EXHIBIT 1.1
UA/UTS
------
11/19/96
GLOBAL MED TECHNOLOGIES, INC.
UNDERWRITING AGREEMENT
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_______________, 1997
RAF Financial Corporation
One Norwest Center
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Gentlemen:
GLOBAL MED TECHNOLOGIES, INC. ("Company"), a Colorado corporation,
hereby confirms its agreement with you, as Representative, and with the
other members of the Underwriting Group as follows:
SECTION 1
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DESCRIPTION OF OFFERING AND SECURITIES
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The Underwriting Group proposes to purchase from the Company a total
of ____Units ("Firm Units"), each Unit consisting of two shares of Common
Stock of the Company ("Shares") and one Class A Common Stock Purchase
Warrant. The Class A Common Stock Purchase Warrants will be referred to as
"Class A Warrants" in this Agreement and in the Agreement Among
Underwriters. The Representative, either on its own behalf or on behalf of
the members of the Underwriting Group, will have an overallotment option to
purchase up to an additional ____ Units ("Overallotment Units") to cover
overallotments. Except as otherwise stated, the Firm Units and the
Overallotment Units are collectively referred to herein as the
"Securities." The Company agrees to sell to the Underwriting Group all of
the Firm Units, and the Company agrees to sell to the Representative all of
the Overallotment Units. The Units will initially be offered and sold to
the public at a price of $_____ per Unit. Such price is referred to herein
as the "Public Offering Price." The Company's authorized and outstanding
capitalization when the offering of the Firm Securities is permitted to
commence and at the Closing Date (hereinafter defined) and at the Option
Closing Date (hereinafter defined) will be as set forth in the Registration
Statement (hereinafter defined) and the Prospectus (hereinafter defined)
included therein.
The Shares and Class A Warrants comprising the Units will not be
separately tradeable or transferable for a period of six months after the
effective date (hereinafter defined) or earlier
at the discretion of the Representative. The date upon which the Shares
and Class A Warrants become separately tradeable and transferable will be
referred to herein as the "Detachment Date."
One Class A Warrant entitles the holder to purchase one share of the
Company's Common Stock ("Warrant Share") at $_____ per share ("Exercise
Price") at any time after the Detachment Date and until ___________, 1999.
Commencing on the Detachment Date, the Company has the right to call all of
the Class A Warrants for redemption at a price $.55 per Class A Warrant at
any time until the end of the second year after the date of the Prospectus
and at a price of $.75 per Class A Warrant at any time until the expiration
of the Class A Warrants. The Class A Warrants may be redeemed upon 30 days
prior written notice given at any time after the Common Stock of the
Company has traded for at least $______ for at least 20 consecutive trading
days ending within 10 days prior to the date of the notice of redemption.
For purposes of determining the daily trading price of the Company's Common
Stock: (i) if the Common Stock is listed on a national stock exchange or
admitted to unlisted trading privileges on any such exchange or quoted on
a trading system of the National Association of Securities Dealers, Inc.
("NASD") such as the NASDAQ Small Cap Market or the NASDAQ National Market
System ("NASDAQ/NMS"), then the last reported sale price of the Common
Stock each day shall be used, but if no such sale has occurred on any of
such days or if the last sale price is not reported, then the average of
the closing bid prices for the Common Stock for such day on such exchange
or system shall be used; or (ii) if the Common Stock is not then traded on
any such exchange or system then the average of the daily bid prices for
the Company's Common Stock reported by the National Quotation Bureau, Inc.
shall be used if the Company's Common Stock is included in the National
Quotation System.
On the effective date, only the Units will be listed for quotation on
the NASDAQ Small Cap Market. The Company will use its best efforts to have
the Shares and Class A Warrants listed for quotation on the NASDAQ Small
Cap Market on the Detachment Date and thereafter, and the Company will use
its best efforts to delist the Units from quotation on the NASDAQ Small Cap
Market at the same time as the Shares and Class A Warrants become listed
for quotation on the NASDAQ Small Cap Market. The foregoing agreements by
the Company are subject to the Company s ability to meet the NASDAQ Small
Cap Market maintenance requirements on the Detachment Date.
The Class A Warrants contain adjustment provisions protecting the
holders thereof against dilution of their interests represented by the
Warrant Shares upon the occurrence of certain events. Holders of the Class
A Warrants have no voting power and are not entitled to dividends. In the
event of liquidation, dissolution, or winding up of the Company, holders of
the Class A Warrants are not be entitled to participate in the Company's
assets. The Company agrees to take whatever actions are necessary so that
during the period that the Class A Warrants are exercisable a registration
statement relating to the Warrant Shares will be effective and current with
the Securities and Exchange Commission ("Commission") and the Company
agrees to use its best efforts so that during such period the Class A
Warrants may be exercised by the holders thereof under the securities laws
in those states in which any of the Securities are sold in the public
offering under the Registration Statement and in those states in which
registered holders reside who in the aggregate own at least 2% of the Class
A Warrants
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outstanding during the period that such Class A Warrants are exercisable.
The Company agrees that its obligations set forth in the preceding sentence
shall remain in full force and effect regardless of whether or not the
"market price" of the Company's Common Stock is less than the Exercise
Price under the Class A Warrants. The Company agrees not to call the Class
A Warrants for redemption at any time that such registration statement is
not effective and current with the Commission and the states described in
the previous sentence.
SECTION 2
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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In order to induce the members of the Underwriting Group to enter into
this Agreement, the Company hereby represents and warrants to and agrees
with the members of the Underwriting Group as follows:
2.01. REGISTRATION STATEMENT AND PROSPECTUS. A registration
statement on Form SB-2 (File No. 333-11723) ("Registration Statement") with
respect to the Securities, the Warrant Shares, and the Representative's
Warrants and Representative's Class A Warrants (hereinafter defined),
including the related Prospectus, copies of which have heretofore been
delivered by the Company to the Representative, has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933,
as amended ("Act"), and the rules and regulations ("Rules and Regulations")
of the Commission thereunder, and said Registration Statement has been
filed with the Commission under the Act; one or more amendments to said
Registration Statement, copies of which have heretofore been delivered to
the Representative, has or have heretofore been filed with the Commission;
and the Company may file with the Commission on or prior to the effective
date additional amendments to said Registration Statement, including the
final Prospectus. As used in this Agreement, the term "Registration
Statement" refers to and means said Registration Statement and all
amendments thereto, including the Prospectus, all exhibits and all
financial statements, as it becomes effective; the term "Prospectus" refers
to and means the Prospectus included in the Registration Statement when it
becomes effective; and the term "Preliminary Prospectus" refers to and
means any Prospectus included in said Registration Statement before it
becomes effective. The terms "effective date" and "effective" refer to the
date the Commission declares effective, pursuant to Section 8 of the Act,
the Registration Statement.
2.02. ACCURACY OF REGISTRATION STATEMENT AND PROSPECTUS. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus with respect to the Securities and each Preliminary
Prospectus has conformed in all material respects with the requirements of
the Act and the applicable Rules and Regulations of the Commission
thereunder and to the best of the Company's knowledge has not included at
the time of filing any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein not
misleading. When the Registration Statement becomes effective and on the
Closing Date and on the Option Closing Date, the Registration Statement and
Prospectus and any further amendments or supplements thereto will contain
all statements which are required to be stated therein in accordance with
the Act and the Rules and Regulations thereunder for the purposes of the
proposed public offering of the Securities, all statements of
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material fact contained in the Registration Statement and Prospectus will
be true and correct and neither the Registration Statement nor the
Prospectus will include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, the Company does
not make any representations or warranties as to information contained in
or omitted from the Registration Statement or the Prospectus in reliance
upon written information furnished on behalf of the members of the
Underwriting Group specifically for use therein.
2.03. FINANCIAL STATEMENTS. The financial statements of the Company
together with related schedules and notes as set forth in the Registration
Statement and Prospectus present fairly the financial position of the
Company and the results of its operations and the changes in its financial
position at the respective dates and for the respective periods for which
they apply. Such financial statements have been prepared in accordance with
generally accepted principles of accounting consistently applied throughout
the periods concerned except as otherwise stated therein.
2.04. INDEPENDENT PUBLIC ACCOUNTANTS. The accountants which have
audited the financial statements filed or to be filed with the Commission
as part of the Registration Statement and Prospectus, are independent
certified public accountants with respect to the Company within the meaning
of the Act and the Rules and Regulations thereunder.
2.05. NO CONTINGENT LIABILITIES AND NO MATERIAL ADVERSE CHANGE.
Except as disclosed in the Registration Statement and Prospectus, neither
the Company nor any of its subsidiaries, if any, have any contingent
liabilities, obligations or claims nor have they received threats of claims
or regulatory action. Except as may be reflected in or contemplated by the
Registration Statement or the Prospectus, subsequent to the dates as of
which information is given in the Registration Statement and Prospectus and
prior to the Closing Date and the Option Closing Date, (i) there shall not
have been any material adverse change in the condition, financial or
otherwise, of the Company or its subsidiaries, if any, or in the business
of the Company or its subsidiaries; (ii) there shall not have been any
material adverse transaction entered into by the Company or any of its
subsidiaries, if any; (iii) neither the Company nor any of its
subsidiaries, if any, shall have incurred any material obligations,
contingent or otherwise, which are not disclosed in the Prospectus; (iv)
there shall not have been any change in the outstanding securities or long
term debt (except current payments) of the Company or any of its
subsidiaries, if any; (v) the Company has not and will not have paid or
declared any dividends or other distributions on its Common Stock or other
securities; and (vi) there shall not have been any change in the officers
or directors of the Company.
2.06. NO DEFAULTS. Neither the Company nor any of its subsidiaries,
if any, is in default under any of the contracts, leases, subleases,
licenses or agreements to which they are a party. Except as disclosed in
the Prospectus, neither the Company nor any of its subsidiaries, if any, is
in default, which has not been waived, in the performance of any
obligation, agreement or condition contained in any debenture, note or
other evidence of indebtedness or any indenture or loan agreement. The
execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and the compliance with the terms of this
Agreement will not conflict with or result in a breach of any of the terms,
conditions or
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provisions of, or constitute a default under, the articles of
incorporation, as amended, or bylaws of the Company or any of its
subsidiaries, if any, any note, indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its subsidiaries, if
any, is a party or by which it, its subsidiaries, if any, or any of their
property is bound, or any existing law, order, rule, regulation, writ,
injunction or decree of any government, governmental instrumentality,
agency or body, arbitration tribunal or court, domestic or foreign, having
jurisdiction over the Company, its subsidiaries, if any, or their property.
The consent, approval, authorization or order of any court or governmental
instrumentality, agency or body is not required for the consummation of the
transactions herein contemplated except such as may be required under the
Act or under the blue sky or securities laws of any state or jurisdiction.
2.07. INCORPORATION AND STANDING. The Company is and at the Closing
Date and at the Option Closing Date will be duly incorporated and validly
existing in good standing as a corporation under the state law of the
Company's state of incorporation with authorized and outstanding capital
stock as set forth in the Registration Statement and the Prospectus and
with full power and authority (corporate and other) to own its property and
conduct its business, present and proposed, as described in the
Registration Statement and Prospectus; the Company has full power and
authority to enter into this Agreement; and the Company is duly qualified
and in good standing as a foreign corporation in each jurisdiction in which
it owns or leases real property or transacts business requiring such
qualification. All of the Company's subsidiaries, if any, are identified
and described in the Registration Statement. Each of the Company's
subsidiaries, if any, is and at the Closing Date and at the Option Closing
Date will be duly incorporated and validly existing in good standing as a
corporation under the state law of their respective state of incorporation
with authorized and outstanding capital stock as set forth in the
Registration Statement and the Prospectus and with full power and authority
(corporate and other) to own its property and conduct its business, present
and proposed, as described in the Registration Statement and Prospectus,
and is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which it owns or leases real property or transacts business
requiring such qualification, except where the failure to so qualify would
not be materially adverse to the Company's business taken as a whole.
2.08. LEGALITY OF OUTSTANDING SECURITIES. The outstanding shares of
Common Stock of the Company and each of its subsidiaries, if any, have been
duly and validly authorized and issued, are fully paid and nonassessable
and conform to all statements with regard thereto contained in the
Registration Statement and Prospectus. No sales of securities have been
made by the Company in violation of the registration provisions of the Act
or in violation of any other federal or state laws.
