.1.
A-2
(p) Prospectus: Any prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement, or to which a Term Sheet
(as defined in Rule 434 under the Securities Act) relates, with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments and all materials incorporated
by reference in such Prospectus.
(q) Public Offering: A public offering of any of the Company's equity or
debt securities pursuant to Registration Statement under the Securities Act.
(r) Registrable Securities: Any Warrant Shares issued to Xxxxxxx Bros.,
L.P. and/or its designees or transferees and/or other securities that may be or
are issued by the Company upon exercise of the Warrants, including those which
may thereafter be issued by the Company in respect of any such securities by
means of any stock splits, stock dividends, recapitalizations,
reclassifications or the like, and as adjusted pursuant to Article 3 hereof;
provided, however, that as to any particular security contained in Registrable
Securities, such securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such Registration Statement; or (ii) they shall
have been sold to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act.
(s) Registration Expenses: Any and all expenses incurred in connection
with any registration or action incident to performance of or compliance by the
Company with Article 6, including, without limitation, (i) all SEC, national
securities exchange and NASD registration and filing fees; all listing fees and
all transfer agent fees, (ii) all fees and expenses of complying with state
securities or blue sky laws (including the fees and disbursements of counsel of
the underwriters in connection with blue sky qualifications of the Registrable
Securities); (iii) all printing, mailing, messenger and delivery expenses; (iv)
all fees and disbursements of counsel for the Company and of its accountants,
including the expenses of any special audits and/or "cold comfort" letters
required by or incident to such performance and compliance; and (v) any
disbursements of underwriters customarily paid by issuers or sellers of
securities including the reasonable fees and expenses of any special experts
retained by the underwriters in connection with the requested registration, but
excluding underwriting discounts and commissions, brokerage fees and transfer
taxes, if any, and fees of counsel or accountants retained by the holders of
Registrable Securities to advise them in their capacity as Holders of
Registrable Securities.
A-3
(t) Registration Statement: Any registration statement of the Company
filed or to be filed with the SEC which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including all
amendments (including post-effective amendments) and supplements thereto, all
exhibits thereto and all material incorporated therein by reference.
(u) SEC: The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act and the Exchange Act.
(v) Securities Act: The Securities Act of 1933, as amended.
(w) 25% Holders: At any time as to which a Demand Registration is
requested, the Holder and/or the holders of any other Warrants and/or the
holders of Warrant Shares who have the right to acquire or hold, as the case
may be, not less than 25% of the combined total of Warrant Shares issuable and
Warrant Shares outstanding (other than Warrant Shares which are no longer
Registrable Securities by reason of the proviso to the definition of the term
"Registrable Securities") at the time such Demand Registration is requested.
(x) Warrant Shares: Common Stock, Common Stock Equivalents and other
securities purchased or purchasable upon exercise or conversion of the
Warrants.
(y) Warrantholder: The person(s) or entity(ies) to whom this Warrant is
originally issued, or any successor in interest thereto, or any assignee or
transferee thereof, in whose name this Warrant is registered upon the books to
be maintained by the Company for that purpose.
(z) Warrants: This Warrant, all other warrants issued on the date hereof
and all other warrants that may be issued in its or their place (together
evidencing the right to purchase an aggregate of up to 185,000 shares of Common
Stock), originally issued as set forth in the definition of Registrable
Securities.
ARTICLE 2
DURATION AND EXERCISE OF WARRANT
2.1. DURATION OF WARRANT
The Warrantholder may exercise this Warrant at any time and from time to
time after 9:00 a.m., New York time, on [first anniversary of closing], 1997
and before 5:00 p.m., New York time, on the Expiration Date. If this Warrant is
not exercised
A-4
on the Expiration Date, it shall become void, and all rights hereunder shall
thereupon cease.
2.2. METHOD OF EXERCISE
(a) The Warrantholder may exercise this Warrant, in whole or in part, by
presentation and surrender of this Warrant to the Company at its corporate
office at 0000 X'Xxxxx Xxxxx, Xxxxx X, Xxxxx Xxxx, Xxxxxxxxxx 00000, or at the
office of its stock transfer agent, if any, with the Exercise Form annexed
hereto duly executed and, in the event of an exercise for cash pursuant to
Section 2.3(a), accompanied by payment of the full Exercise Price for each
Warrant Share to be purchased.
(b) Upon receipt of this Warrant with the Exercise Form fully executed
and, in the event of an exercise for cash pursuant to Section 2.3(a),
accompanied by payment of the aggregate Exercise Price for the Warrant Shares
for which this Warrant is then being exercised, the Company shall cause to be
issued certificates for the total number of whole shares of Common Stock for
which this Warrant is being exercised (adjusted to reflect the effect of the
anti-dilution provisions contained in Article 3 hereof, if any, and as provided
in Section 2.4 hereof) in such denominations as are requested for delivery to
the Warrantholder, and the Company shall thereupon deliver such certificates to
the Warrantholder. A net issuance exercise pursuant to Section 2.3(b) shall be
effective upon receipt by the Company of this Warrant together with the
aforesaid written statement, or on such later date as is specified therein (the
"Net Issuance Exercise Date"), and, at the election of the Holder hereof, may
be made contingent upon the closing of the sale of the Warrant Shares in a
Public Offering. The Warrantholder shall be deemed to be the holder of record
of the shares of Common Stock issuable upon such exercise as of the time of
receipt of the Exercise Form and payment in accordance with the preceding
sentence, in the case of an exercise for cash pursuant to Section 2.3(a), or as
of the Net Issuance Exercise Date, in the case of a net issuance exercise
pursuant to Section 2.3(b), notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Common Stock shall not then be actually delivered to the Warrantholder. If
at the time this Warrant is exercised, a Registration Statement is not in
effect to register under the Securities Act the Warrant Shares issuable upon
exercise of this Warrant, the Company may, in the case of an exercise for cash
pursuant to Section 2.3(a) or in the case of a net issuance exercise prior to
the satisfaction of any holding period required by Rule 144 promulgated under
the Securities Act, require the Warrantholder to make such representations, and
may place such legends on certificates representing the Warrant Shares, as may
be reasonably required in the opinion of counsel to the Company to permit the
Warrant Shares to be issued without such registration.
