EXHIBIT 1(a)
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FORM OF UNDERWRITING AGREEMENT
SIGA PHARMACEUTICALS, INC.
UNDERWRITING AGREEMENT
____________, 1997
Sunrise Securities Corp.
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Low, President
Gentlemen:
The undersigned, SIGA Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), hereby confirms its agreement with you (the "Underwriter") as
follows:
1. INTRODUCTION.
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(a) Subject to the terms and conditions contained herein, the Company
proposes to issue and sell in the United States a minimum of 3,250,000 and a
maximum of 4,000,000 shares (the "Shares") of common stock, without par value of
the Company (the "Common Stock"), with an offering price per share of Common
Stock of $5.00.
(b) The Company is retaining the Underwriter as its exclusive agent in the
offering contemplated hereby (the "Offering") and understands that the
Underwriter is acting on a "best efforts" basis in connection with the Offering
and that the Shares will be sold on an "all or none" basis, such that no Shares
will be sold unless all of the Shares are sold.
(c) The Company hereby agrees to pay to the Underwriter a commission equal
to 10.0% of the gross proceeds of the sale of the Shares in the Offering.
(d) The Company hereby agrees to issue and sell to the Underwriter warrants
(the "Underwriter's Warrants") to purchase a number of shares of Common Stock
equal to 10% of the number of Shares sold to purchasers in the Offering (the
"Warrant Stock") for a purchase price of $.001 per warrant. The Underwriter's
Warrants will be exercisable for the Warrant Stock for a period of four years,
commencing one year after the effective date of the Registration Statement (as
hereinafter defined) at an initial exercise price per share equal to 110% of the
price per Share in the Offering. The Warrant Stock shall be identical to the
Shares. The Underwriter's Warrants shall be substantially in the form filed as
Exhibit 1(b) to the Registration Statement. The Underwriter's Warrants and the
Warrant Stock are sometimes hereinafter referred to collectively as the
"Underwriter's Securities." The Shares and the Underwriter's Securities are
sometimes hereinafter referred to collectively as the "Securities."
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
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to, and agrees with, the Underwriter that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, and may have filed one or more
amendments thereto, on Form SB-2 (Registration No. 333-23037), including
in such registration statement and each such amendment a related
preliminary prospectus, for the registration of the Securities under the
Securities Act of 1933, as amended (the "Act"). As used in this Agreement,
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the term "Registration Statement" shall refer to such registration
statement, as amended, on file with the Commission at the time such
registration statement becomes effective under the Act (including the
prospectus, financial statements, exhibits, and all other documents filed
as a part thereof, or incorporated by reference directly or indirectly
therein (such incorporated documents being herein referred to as the
"Incorporated Documents")); provided, however, that such Registration
Statement, at the time it becomes effective, may omit such information as
is permitted to be omitted from such Registration Statement when it becomes
effective under the Act pursuant to Rule 430A of the General Rules and
Regulations under the Act (the "Regulations"), which information (the "Rule
430A Information") shall be deemed to be included in such Registration
Statement when a final prospectus is filed with the Commission in
accordance with Rules 430A and 424(b)(1) or (4) of the Regulations; the
term "Preliminary Prospectus" shall refer to each prospectus included in
the Registration Statement, or any amendments thereto, before the
Registration Statement becomes effective under the Act, the form of
prospectus omitting Rule 430A Information included in the Registration
Statement when the Registration Statement becomes effective under the Act,
if applicable (the "Rule 430A Prospectus"), and any prospectus filed by the
Company with your consent pursuant to Rule 424(a) of the Regulations; and
the term "Prospectus" shall refer to the final prospectus in the form first
filed pursuant to Rule 424(b)(1) or (4) of the Regulations or, if no such
filing is required, the form of final prospectus included in the
Registration Statement. Any reference in this Agreement to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include any documents filed after the effective
date under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder that are
deemed to be incorporated by reference therein.
(b) When the Registration Statement becomes effective under the Act,
and at all times subsequent thereto up to and including the First Closing
Date (as defined in Section 3), and each Additional Closing Date (as
defined in Section 3) and during such longer period as the Prospectus may
be required to be delivered in connection with sales by you, and during
such longer period until any post-effective amendment thereto shall become
effective under the Act, the Registration Statement (and any post-effective
amendment thereto) and the Prospectus (as amended or as supplemented, if
the Company shall have filed with the Commission any amendment or
supplement to the Registration Statement or the Prospectus), respectively,
will contain all statements which are required to be stated therein in
accordance with the Act and the Regulations, will comply with the Act and
the Regulations, and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and no event will
have occurred which should have been set forth in an amendment or
supplement to the Registration Statement or the Prospectus which has not
then been set forth in such an amendment or supplement; if a Rule 430A
Prospectus is included in the Registration Statement at the time it becomes
effective under the Act, the Prospectus filed pursuant to Rules 430A and
424(b)(1) or (4) of the Regulations will contain all Rule 430A Information
and all statements which are required to be stated therein in accordance
with the Act or the Regulations, will comply with the Act and the
Regulations, and will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and each
Preliminary Prospectus, as of the date filed with the Commission, did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; except that no representation or
warranty is made in this Section 2(b) with respect to statements or
omissions made in reliance upon and in conformity with written information
furnished to the Company as stated in Section 8(b) with respect to the
Underwriter by or on behalf of the Underwriter expressly for inclusion in
the Registration Statement, any Preliminary Prospectus, or the Prospectus,
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or any amendment or supplement thereto. Each of the Incorporated Documents
complies in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder.
(c) Neither the Commission nor the "blue sky" or securities authority
of any jurisdiction has issued an order (a "Stop Order") suspending the
effectiveness of the Registration Statement, preventing or suspending the
use of the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, refusing to permit the
effectiveness of the Registration Statement, or suspending the registration
or qualification of the Securities, nor has any of such authorities
instituted or, to the knowledge of the Company, threatened to institute any
proceedings with respect to a Stop Order.