2.09. LEGALITY OF SECURITIES. The Securities, the Warrant Shares,
and the Representative's Warrant (described in Section 3.04 hereof) have
been duly and validly authorized and, when issued and delivered against
payment as provided in this Agreement, will be validly issued, fully paid
and nonassessable. The Securities, the Warrant Shares, and the
Representative's Warrant, upon issuance, will not be subject to the
preemptive rights of any shareholders of the Company. The Class A Warrants
and the Representative's Warrant, when sold and delivered, will constitute
valid and binding obligations of the Company enforceable in accordance with
their terms. A sufficient number of shares of Common Stock have been
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reserved for issuance upon exercise of the Class A Warrants and the
Representative's Warrant. The Securities, the Warrant Shares, and the
Representative's Warrant will conform to all statements in the Registration
Statement and Prospectus made with respect thereto. Upon delivery of and
payment for the Securities and the Representative's Warrant to be sold by
the Company as set forth in this Agreement, the persons paying therefor
will receive good and marketable title thereto, free and clear of all
liens, encumbrances, charges and claims. The Company will have on the
effective date of the Registration Statement and at the time of delivery of
the Securities and the Representative's Warrant full legal right and power
and all authorizations and approvals required by law to sell and deliver
the Securities and Representative's Warrant in the manner provided
hereunder.
2.10. OUTSTANDING SECURITIES AND LONG TERM DEBT ON EFFECTIVE DATE.
Immediately prior to the effective date, the only shares of capital stock,
warrants, options, or other convertible securities which have been issued
by the Company and which will be outstanding on the effective date will be
as described in the Prospectus, and the Company will not be obligated on
any long term debt, whether or not recorded on the books, records, or
accounts of the Company and will not be obligated to issue any capital
stock, warrants, options, or other convertible securities except as
described in the Prospectus. Unless the Representative has approved in
writing a different maximum number of fully diluted shares, immediately
prior to the effective date of the Registration Statement the number of
shares of Common Stock of the Company outstanding on a fully diluted basis
will not exceed 5,955,655 shares plus the number of shares underlying
options which were issued after May 28, 1996, under the Company's Amended
and Restated Stock Option Plan the last amendment to which was approved by
the Company's shareholders on May 29, 1996 ("Plan"). For purposes of this
Underwriting Agreement, the term "fully diluted basis" shall mean the
number of shares of Common Stock actually issued and outstanding plus the
number of shares of Common Stock underlying all issued and outstanding
convertible or excisable securities.
2.11. CUSIP NUMBER. The Company has obtained a CUSIP number for its
Units, Common Stock, and Class A Warrants.
2.12. OPTIONS AND TREASURY SHARES. There are no outstanding options,
warrants or other rights to purchase securities of the Company, however
characterized, except as described in the Registration Statement. Except as
described in the Registration Statement, there are no securities of the
Company, however characterized, held in its treasury. Except as described
in the Registration Statement, the Company has not offered or agreed to
purchase or issue any shares of Common Stock or any convertible securities
in the future.
2.13. SUBSIDIARIES. Except as described herein and in the
Registration Statement, the Company has no subsidiaries and does not
currently intend to acquire any subsidiaries or engage in mergers with or
the acquisition of any entity.
2.14. PRIOR SALES. No securities of the Company, or of a predecessor
of the Company, have been sold except as described in the Registration
Statement or as disclosed in writing to the Representative.
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2.15. LITIGATION. Except as set forth in the Registration Statement
or except for nonmaterial actions, suits, or proceedings disclosed in
writing to the Representative, there is and at the Closing Date and at the
Option Closing Date there will be no action, suit or proceeding before any
court or governmental agency, authority or body pending or to the knowledge
of the Company threatened against the Company or any of its subsidiaries.
2.16. FINDER. Except as set forth in the Registration Statement, the
Company knows of no outstanding claims against it for compensation for
services in the nature of a finder's fee, origination fee, or financial
consulting fee with respect to the offer and sale of the Securities and
Warrant Shares hereunder.
2.17. EXHIBITS. There are no contracts or other documents which are
required to be filed as exhibits to the Registration Statement by the Act
or by the Rules and Regulations thereunder, which have not been so filed
and each contract to which the Company or any of its subsidiaries is a
party and to which reference is made in the Prospectus has been duly and
validly executed, is in full force and effect in all material respects in
accordance with its terms, and none of such contracts has been assigned and
the Company knows of no present situation or condition or fact which would
prevent compliance with the terms of such contracts. Except for amendments
or modifications of such contracts in the ordinary course of business, the
Company has not been advised that any party to any such contract intends to
exercise any right which it may have to cancel any of its obligations under
any of such contracts and has no knowledge that any other party to any such
contracts has any intention not to render full performance under such
contracts.
2.18. TAX RETURNS. The Company has filed all tax returns which are
required to be filed by it and has paid all taxes shown on such returns and
on all assessments received by it to the extent such taxes have become due.
All taxes with respect to which the Company is obligated have been paid or
adequate accruals have been set up to cover any such unpaid taxes.
2.19. NO PREEMPTIVE RIGHTS. The Company's securities, however
characterized, are not subject to preemptive rights.
2.20. USE OF FORM SB-2. The Company is eligible to use Form SB-2 for
the offering of the Securities, the Representative's Warrant and the
Warrant Shares.
2.21. NO SECURITIES BEING OFFERED. Except as described in the
Registration Statement, neither the Company nor any of its subsidiaries, if
any, is currently offering any securities of which it is the issuer.
2.22. CERTIFICATES, PERMITS, LICENSES, APPROVALS, PATENTS AND
TRADEMARKS. The Company and each of its subsidiaries, if any, possess
adequate certificates, permits, licenses, or approvals, issued by the
appropriate federal, state and local regulatory authorities necessary to
conduct its business and to retain possession of its properties. The
Company and its subsidiaries, if any, have not received any notice of any
proceeding relating to the revocation or modification of any of these
certificates, permits, licenses, or approvals. The Company and each of its
subsidiaries, if any, has sufficient trademarks, patent rights and
copyright protection to conduct
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its business as now being conducted; and except as described in the
Prospectus, the Company has no knowledge of any use by it or any of its
subsidiaries, if any, of the trade secrets of others, of infringement by it
or them of trademarks, patent rights or copyrights of others, or of any
claim being made against the Company or any of its subsidiaries, if any,
regarding trademark, patent or copyright infringement or use of trade
secrets of others.
2.23. TITLE TO PROPERTIES. The Company and each of its subsidiaries,
if any, has marketable title to all properties, including patents, patent
applications, trademarks, trademark applications, service marks, service
xxxx applications, copyrights, equipment, and technology, described in the
Registration Statement as owned by it or them. The properties are free and
clear of all liens, charges, encumbrances or restrictions, however
characterized, except as described in the Registration Statement. All of
the contracts, leases, subleases, patents, patent applications, trademarks,
trademark applications, service marks, service xxxx applications,
copyrights, licenses and agreements, however characterized, under which the
Company and each of its subsidiaries, if any, holds its properties, as
described in the Registration Statement, are in full force and effect.
2.24. NO DIRECTED SALES. The Company has not made any
representation, whether oral or in writing, to any person, whether an
existing shareholder or not, that any of the Securities will be reserved or
directed to such person during the proposed public offering.
2.25. RESTRICTED SECURITIES. The Company has caused each of its
current shareholders who holds "restricted securities" as such term is
defined in Rule 144 under the Act to acknowledge that they hold "restricted
securities" as defined in Rule 144.
2.26. NEGOTIATIONS. During the period from the effective date to the
Closing Date or the Option Closing Date, the Company will notify the
Representative in writing from time to time of the status of any
negotiations involving the Company or any of its subsidiaries, if any,
relating to any transaction which would, if consummated, have a material
effect upon the Company or any of its subsidiaries, if any. Also, the
Company will consult with its legal counsel concerning the need to disclose
any such negotiations.
2.27. AUTHORITY. The execution and delivery by the Company of this
Agreement has been duly authorized by all necessary corporate action and
this Agreement is the valid, binding and legally enforceable obligation of
the Company.
2.28. 0000 XXX. The Company has been advised of the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its affairs in such a manner as to ensure that it will
not become an "investment company" within the meaning of the 1940 Act and
such rules and regulations.
2.29. CAMPAIGN CONTRIBUTIONS. The Company has not at any time during
the last five years made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation
of law, or made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasipublic
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duties, other than payments required or permitted by the laws of the United
States of any jurisdiction thereof.
2.30. SECURITIES ACTIVITIES. The Company has not taken and will not
take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of
the price of any security to facilitate the sale or resale of the
Securities.
2.31. ENVIRONMENTAL. Except as specifically described in the
Prospectus, the Company is in compliance with all federal, state, and local
rules, regulations, and policies relating to the use, treatment, storage,
transportation, discharge, emission, or disposal of, or exposure of others
to, toxic substances and protection of health, safety or the environment
("Environmental Laws") which are applicable to its business; there is no
pending or asserted claim, liability, or investigation by any third party
or governmental authority against the Company under Environmental Laws; no
substances which are prohibited or regulated by any Environmental Law or
designated to be radioactive, toxic, hazardous or otherwise a danger to
health or the environment by any governmental agency ("Hazardous Material")
are present or likely to become present on any property which is owned,
leased, or occupied by the Company and no such property has been designated
as a SuperFund site, pursuant to the Comprehensive Response, Compensation,
and Liability Act of 1980, as amended, or otherwise designated as a
contaminated site under applicable federal, state or local law; and the
Company has received all permits, licenses, or other approvals required of
it under Environmental Laws to conduct its business as presently conducted
and is in compliance with all terms and conditions of such permits,
licenses, or approvals.
2.32. FDA AND DOT COMPLIANCE. The Company's business and the
business of each of the Company's subsidiaries, if any, is being conducted
in compliance with the applicable rules and regulations of the United
States Food & Drug Administration ("FDA") and the United States Department
of Transportation ("DOT"). Neither the Company, nor any subsidiary of the
Company, if any, received any notice of any claim by the FDA or DOT or any
other governmental agency that its business is not being conducted in
compliance with all applicable rules and regulations of the FDA or DOT or
any other governmental agency.
If the Company has any subsidiaries, the parties agree that the
representations and warranties contained in subsections 2.05, 2.06, 2.07,
2.08, 2.15, 2.22, 2.23, 2.26, 2.31, and 2.32, hereof shall be deemed to
have been made by the Company on its own behalf and on behalf of each of
its subsidiaries.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
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SECTION 3
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PURCHASE AND SALE OF THE SECURITIES
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3.01. PURCHASE OF SECURITIES. The Company hereby agrees to sell to
the members of the Underwriting Group named in Schedule I hereto (for all
of whom the Representative is acting), severally and not jointly, and each
member of the Underwriting Group, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter
stated, agrees to purchase from the Company, severally and not jointly, the
number of Firm Units set forth opposite the name of each member of the
Underwriting Group as set forth in Schedule I hereto at a purchase price of
$_____ per Unit. The Company hereby grants to the Representative and the
members of the Underwriting Group an option for a period of 30 days after
the effective date to purchase up to ______ Overallotment Units in order to
cover overallotments. The purchase price of Overallotment Units is $_____
per Unit. Any Overallotment Units purchased shall be purchased for the
account of the Representative and/or for the accounts of the members of the
Underwriting Group as determined by the Representative.