A-5
(c) In case the Warrantholder shall exercise this Warrant with respect to
less than all of the Warrant Shares that may be purchased under this Warrant,
the Company shall execute as of the exercise date (or, if later, the Net
Issuance Exercise Date) a new warrant in the form of this Warrant for the
balance of such Warrant Shares and deliver such new warrant to the
Warrantholder within 10 days following the exercise date (or, if later, the Net
Issuance Exercise Date).
(d) The Company shall pay any and all stock transfer and similar taxes
which may be payable in respect of the issuance of any Warrant Shares.
2.3. EXERCISE OF WARRANT
(a) Right to Exercise for Cash. This Warrant may be exercised by the
Holder by delivery of payment to the Company, for the account of the Company,
by cash, by certified or bank cashier's check or by wire transfer, of the
Exercise Price for the number of Warrant Shares specified in the Exercise Form
in lawful money of the United States of America.
(b) Right to Exercise on a Net Issuance Basis. In lieu of exercising this
Warrant for cash pursuant to Section 2.3(a), the Holder shall have the right to
exercise this Warrant or any portion hereof (the "Net Issuance Right") for
shares of Common Stock as provided in this Section 2.3(b) at any time or from
time to time during the period specified in Section 2.1 hereof by the surrender
of this Warrant to the Company with a duly executed and completed Exercise Form
marked to reflect net issuance exercise. Upon exercise of the Net Issuance
Right with respect to a particular number of shares subject to this Warrant and
noted on the Exercise Form (the "Net Issuance Warrant Shares"), the Company
shall deliver to the Holder (without payment by the Holder of any Exercise
Price or any cash or other consideration) (X) that number of shares of fully
paid and nonassessable Common Stock equal to the quotient obtained by dividing
the value of this Warrant (or the specified portion hereof) on the Net Issuance
Exercise Date, which value shall be determined by subtracting (A) the aggregate
Exercise Price of the Net Issuance Warrant Shares immediately prior to the
exercise of the Net Issuance Right from (B) the aggregate fair market value of
the Net Issuance Warrant Shares issuable upon exercise of this Warrant (or the
specified portion hereof) on the Net Issuance Exercise Date by (Y) the fair
market value of one share of Common Stock on the Net Issuance Exercise Date (as
herein defined).
Expressed as a formula, such net issuance exercise shall be computed as
follows:
X= B-A
---
Y
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Where: X = the number of shares of Common Stock that may be issued to the
Holder
Y = the fair market value ("FMV") of one share of Common Stock as of
the Net Issuance Exercise Date
A = the aggregate Exercise Price (i.e., the product determined by
multiplying the Net Issuance Warrant Shares by the Exercise
Price)
B = the aggregate FMV (i.e., the product determined by multiplying
the FMV by the Net Issuance Warrant Shares)
(c) Determination of Fair Market Value. For purposes of this Section 2.3,
"fair market value" of a share of Common Stock as of the Net Issuance Exercise
Date shall mean:
(i) if the Net Issuance Right is exercised in connection with and
contingent upon a Public Offering, and if the Company's Registration
Statement relating to such Public Offering has been declared effective by
the SEC, then the initial "Price to Public" specified in the final
Prospectus with respect to such offering; and
(ii) if the Net Issuance Right is not exercised in connection with
and contingent upon a Public Offering, then as follows:
(A) if traded on a securities exchange, the fair market value of
the Common Stock shall be deemed to be the average of the closing prices of
the Common Stock on such exchange over the 30-day period ending five
business days prior to the Net Issuance Exercise Date;
(B) if traded on the Nasdaq National Market or the Nasdaq
SmallCap Market, the fair market value of the Common Stock shall be deemed
to be the average of the last reported sales prices of the Common Stock on
such Market over the 30-day period ending five business days prior to the
Net Issuance Exercise Date;
(C) if traded over-the-counter other than on the Nasdaq National
Market or the Nasdaq SmallCap Market, the fair market value of the Common
Stock shall be deemed to be the average of the closing bid prices of the
Common Stock over the 30-day period ending five business days prior to the
Net Issuance Exercise Date; and
(D) if there is no public market for the Common Stock, then fair
market value shall be determined by mutual agreement of the Warrantholder
and the Company, and if the
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Warrantholder and the Company are unable to so agree, at the Company's sole
expense, by an investment banker of national reputation selected by the
Company and reasonably acceptable to the Warrantholder.
2.4. RESERVATION OF SHARES
The Company hereby agrees that at all times there shall be reserved for
issuance and delivery upon exercise of this Warrant such number of shares of
Common Stock or other shares of capital stock of the Company from time to time
issuable upon exercise of this Warrant. All such shares shall be duly
authorized, and when issued upon such exercise, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale (except as contemplated
by Sections 2.2(b) and 5.2) and free and clear of all preemptive and other
similar rights.
2.5. FRACTIONAL SHARES
The Company shall not be required to issue any fraction of a share of its
capital stock in connection with the exercise of this Warrant, and in any case
where the Warrantholder would, except for the provisions of this Section 2.5,
be entitled under the terms of this Warrant to receive a fraction of a share
upon the exercise of this Warrant, the Company shall, upon the exercise of this
Warrant, pay to the Warrantholder an amount in cash equal to the fair market
value (determined in the manner set forth in Section 2.3(c) hereof) of such
fractional share as of the exercise date (or, if applicable and a later date,
the Net Issuance Exercise Date).
2.6. LISTING
Prior to the issuance of any shares of Common Stock upon exercise of this
Warrant, the Company shall secure the listing of such shares of Common Stock
upon each national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice
of issuance upon exercise of this Warrant) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares of
Common Stock from time to time issuable upon the exercise of this Warrant; and
the Company shall so list on each national securities exchange or automated
quotation system, and shall maintain such listing of, any other shares of
capital stock of the Company issuable upon the exercise of this Warrant if and
so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.
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ARTICLE 3
ADJUSTMENT OF SHARES OF COMMON STOCK PURCHASABLE AND OF
EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article 3.