(d) Any contract, agreement, instrument, lease, or license required to
be described in the Registration Statement or the Prospectus has been
properly and accurately described therein. Any contract, agreement,
instrument, lease, or license required to be filed as an exhibit to the
Registration Statement has been filed with the Commission as an exhibit to,
or has been incorporated as an exhibit by reference into, the Registration
Statement.
(e) The Company has no subsidiary or subsidiaries (as defined in the
Regulations). The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits of
and from, and declarations and filings with, all federal, state, local, and
other governmental authorities and all courts and other tribunals, to own,
lease, license, and use its properties and assets and to conduct its
business in the manner described in the Prospectus. The Company is duly
qualified to do business as a foreign corporation and is in good standing
as such in every jurisdiction in which its ownership, leasing, licensing,
or use of property and assets or the conduct of its business makes such
qualification necessary, except where the failure to be so qualified does
not amount to a material liability or disability to the Company.
(f) The authorized capital stock of the Company consists of 25,000,000
shares of Common Stock, of which 3,367,182 shares are outstanding without
giving effect to the issuance of the Shares and 10,000,000 shares of
Preferred Stock, par value $.0001 per share, of which there are no
outstanding shares. Except as disclosed in the Prospectus, each
outstanding share of Common Stock is validly authorized and issued, fully
paid, and nonassessable, without any personal liability attaching to the
ownership thereof, has not been issued and is not owned or held in
violation of any preemptive rights of stockholders. Except as may be
Properly described in the Prospectus, or as is not required to be described
in the Prospectus, there is no commitment, plan, or arrangement to issue,
and no outstanding option, warrant, or other right calling for the issuance
of, any share of capital stock of the Company or any security or other
instrument which by its terms is convertible into, or exercisable or
exchangeable for, capital stock of the Company. There is outstanding no
security or other instrument which by its terms is convertible into, or
exercisable or exchangeable for, capital stock of the Company, except as
may be properly described in the Prospectus. The certificates evidencing
the Common Stock are in proper form.
(g) The financial statements of the Company included in the
Registration Statement and the Prospectus fairly present, with respect to
the Company, the balance sheets, the statements of stockholders' equity,
the statements of operations, the statements of cash flows, and the other
information purported to be shown therein at the respective dates and for
the respective periods to which they apply. Such financial statements have
been prepared in accordance with generally accepted accounting principles
(except to the extent that certain footnote disclosures regarding any stub
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period may have been omitted in accordance with the applicable rules of the
Commission under the Exchange Act) consistently applied throughout the
periods involved, are correct and complete in all material respects, and
are in accordance with the books and records of the Company. Price
Waterhouse LLP, the accountants whose report on the audited financial
statements is filed with the Commission as a part of the Registration
Statement, are, and during the periods covered by their report(s) included
in the Registration Statement and the Prospectus were, independent
certified public accountants with respect to the Company within the meaning
of the Act and the Regulations. No other financial statements are required
by Form SB-2 or otherwise to be included in the Registration Statement or
the Prospectus. Since the date of the latest information set forth in the
Registration Statement or the Prospectus, except as may be properly
described in the Prospectus, there has at no time been a material adverse
change in the financial condition, results of operations, business,
properties, assets, liabilities or, to the best of its knowledge, future
prospects of the Company.
(h) There is no claim or litigation, arbitration, governmental or
other proceeding (formal or informal), or investigation pending,
threatened, or, to the best knowledge of the Company, in prospect (or any
basis therefor) with respect to the Company or any of its operations,
businesses, properties, or assets, except (i) as may be properly described
in the Prospectus or (ii) such as individually or in the aggregate do not
now have, and will not in the future have, a material adverse effect upon
the operations, business, properties, or assets of the Company. The
Company is not in violation of, or in default with respect to, any law,
rule, regulation, order, judgment, or decree, except: (A) as may be
properly described in the Prospectus or (B) such as in the aggregate do not
now have, and will not in the future have, a material adverse effect upon
the operations, business, properties, assets or net worth of the Company.
The Company is not currently required to take any action in order to avoid
any such violation or default.
(i) The Company has good title to all properties and assets which the
Prospectus indicates are owned by it, free and clear of all liens, security
interests, pledges, charges, encumbrances and mortgages, except such as do
not materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company (or except as may be properly described in the Prospectus). No
real property leased, licensed, or used by the Company lies in an area
which is, or to the knowledge of the Company will be, subject to zoning,
use, or building code restrictions which would prohibit, and no state of
facts relating to the actions or inactions of another person or entity or
his or its ownership, leasing, licensing, or use of any real or personal
property exists or will exist which would prevent, the continued effective
leasing, licensing, or use of such real property in the business of the
Company as presently conducted or as the Prospectus indicates the Company
contemplates conducting, with such exceptions as are not material and do
not interfere with the use made or proposed to be made of such property and
buildings by the Company (or except as may be properly described in the
Prospectus).
(j) Neither the Company nor, to the knowledge of the Company, any
other party, is now, or is expected by the Company to be, in violation or
breach of, or in default with respect to, any material provision of any
contract, agreement, instrument, lease, license, arrangement, or
understanding which is material to the Company, and each such contract,
agreement, instrument, lease, license, arrangement, and understanding is in
full force and effect and is the legal, valid, and binding obligation of
the parties thereto and is enforceable as to them in accordance with its
terms, subject to applicable bankruptcy and insolvency laws. The Company
enjoys peaceful and undisturbed possession under all leases and licenses
under which it is operating. Except as described in the Prospectus, the
Company is not a party to, or bound by, any contract, agreement,
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instrument, lease, license, arrangement, or understanding, or subject to
any charter or other restriction, which has had, or may reasonably be
expected to have, a material adverse effect on the financial condition,
results of operations, business, properties, assets, liabilities or future
prospects of the Company. The Company is not in violation or breach of, or
in default with respect to, any term of its certificate of incorporation
(or other charter document) or by-laws.