3.01.01. DEFAULT BY MEMBER OF UNDERWRITING GROUP. If for any
reason one or more of the Underwriters shall fail or refuse (otherwise
than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 9 hereof) to purchase and
pay for the number of Firm Units agreed to be purchased by such
Underwriter, the Company shall immediately give notice thereof to the
Representative, and the nondefaulting Underwriters shall have the
right within 24 hours after the receipt by the Representative of such
notice, to purchase or procure one or more other Underwriters to
purchase, in such proportions as may be agreed upon among the
Representative and such purchasing Underwriter or Underwriters and
upon the terms herein set forth, the Firm Units which such defaulting
Underwriter or Underwriters agreed to purchase. If the nondefaulting
Underwriters fail so to make such arrangements with respect to all
such Firm Units, the number of Firm Units which each nondefaulting
Underwriter is otherwise obligated to purchase under this Agreement
shall be automatically increased pro rata to absorb the remaining Firm
Units which the defaulting Underwriter or Underwriters agreed to
purchase; provided, however, that the nondefaulting Underwriters shall
not be obligated to purchase any of the Firm Units if the aggregate
Public Offering Price of the Firm Units which the defaulting
Underwriter or Underwriters agreed to purchase exceeds 10% of the
Public Offering Price of the total Firm Units which all Underwriters
agreed to purchase hereunder. If the total number of Firm Units which
the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with this subsection
3.01.01, then the Company shall have the right, within 24 hours next
succeeding the 24 hour period above referred to, to make arrangements
with other underwriters or purchasers satisfactory to the
Representative for the purchase of all of the Firm Units which the
defaulting Underwriter or Underwriters agreed to purchase hereunder on
the terms herein set forth. In any such case, either the
Representative or the Company shall have the right to postpone the
Closing Date determined as provided in subsection 3.02.02. hereof for
not more than seven business days after the date originally fixed as
the Closing Date
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pursuant to said subsection 3.02.02. in order that any necessary
changes in the Registration Statement, the Prospectus or any other
documents or arrangements may be made. If neither the nondefaulting
Underwriters nor the Company shall make arrangements within the 24
hour periods stated above for the purchase of all the Firm Units which
the defaulting Underwriter or Underwriters agreed to purchase
hereunder, this Agreement shall be terminated without further act or
deed and without any liability on the part of the Company to any
nondefaulting Underwriter and without any liability on the part of any
nondefaulting Underwriter to the Company.
3.01.02. LIABILITY OF DEFAULTING MEMBERS OF THE UNDERWRITING
GROUP. Nothing contained in this Section 3.01 shall relieve any
defaulting member of the Underwriting Group of its liability, if any,
to the Company or to the remaining members of the Underwriting Group
for damages occasioned by its default hereunder.
3.02. PUBLIC OFFERING PRICE. After the Commission notifies the
Company that the Registration Statement has become effective and after this
Agreement becomes effective, the members of the Underwriting Group propose
to initially offer the Units to the public at the Public Offering Price.
The members of the Underwriting Group may allow such concessions and
discounts upon sales to selected dealers as may be determined from time to
time by the Representative.
3.02.01. PAYMENT FOR FIRM UNITS. Payment for the Firm Units
shall be made to the Company by regular check or checks at the offices
of the Representative set forth above in Denver, Colorado, upon
delivery to the Representative of certificates for the Firm Units in
definitive form in such numbers and registered in such names as the
Representative requests in writing at least two full business days
prior to such delivery. The Company agrees not to seek to obtain (i)
certification of the Representative's closing check or checks from the
Representative's bank or banks or (ii) a cashier's check or checks
from the Representative's bank or banks in substitution for the
Representative's closing check or checks. The Company agrees to
deposit the Representative's closing check or checks into the
Company's bank account and to allow such check or checks to clear
through the banking system on a "regular way" basis. Nothing contained
in this Section 3.02.01 shall be construed to relieve the
Representative from its obligations created as a result of the
issuance of the Representative's regular check or checks at the
Closing.
3.02.02. CLOSING. The time and date of delivery and payment
hereunder for the Firm Units is herein called the "Closing Date" and
shall take place at the office of the Representative at the address
set forth above in Denver, Colorado, at 10:00 A.M. on the third
business day following the effective date of this Agreement; provided,
however, the Company and the Representative may agree, on the date
that this Agreement becomes legally effective, to an alternative
Closing Date and such alternative Closing Date shall become the
Closing Date under this Agreement. Should the Representative elect to
exercise any part of the overallotment option pursuant to Section 3.01
hereof, the time, date of delivery and payment for the Overallotment
Securities being purchased shall be as mutually agreed between the
Company and the Representative, but not later
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than the thirtieth calendar day after the effective date. Said date is
hereinafter referred to as the "Option Closing Date."
3.02.03. INSPECTION OF CERTIFICATES. For the purpose of
expediting the checking and packaging of the certificates for the
Units, the Company agrees to make the certificates available for
inspection by the Representative at the place designated by the
Representative at least one full business day prior to the proposed
delivery date.
3.03. REPRESENTATIVE'S NONACCOUNTABLE EXPENSE ALLOWANCE. It is
understood that the Company shall reimburse the Representative for its
expenses on a nonaccountable basis in the amount of 3% of the Public
Offering Price of the Firm Units and Overallotment Units purchased by the
Underwriters. The Representative acknowledges that it has received $40,000
of the nonaccountable expense allowance, which amount will be credited
against the unpaid balance of such nonaccountable expense allowance. On
the Closing Date and the Option Closing Date, the Company shall pay to the
Representative the unpaid balance of such nonaccountable expense allowance
then due.
3.04. REPRESENTATIVE'S WARRANT. On the Closing Date, the Company
will sell a warrant to the Representative and its designees
("Representative's Warrant") entitling the Representative to purchase a
total of ______ Units. The Representative's Warrant will be in the form of
the Representative's Warrant to Purchase Units filed as an exhibit to the
Registration Statement. The total amount that the Representative shall pay
the Company for the Representative's Warrant is $100. The Company and the
Representative agree that the Representative's Warrant may not be sold,
transferred, assigned, pledged, or hypothecated for a period of one year
after the effective date of the Registration Statement except to officers
of the Representative, to members of the Underwriting Group, and to
officers of members of the Underwriting Group and except by will or
operation of law. After such one year period, the Representative's Warrant
may be sold, transferred, assigned, pledged, or hypothecated provided that
any such transaction is in accordance with the registration or exemption
from registration provisions of the Act and any applicable state securities
laws. If the Representative's Warrant is exercised during the first year
after the effective date of the Registration Statement, then any shares of
Common Stock of the Company acquired as a result of any such exercise may
not be sold, transferred, assigned, pledged, or hypothecated until after
expiration of such one year period.
3.05. REPRESENTATIONS OF THE PARTIES. The parties hereto
respectively represent that as of the Closing Date and as of the Option
Closing Date the representations herein contained and the statements
contained in all the certificates theretofore or simultaneously delivered
by any party to another, pursuant to this Agreement, shall in all material
respects be true and correct.
3.06. POSTCLOSING INFORMATION. The Representative covenants that
reasonably promptly after the Closing Date and after the Option Closing
date, the Representative will supply the Company with all information that
the Company may reasonably request which must be supplied to the Commission
or securities authorities of states in which the Securities have been
qualified for sale.
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3.07. REOFFERS BY SELECTED DEALERS. On each sale by the members of
the Underwriting Group of any of the Securities to selected dealers, the
members of the Underwriting Group shall require the selected dealers
purchasing any such Securities to agree to reoffer such Securities on the
terms and conditions of the offering set forth in the Registration
Statement and Prospectus.
SECTION 4
---------
REGISTRATION STATEMENT AND PROSPECTUS
-------------------------------------
4.01. DELIVERY OF REGISTRATION STATEMENT. The Company has delivered
to the Representative without charge two signed printed copies of the
Registration Statement, including all financial statements and exhibits
filed therewith and any amendments or supplements thereto, and shall
deliver without charge to the Representative such number of conformed
printed copies of the Registration Statement as the Representative shall
request, including all financial statements and exhibits filed therewith
and any amendments or supplements thereto. The signed copies of the
Registration Statement furnished to the Representative include signed
copies of any and all opinions and consents of the independent public
accountants certifying to the financial statements included in the
Registration Statement and Prospectus and signed copies of any and all
opinions, consents and certificates of any other persons whose profession
gives authority to statements made by them and who are named in the
Registration Statement or Prospectus as having prepared, certified or
reviewed any part thereof.
4.02. DELIVERY OF PRELIMINARY PROSPECTUS AND AGREEMENTS. The Company
will have caused to be delivered, at its expense, to the members of the
Underwriting Group and to other broker dealers specified by the
Representative prior to the effective date of the Registration Statement as
many printed copies of (i) each Preliminary Prospectus filed with the
Commission bearing in red ink the statements required by Item 501 of
Regulation S-B, and (ii) each Agreement Among Underwriters, Underwriting
Agreement, and Selected Dealer Agreement, all as may have been requested by
the Representative. The Company consents to the use of such documents by
the members of the Underwriting Group and by prospective dealers prior to
the effective date of the Registration Statement, so long as such use is in
accordance with the applicable provisions of the Act, the applicable Rules
and Regulations thereunder and the applicable state blue sky or securities
laws.
4.03. DELIVERY OF PROSPECTUS. The Company will deliver, at its
expense, to the members of the Underwriting Group and to other broker
dealers specified by the Representative, as many printed copies of the
Prospectus as the Representative may request and will deliver said printed
copies of the Prospectus to the members of the Underwriting Group and such
other persons on the effective date and for such period of time thereafter
as the Prospectus is required by law to be delivered in connection with
offers and sales of the Securities.
4.04. FURTHER AMENDMENTS AND SUPPLEMENTS. If during the period of
time that the Company's Prospectus is required to be delivered under the
Act, any event occurs or any event known to the Company relating to or
affecting the Company shall occur, as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
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material fact, or omit to state any material fact necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading or if it is necessary at any time after the
effective date to amend or supplement the Prospectus to comply with the
Act, the Company agrees to immediately notify the Representative thereof
and prepare and file with the Commission such further amendment to the
Registration Statement or supplemental or amended Prospectus as may be
required and furnish and deliver to the Representative and to others
designated by the Representative, all at the Company's expense, a
reasonable number of copies of the amended or supplemented Prospectus which
as so amended or supplemented will not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading when it is delivered to a purchaser or
prospective purchaser, and which will comply in all respects with the Act;
and in the event the Representative is required to deliver a Prospectus
after the date specified in Rule 174 of the Rules and Regulations, the
Company upon request will prepare promptly such Prospectus or Prospectuses
as may be necessary to permit compliance with the requirements of Section
10 of the Act.
4.05. USE OF PROSPECTUS. The Company authorizes the members of the
Underwriting Group in connection with the distribution of the Securities
and all dealers who may distribute any of the Securities to use the
Prospectus, as from time to time amended or supplemented, in connection
with the offering and sale of the Securities so long as such use is in
accordance with the applicable provisions of the Act, the applicable Rules
and Regulations thereunder and applicable state blue sky or securities
laws.
SECTION 5
---------
COVENANTS OF THE COMPANY
------------------------
The Company covenants and agrees with the members of the Underwriting
Group that:
5.01. OBJECTION OF REPRESENTATIVE TO AMENDMENTS OR SUPPLEMENTS.
After the date hereof, the Company will not at any time, whether before or
after the effective date of the Registration Statement, file any amendment
or supplement to the Registration Statement or Prospectus (i) unless and
until a copy of such amendment or supplement has been previously furnished
to the Representative within a reasonable time period prior to the proposed
filing thereof or (ii) to which the Representative or legal counsel to the
Representative has reasonably objected, in writing, on the ground that such
amendment or supplement is not in compliance with the Act or the Rules and
Regulations.
5.02. COMPANY'S BEST EFFORTS TO CAUSE REGISTRATION STATEMENT TO
BECOME EFFECTIVE. The Company agrees to use its best efforts to cause the
Registration Statement and any amendment thereto to become effective as
promptly as reasonably practicable and will promptly advise the
Representative and will confirm such advice in writing (i) when the
Registration Statement shall have become effective and when any amendment
thereto shall have become effective and when any amendment of or supplement
to the Prospectus shall be filed with the Commission, (ii) when the
Commission shall make, either orally or in writing, a request or suggestion
for any amendment to the Registration Statement or the Prospectus or for
any
-15-
additional information and the nature and substance thereof, (iii) of the
issuance by the Commission of an order suspending the effectiveness of the
Registration Statement pursuant to Section 8 of the Act or of the
initiation of any proceedings for that purpose, (iv) of the happening of
any event which in the judgment of the Company makes any material statement
in the Registration Statement or Prospectus untrue or which requires the
making of any changes in the Registration Statement or Prospectus in order
to make the statements therein not misleading, and (v) of the refusal to
qualify or the suspension of the qualification of the Securities for
offering or sale in any jurisdiction or of the institution of any
proceedings for any of such purposes. The Company will use every reasonable
effort to prevent the issuance of any such order or of any order preventing
or suspending such use, to prevent any such refusal to qualify or any such
suspension, and to obtain as soon as possible a lifting of any such order,
the reversal of any such refusal and the termination of any such
suspension.
5.03. PREPARATION AND FILING OF AMENDMENTS AND SUPPLEMENTS. The
Company agrees to prepare and file promptly with the Commission, upon
request of the Representative, such amendments or supplements to the
Registration Statement or Prospectus, in form satisfactory to legal counsel
to the Representative, as in the opinion of the Representative and of legal
counsel to the Company, may be necessary in connection with the offering or
distribution of the Securities and will use its best efforts to cause the
same to become effective as promptly as possible.