3.1. MECHANICAL ADJUSTMENTS
(a) If at any time prior the exercise of this Warrant in full, the
Company shall (i) declare a dividend or make a distribution on the Common Stock
payable in shares of its capital stock (whether shares of Common Stock or of
capital stock of any other class); (ii) subdivide, reclassify or recapitalize
its outstanding Common Stock into a greater number of shares; (iii) combine,
reclassify or recapitalize its outstanding Common Stock into a smaller number
of shares; or (iv) issue any shares of its capital stock by reclassification of
its Common Stock (including any such reclassification in connection with a
consolidation or a merger in which the Company is the continuing corporation),
the number of Warrant Shares issuable upon exercise of the Warrant and/or the
Exercise Price in effect at the time of the record date of such dividend,
distribution, subdivision, combination, reclassification or recapitalization
shall be adjusted so that the Warrantholder shall be entitled to receive the
aggregate number and kind of shares which, if this Warrant had been exercised
in full immediately prior to such event, the Warrantholder would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
distribution, subdivision, combination, reclassification or recapitalization.
Any adjustment required by this Section 3.1 (a) shall be made successively
immediately after the record date, in the case of a dividend or distribution,
or the effective date, in the case of a subdivision, combination,
reclassification or recapitalization, to allow the purchase of such aggregate
number and kind of shares.
(b) If at any time prior to the exercise of this Warrant in full, the
Company shall fix a record date for the issuance or making of a distribution to
all holders of the Common Stock (including any such distribution to be made in
connection with a consolidation or merger in which the Company is to be the
continuing corporation) of evidences of its indebtedness, any other securities
of the Company or any cash, property or other assets (excluding a combination,
reclassification or recapitalization referred to in Section 3.1(a), regular
cash dividends or cash distributions paid out of net profits legally available
therefor and in the ordinary course of business if the full amount thereof,
together with the value of other dividends and distributions made substantially
concurrently therewith or pursuant to a plan which includes payment thereof, is
equivalent
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to not more than 5% of the Company's net worth, or subscription rights, options
or warrants for Common Stock or Common Stock Equivalents (excluding those
referred to in Section 3.1(b)) (any such nonexcluded event being herein called
a "Special Dividend")), the Exercise Price shall be decreased immediately after
the record date for such Special Dividend to a price determined by multiplying
the Exercise Price then in effect by a fraction, the numerator of which shall
be the then current market price of the Common Stock (as defined in Section
3.1(e)) on such record date less the fair market value (as determined by the
Company's Board of Directors) of the evidences of indebtedness, securities or
property or other assets issued or distributed in such Special Dividend
applicable to one share of Common Stock or of such subscription rights or
warrants applicable to one share of Common Stock and the denominator of which
shall be the then current market price per share of Common Stock (as so
determined). Any adjustments required by this Section 3.1(b)shall be made
successively whenever such a record date is fixed and in the event that such
distribution is not so made, the Exercise Price shall again be adjusted to be
the Exercise Price that was in effect immediately prior to such record date.
(c) If at any time prior to the exercise of this Warrant in full, the
Company shall make a distribution to all holders of the Common Stock of stock
of a subsidiary or securities convertible into or exercisable for such stock,
then in lieu of an adjustment in the Exercise Price or the number of Warrant
Shares purchasable upon the exercise of this Warrant, each Warrantholder, upon
the exercise hereof at any time after such distribution, shall be entitled to
receive from the Company, such subsidiary or both, as the Company shall
determine, the stock or other securities to which such Warrantholder would have
been entitled if such Warrantholder had exercised this Warrant immediately
prior thereto, all subject to further adjustment as provided in this Article 3,
and the Company shall reserve, for the life of the Warrant, such securities of
such subsidiary or other corporation; provided, however, that no adjustment in
respect of dividends or interest on such stock or other securities shall be
made during the term of this Warrant or upon its exercise.
(d) Whenever the Exercise Price payable upon exercise of each Warrant is
adjusted pursuant to one or more of paragraphs (a) and (b) of this Section 3.1,
the Warrant Shares shall simultaneously be adjusted by multiplying the number
of Warrant Shares initially issuable upon exercise of each Warrant by the
Exercise Price in effect on the date thereof and dividing the product so
obtained by the Exercise Price, as adjusted.
(e) For the purpose of any computation under this Section 3.1, the
current market price per share of Common Stock at any date shall be deemed to
be the average of the daily closing prices for 20 consecutive trading days
commencing 30 trading days
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before such date. The closing price for each day shall be the last sale price
regular way or, in case no such reported sales take place on such day, the
average of the last reported bid and asked prices regular way, in either case
on the principal national securities exchange on which the Common Stock is
admitted to trading or listed, or if not listed or admitted to trading on such
exchange, the representative closing bid price as reported by Nasdaq, or other
similar organization if Nasdaq is no longer reporting such information, or if
not so available, the fair market price as determined in good faith by the
Board of Directors of the Company.
(f) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($.05)
in such price; provided, however, that any adjustments which by reason of this
paragraph (f) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
3.1 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. Notwithstanding anything in this Section 3.1 to the
contrary, the Exercise Price shall not be reduced to less than the then
existing par value of the Common Stock as a result of any adjustment made
hereunder.
(g) In the event that at any time, as a result of any adjustment made
pursuant to Section 3.1(a), the Warrantholder thereafter shall become entitled
to receive any shares of the Company other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of any Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in this Section 3.1.
(h) In case any event shall occur as to which the other provisions of
this Article 3 are not strictly applicable but as to which the failure to make
any adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles hereof then, in
each such case, the Warrantholders representing the right to purchase a
majority of the Warrant Shares subject to all outstanding Warrants may appoint
a firm of independent public accountants of recognized national standing
reasonably acceptable to the Company, which shall give their opinion as to the
adjustment, if any, on a basis consistent with the essential intent and
principles established herein, necessary to preserve the purchase rights
represented by the Warrants. Upon receipt of such opinion, the Company will
promptly mail a copy thereof to the Warrantholder and shall make the
adjustments described therein. The fees and expenses of such independent public
accountants shall be borne by the Company.