(k) All United States and foreign patents, patent applications,
trademarks, trademark applications, trade names, service marks, copyrights,
franchises, and other intangible properties and assets (all of the
foregoing being herein called "Intangibles") that the Company owns or has
pending, or under which it is licensed, are in good standing and
uncontested, except as may be properly described in the Prospectus. There
is no right under any Intangible necessary to the business of the Company
as presently conducted or as the Prospectus indicates it contemplates
conducting, except as may be so designated in the Prospectus. The Company
has not infringed, is not infringing, or has not received notice of (or
knows of any basis for) a third party claim of infringement with respect to
asserted Intangibles of others, except as may be properly described in the
Prospectus. To the knowledge of the Company, there is no infringement by
others of Intangibles of the Company. To the knowledge of the Company,
there is no Intangible of others which has had, or may in the future have a
material adverse effect on the financial condition, results of operations,
business, properties, assets, liabilities or future prospects of the
Company, except as may be properly described in the Prospectus.
(l) Neither the Company, nor any director, officer, agent, employee,
or other person associated with the Company, in such capacity, or acting on
behalf of, the Company has, directly or indirectly: used any corporate
funds for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or made
any bribe, rebate, payoff, influence payment, kickback, or other unlawful
payment. The Company's internal accounting controls and procedures are
sufficient to cause the Company to comply in all respects with the Foreign
Corrupt Practices Act of 1977, as amended.
(m) The Company has all requisite power and authority to execute,
deliver, and perform this Agreement, the Escrow Agreement (as hereinafter
defined), the Subscription Agreements (as hereinafter defined) and the
Underwriter's Warrants. All necessary corporate proceedings of the Company
have been duly taken effective the date hereof to authorize the execution,
delivery and performance by the Company of this Agreement, the Escrow
Agreement, the Subscription Agreements and the Underwriter's Warrants.
Assuming due execution and delivery by the Underwriter, this Agreement has
been duly authorized, executed, and delivered by the Company, is the legal,
valid and binding obligation of the Company, and is enforceable against the
Company in accordance with its terms. Assuming due execution and delivery
by any other parties thereto, the Underwriter's Warrants, the Escrow
Agreement, and the Subscription Agreements have been duly authorized by the
Company and, when executed and delivered by the Company, will be the legal,
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms. No consent, authorization,
approval, order, license, certificate, or permit of or from, or declaration
or filing with, any federal, state, local, or other governmental authority
or any court or other tribunal is required by the Company or the Subsidiary
for the execution, delivery, or performance by the Company of this
Agreement, the Escrow Agreement, the Subscription Agreements, or the
Underwriter's Warrants (except such as have been obtained or filings under
the Act which have been or will be made before the First Closing Date or
Additional Closing Date, as the case may be, and consents, authorizations,
approvals, orders, licenses, certificates, permits, declarations, or
filings required under "blue sky" or securities
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laws which have been obtained at or prior to the date of this Agreement).
No consent of any party to any contract, agreement, instrument, lease,
license, arrangement, or understanding to which the Company is a party, or
to which any of their respective properties or assets are subject, is
required for the execution, delivery, or performance of this Agreement, the
Escrow Agreement, the Subscription Agreements, and the Underwriter's
Warrants, except such consents as in the aggregate will not have a material
adverse effect upon the operations, business, properties, assets or net
worth of the Company. The execution, delivery, and performance of this
Agreement, the Escrow Agreement, the Subscription Agreements, and the
Underwriter's Warrants will not violate, result in a material breach of,
conflict with, result in the creation or imposition of any lien, charge, or
encumbrance upon any properties or assets of the Company pursuant to the
terms of, or (with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default under, any such
contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate, result in a breach of, or conflict with any term
of the certificate of incorporation (or other charter document) or by-laws
of the Company, or violate, result in a material breach of, or conflict
with any law, rule, regulation, order, judgment or decree binding on the
Company or to which any of its operations, businesses, properties or assets
are subject.
(n) Each Share to be delivered on the First Closing Date or any
Additional Closing Date is validly authorized and, when issued and
delivered in accordance with this Agreement, will be validly issued, fully
paid, and nonassessable, without any personal liability attaching to the
ownership thereof, and will not be issued in violation of any preemptive or
similar rights of stockholders, and each purchaser will, upon payment
therefor, receive good title to the Shares purchased by it from the
Company, free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts. The Warrant
Stock is validly authorized and reserved for issuance and, when issued and
delivered upon the exercise of the Underwriter's Warrants and payment
therefor in accordance with the respective terms thereof, will be validly
issued, fully-paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and will not be issued in violation of
any preemptive or similar rights of stockholders. When issued, the
Underwriter's Warrants will constitute legal, valid, and binding
obligations of the Company to issue and sell, upon exercise thereof and
payment therefor in accordance with the respective terms thereof, the
number and type of securities of the Company called for thereby and the
Underwriter's Warrants will be enforceable against the Company in
accordance with their respective terms. The Underwriter will receive good
title to the Underwriter's Warrants purchased by it, free and clear of all
liens, security interests, pledges, charges, encumbrances, restrictions
(other than restrictions under federal and any applicable state securities
laws), stockholders' agreements, and voting trusts.
(o) The Securities conform in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus.
(p) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may
otherwise be properly described in the Prospectus, the Company has not (i)
issued any securities or incurred any liability or obligation, primary or
contingent, for borrowed money, (ii) entered into any transaction not in
the ordinary course of business, (iii) declared or paid any dividend on its
capital stock or (iv) experienced any adverse changes or any development
which may materially adversely effect the condition (financial or
otherwise), net assets or stockholders' equity, results of operations,
business, key personnel, assets, or properties of the Company.