5.04. BLUE SKY QUALIFICATION. The Company agrees to use its best
efforts to register or qualify the Securities or such part thereof as the
Representative may determine for sale under the blue sky laws of such
states as are requested by the Representative. The Company will be
assisted by legal counsel for the Company in registering or qualifying the
Securities for sale under such blue sky laws. The Company will pay all of
the filing fees and legal fees, costs and expenses incurred by such legal
counsel in so registering or qualifying such Securities. The Company's
legal counsel will forward to legal counsel for the Representative copies
of all documents and correspondence sent to or received from such states in
connection with such registrations and qualifications at the time such
documents and correspondence are sent or received by legal counsel for the
Company. On the effective date of the Registration Statement, legal
counsel for the Company will issue to the Company and the Underwriting
Group a Blue Sky Legal Opinion in form and content satisfactory to the
Representative. The Company understands that one of the factors considered
by the Representative and the Underwriting Group in deciding to execute
this Underwriting Agreement was the states in which the Securities have
been registered or qualified for resale.
5.05. FINANCIAL STATEMENTS. The Company at its own expense agrees to
prepare and give and will continue to give such financial statements and
other information and reports to and as may be required by the Commission
or the proper public bodies of the states in which the Securities may be
registered or qualified.
5.06. REPORTS AND FINANCIAL STATEMENTS TO THE REPRESENTATIVE. For a
period of five years from the Closing Date, the Company agrees to deliver
to the Representative copies of each annual report of the Company and
copies of all reports it is required to file or make available pursuant to
the Securities Exchange Act of 1934, as amended ("Exchange Act"), and will
deliver
-16-
to the Representative: (i) within 90 days (plus any extensions of time that
the Commission grants to the Company to file its annual report on the
appropriate Form) after the close of each fiscal year of the Company, a
financial report of the Company and its subsidiaries, if any, on a
consolidated basis, and a similar financial report of all of the Company's
unconsolidated subsidiaries, if any, all such reports to include a balance
sheet as of the end of the preceding fiscal year, a statement of
operations, a statement of stockholders' equity and statement of cash flows
covering such fiscal year, and all to be in reasonable detail and certified
by independent public accountants for the Company; (ii) within 45 days
(plus any extensions of time that the Commission grants to the Company to
file its quarterly report on the appropriate Form) after the end of each
quarterly fiscal period of the Company other than the last quarterly fiscal
period in any fiscal year, copies of the consolidated statements of
operations, stockholders' equity and cash flows for the quarterly fiscal
period and the fiscal year to the end of such quarterly fiscal period, and
the balance sheet as of the end of that period of the Company and its
subsidiaries, if any, and the equivalent financial statements of all of the
Company's unconsolidated subsidiaries, if any, for that period, all subject
to year end adjustment, certified by the principal financial or accounting
officer of the Company; (iii) copies of all other statements, documents or
other information which the Company mails or otherwise makes available to
any class of its security holders or files with the Commission; (vi) copies
of all news, press or public information releases when made; (v) copies of
all letters to the Company from its independent certified public
accountants concerning actual or potential deficiencies in the Company's
accounting procedures or internal control of funds; and (vi) upon request
in writing from the Representative, such other information as may
reasonably be requested and which may be properly disclosed to the
Representative with reference to the property, business and affairs of the
Company and its subsidiaries, if any. If the Company fails to furnish the
Representative with financial statements as herein provided, within the
times specified herein, the Representative shall have the right to have
such financial statements prepared by independent public accountants of
such Representative's own choosing and the Company agrees to furnish such
independent public accountants such data and assistance and access to such
records as they may reasonably require to enable them to prepare such
statements and to pay their reasonable fees and expenses in preparing the
same; provided, however, the Company shall have the right to furnish the
financial statements to the Representative at any time after the
Representative retains independent public accountants to prepare the
financial statements in which event the amount of fees that the Company
shall be obligated to pay to the independent public accountants selected by
the Representative will be limited to those fees (including any retainer
paid) actually incurred to the point in time that the Company furnishes the
required financial statements.
5.07. EXPENSES PAID BY THE COMPANY. The Company agrees to pay,
whether or not the transactions contemplated hereunder are consummated or
this Agreement is prevented from becoming effective or is terminated, all
costs and expenses incident to the performance of its obligations under
this Agreement, including all expenses incident to the authorization,
issuance, and delivery of the Securities, Representative's Warrants, and
the Representative's Class A Warrants, any original issue taxes in
connection therewith, all transfer taxes, if any, incident to the initial
sale of the Securities to the public, the fees and expenses of the
Company's personnel in connection with the offering, the costs, fees, and
expenses incident to the preparation, printing and filing under the Act and
with the NASD of the Registration Statement, or supplements thereto, the
cost of printing, reproducing and filing all exhibits to the Registration
-17-
Statement, the Agreement Among Underwriters, this Agreement, the Selected
Dealer Agreement and any other underwriting documents, the cost of printing
and delivering to the Representative, the members of the Underwriting
Group, and selected dealers copies of the Registration Statement and copies
of the Agreement Among Underwriters, this Agreement and the Selected Dealer
Agreement, and any other underwriting documents, the Preliminary Prospectus
and the Prospectus as herein provided, the costs and legal counsel fees of
qualifying the Securities and Warrant Shares under the state securities or
blue sky laws as provided in Section 5.04 herein, the cost of providing the
Representative with two bound volumes of the Registration Statement, as
amended, all exhibits thereto, all state filings and all correspondence
relating to the Registration Statement and all state filings, the expenses
of Company representatives in attending a reasonable number of "due
diligence" meetings (which shall include all presentations specified by the
Representative) held by the Representative and the cost, not to exceed
$3,000, of tombstone advertising relating to the proposed Public Offering,
and any other expenses customarily paid by an issuer.
5.08. REPORTS TO SHAREHOLDERS. For so long as the Company's Common
Stock is registered under the Exchange Act, the Company agrees to hold an
annual meeting of shareholders for the election of directors within 180
days after the end of each of the Company's fiscal years and, within 180
days after the end of each of the Company's fiscal years to send to each of
the Company's shareholders the audited financial statements of the Company
as of the end of the fiscal year just completed prior thereto. Such
financial statements shall be those required by Rule 14a-3 under the
Exchange Act and shall be included in an annual report meeting the
requirements of such Rule. Further, the Company agrees, so long as such
Common Stock is so registered:
(i) to send, within 30 days after the Closing Date, a letter
to shareholders of the Company which welcomes them as
shareholders and discusses the business conducted by the
Company since the effective date.
(ii) to send, as least every 60 days for a period of three
years after the effective date, a letter or report to
shareholders of the Company and to broker dealers which
are then market markers of Securities of the Company on
NASDAQ ("market makers"), which contains a narrative
discussion of the Company s financial status and results
of operations and a narrative discussion of the business
conducted by the Company since the last report or letter
to shareholders and market markers.
(iii) during the period after three years from the effective
date, to send to each of the Company s shareholders and
market markers in printed form within 60 days after the
end of each fiscal quarter just ended and a narrative
discussion of such financial statements and the business
conducted by the Company during such quarter.
If the Company breaches any of its agreements set forth in this Section
5.08, the parties agree that any such breach will result in irreparable
harm to the Representative for which an adequate remedy for damages will
not exist and therefor the Representative shall be entitled to seek and
-18-
obtain a court injunction in equity which orders the Company to comply with
its agreements set forth in this Section 5.08 and which requires the
Company to reimburse the Representative for its costs, including reasonable
attorney fees, incurred in obtaining such injunctive order.
5.09. SECTION 11(A) FINANCIALS. The Company agrees to send to each
of its security holders and agrees to deliver to the Representative, as
soon as practicable, but in no event later than the first day of the
sixteenth full calendar month following the effective date, an earnings
statement (as to which no opinion need be rendered but which will satisfy
the provisions of Section 11(a) of the Act) covering a period of at least
12 months beginning after the effective date.
5.10. POSTEFFECTIVE AVAILABILITY OF PROSPECTUS. Within the time
during which the Prospectus is required to be delivered under the Act, the
Company agrees to comply, at its own expense, with all requirements imposed
upon it by the Act, as now or hereafter amended, by the Rules and
Regulations, as from time to time may be in force, and by any order of the
Commission, so far as necessary to permit the continuance of sales of the
Securities.
5.11. APPLICATION OF PROCEEDS. The Company intends to apply the net
proceeds from the sale of the Securities substantially in the manner set
forth in the Registration Statement. Except for cumulative changes of less
than 10% in each specific item set forth in the "Use of Proceeds" section
of the definitive Prospectus, the Company will not deviate from such use
without giving written notice of such proposed deviation to the
Representative at least 10 business days prior to any such deviation.
Pending utilization of the net proceeds by the Company for business
purposes, all of the unused net proceeds from the sale of the Securities
will be invested in short term United States government securities
purchased through a bank or in a nondiscretionary account of the Company
with the Representative.
5.12. DELIVERY OF DOCUMENTS. Prior to the Closing Date, the Company
agrees to deliver to the Representative true and correct copies of the
articles of incorporation and certificate of incorporation of the Company
and all amendments thereto, all such copies to be certified by the
secretary of state of the state of incorporation of the Company; true and
correct copies of the bylaws of the Company and of the minutes of all
meetings of the directors and shareholders of the Company held prior to the
Closing Date; and true and correct copies of all material contracts to
which the Company or any of its subsidiaries, if any, is a party.
5.13. COOPERATION WITH REPRESENTATIVE'S DUE DILIGENCE. At all times
prior to the Closing Date, the Company agrees to cooperate with the
Representative, legal counsel to the Representative, and the
Representative's consultants in such investigation as the Representative
may make or cause to be made of the Company and its affiliates and the
Company agrees to make available to the Representative in connection
therewith such information and documents relating to the Company and its
affiliates as the Representative may reasonably request.
5.14. ANNUAL MEETINGS. The Company will, at its expense, so long as
its Common Stock is registered under the Exchange Act, hold an annual
meeting of shareholders for the election of directors within 180 days after
the end of each of the Company's fiscal years.
-19-
5.15. LIMITATIONS ON COMPANY. Except with the Representative's prior
written consent, the Company agrees that the Company will not do the
following until (a) the termination of this Agreement or (b) the number of
days after the effective date for which the Prospectus is required to be
used pursuant to Rule 174 of the Rules and Regulations, whichever occurs
first:
(i) Undertake or authorize any change in its capital
structure;
(ii) Borrow any funds other than in the ordinary course of
business and as contemplated by the Prospectus;
(iii) Consolidate or merge with or into any other corporation;
or
(iv) Create any mortgage or any lien upon any of its properties
or assets other than in the ordinary course of business
and as contemplated by the Prospectus.
5.16. APPOINTMENT OF TRANSFER AGENT AND WARRANT AGENT. Prior to the
effective date, the Company will have appointed American Securities
Transfer & Trust, Inc., Denver, Colorado, as transfer agent for the
Company's Units and Common Stock and as warrant agent for the Company's
Class A Warrants.
5.17. CERTIFICATES. The Company agrees to make arrangements to have
available at the office of the transfer agent sufficient quantities of the
Company's certificates as may be needed for the quick and efficient
transfer of the Units and Common Stock. The Company agrees to make
arrangements to have available at the office of the warrant agent
sufficient quantities of the Company's Class A Warrant Certificates has may
be needed for quick and efficient transfer of Class A Warrants.
5.18. COMPLIANCE WITH CONDITIONS PRECEDENT. The Company agrees to
use all reasonable efforts to comply or cause to be complied with the
conditions precedent to the obligations of the members of the Underwriting
Group in Section 8 hereof.
5.19. FILINGS OF FORMS. The Company agrees to file with the
Commission all required reports on Form SR in accordance with the
provisions of Rule 463 of the Rules and Regulations and will file with the
appropriate state securities authorities any sales and other reports
required by the rules and regulations of such agencies and will provide
copies of such reports to the Representative and to the legal counsel to
the members of the Underwriting Group.
5.20. REGISTRATION UNDER THE EXCHANGE ACT. Prior to the effective
date of the Registration Statement, the Company will have made a filing
under Section 12(g) of the Exchange Act with respect to the Company's
Common Stock and Class A Warrants. The Company agrees to deliver a copy of
such filing to the Representative and to legal counsel for the
Representative when filed. On the effective date of the Registration
Statement, the Company will cause the Company's filing under Section 12(g)
of the Exchange Act to become effective with the Commission.