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(i) If, as a result of an adjustment made pursuant to this Article 3, the
Holder of any Warrant thereafter surrendered for exercise shall become entitled
to receive shares of two or more classes of capital stock or shares of Common
Stock and other capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a written notice to
the Holder of any Warrant promptly after such adjustment) shall determine the
allocation of the adjusted Exercise Price between or among shares or such
classes of capital stock or shares of Common Stock and other capital stock.
3.2. NOTICES OF ADJUSTMENT
Whenever the number of Warrant Shares or the Exercise Price is adjusted
as herein provided, the Company shall prepare and deliver forthwith to the
Warrantholder a certificate signed by its President, and by any Vice President,
Treasurer or Secretary, setting forth the adjusted number of shares purchasable
upon the exercise of this Warrant and the Exercise Price of such shares after
such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which adjustment was made.
3.3. NO ADJUSTMENT FOR DIVIDENDS
Except as provided in Section 3.1 of this Agreement, no adjustment in
respect of any cash dividends shall be made during the term of this Warrant or
upon the exercise of this Warrant.
3.4. PRESERVATION OF PURCHASE RIGHTS IN CERTAIN TRANSACTIONS
In case of any reclassification, capital reorganization or other change
of outstanding shares of Common Stock (other than a subdivision or combination
of the outstanding Common Stock and other than a change in the par value of the
Common Stock) or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger in which the Company is the
continuing corporation and that does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common Stock of
the class issuable upon exercise of this Warrant) or in the case of any sale,
lease, transfer or conveyance to another corporation of the property and assets
of the Company as an entirety or substantially as an entirety, the Holder of
this Warrant shall have the right thereafter to receive on the exercise of this
Warrant the kind and amount of securities, cash or other property which the
Holder would have owned or have been entitled to receive immediately after such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance had this Warrant been exercised immediately prior to the
effective date of such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if necessary,
appropriate adjustment shall be made in the
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application of the provisions set forth in this Article 3 with respect to the
rights and interests thereafter of the Holder of this Warrant to the end that
the provisions set forth in this Article 3 shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to any shares of
stock or other securities or property thereafter deliverable on the exercise of
this Warrant. The provisions of this Section 3.4 shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers,
statutory exchanges, sales or conveyances. The issuer of any shares of stock or
other securities or property thereafter deliverable on the exercise of this
Warrant shall be responsible for all of the agreements and obligations of the
Company hereunder. Notice of any such reorganization, reclassification,
consolidation, merger, statutory exchange, sale or conveyance and of said
provisions so proposed to be made, shall be mailed to the Holders of the
Warrants not less than 30 days prior to such event. A sale of all or
substantially all of the assets of the Company for a consideration consisting
primarily of securities shall be deemed a consolidation or merger for the
foregoing purposes.
3.5. FORM OF WARRANT AFTER ADJUSTMENTS
The form of this Warrant need not be changed because of any adjustments
in the Exercise Price or the number or kind of the Warrant Shares, and Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant, as initially issued.
3.6. TREATMENT OF WARRANTHOLDER
Prior to due presentment for registration of transfer of this Warrant,
the Company may deem and treat the Warrantholder as the absolute owner of this
Warrant (notwithstanding any notation of ownership or other writing hereon) for
all purposes and shall not be affected by any notice to the contrary.
ARTICLE 4
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
4.1. NO RIGHTS AS STOCKHOLDERS; NOTICE TO WARRANTHOLDERS
Nothing contained in this Warrant shall be construed as conferring upon
the Warrantholder or his or its transferees the right to vote or to receive
dividends or to consent or to receive notice as a stockholder in respect of any
meeting of stockholders for the election of directors of the Company or of any
other matter, or any rights whatsoever as stockholders of the Company. The
Company shall give notice to the Warrantholder by registered
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mail if at any time prior to the expiration or exercise in full of the
Warrants, any of the following events shall occur:
(a) the Company shall authorize the payment of any dividend payable in
any securities upon shares of Common Stock or authorize the making of any
distribution (other than a cash dividend subject to the parenthetical set forth
in Section 3.1(b)) to all holders of Common Stock;
(b) the Company shall authorize the issuance to all holders of Common
Stock of any additional shares of Common Stock or Common Stock Equivalents or
of rights, options or warrants to subscribe for or purchase Common Stock or
Common Stock Equivalents or of any other subscription rights, options or
warrants;
(c) a dissolution, liquidation or winding up of the Company shall be
proposed; or
(d) a capital reorganization or reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock and
other than a change in the par value of the Common Stock) or any consolidation
or merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or change of Common Stock
outstanding) or in the case of any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an entirety.
Such giving of notice shall be initiated (i) at least 10 Business Days
prior to the date fixed as a record date or effective date or the date of
closing of the Company's stock transfer books for the determination of the
stockholders entitled to such dividend, distribution or subscription rights, or
for the determination of the stockholders entitled to vote on such proposed
merger, consolidation, sale, conveyance, dissolution, liquidation or winding
up. Such notice shall specify such record date or the date of closing the stock
transfer books, as the case may be. Failure to provide such notice shall not
affect the validity of any action taken in connection with such dividend,
distribution or subscription rights, or proposed merger, consolidation, sale,
conveyance, dissolution, liquidation or winding up.
4.2. LOST, STOLEN, MUTILATED OR DESTROYED WARRANTS
If this Warrant is lost, stolen, mutilated or destroyed, the Company may,
on such terms as to indemnity or otherwise as it may in its reasonable judgment
impose (which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as, and in
substitution for, this Warrant.
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ARTICLE 5
SPLIT UP, COMBINATION, EXCHANGE AND TRANSFER OF WARRANTS AND
WARRANT SHARES
5.1. SPLIT UP, COMBINATION AND EXCHANGE OF WARRANTS
This Warrant may be split up, combined or exchanged for another Warrant
or Warrants containing the same terms to purchase a like aggregate number of
Warrant Shares. If the Warrantholder desires to split up, combine or exchange
this Warrant, he or it shall make such request in writing delivered to the
Company and shall surrender to the Company this Warrant and any other Warrants
to be so split up, combined or exchanged. Upon any Such surrender for split up,
combination or exchange, the Company shall execute and deliver to the person
entitled thereto a Warrant or Warrants, as the case may be, as so requested.