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(q) Neither the Company nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or will take,
directly or indirectly, any action designed to stabilize or manipulate the
price of any security of the Company, or which has caused or resulted in,
or which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company,
to facilitate the sale or resale of any of the Shares.
(r) The Company has obtained from each of the Company's stockholders
owning in excess of one percent of the outstanding securities of any class
of the Company as of the effectiveness of the Registration Statement under
the Act (the "Beneficial Owners"), and each officer, director and founder
of the Company, his or its enforceable written agreement, in form and
substance satisfactory to counsel for the Underwriter, that for a period of
(i) six months from the date on which the Registration Statement becomes
effective under the Act, with respect to the Beneficial Owners, and (ii) 24
months from such date with respect to the directors, officers and founders
of the Company, he or it will not, without the prior written consent of the
Underwriter, issue, offer, sell, contract to sell, grant any option for the
sale of, or otherwise dispose ("Dispose") of, directly or indirectly, any
shares of Common Stock or other securities of the Company or any security
or other instrument which by its terms is convertible into, exercisable
for, or exchangeable for shares of Common Stock or any other securities of
the Company, including, without limitation, any shares of Common Stock
issuable under any employee stock options. Each such agreement is a legal,
valid, and binding obligation of the director, officer, or securityholder
executing the same, and is enforceable as to such director, officer, or
securityholder in accordance with the terms thereof.
(s) The Company is not, and does not intend to conduct its business in
a manner in which it would become, an "investment company" as defined in
Section 3(a) of the Investment Company Act of 1940, as amended.
(t) No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company because of the
filing or effectiveness of the Registration Statement, except as properly
and accurately described in the Prospectus.
(u) Except as may be set forth in the Prospectus, the Company has not
incurred any liability for a fee, commission, or other compensation on
account of the employment of a broker or finder in connection with the
transactions contemplated by this Agreement.
(v) Neither the Company nor any of its affiliates is presently doing
business with the government of Cuba or with any person or affiliate
located in Cuba. If, at any time after the date on which the Registration
Statement is declared effective under the Act or with the Florida
Department of Banking and Finance (the "Florida Department"), whichever is
later, and prior to the end of the period referred to in the first clause
of Section 2(b), the Company commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba, the
Company will so inform the Florida Department within 90 days after such
commencement of business in Cuba, and, during the period referred to in
Section 2(b), will inform the Florida Department within 90 days after any
change occurs with respect to previously reported information.
(w) Except as disclosed in the Prospectus, no officer or director of
the Company has any affiliation or association with the National
Association of Securities Dealers, Inc. (the "NASD") or any member thereof
and upon inquiry of its stockholders beneficially owning five percent or
more of the outstanding shares of Common Stock, the Company has been
advised that no such stockholder has any such affiliation of association,
except as disclosed in writing to the Underwriter.
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(x) Except as disclosed in the Prospectus, the Company has filed all
necessary federal, state, local, and foreign income and franchise tax
returns and other reports required to be filed and has paid all taxes shown
as due thereon; and there is no tax deficiency which has been, or, to the
knowledge of the Company, might be, asserted against the Company.
(y) All requirements for the use by the Company of a registration
statement on Form SB-2 with respect to the Offering have been satisfied.
(z) The Common Stock is authorized for quotation on the Nasdaq
SmallCap Market ("Nasdaq") and upon the Closing Date, all appropriate
action will have been taken to include the Shares on Nasdaq.
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3. PURCHASE, SALE, AND DELIVERY OF THE SHARES.
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(a) On the basis of representations and warranties herein contained,
but subject to the terms and conditions herein set forth, the Company
hereby appoints you its sales agent and grants you the exclusive right to
offer and sell the Shares during the Offering Period (as hereinafter
defined) for the account and risk of the Company. You accept such
appointment and agree to use your best efforts as sales agent, following
written or telegraphic receipt of notice of the effective date of the
Registration Statement, to offer and sell such number of Shares as
contemplated by this Agreement at the price stated in the Prospectus.
(b) Each prospective purchaser of Shares will be required to complete,
execute, and deliver to the Company a subscription agreement in the form
filed as an exhibit to the Registration Statement (the "Subscription
Agreement"). Prior to or concurrently with the delivery to the Company of
any Subscription Agreement by any purchaser, funds sufficient to purchase
the Shares subscribed for shall be wired to an escrow account to be
maintained pursuant to an escrow agreement among the Escrow Agent (as
hereinafter defined), the Company, and the Underwriter in the form filed as
an exhibit to the Registration Statement (the "Escrow Agreement"). You
shall transmit any funds received from any purchaser directly to the Escrow
Agent by noon of the next business day after your receipt of such checks.
Except as provided in the first sentence of subparagraph (c) below, the
Company shall not be entitled to reject, without the Underwriter's consent,
any Subscription Agreement tendered to it prior to the Termination Date (as
hereinafter defined) unless (i) the Subscription Agreement is not properly
completed after the Underwriter and the Company have given the subscriber
an opportunity to cure the defect or payment in full for the Shares
subscribed for is not made in accordance with such Subscription Agreement
or (ii) the subscriber submitting such Subscription Agreement is a resident
of a jurisdiction in which the offering is not registered, qualified, or
exempt from such registration or qualification. The Company will forward to
you copies of each Subscription Agreement accepted by it within three
business days of receipt by the Company of such Subscription
Agreement.