-20-
5.21. LISTING IN MANUALS. As soon as possible prior to the effective
date, the Company agrees to use its best efforts to have the Company listed
in Xxxxx'x Over-the-Counter Manual and Standard & Poor's Standard
Corporation Records and such other Manuals as are reasonably requested by
the Representative.
5.22. NASDAQ/NMS. The Company agrees to have Units listed and
available for quotation on the NASDAQ Small Cap Market on the effective
date of the Registration Statement. Subject to the Company s ability to
meet the maintenance requirements of the NASDAQ Small Cap Market on the
Detachment Date, the Company agrees to have its Common Stock and the Class
A Warrants listed and available for quotation on the NASDAQ Small Cap
Market on the Detachment Date and to delist the Units from quotation on the
NASDAQ Small Cap Market at the same time as the Common Stock and Class A
Warrants become listed for quotation on the NASDAQ Small Cap Market. The
trading symbols shall be mutually agreeable to the Company and the
Representative. As soon as the Company meets the qualifications required
with respect thereto, the Company will designate its securities for
inclusion on the NASDAQ/NMS or, in the alternative, such national stock
exchange as is agreed to between the Company and the Representative.
5.23. SECONDARY TRADING QUALIFICATION. The Company agrees to qualify
its securities for secondary trading, as soon as legally possible, in
California and such other states as are reasonably requested by the
Representative from time to time.
5.24. LEGENDS ON STOCK CERTIFICATES. The Company agrees to cause the
stock certificates of its current shareholders that represent "restricted
securities," and the stock and warrant certificates held by officers,
directors, or controlling persons of the Company to be clearly legended as
being restricted against transfer without compliance with the Act and to
cause the Company's transfer agent and warrant agent to put stop transfer
instructions against such certificates.
5.25. UNITHOLDERS, STOCKHOLDERS, AND CLASS A WARRANTHOLDERS LISTS AND
TRANSFER SUMMARIES. Within 10 business days after the Closing Date and
within 10 business days after the Option Closing Date, the Company will
deliver to the Representative complete lists of all holders of the Units
and Common Stock of the Company as of the Closing Date and as of the Option
Closing Date, respectively. Each such list shall include the name and
address of each such holder and the number of Units and shares of Common
Stock owned by each such person as of such date. Within 10 business days
after the end of each of the first 24 calendar months after the Closing
Date, the Company will provide the Representative with a new list
containing the information described above with respect to the Units,
Common Stock, and Class A Warrants as of the end of each such month and a
list which shows each transaction involving a transfer of a Unit or Common
Stock certificate or Class A Warrant certificate during such month. This
transfer list shall include the name and address of the transferor and the
transferee and the number of shares of Units, Common Stock, or Class A
Warrants transferred.
5.26. DIRECTORS, OFFICERS AND COMMITTEES. The Company agrees that
the persons comprising the board of directors and officers of the Company
on the effective date must be acceptable to the Representative. Such
acceptance will only be withheld by the Representative
-21-
if material adverse information is discovered by the Representative. The
Company agrees that for a period of three years after the effective date,
at the request of the Representative, the Company will permit a
representative of the Representative to be present at all meetings of the
board of directors of the Company. The Representative shall be provided
with the same notice of each meeting of the board of directors as is
provided to the board of directors. No compensation shall be paid to such
observer. However, the Company will reimburse out of pocket expenses
incurred by such observer to attend meetings. Such observer shall have no
vote at such meetings; such observer shall be required, prior to attending
any such meeting, to represent in writing to the Company that such observer
is familiar with and will comply with all requirements of the federal
securities laws applicable to a person who comes into possession of
material nonpublic information concerning the Company; and such observer
may be excluded from attendance at any such meeting during the discussion
of information which is subject to the attorney client or accountant client
privilege. The board of directors of the Company will establish an audit
and a management compensation committee and will maintain such committees
so long as the Common Stock of the Company is registered under the Exchange
Act.
5.27. RIGHT OF INSPECTION. The Company agrees that for a period of
five years after the effective date, the Representative, at the
Representative's expense, will have the right to have a person or persons
selected by the Representative review the books and records of the Company
if at any time the audited or unaudited financial statements of the Company
indicate that the Company has realized a net loss after taxes or if a
material adverse change occurs in the Company, provided that the
Representative may cause such review no more than once in any 12 month
period.
5.28. PUBLIC RELATIONS FIRM. For a period of at least 36 months
after the effective date, the Company will use a public relations firm
which is mutually acceptable to the Company and the Representative. The
Company shall have sole authority to determine the compensation and the
utilization of such public relations firm. Such public relations firm
shall not be a member of the Underwriting Group or a "related person" of
any such member of the Underwriting Group. The term "related person" is
described in Section 5.30 of this Agreement.
5.29. MANAGEMENT REFERRALS. Persons whom management of the Company
believe may be interested in purchasing Securities in the public offering
will be referred only to Representative and management of the Company will
purchase Securities in the public offering only through the Representative.
The Representative will have complete control of the distribution of the
Securities in the public offering.
5.30. NO NASD MEMBER PAYMENTS. For purposes of this Section and
Section 5.28 hereof, a related person of an NASD member is a person who has
any of the following relationships with any NASD member: legal counsel,
financial consultant or advisor, finder, associated person, or member of
the immediate family of any such person. The Company represents to the
Representative that the Company has not paid and will not pay, except as
described in the Registration Statement or the next sentence, or agreed to
pay or deliver any item of value, including securities, to any member of
the NASD or to any person associated with a member of the NASD or to any
related person of an NASD member during the period
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beginning on the 366th day prior to the filing of the Registration
Statement with the Commission and ending on the 45th day after the
effective date of the Registration Statement. The representation contained
in the foregoing sentence shall not include cash discounts or commissions
paid by the Company in connection with a distribution of the Company's
securities which occurs prior to the filing of the Registration Statement
with the Commission and shall not include payments made to Xxxxxxx
Securities Corporation pursuant to the letter dated September 22, 1995, as
amended by letters dated February 7 and March 7, 1996.
5.31. FUTURE SALES.
5.31.01. COMPANY SALES TO OTHERS. During the period of six
months after the effective date of the Registration Statement, the
Company will not sell any securities (other than debt securities
issued to financial institutions) not covered by the Registration
Statement without the Representative's prior written consent.
Excepted from this provision shall be sales of Excluded Securities.
The term "Excluded Securities" shall mean options and warrants which
are issued and outstanding on the effective date of the Registration
Statement or which are issued pursuant to a plan ("Plan") which has
been approved in writing by the board of directors of the Company and
the Representative prior to the effective date of the Registration
Statement.
5.31.02. COVERED PERSONS. Prior to the effective date of the
Registration Statement, the Company will cause each of its officers,
directors, 5% or more shareholders, and their affiliates ("Covered
Persons) to agree in writing with the Representative that, without the
prior written consent of the Representative, each such Covered Person
will not sell for a period of 13 months after the Closing Date any of
the Company's shares of Common Stock owned by him or it prior to the
Closing Date. Such agreement will also provide that if a Covered
Person who is an officer or director of the Company on the effective
date of the Registration Statement ceases to be an officer or director
of the Company during the period of 13 months after the Closing Date,
then such Covered Person and the affiliates of such Covered Person
will agree not to sell any of the Company's shares of Common Stock
owned by such Covered Person and such Covered Person's affiliates
prior to the Closing Date of such Registration Statement until the
expiration of 13 months after the Closing Date. The agreements with
Covered Persons Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx, Xx. will
exclude from such restriction on future sales the sale by such persons
collectively of a maximum of 111,067 shares of Common Stock pursuant
to the exercise of options granted by such persons to nine persons.
For purposes of this Agreement, the term "affiliate" shall have the
meaning ascribed to it in Rule 405 of the Act. Such agreements between
the Representative and the Covered Persons will also provide that any
sales of shares of Common Stock of the Company by such persons during
the three year period after the Closing Date, under Rule 144
promulgated by the SEC under the Act ("Rule 144 Sales"), will be
executed only through the Representative acting as a broker or dealer.
In such agreement the Representative will agree to execute such Rule
144 Sales on a competitive basis. If any person required to execute an
agreement under
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this subsection 5.31.02. has pledged, or during the applicable period
pledges, any of the Company's shares of Common Stock which are covered
by such agreement; such person shall cause his pledgee to also agree
in writing to comply with the pledgor's agreement with the
Representative. A copy of any such written agreement from the pledgee
shall be promptly delivered by the pledgor to the Representative after
execution thereof by the pledgee.
SECTION 6
---------
INDEMNIFICATION
---------------
6.01. INDEMNIFICATION BY COMPANY. The Company agrees to indemnify
and hold harmless the members of the Underwriting Group and each person who
controls any member of the Underwriting Group within the meaning of Section
15 of the Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Act or any other statute or at common law and to reimburse the persons
indemnified for any legal or other expenses (including the cost of any
investigation and preparation) incurred by them in connection with any
litigation, whether or not resulting in any liability, but only insofar as
such losses, claims, damages, liabilities and litigation arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment
thereto or any application or other document filed in order to qualify the
Securities under the blue sky or securities laws of the states where
filings were made, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, all as of the date when the Registration
Statement or such amendment, as the case may be, becomes effective, or any
untrue statement or alleged untrue statement of a material fact contained
in the Prospectus (as amended or supplemented if the Company shall have
filed with the Commission any amendments thereof or supplements thereto),
or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the indemnity agreement contained in this subsection 6.01
shall not apply to the members of the Underwriting Group or any person
controlling a member of the Underwriting Group in respect of any such
losses, claims, damages, liabilities or actions arising out of or based
upon any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission was made in
reliance upon information peculiarly within the knowledge of a member of
the Underwriting Group and furnished in writing to the Company by a member
of the Underwriting Group specifically for use in connection with the
preparation of the Registration Statement and Prospectus or any such
amendment or supplement thereto. This indemnity agreement is in addition to
any other liability which the Company may otherwise have to the members of
the Underwriting Group or to any person controlling a member of the
Underwriting Group. Each member of the Underwriting Group agrees within 10
days after the receipt by it of written notice of the commencement of any
action against it or against any person controlling it as aforesaid, in
respect of which indemnity may be sought from the Company on account of the
indemnity agreement contained in this subsection 6.01 to notify the Company
in writing of the commencement thereof. The failure of such a member of the
Underwriting Group so to notify the Company of any such action shall
relieve the person to whom such
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notice was not given from any liability which it may have to that member of
the Underwriting Group or any person controlling it as aforesaid on account
of the indemnity agreement contained in this subsection 6.01, but shall not
relieve the Company from any other liability which it may have to that
member of the Underwriting Group or such controlling person. In case any
such action shall be brought against a member of the Underwriting Group or
any such controlling person and the member of the Underwriting Group shall
notify the Company of the commencement thereof, the Company shall be
entitled to participate in (and, to the extent that it shall wish, to
direct) the defense thereof at its own expense, but such defense shall be
conducted by legal counsel of recognized standing and reasonably
satisfactory to such member of the Underwriting Group or such controlling
person or persons, which is a defendant or which are defendants in such
litigation. The Company shall not be liable for amounts paid in settlement
of any such litigation if such settlement was effected without the written
consent of the Company. If the Company elects to direct such defense, the
Company agrees to furnish to the involved member of the Underwriting Group
at its request, copies of all pleadings therein and to apprise the involved
member of the Underwriting Group of all developments therein, all at the
Company's expense, and to permit the member of the Underwriting Group to be
an observer therein.