The Company shall not be required to effect any split up, combination or
exchange which will result in the issuance of a Warrant entitling the
Warrantholder to purchase upon exercise a fraction of a share of Common Stock
or a fractional Warrant. The Company may require such Warrantholder to pay a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any split up, combination or exchange of Warrants.
5.2. RESTRICTIONS ON TRANSFER; RESTRICTIVE LEGENDS
Except as otherwise permitted by this Section 5.2, each Warrant shall
(and each Warrant issued upon direct or indirect transfer or in substitution
for any Warrant pursuant to Section 5.1 shall) be stamped or otherwise
imprinted with a legend in substantially the following form:
"THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE
OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT."
Except as otherwise permitted by this Section 5.2, each stock certificate
for Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD OR
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OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT."
Notwithstanding the foregoing, the Warrantholder may require the Company
to issue a Warrant or a stock certificate for Warrant Shares without a legend,
if (i) the issuance of such Warrant Shares has been registered under the
Securities Act, (ii) such Warrant or such Warrant Shares, as the case may be,
have been registered for resale under the Securities Act or sold pursuant to
Rule 144 under the Securities Act (or a successor thereto) or (iii) the
Warrantholder has received an opinion of counsel (who may be in-house counsel
for such Warrantholder) reasonably satisfactory to the Company that such
registration is not required with respect to such Warrant or such Warrant
Shares, as the case may be.
ARTICLE 6
REGISTRATION UNDER THE SECURITIES ACT OF 1933
6.1. PIGGYBACK REGISTRATION
(a) Right to Include Registrable Securities. If at any time or from time
to time prior to the seventh anniversary of the Original Issuance Date, the
Company proposes to register any of its securities under the Securities Act on
any form for the registration of securities under such Act, whether or not for
its own account (other than by a registration statement on Form X-0, Xxxx X-0
or other form which does not include substantially the same information as
would be required in a form for the general registration of securities or would
not be available for the Registrable Securities) (a "Piggyback Registration"),
it shall as expeditiously as possible give written notice to all Holders of its
intention to do so and of such Holders' rights under this Section 6.1. Such
rights are referred to hereinafter as "Piggyback Registration Rights." Upon the
written request of any such Holder made within 20 days after receipt of any
such notice (which request shall specify the Registrable Securities intended to
be disposed of by such Holder), the Company shall include in the Registration
Statement the Registrable Securities which the Company has been so requested to
register by the Holders thereof and the Company shall keep such registration
statement in effect and maintain compliance with each Federal and state law or
regulation for the period necessary for such Holder to effect the proposed sale
or other disposition (but in no event for a period greater than 90 days).
(b) Withdrawal of Piggyback Registration by Company. If, at any time
after giving written notice of its intention to
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APITAL PRINTING SYSTEMS]
register any securities in a Piggyback Registration but prior to the effective
date of the related Registration Statement, the Company shall determine for any
reason not to register such securities, the Company shall give notice of such
determination to each Holder and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
Piggyback Registration. All best efforts obligations of the Company pursuant to
Section 6.4 shall cease if the Company determines to terminate prior to such
effective date any registration where Registrable Securities are being
registered pursuant to this Section 6.1.
(c) Piggyback Registration of Underwritten Public Offering. If a
Piggyback Registration involves an offering by or through underwriters, then
(i) all Holders requesting to have their Registrable Securities included in the
Company's Registration Statement must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and conditions as apply
to other selling stockholders and (ii) any Holder requesting to have his or its
Registrable Securities included in such Registration Statement may elect in
writing, not later than three Business Days prior to the effectiveness of the
Registration Statement filed in connection with such registration, not to have
his or its Registrable Securities so included in connection with such
registration.
(d) Payment of Registration Expenses for Piggyback Registration. The
Company shall pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to a Piggyback
Registration Right contained in this Section 6.1.
(e) Priority in Piggyback Registration. If a Piggyback Registration
involves an offering by or through underwriters, the Company, except as
otherwise provided herein, shall not be required to include Registrable Shares
therein if and to the extent that the underwriter managing the offering
reasonably believes in good faith and advises each Holder requesting to have
Registrable Securities included in the Company's Registration Statement that
such inclusion would materially adversely affect such offering; provided that
(i) if other selling stockholders without contractual registration rights have
requested registration of securities in the proposed offering, the Company will
reduce or eliminate such securities held by selling stockholders without
registration rights before any reduction or elimination of Registrable
Securities; and (ii) any such reduction or elimination (after taking into
account the effect of clause (i)) shall be pro rata to all other selling
stockholders with contractual registration rights.
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6.2. DEMAND REGISTRATION
(a) Request for Registration. If, at any time prior to the fifth
anniversary of the Original Issuance Date, any 25% Holders request that the
Company file a registration statement under the Securities Act, as soon as
practicable thereafter the Company shall use its best efforts to file a
registration statement with respect to all Warrant Shares that it has been so
requested to include and obtain the effectiveness thereof, and to take all
other action necessary under Federal or state law or regulation to permit the
Warrant Shares that are held and/or that may be acquired upon the exercise of
the Warrants specified in the notices of the Holders or holders hereof to be
sold or otherwise disposed of, and the Company shall maintain such compliance
with each such Federal and state law and regulation for the period necessary
for such Holders or Holders to effect the proposed sale or other disposition;
provided, however, that the Company shall be entitled to defer such
registration for a period of up to 60 days if and to the extent that its Board
of Directors shall in good faith determine that such registration would require
disclosure of information not otherwise then required to be disclosed and that
such disclosure would adversely affect any material business transaction or
negotiation then proposed, contemplated or being engaged in by the Company. The
Company shall also promptly give written notice to the Holders and the holders
of any other Warrants and/or the holders of any Warrant Shares who or that have
not made a request to the Company pursuant to the provisions of this Section
6.2(a) of its intention to effect any required registration or qualification,
and shall use its best efforts to effect as expeditiously as possible such
registration or qualification of all such Other Warrant Shares that are then
held and/or that may be acquired upon the exercise of the Warrants, the Holder
or holders of which have requested such registration or qualification, within
15 days after such notice has been given by the Company, as provided in the
preceding sentence. The Company shall be required to effect a registration or
qualification pursuant to this Section 6.2(a) on one occasion only.