(c) All subscriptions for Shares will be conditioned upon the
acceptance by the Company of Subscription Agreements at least 3,250,000
Shares (the "Minimum Subscriptions") on or prior to 30 days after the
effectiveness of the Registration Statement, which is the last date on
which the offering of Shares may be made, except that such last offering
date may be extended by the Underwriter, in its sole discretion, to a date
not later than 60 days after the effective date of the Registration
Statement (the last date on which the offering of Shares may be made is
herein referred to as the "Termination Date" and the period during which
the offering of Shares may be made is herein referred to as the "Offering
Period"). If Minimum Subscriptions are not tendered to and accepted by the
Company by the Termination Date, this Agreement shall, subject to the
provisions of Section 10 hereof, terminate. If at least the Minimum
Subscriptions are tendered to and accepted by the Company on or before the
Termination Date, a closing will be held at the offices of the Underwriter
at a mutually agreed date (not later than five business days after the
Termination Date) and time as soon as practicable after the delivery of the
last of such subscriptions (the "First Closing Date") and shall be subject
to each of the conditions precedent to closing provided for in this
Agreement. The parties hereto may mutually agree to continue the Offering
after the First Closing Date and prior to the Termination Date until up to
4,000,000 Shares are subscribed for. If additional subscriptions are
tendered and accepted after the First Closing Date and prior to the
Termination Date, one or more additional closings with respect to such
subscriptions shall be held in accordance with the terms of the Prospectus
(each an "Additional Closing Date"). Each such additional closing will be
held at the offices of the Underwriter at a mutually agreed date (not later
than five business days after the Termination Date) and time and shall be
subject to each of the conditions precedent to closing provided for in this
Agreement. Each closing date provided for under this Agreement (including
the First Closing Date) shall constitute a "Closing Date."
(d) On or prior to the applicable Closing Date, all cash payments of
purchasers received (unless and until returned to the purchasers pursuant
hereto) will be placed in a segregated escrow account with United States
Trust Company of New York (the "Escrow Agent") for the purchasers' benefit.
(e) The purchase price paid by any prospective purchaser whose
subscription is rejected, or is returned because the conditions to closing
were not satisfied, shall be returned to such prospective purchaser,
without any deduction therefrom or interest thereon.
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(f) If, prior to the Termination Date, subscriptions for more than
4,000,000 Shares are received, the Underwriter, in its sole and absolute
discretion, may allocate the Shares among the subscribers as to whom a
closing has not already been held in such manner as it shall see fit.
(g) As soon as practicable after each Closing Date, the Company shall
deliver or cause to be delivered by mail to each purchaser of Shares on
such Closing Date (i) a copy of an executed Subscription Agreement which
indicates thereon the number of Shares such purchaser has purchased and
(ii) a stock certificate representing such Shares, registered in such
purchaser's name.
4. OFFERING OF THE SHARES ON BEHALF OF THE COMPANY.
-----------------------------------------------
(a) In offering the Shares for sale, you shall offer Shares as agent
for the Company, and the Offering shall be made upon the terms and subject
to the conditions set forth in the Registration Statement and Prospectus.
The Underwriter shall commence offering the Shares for sale as agent for
the Company as soon after the effective date of the Registration Statement
as the Underwriter may deem advisable.
5. COVENANTS. The Company covenants that it will:
---------
(a) Use its best efforts to cause the Registration Statement to become
effective under the Act as promptly as possible and notify you immediately,
and confirm such notice in writing, (i) when the Registration Statement and
any post-effective amendment thereto become effective under the Act, (ii)
of the receipt of any comments from the Commission or the "blue sky" or
securities authority of any jurisdiction regarding the Registration
Statement, any post-effective amendment thereto, the Prospectus, or any
amendment or supplement thereto, (iii) of the filing with the Commission of
any supplement to the Prospectus and (iv) of the receipt of, or its
otherwise becoming aware of, any notification with respect to a Stop Order
or the initiation or threatening of any proceeding with respect to a Stop
Order. The Company will use its best efforts to prevent the issuance of
any Stop Order and, if any Stop Order is issued, to obtain the lifting
thereof as promptly as possible. If the Registration Statement has become
or becomes effective under the Act with a form of prospectus omitting Rule
430A Information, or filing of the Prospectus with the Commission is
otherwise required under Rule 424(b) of the Regulations, the Company will
file with the Commission the Prospectus, properly completed, pursuant to
Rule 424(b) of the Regulations within the time period prescribed and will
provide evidence satisfactory to you of such timely filing.
(b) During the time when a prospectus relating to the Shares is
required to be delivered hereunder or under the Act or the Regulations,
comply with all requirements imposed upon it by the Act, as now existing
and as hereafter amended, and by the Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of, or
dealings in, the Shares and in accordance with the provisions hereof and of
the Prospectus. If, at any time when a prospectus relating to the Shares
is required to be delivered hereunder or under the Act or the Regulations,
any event shall have occurred as a result of which, in the reasonable
opinion of counsel for the Company or counsel for the Underwriter, the
Registration Statement or the Prospectus as then amended or supplemented
contains 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, or if, in the opinion of either of such
counsel, it is necessary at any time to amend or supplement the
Registration Statement or the Prospectus to comply with the Act or the
Regulations, the Company will as promptly as practicable, and, in any event
within one business day, notify you and promptly prepare and file with the
Commission an appropriate amendment or supplement (in form and substance
satisfactory to you) which will correct such statement or omission or which
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will effect such compliance and will use its best efforts to have any such
amendment declared effective under the Act as soon as possible.
(c) Deliver without charge to you such number of copies of each
Preliminary Prospectus as you may reasonably request and, as soon as the
Registration Statement, or any amendment thereto, becomes effective under
the Act or a supplement is filed with the Commission, deliver without
charge to you or your counsel not less than two signed copies of the
Registration Statement, including exhibits and Incorporated Documents, or
such amendment thereto, as the case may be, and two copies of any
supplement thereto, and deliver without charge to you such number of copies
of the Prospectus, the Registration Statement, and amendments and
supplements thereto, if any, without exhibits or Incorporated Documents, as
you may request for the purposes contemplated by the Act.