6.02. INDEMNIFICATION BY THE MEMBERS OF THE UNDERWRITING GROUP. The
members of the Underwriting Group agree, in the same manner as set forth in
subsection 6.01. above, to indemnify and hold harmless the Company, the
directors and officers of the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the Act, with respect to
any statement in or omission from the Registration Statement or any
amendment thereto, or the Prospectus (as amended or as supplemented, if
amended or supplemented as aforesaid) or any application or other document
filed in any state or jurisdiction in order to qualify the Securities under
the blue sky or securities laws thereof, or any information furnished
pursuant to subsection 3.06 hereof, if such statement or omission was made
in reliance upon information peculiarly within the knowledge of a member of
the Underwriting Group and furnished in writing to the Company by a member
of the Underwriting Group or on its behalf specifically for use in
connection with the preparation thereof or supplement thereto. No member of
the Underwriting Group shall be liable for amounts paid in settlement of
any such litigation if such settlement was effected without the written
consent of the member of the Underwriting Group. In case of commencement of
any action in respect of which indemnity may be sought from a member of the
Underwriting Group on account of the indemnity agreement contained in this
subsection 6.02., each person to be indemnified by the member of the
Underwriting Group shall have the same obligation to notify the member of
the Underwriting Group as the members of the Underwriting Group have toward
the Company in subsection 6.01. above, subject to the same loss of
indemnity in the event such notice is not given, and the member of the
Underwriting Group shall have the same right to participate in (and, to the
extent that the member of the Underwriting Group shall wish, to direct) the
defense of such action at the expense of the member of the Underwriting
Group, but such defense shall be conducted by legal counsel of recognized
standing and reasonably satisfactory to the Company. If the member of the
Underwriting Group elects to direct such defense, the member of the
Underwriting Group agrees to furnish to the Company at its request copies
of all pleadings therein and apprise it of all the developments therein,
all at the expense of the member of the Underwriting Group, and permit the
Company to be an observer therein.
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6.03. CONTRIBUTION. If the indemnification provided for in this
Section 6 is unavailable to or insufficient to hold harmless an indemnified
party under subsections 6.01. and 6.02. above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall in lieu of indemnifying such
indemnified party contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect not only (i) the relative benefits received by the
Company on the one hand and the member of the Underwriting Group on the
other from the offering of the Securities, but also (ii) the relative fault
of the Company and the member of the Underwriting Group in connection with
the statements or omissions which resulted in such losses, claims, damages,
or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the member of the Underwriting Group on the
other shall be deemed to be in the same proportion as the total net
proceeds from the public offering of the Securities (before deducting
expenses) received by the Company bears to the total underwriting discount
received by the members of the Underwriting Group, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the member of the Underwriting Group and the person's relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the members of the
Underwriting Group agree that it would not be just and equitable if
contribution pursuant to this subsection 6.03. were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection 6.03. shall be deemed to include any legal or
other expenses to which such indemnified party would be entitled if
subsections 6.01. and 6.02. hereof were applied. Notwithstanding the
provisions of this subsection 6.03., no member of the Underwriting Group
shall be required to contribute any amount in excess of the amount equal to
the total price of the Securities underwritten and distributed by it to the
public. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11 of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
6.04. THREAT OF REGULATORY ACTION. The Company and the
Representative agree to advise each other immediately and confirm in
writing the receipt of any threat of or the initiation of any steps or
procedures which would impair or prevent the right to offer the Securities
or the issuance of any "suspension orders" or other prohibitions preventing
or impairing the proposed offering of the Securities. In the case of the
happening of any such event, neither the Company nor the members of the
Underwriting Group will acquiesce in such steps, procedures or suspension
orders and each party agrees to actively defend any such actions or orders
unless all parties agree in writing to acquiesce in such actions or orders.
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SECTION 7
---------
EFFECTIVENESS OF AGREEMENT
--------------------------
After this Agreement has been executed by the Company and the
Representative, this Agreement shall become effective (i) at 10:00 A.M.,
Denver, Colorado Time, on the first full business day after the effective
date of the Registration Statement or (ii) upon release by the
Representative of the Securities for offering after the effective date,
whichever shall first occur. The time of the release by the Representative
of the Securities for offering, for the purposes of this Section 7, shall
mean the time of release by the Representative for publication of the first
newspaper advertisement which is subsequently published relating to the
Securities or the time of the first mailing of copies of the Prospectus
relating to the Securities in connection with a confirmation of a sale of
Securities by an Underwriter or Dealer whichever shall first occur.
SECTION 8
---------
CONDITIONS OF THE OBLIGATIONS OF THE
------------------------------------
MEMBERS OF THE UNDERWRITING GROUP
--------------------------------
After execution of this Agreement by the Company and the
Representative, the obligations of the members of the Underwriting Group to
purchase the Securities and to make payment therefor on the Closing Date
and on the Option Closing Date shall be subject to the accuracy, as of the
Closing Date and as of the Option Closing Date, of the representations and
warranties on the part of the Company herein contained, to the performance
by the Company of all of its agreements and obligations herein contained,
to the fulfillment of or compliance by the Company with all covenants and
conditions hereof, and to the following additional conditions, any of which
may be waived or modified by the Representative:
8.01. EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement shall have become effective and no order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission or be pending; any request for additional information on the
part of the Commission (to be included in the Registration Statement or
Prospectus or otherwise) shall have been complied with to the satisfaction
of the Commission; and neither the Registration Statement nor the
Prospectus nor any amendment thereto shall have been filed to which legal
counsel to the members of the Underwriting Group shall have reasonably
objected in writing or have not given its consent.
8.02. ACCURACY OF REGISTRATION STATEMENT. The Representative shall
not have disclosed in writing to the Company that the Registration
Statement or the Prospectus or any amendment thereof or supplement thereto
contains an untrue statement of a fact which, in the opinion of legal
counsel to the members of the Underwriting Group is material, or omits to
state a fact which, in the opinion of such legal counsel, is material and
is required to be stated therein, or is necessary to make the statements
therein not misleading.
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8.03. NO MATERIAL ADVERSE CHANGES. No material adverse changes shall
have occurred in or with respect to the officers or directors of the
Company. No material adverse changes shall have occurred in or with respect
to the business, properties, financial condition or credit of the Company
or in or with respect to any conditions affecting the prospects of its
business.
8.04. CASUALTY AND OTHER CALAMITY. The Company shall not have
sustained any loss on account of fire, explosion, flood, accident, calamity
or any other cause, of such character as materially adversely affects its
business or property considered as an entire entity, whether or not such
loss is covered by insurance, and no officer or director of the Company
shall have suffered any injury, sickness or disability of a nature which
would materially adversely affect his or her ability to properly function
as an officer or director of the Company.
8.05. LITIGATION AND OTHER PROCEEDINGS. Except as disclosed in the
Prospectus, there shall be no litigation instituted or threatened against
the Company and there shall be no proceeding instituted or threatened
against the Company before or by any federal or state commission,
regulatory body or administrative agency or other governmental body,
domestic or foreign.
8.06. LACK OF MATERIAL CHANGE. Except as contemplated herein or as
set forth in the Registration Statement and Prospectus, during the period
subsequent to the date of the last audited balance sheet included in the
Registration Statement, the Company (i) shall have conducted its business
in the usual and ordinary manner as the same was being conducted on the
date of the last audited balance sheet included in the Registration
Statement, and (ii) except in the ordinary course of its business, the
Company shall not have incurred any liabilities or obligations (direct or
contingent) or disposed of any of its assets, or entered into any material
transaction or suffered or experienced any materially adverse change in its
condition, financial or otherwise. The capital stock and surplus accounts
of the Company shall be substantially the same as at the date of the last
balance sheet included in the Registration Statement, without considering
the proceeds from the sale of the Securities, other than as may be set
forth in the Prospectus.
8.07. REVIEW BY LEGAL COUNSEL TO THE MEMBERS OF THE UNDERWRITING
GROUP. The authorization of the Securities, Representative's Warrant,
Warrant Shares, Registration Statement, Prospectus and all corporate
proceedings and other legal matters incident thereto and to this Agreement
shall be reasonably satisfactory in all respects to legal counsel to the
members of the Underwriting Group.
8.08. OPINIONS OF LEGAL COUNSEL.
8.08.01. XXXXXXX KEY & XXXXXXXX, P.C., LEGAL OPINION. The
Company shall have furnished to the members of the Underwriting Group
an opinion, dated the Closing Date, addressed to the members of the
Underwriting Group, from Xxxxxxx Key & Xxxxxxxx, P.C., legal counsel
to the Company, to the effect that based upon a review by them of the
Registration Statement, Prospectus, the Company's certificate of
incorporation, bylaws and relevant corporate proceedings and
contracts, an examination
-28-
of such statutes they deem necessary and based upon such other
investigation by such legal counsel as they deem necessary to express
such opinion:
(i) The Company and each of its subsidiaries, if any, have
been duly incorporated and are validly existing corporations in
good corporate standing under the laws of the state in which it
was incorporated, with full corporate power and authority to own
and operate its properties and to carry on its business as set
forth in the Registration Statement and Prospectus.
(ii) The Company has authorized and outstanding securities
as set forth in the Registration Statement and Prospectus; the
outstanding securities of the Company and each of its
subsidiaries, if any, and the Securities conform to the
statements concerning them in the Registration Statement and
Prospectus; the outstanding securities of the Company and each of
its subsidiaries, if any, have been duly and validly issued and
are fully paid and nonassessable and contain no preemptive
rights; the Securities being sold by the Company to the
Underwriting Group and the Representative's Warrant have been
duly and validly authorized and, upon issuance thereof and
payment therefor in accordance with this Agreement and the
Representative's Warrant will be duly and validly issued, fully
paid and nonassessable and will not be subject to the preemptive
rights of any shareholder of the Company.
(iii) To legal counsel's knowledge, no consents, approvals,
authorizations or orders of agencies, officers or other
regulatory authorities are known to such legal counsel which are
necessary for the valid authorization, issue or sale of the
Securities being sold by the Company to the Underwriting Group
hereunder, except as required under the Act or the securities
laws of the states in which the Securities are qualified or
except as required by the NASD.
(iv) To legal counsel's knowledge, the issuance and sale of
the Securities being sold by the Company to the Underwriting
Group and the consummation of the transactions herein
contemplated and compliance with the terms of this Agreement will
not conflict with or result in a breach of any of the terms,
conditions, or provisions of or constitute a default under the
certificate of incorporation or bylaws of the Company, or any
note, indenture, mortgage, deed of trust, or other agreement or
instrument known to such counsel to which the Company is a party
or by which the Company or any of its property is bound or any
existing law (provided this Section 8.08 (iv) shall not relate to
federal or state securities laws), order, rule, regulation, writ,
injunction, or decree of any government, governmental
instrumentality, agency, body, arbitration tribunal, or court,
domestic or foreign, having jurisdiction over the Company or its
property and which is known to such counsel.
(v) No preemptive rights exist with respect to the
Company's securities.
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(vi) The Company has authorized capitalization as described
in the Registration Statement.
(vii) Based upon written or oral communications from the
Commission, the Registration Statement has become effective under
the Act and, to the knowledge of such legal counsel, no stop
order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose has been
instituted or is pending or contemplated; legal counsel has
participated in the preparation of the Registration Statement and
Prospectus and each amendment and supplement thereto, and no
facts have come to the attention of legal counsel to lead counsel
to believe that either the Registration Statement or the
Prospectus or any amendment or supplement thereto contains any
untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
under which made (except for the financial statements and other
financial data included therein, as to which legal counsel
expresses no opinion); and such counsel is familiar with all
contracts referred to in the Registration Statement or Prospectus
and such contracts are sufficiently summarized or disclosed
therein or filed as exhibits thereto as required, and such legal
counsel does not know of any other contracts that are required to
be summarized or disclosed or filed, and such legal counsel does
not know of any legal or governmental proceedings pending or
threatened to which the Company is subject of such a character
required to be disclosed in the Registration Statement or the
Prospectus which are not disclosed and properly described
therein.
(viii) This Agreement has been duly authorized by the
Company and is a valid and binding agreement of the Company
enforceable according to its terms subject to equitable
principles and to applicable bankruptcy, insolvency and other
laws concerning the enforceability of creditors' rights
generally; provided that such counsel need express no opinion as
to the enforceability of any indemnification or contribution
provisions contained in this Agreement. A sufficient number of
shares of the Company's Common Stock have been duly reserved for
issuance upon exercise of the Class A Warrants, the
Representative's Warrant, and the Representative s Class A
Warrants issuable upon exercise of the Representative's Warrant.
(ix) Except as disclosed in the Registration Statement and
Prospectus, to the knowledge of legal counsel, the Company is not
in default under any of the contracts, licenses, leases or
agreements to which it is a party and which are described in the
Registration Statement or attached thereto as exhibits and the
offering of the Securities being sold by the Company to the
Underwriting Group will not cause the Company to become in
default of any of such contracts, licenses, leases or agreements.