(b) Payment of Registration Expenses for Demand Registration. The Company
shall pay all Registration Expenses in connection with the Demand Registration.
(c) Selection of Underwriters. If any Demand Registration is requested to
be in the form of an underwritten offering, the managing underwriter shall be
Xxxxxxx Bros., L.P. and the co-manager (if any) and the independent price
required under the rules of the NASD (if any) shall be selected and obtained by
the Holders of a majority of the Warrant Shares to be registered. Such
selection shall be subject to the Company's consent, which consent shall not be
unreasonably withheld. All fees and expenses (other than Registration Expenses
otherwise required to be paid) of any managing underwriter, any co-manager
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or any independent underwriter or other independent price required under the
rules of the NASD shall be paid for by such underwriters or by the Holders or
holders whose shares are being registered. If Xxxxxxx Bros., L.P. should
decline to serve as managing underwriter, the Holders of a majority of the
Warrant Shares to be registered may select and obtain one or more managing
underwriters. Such selection shall be subject to the Company's consent, which
shall not be unreasonably withheld.
(d) Procedure for Requesting Demand Registration. Any request for a
Demand Registration shall specify the aggregate number of the Registrable
Securities proposed to be sold and the intended method of disposition. Within
10 days after receipt of such a request, the Company will give written notice
of such registration request to all Holders, and, subject to the limitations of
Section 6.2(b), the Company will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 15 Business Days after the date on which such notice
is given. Each such request shall also specify the aggregate number of
Registrable Securities to be registered and the intended method of disposition
thereof.
6.3. BUY-OUTS OF REGISTRATION DEMAND
In lieu of carrying out its obligations to effect a Piggyback
Registration or Demand Registration of any Registrable Securities pursuant to
this Article 6, the Company may carry out such obligation by offering to
purchase and purchasing such Registrable Securities requested to be registered
in an amount in cash equal to the difference between (a) 95% of the last sale
price of the Common Stock on the day the request for registration is made and
(b) the Exercise Price in effect on such day; provided, however, that the
Holder or Holders may withdraw such request for registration rather than accept
such offer by the Company.
6.4. REGISTRATION PROCEDURES
If and whenever the Company is required to use its best efforts to take
action pursuant to any Federal or state law or regulation to permit the sale or
other disposition of any Registrable Securities that are then held or that may
be acquired upon exercise of the Warrants in order to effect or cause the
registration of any Registrable Securities under the Securities Act as provided
in this Article 6, the Company shall, as expeditiously as practicable:
(a) prepare and file with the SEC, as soon as practicable within 60 days
after the end of the period within which requests for registration may be given
to the Company (but subject to the provision for deferral contained in Section
6.2(a) hereof) a Registration Statement or Registration Statements relating to
the
A-19
registration on any appropriate form under the Securities Act, which form shall
be available for the sale of the Registrable Securities in accordance with the
intended method or methods of distribution thereof, and use its best efforts to
cause such Registration Statements to become effective; provided that before
filing a Registration Statement or Prospectus or any amendment or supplement
thereto, including documents incorporated by reference after the initial filing
of any Registration Statement, the Company will furnish to the Holders of the
Registrable Securities covered by such Registration Statement and the
underwriters, if any, copies of all such documents proposed to be filed, which
documents will be subject to the review of such Holders and underwriters;
(b) prepare and file with the SEC such amendments and post-effective
amendments to a Registration Statement as may be necessary to keep such
Registration Statement effective for 180 days if the offering is not
underwritten, provided that such 180 day period shall be extended by the number
of days a Prospectus is not available pursuant to Section 6.4(k) because of the
occurrence of an event set forth in Section 6.4(c)(vi); cause the related
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement or supplement to such
Prospectus;
(c) notify the selling Holders of Registrable Securities and the managing
underwriters, if any, promptly, and (if requested by any such Person) confirm
such advice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the SEC for amendments or supplements to a Registration
Statement or related Prospectus or for additional information; (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iv) if at any time the representations and warranties of the Company
contemplated by paragraph (m) below cease to be true and correct in all
material respects; (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purposes; and (vi) of the happening of any event that makes
any statement of a material fact made in the Registration Statement, the
Prospectus or any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement or Prospectus
so that they will not contain any untrue statement of a material
A-20
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(e) if reasonably requested by the managing underwriters, immediately
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters believe (on advice of counsel) should
be included therein as required by applicable law relating to such sale of
Registrable Securities, including, without limitation, information with respect
to the purchase price being paid for the Registrable Securities by such
underwriters and with respect to any other terms of the underwritten (or
"best-efforts" underwritten) offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(f) furnish to each selling Holder of Registrable Securities and each
managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(g) deliver to each selling Holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each preliminary prospectus) any amendment or
supplement thereto as such Persons may reasonably request; and the Company
consents to the use of such Prospectus or any amendment or supplement thereto
by each of the selling Holders of Registrable Securities and the underwriters,
if any, in connection with the offering and sale of the Registrable Securities
covered by such Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities, cooperate
with the selling Holders of Registrable Securities, the underwriters, if any,
and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder or underwriter reasonably requests in writing, keep each
such registration or qualification effective during the period such
Registration Statement is required to be kept effective and do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the applicable
Registration Statement; provided that the Company will
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not be required to qualify to do business in any jurisdiction where it not then
so qualified or to take any action which would subject the Company to general
service of process in any jurisdiction where it is not at the time so subject;
(i) cooperate with the selling Holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be
in such denominations and registered in such names as the managing underwriters
may request at least two Business Days prior to any sale of Registrable
Securities to the underwriters;
(j) use its best efforts to cause the Registrable Securities covered by
the applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities within the United States as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Registrable Securities;
(k) upon the occurrence of any event contemplated by Section 6.4(c)(vi)
above, prepare a supplement or post-effective amendment to the applicable
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold
thereunder, such Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading;
(l) with respect to each issue or class of Registrable Securities, use
its best efforts to cause all Registrable Securities covered by the
Registration Statements to be listed on each securities exchange or automated
quotation system, if any, on which similar securities issued by the Company are
then listed if requested by the Holders of a majority of such issue or class of
Registrable Securities;
(m) enter into such agreements (including an underwriting agreement) and
take all such other action reasonably required in connection therewith in order
to expedite or facilitate the disposition of such Registrable Securities and in
such connection, if the registration is in connection with an underwritten
offering (i) make such representations and warranties to the underwriters (or
the Holders of the Registrable Securities if such offering is not
underwritten), in such form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same if and
when requested; (ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions in form, scope and substance shall be
reasonably satisfactory to the underwriters) addressed to the underwriters (or
the Holders of the Registrable Securities if such offering is not underwritten)
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such
underwriters (or the Holders of
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the Registrable Securities if such offering is not underwritten); (iii) obtain
"cold comfort" letters and updates thereof from the Company's accountants
addressed to the underwriters (or the Holders of the Registrable Securities if
such offering is not underwritten), such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters by
underwriters in connection with underwritten offerings; (iv) set forth in full
in any underwriting agreement entered into the indemnification provisions and
procedures of Section 6.5 hereof with respect to all parties to be indemnified
pursuant to said Section; and (v) deliver such documents and certificates as
may be reasonably requested by the underwriters to evidence compliance with
clause (i) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company; the
above shall be done at each closing under such underwriting or similar
agreement or as and to the extent required hereunder;
(n) make available for inspection by one or more representatives of the
Holders of Registrable Securities being sold, any underwriter participating in
any disposition pursuant to such registration, and any attorney or accountant
retained by such Holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such representatives, in connection with such; and
(o) otherwise use its best efforts to comply with all applicable Federal
and state regulations; and take such other action as may be reasonably
necessary or advisable to enable each such Holder and each such underwriter to
consummate the sale or disposition in such jurisdiction or jurisdiction in
which any such Holder or underwriter shall have requested that the Registrable
Securities be sold.