(d) Endeavor in good faith, in cooperation with you and your counsel,
at or prior to the time the Registration Statement becomes effective under
the Act, to qualify the Shares for offering and sale under the "blue sky"
or securities laws of such jurisdictions as you may designate; provided,
however, that no such qualification shall be required in any jurisdiction
where, as a result thereof, the Company would be subject to service of
general process or to taxation as a foreign corporation doing business in
such jurisdiction to which it is not then subject. In each jurisdiction
where such qualification shall be effected, the Company will, unless you
agree in writing that such action is not at the time necessary or
advisable, file and make such statements or reports at such times as are or
may be required by the laws of such jurisdiction.
(e) Make generally available (within the meaning of Section 11(a) of
the Act and the Regulations) to its securityholders as soon as practicable,
but not later than 45 days after the end of its fiscal quarter in which the
first anniversary date of the Registration Statement occurs an earnings
statement (which need not be certified by independent certified public
accountants unless required by the Act or the Regulations, but which shall
satisfy the provisions of Section 11(a) of the Act and the Regulations)
covering a period of at least 12 months beginning after the effective date
of the Registration Statement.
(f) For a period of 12 months (or six months, in the case of any
public offering under the Act) after the date hereof, not, without the
prior written consent of the Underwriter, which shall not be unreasonably
withheld or delayed, Dispose of any shares of Common Stock or other
securities of the Company (or any security or other instrument which by its
terms is convertible into, or exercisable or exchangeable for, shares of
Common Stock or any other securities of the Company), except for (i) the
Underwriter's Warrants and the Warrant Stock; (ii) the shares of Common
Stock issuable upon the exercise of options or warrants outstanding on the
date hereof, which may not be sold until the lock-ups referred to in
Section 2(r) expire; (iii) the grant or exercise of options under the plans
existing on the date hereof or pursuant to a plan adopted by the Company
with the consent of the Board of Directors and the stockholders, in the
case of grants to officers and directors, shall provide that the underlying
shares are not saleable until the lock-ups referred to in Section 2(r)
expire; (iv) securities Disposed of in connection with any strategic
alliance with a pharmaceutical company or in connection with the hiring or
retention of key employees, consultants or directors; and (v) securities
Disposed of in connection with commitments existing as of the date hereof;
provided further that the Company may extend the exercisibility of
outstanding options and warrants or replace them upon their termination or
expiration with a like number of options or warrants.
(g) During the Offering Period, without the prior written consent of
the Underwriter, which shall not be unreasonably withheld or delayed, not
consummate any stock dividend, stock split, recapitalization,
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reorganization, reclassification, combination or any other similar event
affecting the capital stock of the Company.
(h) For a period of three years after the effective date of the
Registration Statement, furnish you without charge the following:
(i) within 90 days after the end of each fiscal year, three
copies of financial statements certified by independent certified
public accountants, including a balance sheet, statement of
operations, and statement of cash flows of the Company and its then
existing subsidiary or subsidiaries, with supporting schedules,
prepared in accordance with generally accepted accounting principles,
as at the end of such fiscal year and for the 12 months then ended,
which may be on a consolidated basis;
(ii) as soon as practicable after they have been sent to
stockholders of the Company or filed with, or furnished to, the
Commission or the NASD, three copies of each annual and interim
financial and other report or communication sent by the Company to its
stockholders or filed with, or furnished to, the Commission or the
NASD;
(iii) as soon as practicable, two copies of every press release
and every material news item and article in respect of the Company or
its affairs which was released by the Company; and
(iv) such additional documents and information with respect to
the affairs of the Company and its then existing subsidiary or
subsidiaries as you may from time to time reasonably request;
provided, however, that such additional documents and information
shall be received by you on a confidential basis, unless otherwise
disclosed to the public, and shall not be used in violation of the
Federal securities laws and the regulations promulgated thereunder.
(i) Apply the net proceeds received by the Company from the Offering
contemplated by this Agreement in the manner set forth under the heading
"Use of Proceeds" in the Prospectus.
(j) Furnish to you as early as practicable prior to the First Closing
Date, and any Additional Closing Date, as the case may be, but no less than
two full business days prior thereto, a copy of the latest available
unaudited interim financial statements of the Company which have been read
by the Company's independent certified public accountants, as stated in
their letters to be furnished pursuant to Section 7(e).
(k) File no amendment or supplement to the Registration Statement or
Prospectus at any time, whether before or after the date on which the
Registration Statement becomes effective under the Act, unless such filing
shall comply with the Act and the Regulations and unless you shall
previously have been advised of such filing and furnished with a copy
thereof, and you and counsel for the Underwriter shall have approved such
filing. Until the later of (i) the completion by you of the distribution
of the Shares (but in no event more than nine months after the date on
which the Registration Statement shall have become effective under the Act)
and (ii) 25 days after the date on which the Registration Statement becomes
effective under the Act, the Company will prepare and file with the
Commission, promptly upon the Underwriter's request, any amendments or
supplements to the Registration Statement or the Prospectus which, in the
Underwriter's sole opinion, may be necessary or advisable in connection
with the distribution of the Shares.
(l) File timely with the Commission and the NASD a report on Form 10-C
in accordance with the rules and regulations of the Commission under the
Exchange Act.
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(m) Comply with all provisions of all undertakings contained in the
Registration Statement.
(n) Prior to the First Closing Date or any Additional Closing Date, as
the case may be, issue no press release or other communication, directly or
indirectly, and hold no press conference with respect to the Company or the
financial condition, results of operations, business, properties, assets,
liabilities of the Company, or the Offering, without the prior written
consent of the Underwriter, (other than trade releases issued in the
ordinary course of the Company's business or otherwise required by law, in
which case deliver such release to the Underwriter for review prior to
issuance).
(o) Make all filings required, and otherwise use its reasonable best
efforts, to maintain the inclusion of the Common Stock on Nasdaq for at
least five years from the date of this Agreement.
(p) On each Closing Date, sell to the Underwriter (or its designee),
the Underwriter's Warrants at the price of $.001 per option, entitling the
holder thereof to purchase a number of shares of Common Stock equal to 10%
of the number of Shares sold on such Closing Date for an exercise price
equal to 110% of the price per Share in the Offering.