(x) Except as disclosed in the Registration Statement and
Prospectus and subject to equitable principles, to the knowledge
of legal counsel, the properties
-30-
owned by the Company and its subsidiaries, if any, described in
the Registration Statement are free and clear of all liens,
charges, encumbrances or restrictions; all of the leases,
subleases and other agreements known to such counsel under which
the Company and each of its subsidiaries, if any, holds its
properties and conducts its business are in full force and
effect; neither the Company nor any of its subsidiaries, if any,
is in default under any of the material terms or provisions of
any of such leases, subleases or other agreements known to such
counsel; and there are no claims against the Company or any of
its subsidiaries, if any, concerning its rights under such
leases, subleases and other agreements and concerning its right
to continued possession of its properties.
(xi) Legal counsel is unaware of any affiliate, parent or
subsidiaries of the Company except as are described in the
Registration Statement and Prospectus.
(xii) Such counsel has not received and is not aware of the
Company having received any notice of any claim from any third
party which notice would cause such counsel to conclude that the
Company does not own or possess adequate rights with respect to
the U.S. Patents, the U.S. Trademarks, or other material patents,
patent rights, trademarks, service marks, trade names, copyrights
described or referred to in the Prospectus as owned or used by
the Company or which are necessary for the conduct of the
Company's business or proposed business as described in the
Prospectus.
(xiii) To such counsel's knowledge, except as set forth in
the Registration Statement and Prospectus, no holders of Common
Stock or other securities of the Company have registration rights
with respect to securities of the Company and, except as set
forth in the Registration Statement and Prospectus, all holders
of securities of the Company having rights to registration of
such Common Stock, or other securities, because of the filing of
the Registration Statement by the Company have, with respect to
the offering contemplated thereby, waived such rights or such
rights have expired by reason of lapse of time following
notification of the Company's intent to file the Registration
Statement, or have included securities in the Registration
Statement pursuant to the exercise of such rights.
In rendering such opinions, such legal counsel shall be entitled
to rely upon Public Authority Documents and upon information provided
by client officials in written Certificates provided that copies of
such Public Authority Documents and Certificates are attached as
exhibits to the written opinion of legal counsel. The term "Public
Authority Documents" shall have the meaning ascribed to it in the
Legal Opinion Accord of the ABA Section of Business Law (1991). Such
opinions may be subject to such qualifications, exceptions,
definitions, limitations as are normally included in similar opinions.
-31-
8.08.02. The Company shall furnish to the members of the
Underwriting Group an opinion, dated the Closing Date, addressed to
the members of the Underwriting Group, from ________________________
to the effect that:
(i) To the knowledge of such counsel, the Company's business
and the business of each of the Company's subsidiaries, if any,
is in compliance with all laws applicable to the FDA and DOT, all
applicable rules and regulations of the FDA and DOT and all laws
and regulations of any states in which such business is
conducted.
(ii) Such counsel has not received and is not aware of the
Company having received any notice of any claim by the FDA or DOT
or any other governmental agency that the products and services
being marketed by the Company are not in compliance with all
applicable rules and regulations of the FDA and DOT and any laws
and regulations of any states in which such products and services
are marketed.
In rendering such opinion, such legal counsel shall be entitled
to rely upon Public Authority Documents and upon information provided
by client officials in written Certificates provided that copies of
such Public Authority Documents and Certificates are attached as
exhibits to the written opinion of legal counsel. The term "Public
Authority Documents" shall have the meaning ascribed to it in the
Legal Opinion Accord of the ABA Section of Business Law (1991). Such
opinions may be subject to such qualifications, exceptions,
definitions, limitations as are normally included in similar opinions.
8.09. ACCOUNTANT'S LETTER. The Representative shall have received a
letter addressed to the Representative and dated the Closing Date from
Ernst & Young LLP, independent public accountants for the Company, stating
that with respect to the Company they are independent public accountants
within the meaning of the Act and the applicable published Rules and
Regulations thereunder; in their opinion, the financial statements audited
by them of the Company at all dates and for all periods referred to in
their opinion and included in the Registration Statement and Prospectus,
comply in all material respects with the applicable accounting requirements
of the Act and the published Rules and Regulations thereunder with respect
to registration statements on Form SB-2; on the basis of certain indicated
procedures (but not an audit in accordance with generally accepted
accounting principles), including reading of the instruments of the Company
set forth in the Prospectus, a reading of the latest available interim
unaudited financial statements of the Company, whether or not appearing in
the Prospectus, inquiries of the officers of the Company or other persons
responsible for its financial and accounting matters regarding the specific
items for which representations are requested below and a reading of the
minute book of the Company, nothing has come to their attention, except as
disclosed in their letter, which would cause them to believe that during
the period from the last audited balance sheet included in the Registration
Statement to a specified date not more than two days prior to the date of
such letter:
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(i) there has been any material change in the financial
position of the Company other than as contemplated by disclosures
contained in the Prospectus;
(ii) there has been any material change in the capital
stock or surplus accounts of the Company or any payment or
declaration of any dividend or other distribution in respect
thereof or exchange therefor or in the debt of the Company from
that shown in the Company's last audited balance sheet included
in the Prospectus, other than as contemplated by disclosures
contained in the Prospectus;
(iii) there have been any material decreases in working
capital or net worth as compared with amounts shown in the
Company's last audited balance sheet included in the Prospectus
other than as contemplated by disclosures contained in the
Prospectus;
(iv) there have been any material decreases, as compared
with amounts shown in the Company's last audited balance sheet
included in the Prospectus, in the cash balances other than as
contemplated by disclosures contained in the Prospectus;
(v) the financial statements and schedules set forth in the
Registration Statement and Prospectus do not present fairly the
financial position and results of operations of the Company for
the periods indicated in conformity with generally accepted
accounting principles applied on a consistent basis, and are not
in all material respects a fair presentation of the information
purported to be shown; and
(vi) the dollar amounts, percentages and other financial
information set forth in the Registration Statement and
Prospectus under the captions "Summary," "The Offering,"
"Selected Financial Information," "Risk Factors," "Use of
Proceeds," "Capitalization," "Dilution," "Management's Discussion
and Analysis of Financial Condition and Results of Operations,"
"The Company," "Executive Compensation," and "Certain
Relationships and Related Transactions" are not in agreement with
the Company's general ledger, financial records or computations
made by the Company therefrom.
Such letter shall also cover such other matters incident to the
transactions contemplated by this Agreement in form satisfactory to
the Representative as the Representative reasonably requests.
8.10. CONFORMED COPIES OF ACCOUNTANT'S LETTER. The Representative
shall be furnished without charge, in addition to the original signed
copies, such number of signed or photostatic or conformed copies of such
letters as the Representative shall reasonably request.
8.11. OFFICER'S CERTIFICATES. The Company shall have furnished to
the Representative two certificates each signed by the chairman of the
board, by the president and by the chief
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financial officer of the Company, one dated the date of this Agreement and
one dated as of the Closing Date, to the effect that:
(i) The representations and warranties of the Company in
this Agreement are true and correct at and as of the date of the
certificate and the Company has complied with all the agreements
and has satisfied all the conditions on its part to be performed
or satisfied at or prior to the date of the certificate.
(ii) The Registration Statement has become effective and no
order suspending the effectiveness of the Registration Statement
has been issued and to the best of the knowledge of the
respective signers, after such respective signers have made
inquiry, no proceeding for that purpose has been initiated or is
threatened by the Commission.
(iii) The respective signers have each carefully examined
the Registration Statement and Prospectus and any amendments and
supplements thereto, and the Registration Statement and the
Prospectus and any amendments and supplements thereto contain all
statements required to be stated therein, and all statements
contained therein are true and correct, and neither the
Registration Statement nor Prospectus nor any amendment or
supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth
in an amended or a supplemented Prospectus which has not been so
set forth.
(iv) This Agreement has been, and, as of the Closing Date,
the Representatives Warrant and the Representative's Class A
Warrants issuable upon the exercise of the Representative s
Warrant will have been, duly authorized and executed by the
Company.
(v) The respective signers have each reviewed the
questionnaires provided to the Representative by each officer,
director, and 5% or more shareholder of the Company and, to the
best of their knowledge, the statements made in such
questionnaires are true and correct.
(vi) Except as set forth in the Registration Statement and
Prospectus, since the respective dates as of which information is
given in the Registration Statement and Prospectus and prior to
the date of such certificate, (i) there has not been any change
in the officers or directors of the Company or any substantially
adverse change, financial or otherwise, in the affairs or
condition of the Company, and (ii) the Company has not incurred
any liabilities, direct or contingent, or entered into any
transactions, otherwise than in the ordinary course of business.
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(vii) Subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, no dividends or distributions whatever have been
declared and/or paid on or with respect to the securities of the
Company.
8.12. TENDER FOR DELIVERY. All of the Securities being offered by
the Company which have been sold in the offering shall be tendered for
delivery in accordance with the terms and provisions of this Agreement.
8.13. BLUE SKY QUALIFICATION. The Securities shall be qualified in
such states as are reasonably designated by the Representative as set forth
in Section 5.04 hereof and each such qualification shall be in effect and
not subject to any stop order or other proceeding on the Closing Date or
Option Closing Date. On both the effective date of the Registration
Statement and on the Closing Date, the Company and the Representative shall
receive from Xxxxxxx Key & Xxxxxxxx, P.C., a written opinion which contains
the following:
(i) The names of the states in which applications to
register or qualify the Securities have been filed;
(ii) The status of such registrations or qualifications in
such states as of the date thereof;
(iii) A list containing the name of each such state in
which the Securities may be legally offered and sold by a dealer
licensed in such state and the number of each which may be
legally offered and sold in each such state as of the date
thereof;
(iv) With respect to the written opinion dated on the
effective date, a representation that such legal counsel will
continuously update such written information if any changes occur
in the information provided therein between the effective date
and the Closing Date and Option Closing Date; and
(v) A statement that the Company, the members of the
Underwriting Group and selected dealers in the offering may rely
upon the opinions contained therein.
8.14. APPROVAL OF LEGAL COUNSEL TO THE REPRESENTATIVE. All opinions,
letters, certificates and evidence mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance satisfactory to legal counsel to the
Representative. The suggested form of such documents shall be provided to
the legal counsel to the Representative at least three business days before
the Closing Date.
8.15. OFFICER'S CERTIFICATE AS A COMPANY REPRESENTATIVE. Any
certificate signed by an officer of the Company and delivered to the
Representative or to legal counsel to the members of the Underwriting Group
will be deemed a representation and warranty by the Company to the members
of the Underwriting Group as to the statements made therein.
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SECTION 9
---------
TERMINATION
-----------
9.01. TERMINATION BECAUSE OF NONCOMPLIANCE. This Agreement may be
terminated by the members of the Underwriting Group by notice to the
Company in the event that the Company shall have failed or been unable to
comply with any of the terms, conditions or provisions of this Agreement on
the part of the Company to be performed, complied with or fulfilled within
the respective times herein provided for, unless compliance therewith or
performance or satisfaction thereof shall have been expressly waived by the
Representative in writing. This Agreement may be terminated by the Company
by notice to the Representative in the event the members of the
Underwriting Group shall have failed or been unable to comply with any of
the terms, conditions or provisions of this Agreement on the part of the
members of the Underwriting Group to be performed, complied with or
fulfilled within the respective times herein provided for, unless
compliance therewith or performance or satisfaction thereof shall have been
expressly waived by the Company in writing.
9.02. TERMINATION BECAUSE OF CHANGES. This Agreement may be
terminated by the members of the Underwriting Group by notice to the
Company if the Representative believes in its sole judgment that any
changes have occurred in or with respect to the management of the Company,
that material adverse changes have occurred in or with respect to the
condition or obligations of the Company, or if the Company shall have
sustained a loss or anticipated loss as a result of a strike, governmental
action, fire, flood, accident, contract termination, or other calamity of
such a character as, in the sole judgment of the Representative, may
interfere materially with the conduct of the Company's business and
operations regardless of whether or not such loss or anticipated loss shall
have been insured.
9.03. MARKET OUT TERMINATION. This Agreement may be terminated by
the members of the Underwriting Group by notice to the Company at any time
if, in the judgment of the Representative, payment for and delivery of the
Securities is rendered impracticable or inadvisable because (i) additional
material governmental restrictions not in force and effect on the date
hereof shall have been imposed upon the trading in securities generally, or
minimum or maximum prices shall have been generally established on the New
York or American Stock Exchange, or trading in securities generally on
either such Exchange shall have been suspended, or a general moratorium
shall have been established by federal or state authorities, or (ii) a war
or other national calamity or emergency shall have occurred, or (iii) of
any suspension of trading of the Common Stock of the Company in the over
the counter market, or (iv) the occurrence of a material adverse event
affecting the Company which materially impairs the investment quality of
the Securities or (v) substantial and material adverse changes in the
condition of the securities markets beyond normal fluctuations have
occurred.