Except as otherwise provided in this Agreement, the Company shall have
sole control in connection with the preparation, filing, withdrawal, amendment
or supplementing of each Registration Statement, the selection of underwriters,
and the distribution of any preliminary prospectus included in the Registration
Statement, and may include within the coverage thereof additional shares of
Common Stock or other securities for its own account or for the account of one
or more of its other security holders.
The Company may require each Seller of Registrable Securities as to which
any registration is being effected to furnish to the Company such information
regarding the
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distribution of such securities and such other information as may otherwise be
required by the Securities Act to be included in such Registration Statement.
6.5. INDEMNIFICATION
(a) Indemnification by Company. In connection with each Registration
Statement relating to the disposition of Registrable Securities, the Company
shall indemnify and hold harmless each Holder, its officers, directors and
agents and each underwriter of Registrable Securities and each Person, if any,
who controls such Holder or underwriter (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) against any and all
losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or regulation,
at common law or otherwise, insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or preliminary prospectus or any amendment thereof or supplement
thereto, or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that such
indemnity shall not inure to the benefit of any Holder or underwriter (or any
Person controlling such Holder or underwriter within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) on account of any
losses, claims, damages or liabilities arising from the sale of the Registrable
Securities if such untrue statement or omission or alleged untrue statement or
omission was made in such Registration Statement, Prospectus or preliminary
prospectus, or such amendment or supplement, in reliance upon and in conformity
with information furnished in writing to the Company by such Holder or
underwriter specifically for use therein. The Company shall also indemnify
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, their officers and directors and each Person
who controls such Persons (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) to the same extent as provided above
with respect to the indemnification of the Holders of Registrable Securities,
if requested. This indemnity agreement shall be in addition to any liability
that the Company may otherwise have.
(b) Indemnification by Holder. In connection with each Registration
Statement, each selling Holder shall indemnify, to the same extent as the
indemnification provided by the Company in Section 6.5(a), the Company, its
directors and each officer who signs the Registration Statement and each Person
who controls the
A-24
Company (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act) but only insofar as such losses, claims, damages and
liabilities arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which was made in the Registration
Statement, the Prospectus or preliminary prospectus or any amendment thereof or
supplement thereto, in reliance upon and in conformity with information
furnished in writing by such Holder to the Company specifically for use
therein. In no event shall the liability of any selling Holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation. The Company shall be entitled
to receive indemnities from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution, to
the same extent as provided above, with respect to information so furnished in
writing by such Persons specifically for inclusion in any Prospectus,
Registration Statement or preliminary prospectus or any amendment thereof or
supplement thereto.
(c) Conduct of Indemnification Procedure. Any party that proposes to
assert the right to be indemnified hereunder will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or parties
under this Section, notify each such indemnifying party of the commencement of
such action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 6.5(a) or 6.5(b) shall be available to
any party who shall fail to give notice as provided in this Section 6.5(c) if
the party to whom notice was not given was unaware of the proceeding to which
such notice would have related and was prejudiced by the failure to give such
notice, but the omission so to notify such indemnifying party of any such
action, suit or proceeding shall not relieve it from any liability that it may
have to any indemnified party for contribution otherwise than under this
Section. In case any such action, suit or 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
in, 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 after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof and the approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, except as provided below and except for the reasonable costs
of investigation subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such
A-25
indemnified party unless (i) the employment of counsel by such indemnified
party has been authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may be a conflict
of interest between the indemnifying parties and the indemnified party in the
conduct of the defense of such action (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying parties. An
indemnified party shall not be liable for any settlement of any action, suit,
proceeding or claim effected without its written consent.
(d) Contribution. In connection with each Registration Statement relating
to the disposition of Registrable Securities, if the indemnification provided
for in subsection (a) hereof is unavailable to an indemnified party thereunder
in respect to any losses, claims, damages or liabilities referred to therein,
then the indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 6.5 in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. 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 indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
Notwithstanding anything to the contrary in this Section 6.5(d), no selling
Holder of Registrable Securities shall be required to contribute any amount in
excess of the net proceeds it received in connection with its sale of
Registrable Securities.
(e) Underwriting Agreement to Control. Notwithstanding the foregoing
provisions of this Section 6.5, to the extent that the provisions on
indemnification and contribution contained in any underwriting agreement
entered into in connection with the underwritten public offering of the
Registrable Securities are in conflict with the foregoing provisions, the
provisions in such underwriting agreement shall control.