(q) Until expiration of the Underwriter's Warrants, keep reserved
sufficient shares of Common Stock for issuance upon exercise of the
Underwriter's Warrants.
(r) Deliver to the Underwriter, without charge, within a reasonable
period after the last Closing Date, three sets of bound volumes of the
Registration Statement and all related materials to the individuals
designated by you or counsel for the Underwriter.
(s) For a period of three years after the effective date of the
Registration Statement, provide, at its sole expense, to the Underwriter
copies of the Company's daily transfer sheets, if so requested.
(t) For a period of five years after the First Closing Date, supply to
the appropriate parties such information as may be necessary or desirable,
and otherwise use its best efforts, so that during such five-year period
the Company will be listed in one or more of the securities manuals
published by Standard & Poor's Corporation and Xxxxx'x Investors Service,
Inc. and that, at all times during such period, such listing will, at a
minimum, contain the names of the Company's officers and directors, a
balance sheet as of a date not more than 18 months prior to such time and a
statement of operations for either the fiscal year preceding such date or
the most recent fiscal year of operations.
(u) Comply with all registration, filing and reporting requirements of
the Exchange Act, which may from time to time be applicable to the Company.
6. PAYMENT OF EXPENSES.
-------------------
(a) The Company hereby agrees to pay, whether or not the Offering is
consummated, all expenses (other than fees of counsel to the Underwriter, except
as provided in Sections 6(a)(iii) and 6(b)) in connection with (i) the
preparation, printing, filing, distribution, and mailing of the Registration
Statement and the Prospectus and the printing, filing, distribution, and mailing
of this Agreement, and related documents, including the cost of all copies
thereof and of the Preliminary Prospectuses and of the Prospectus and any
amendments or supplements thereto supplied to the Underwriter in quantities as
hereinabove stated, (ii) the issuance, sale, transfer, and delivery of the
Securities, including any transfer or other taxes payable thereon, (iii) the
registration or qualification of the Securities under state or foreign "blue
sky" or securities laws, including the costs of printing and mailing any "Blue
Sky Surveys" and the fees of counsel (in the amount of $35,000) for the
Underwriter
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and the disbursements in connection therewith, (iv) the filing fees payable to
the Commission, the NASD, and the jurisdictions in which such qualification is
sought, (v) any fees relating to the listing of the Securities on Nasdaq, (vi)
the cost of printing certificates representing the Securities and (vii) the fees
of the transfer agent for the Securities.
(b) In addition, if the Offering is consummated, the Company hereby
agrees to pay to the Underwriter on each Closing Date (i) a non-accountable
expense allowance equal to 3.0% of the gross proceeds from the sale of the
Shares on such Closing Date, $45,000 of which has already been paid by the
Company; and (ii) a commission equal to 10.0% of the gross proceeds from the
sale of Shares on such Closing Date.
(c) In the event that (i) this Agreement is terminated by the
Underwriter pursuant to Section 10 hereof, or (ii) the Minimum Subscriptions are
not received prior to the Termination Date, the Company hereby confirms that it
will pay within 10 days following the date of termination of this Agreement (in
the case of clause (i) above) and within 10 days following the Termination Date
(in the case of clause (ii) above), the amount of all of your actual accountable
out-of-pocket expenses, including, without limitation, the reasonable legal fees
and expenses, marketing and due diligence expenses, and travel expenses incurred
by you, but in no event to exceed the sum of $100,000, less amounts previously
paid to you in reimbursement for such expenses (including, without limitation,
the sum of $45,000 paid on or about July 23, 1996); and the Company will be
responsible for the payment of all other expenses relating to this Agreement and
the Offering, whether or not set forth in clauses (i) through (vii) of Section
6(a) hereof.
7. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. Your obligations hereunder,
---------------------------------------
and the right of the Company to obtain on any Closing Date the purchase price
for Shares to be purchased on such Closing Date, shall be subject to the
continued accuracy in all material respects, on the date hereof and on such
Closing Date, of the representations, warranties and agreements of the Company
and to the performance by the Company of its obligations hereunder to the
following terms and conditions:
(a) The Registration Statement shall have become effective under the
Act not later than 6:00 p.m., New York City time, on the date of this Agreement
or such later date and time as shall be consented to in writing by you; on or
prior to the First Closing Date, or any Additional Closing Date, as the case may
be, no Stop Order shall have been issued, and no proceeding shall have been
initiated or threatened with respect to a Stop Order; and any request by the
Commission for additional information shall have been complied with by the
Company to the reasonable satisfaction of your counsel. If required, the
Prospectus shall have been filed with the Commission in the manner and within
the time period required by Rule 424(b) under the Regulations.
(b) On the First Closing Date and any Additional Closing Date, as the
case may be, the Underwriter shall have received the opinions of Xxxxxxxxx &
Xxxxxx, counsel for the Company, dated the date of delivery, addressed to the
Underwriter, and [ ], patent counsel for the Company, in form and substance
satisfactory to counsel for the Underwriter.
(c) On or prior to the First Closing Date and any Additional Closing
Date, as the case may be, the Underwriter shall have been furnished such
information, documents, certificates, and opinions as they may reasonably
require in order to evidence the accuracy, completeness, or satisfaction of any
of the representations, warranties, covenants, agreements, or conditions herein
contained, or as the Underwriter may reasonably request.
(d) At the First Closing Date, and any Additional Closing Date, as
the case may be, you shall have received a certificate of the chief executive
officer and the chief financial officer of the Company, dated the First Closing
Date or such Additional Closing Date, as the case may be, to the effect that,
(i) the conditions set forth in Section 7(a) have been satisfied, (ii) as of the
date of this Agreement and as of the First Closing Date or such Additional
Closing Date, as the case may be, the representations and warranties of the
Company contained herein were and are accurate and correct in all material
respects, and (iii) as of the First Closing Date or such Additional Closing
Date, as the case may be, the obligations to be performed by the Company
hereunder on or prior thereto have been fully performed in all material
respects.