9.04. EFFECT OF TERMINATION HEREUNDER. If the members of the
Underwriting Group decide to terminate this Agreement pursuant to this
Section 9 or the Company decides to terminate this Agreement pursuant to
Section 10 hereof, such party shall provide notice of such termination to
the other party. In such event, the Representative shall provide the
Company with a statement of the Underwriting Group's actual accountable out
of pocket expenses, which shall
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include but are not limited to, fees of legal counsel to the members of the
Underwriting Group and the fees of independent consultants who are not
directly or indirectly affiliated or associated with a member of the NASD
and who are retained by the Underwriting Group to provide a service in
connection with the due diligence investigation of the proposed offering,
entertainment expenses, travel expenses, postage expenses, advertising
costs, duplication expenses, long distance telephone expenses, and any
other actual out of pocket accountable expense incurred by the Underwriting
Group in connection with the proposed offering. The Representative shall
not be required to include in such accountable expenses any of the expenses
to be paid by the Company under Section 5.07 hereof, and, if the
Underwriting Group has paid any of such expenses on behalf of the Company,
the Company shall separately reimburse the Underwriting Group for such
advances immediately upon receipt of a statement therefor from the
Representative. If such actual accountable out of pocket expenses are more
than the amount of the nonaccountable expense payments the Company has made
to the Underwriting Group, the Underwriting Group will be entitled to keep
the amount of the nonaccountable expense payments the Company has made to
the Underwriting Group and, within 10 days after receipt by the Company of
such statement, the Company will pay to the Representative the excess
expenses the Underwriting Group has incurred, but if the actual accountable
out of pocket expenses are less than the amount of nonaccountable expense
payments the Underwriting Group has received from the Company, the
Underwriting Group will return the difference to the Company. The Company
and the members of the Underwriting Group shall not have any liabilities to
each other if the Company or the members of the Underwriting Group decide
not to proceed with the proposed offering for any reason set forth in this
Section 9 or in Section 10 hereof, except that the Company shall remain
obligated to pay the costs and expenses provided to be paid by it as
specified in Sections 5.07 and 9.04 hereof; and the Company, and the
members of the Underwriting Group shall be obligated to pay, respectively,
all losses, claims, damages or liabilities, joint or several, under Section
6 hereof.
SECTION 10
----------
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
THE MEMBERS OF THE UNDERWRITING GROUP
-------------------------------------
The members of the Underwriting Group represent and warrant to and
agree with the Company that:
10.01. REGISTRATION AS BROKER DEALER AND MEMBER OF NASD. The members
of the Underwriting Group are registered as broker dealers with the
Commission and are members in good standing of the NASD and are licensed as
a dealer in all states in which they will sell the Securities.
10.02. NO PENDING PROCEEDINGS. There is not now pending against the
Representative any action or proceeding of which it has been advised,
either in any court of competent jurisdiction, before the Commission or any
state securities commission, concerning its activities as a broker or
dealer that, in the opinion of the Representative, would prevent it from
acting as such under federal securities laws or under the laws of the
states in which it intends to offer the Securities.
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10.03. COMPANY'S RIGHT TO TERMINATE. In the event any action or
proceeding of the type referred to in Section 10.02 above shall be
instituted against the Representative at any time prior to the Closing Date
hereunder, or in the event there shall be filed by or against the
Representative in any court pursuant to any federal, state, local or
municipal statute, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of assets of
the Representative or if the Representative makes an assignment for the
benefit of creditors, the Company shall have the right on written notice to
the Representative to terminate this Agreement without any liability to the
members of the Underwriting Group of any kind except for the payment of
expenses as provided in Section 5.07 hereof.
10.4. FINDER. The members of the Underwriting Group know of no
outstanding claims against them for compensation for services in the nature
of a finder's fee, origination fee or financial consulting fee with respect
to the offer and sale of the Securities hereunder.
10.5 COMPLIANCE. The members of the Underwriting Group, severally
and not jointly, agree to offer and sell the Securities being purchased
hereunder in accordance with the requirements of federal and state
securities laws and the rules of the NASD.
SECTION 11
----------
RIGHT OF FIRST REFUSAL
----------------------
For a period of three years after the effective date of the
Registration Statement, the Representative shall have a preferential right
to purchase for its account or to sell for any account of the Company, its
parent company, if any, or the Company's subsidiaries, if any, any
securities with respect to which the Company, its parent company, or its
subsidiaries may seek a public or private offering within the United States
for cash. The Company will consult the Representative with regard to any
such covered offering for cash and will offer the Representative the
opportunity to purchase or sell any such securities on terms not less
favorable to the Company, its parent company, or its subsidiaries than it
or they can secure elsewhere. The Representative will have 20 days in which
to accept such offer. If the Representative rejects such offer, the
Company, its parent company, or its subsidiaries may sell such securities
on terms not less favorable than those offered to the Representative. If
such securities are not sold within a period of 270 days, the
Representative will once again have the rights specified herein with
respect to the sale or purchase of such securities. The Company has
informed the Representative that it has not previously granted a similar
right of first refusal to any other person which is currently binding on
the Company.
SECTION 12
----------
FEE PAYABLE ON OCCURRENCE OF CERTAIN EVENTS
-------------------------------------------
12.01 MERGERS AND ACQUISITIONS. Subject to the purchase of the Firm
Units by the members of the Underwriting Group, for a period of five years
after the effective date, the Representative will provide consulting
services which are customary in the industry in connection with, and the
Representative will be paid a consulting fee in connection with any
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transaction initiated by the Representative involving, a merger,
consolidation, stock exchange, or the acquisition or sale of all or a
material part of the assets or business of any entity, if such transaction
involves the Company, its parent company, or its subsidiaries. A
transaction will be deemed initiated by the Representative if it is
suggested by the Representative to either party to the transaction. The
consulting fee will be computed as follows:
Amount of Transaction Fee
----------------------- --------
$1.00 - $1,000,000 5% plus
$1,000,001 - $2,000,000 4% plus
$2,000,001 - $3,000,000 3% plus
$3,000,001 - $4,000,000 2% plus
$4,000,001 and over 1%
Amount of the transaction includes:
(i) the total proceeds and other consideration being
received by the Company, its parent company, or its subsidiaries
and/or any of their stockholders upon the consummation of the
transaction (including payments made in installments) inclusive
of cash, securities, notes, liabilities assumed, consulting
agreements and agreements not to compete;
(ii) if a portion of such consideration includes contingent
payments (whether or not related to future earnings or
operations), 50% of the maximum amount of such payments; and
(iii) in the event that the aggregate consideration for a
transaction consists in whole or in part of securities, for the
purposes of calculating the amount of the consideration, the
value of such securities will be, in the case of the existence of
a public trading market thereof, the average of the closing sale
prices for the five days preceding the consummation of the
transaction or, in the absence of a public trading market
thereof, the fair market value thereof as agreed to by the
parties on the day preceding the consummation of the transaction.
If the Company, its parent company, or any of its subsidiaries
proposes to engage in any such type of transaction which was not initiated
by the Representative, but in connection with which the Company, its parent
company, or any of its subsidiaries proposes to obtain services from an
investment banker, the Company, its parent company, or such Subsidiary
shall provide the Representative with the first opportunity to provide
consulting services which are customary in the industry in connection
therewith. The Representative shall have 10 days within which to accept
such offer. If the Representative does not accept such offer within such 10
days, the Company and/or its subsidiary shall be free to obtain such
services for such proposed transaction from any investment banker selected
by the Company and/or its subsidiary. If the Representative accepts such
offer, the fee for such services shall be
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determined by using 50% of the full 5% to 1% scale set forth above. The
Company has not previously granted similar rights to any other person.
12.02 WARRANT EXERCISE FEE. If the Representative provides written
notice to the Company, at any time after 12 months from the effective date
of the Registration Statement, that the Representative is electing to
solicit the exercise of the Class A Warrants by the holders thereof, the
Company will pay to the Representative a fee of 10% of the aggregate
exercise price received by the Company as a result of the Representative s
solicitation of such holders, if (i) the market price of the Company's
Common Stock on the date a Class A Warrant is exercised is greater than the
exercise price of the Class A Warrant, (ii) the Class A Warrant being
solicited is not held in a discretionary account at the time of exercise,
except where prior specific approval for exercise is received from the
person exercising the Class A Warrant, (iii) the person exercising the
Class A Warrant states in writing that the exercise was solicited and
designates in writing the Representative or another broker-dealer to
receive compensation in connection with the exercise and (iv) the
solicitation of the exercise of the Class A Warrant is not in violation of
Rule 10b-6 promulgated under the Exchange Act. The Representative may
reallow a portion of the fee to soliciting broker-dealers.
SECTION 13
----------
NOTICE
------
Except as otherwise expressly provided in this Agreement:
13.01. NOTICE TO THE COMPANY. Whenever notice is required by the
provisions of this Agreement to be given to the Company, such notice shall
be in writing addressed as follows:
Global Med Technologies, Inc.
00000 Xxxx Xxxxxx
Xxxxx X-000
Xxxxxxxx, Xxxxxxxx 00000
13.02. NOTICES. Whenever notice is required by the provisions of
this Agreement to be given to the members of the Underwriting Group, such
notice shall be given in writing addressed to the Representative at the
address set out at the beginning of this Agreement.
SECTION 14
----------
MISCELLANEOUS
-------------
14.01. BENEFIT. This Agreement is made solely for the benefit of the
members of the Underwriting Group, the Company, their respective officers
and directors and any controlling person referred to in Section 15 of the
Act, 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
"successor" or the term "successors and assigns" as used in this Agreement
shall not include any purchasers, as such, of any of the Securities. In
addition, the indemnity, defense and contribution obligations of the
Company included in Section 6 of this Agreement also inure to the benefit
of the selected dealers and any person who controls the selected dealers
within the meaning of Section 15 of the Act.
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14.02. SURVIVAL. The respective indemnities, agreements,
representations, warranties, covenants and other statements as set forth in
or made pursuant to this Agreement and the indemnity and contribution
agreements contained in Section 6 hereof shall survive and remain in full
force and effect, regardless of (i) any investigation made by or on behalf
of the Company, or the members of the Underwriting Group or any such
officer or director thereof or any controlling person of the Company or of
any member of the Underwriting Group, (ii) delivery of or payment for the
Securities, and (iii) the occurrence of Closing Date and the Option Closing
Date; and any successor of the Company, any member of the Underwriting
Group or any controlling person, officer or director thereof, shall be
entitled to the benefits hereof.
14.03. GOVERNING LAW. The validity, interpretation and construction
of this Agreement and of each part hereof will be governed by the laws of
the state of Colorado.
14.04. THE INFORMATION OF THE MEMBERS OF THE UNDERWRITING GROUP.
Notwithstanding any participation by the legal counsel of the members of
the Underwriting Group in the reorganization and/or revision of the
Prospectus, the statements with respect to the public offering of the
Securities on the cover page of the Prospectus and the Notes thereto and
under the caption "Underwriting" in the Prospectus constitute the only
written information furnished by or on behalf of the members of the
Underwriting Group referred to in Sections 2.02, 6.01 and 6.02 hereof.
14.05. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be deemed an original and all of which
together will constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the Agreement
between the members of the Underwriting Group and the Company.
Very truly yours,
GLOBAL MED TECHNOLOGIES, INC.
By:_____________________________________
Xxxxxxx X. Xxxxx,
Chairman of the Board
By:_____________________________________
Xxxxxxx X. Xxxxxxx, Secretary
THE REPRESENTATIVE, ON BEHALF OF THE UNDERWRITING GROUP, HEREBY CONFIRMS AS
OF THE DATE HEREOF THAT THE ABOVE LETTER SETS FORTH THE AGREEMENT BETWEEN
THE COMPANY AND THE UNDERWRITING GROUP.
RAF FINANCIAL CORPORATION
By:_____________________________________
Xxxxxx X. Xxxx, Senior Vice
President of RAF Financial
Corporation, as Attorney in
Fact for the several Underwriters
named in Schedule I to the
Underwriting Agreement
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SCHEDULE I
UNDERWRITERS
Underwriter Number of Units Purchased
---------------------- --------------------------
RAF Financial Corporation
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