(f) Specific Performance. The Company and the Holder acknowledge that
remedies at law for the enforcement of this
A-26
Section 6.5 may be inadequate and intend that this Section 6.5 shall be
specifically enforceable.
(g) Survival of Obligations. The obligations of the Company and the
Holder under this Section 6.5 shall survive the completion of any offering of
Registrable Securities pursuant to a Registration Statement under this Article
6, and otherwise.
6.6. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the
SEC that may at any time permit a Holder to sell securities of the Company to
the public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined under SEC Rule 144, at all times after 90 days after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144 (at any time
after 90 days after the effective date of the first registration statement
filed by the Company), the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
by the Company and (iii) such other information as may be reasonably requested
in availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
ARTICLE 7
OTHER MATTERS
7.1. BINDING EFFECTS; BENEFITS
This Warrant shall inure to the benefit of and shall be binding upon the
Company and the Warrantholder and their
A-27
respective heirs, legal representatives, successors and assigns. Nothing in
this Warrant, expressed or implied, is intended to or shall confer on any
person other than the Company and the Warrantholder, or their respective heirs,
legal representatives, successors or assigns, any rights, remedies, obligations
or liabilities under or by reason of this Warrant.
7.2. NO INCONSISTENT AGREEMENTS
The Company will not on or after the date of this Warrant enter into any
agreement with respect to its securities which is inconsistent with the rights
granted to the Holders in this Warrant or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to holders
of the Company's securities under any other agreements.
7.3. ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES
The Company will not take any action outside the ordinary course of
business, or permit any change within its control to occur outside the ordinary
course of business, with respect to the Registrable Securities which is without
a bona fide business purpose, and which is intended to interfere with the
ability of the Holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to this Agreement.
7.4. INTEGRATION/ENTIRE AGREEMENT
This Warrant is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Warrants.
This Warrant supersedes all prior agreements and understandings between the
parties with respect to such subject matter (other than warrants previously
issued by the Company to the Warrantholder).
7.5. AMENDMENTS AND WAIVERS
The provisions of this Warrant, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless the Company
has obtained the written consent of holders of at least a majority of the
outstanding Registrable Securities. Holders shall be bound by any consent
authorized by this Section whether or not certificates
A-28
representing such Registrable Securities have been marked to indicate such
consent.
7.6. COUNTERPARTS
This Warrant may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
7.7. GOVERNING LAW
This Warrant shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
entirely within such State.
7.8. SEVERABILITY
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provisions
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
7.9. Attorneys' Fees
In any action or proceeding brought to enforce any provisions of this
Warrant, or where any provision hereof is validly asserted as a defense, the
successful party shall be entitled to recover reasonable attorneys' fees and
disbursements in addition to its costs and expenses and any other available
remedy.
7.10. COMPUTATIONS OF COMMENT
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the Company or its affiliates (other than the Warrantholder or subsequent
Holders if they are deemed to be such affiliates solely by reason of their
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
7.11. NOTICE
Any notices or certificates by the Company to the Holder and by the
Holder to the Company shall be deemed delivered if in writing and delivered in
person or by registered mail (return receipt requested) to the Holder addressed
to him in care of
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Xxxxxxx Bros., L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or, if the
Holder has designated, by notice in writing to the Company, any other address,
to such other address, and if to the Company, addressed to it at: 0000 X'Xxxxx
Xxxxx, Xxxxx X, Xxxxx Xxxx, Xxxxxxxxxx 00000, Attention: Secretary, with a copy
to Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000, Attention: Xxxxxxx X. Xxxxxxxx, Esq., or if the Company has
designated, by notice in writing to the Holder, any other address, to such
other address.
7.12. TRANSFER
Notwithstanding anything to the contrary contained herein, the
Warrantholder will not sell, assign, pledge, or transfer this Warrant, except
to its officers or partners, or to the officers or partners of an underwriter
of the Offering for a period of one year from the Original Issuance Date.
The Company may change its address by written notice to the Holder and
the Holder may change its address by written notice to the Company.
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company
under its corporate seal as of the __ day of ________, 1996.
INGENEX, INC.
By:
----------------------------
Title:
-------------------------
Attest:
---------------------------
Secretary
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EXERCISE FORM
(To be executed upon exercise of Warrant)
Ingenex, Inc.
0000 X'Xxxxx Xxxxx, Xxxxx X
Xxxxx Xxxx, Xxxxxxxxxx 00000
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase Warrant Shares and (check one):
[ ] herewith tenders payment for _________ of the Warrant Shares to the
order of Ingenex, Inc. in the amount of $_______ in accordance with
the terms of this Warrant; or
[ ] herewith tenders this Warrant for Warrant Shares pursuant to the net
issuance exercise provisions of Section 2.3(b) of this Warrant.
Please issue a certificate or certificates for such Warrant Shares in the
name of, and pay any cash for any fractional share to:
Name
---------------------------------
---------------------------------
---------------------------------
---------------------------------
(Please print Name, Address
and Social Security No.)
Signature
-----------------------
Note: The above signature should
correspond exactly with the name
on the first page of this Warrant
Certificate or with the name of
the assignee appearing in the
assignment form below.
If said number of shares shall not be all the shares purchasable under
the within Warrant Certificate, a new Warrant Certificate is to be issued in
the name of said undersigned for the balance remaining of the shares
purchasable thereunder.
A-31
ASSIGNMENT
(To be executed only upon assignment of Warrant)
For value received, hereby sells, assigns and transfers unto
the within Warrant, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
attorney, to transfer said Warrant on the books of the within-named Company
with respect to the number of Warrant Shares set forth below, with full power
of substitution in the premises:
Name(s) of No. of
Assignee(s) Address Warrant Shares
----------- ------- --------------
And if said number of Warrant Shares shall not be all the Warrant Shares
represented by the Warrant, a new Warrant is to be issued in the name of said
undersigned for the balance remaining of the Warrant Shares registered by said
Warrant.
Dated: , 19
---------- --
Signature
--------------------
Note: The above signature
should correspond
exactly with the name
on the face of this
Warrant
A-32