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(e) At the First Closing Date and any Additional Closing Date, as the
case may be, you shall have received a letter, dated the date of delivery,
addressed to the Underwriter, from Price Waterhouse LLP, independent certified
public accountants for the Company:
(i) confirming that they are, and during the period covered by their
report included in the Registration Statement and the Prospectus were,
independent certified public accountants with respect to the Company within the
meaning of the Act and the published Regulations;
(ii) stating that, in their opinion, the consolidated financial
statements of the Company included in the Registration Statement examined by
them comply in form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations;
(iii) stating that, on the basis of procedures (but not an examination
made in accordance with generally accepted auditing standards) consisting of a
reading of the latest available unaudited interim consolidated financial
statements of the Company (with an indication of the date of the latest
available unaudited consolidated interim financial statements), a reading of the
latest available minutes of the stockholders and Board of Directors of the
Company and committees of such Board of Directors, inquiries to certain officers
and other employees of the Company responsible for financial and accounting
matters, and other specified procedures and inquiries, nothing has come to their
attention that caused them to believe that: (A) any unaudited financial
statements of the Company included in the Registration Statement and Prospectus
do not comply in form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published rules and
regulations under the Act or the Exchange Act or are not fairly presented in
conformity with generally accepted accounting principles (except to the extent
that certain footnote disclosures regarding any stub period may have been
omitted in accordance with the applicable rules of the Commission under the
Exchange Act) applied on a basis consistent with that of the audited financial
statements appearing therein; (B) there was any change in the capital stock or
long-term debt of the Company or any decrease in the net current assets or
stockholders' equity of the Company as of the date of the latest available
monthly financial statements of the Company as of a specified date not more than
five business days prior to the date of such letter, each as compared with the
amounts shown in the latest balance sheet included in the Registration Statement
and Prospectus, other than as properly described in the Registration Statement
and Prospectus; or (C) there was any decrease in current assets or stockholders'
equity or increase in net loss during the period from the date of such balance
sheet to the date of the latest available monthly financial statements of the
Company or to a specified date not more than five business days prior to the
date of such letter, each as compared with the corresponding period in the
preceding fiscal year, other than as properly described in the Registration
Statement and Prospectus; and
(iv) stating that they have compared specific numerical data and
financial information pertaining to the Company set forth in the Registration
Statement, which have been specified by you, to the extent that such data and
information may be derived from the general accounting records of the Company,
with the results obtained from the application of specified readings, inquiries,
and other appropriate procedures (which procedures do not constitute an
examination in accordance with generally accepted auditing standards) set forth
in the letter, and found them to be in agreement.
(f) All proceedings taken in connection with the issuance, sale,
transfer, and delivery of the Securities shall be satisfactory in form and
substance to you and to your counsel.
(g) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to the Underwriter's participation in such
offering upon the terms and conditions provided for herein.
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(h) Prior to or on each Closing Date, the Company shall have issued,
in accordance with this Agreement, the Underwriter's Warrants to the Underwriter
in the name or names and in such authorized denominations as the Underwriter may
request.
(i) At least the Minimum Subscriptions shall have been tendered to the
Company in accordance with the terms hereof.
Any certificate or other document signed by any officer of the Company and
delivered to the Underwriter or to counsel for the Underwriter shall be deemed a
representation and warranty by the Company hereunder to the Underwriter as to
the statements made therein. If any condition to the Underwriter's obligations
hereunder to be fulfilled prior to or at the First Closing Date, or any
Additional Closing Date, as the case may be, is not so fulfilled, the
Underwriter may terminate this Agreement or, if the Underwriter so elects, in
writing waive any such conditions which have not been fulfilled or extend the
time for their fulfillment.
If any of the conditions specified in this Section 7 shall not have been
fulfilled or waived, this Agreement and all your obligations hereunder may be
cancelled, prospectively, by you at, or at any time prior to, any Closing Date.
Any such cancellation shall be without liability to you, and the obligations of
the Company pursuant to Sections 6 and 8 hereof shall nevertheless survive and
continue thereafter. Notice of such cancellation shall be given to the Company
at the addresses specified in Section 11 hereof, in writing, or by telegraph or
telephone confirmed in writing.
8. INDEMNIFICATION AND CONTRIBUTION.
--------------------------------
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Underwriter, its officers, directors,
stockholders, employees, agents, and counsel, and each person, if any, who
controls the Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim, damage,
and expense whatsoever (which shall include, for all purposes of this Section 8,
but not be limited to, attorneys' fees and any and all expense whatsoever
incurred in investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation) as and when incurred arising out of,
based upon, or in connection with, (i) any untrue statement of a material fact
or alleged untrue statement of a material fact contained in (A) the Registration
Statement, any Preliminary Prospectus, or the Prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto or (B) any
application or other document or communication (for purposes of this Section 8,
collectively referred to as an "application") executed by, or on behalf of, the
Company or based upon written information furnished by, or on behalf of, the
Company filed in any jurisdiction in order to qualify the Securities under the
"blue sky" or securities laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance upon, and
in conformity with, written information furnished to the Company by or on behalf
of the Underwriter as stated in Section 8(b) with respect to the Underwriter,
expressly for inclusion in the Registration Statement, any Preliminary
Prospectus, or the Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be, or (ii) any breach of any representation,
warranty, covenant, or agreement of the Company contained in this Agreement.
The foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Agreement.
If any action is brought against the Underwriter or any of its officers,
directors, stockholders, employees, agents, or counsel, or any person who
controls the Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall within three business days notify the Company
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in writing of the institution of such action (but the failure so to notify,
including within such three-day period, shall not relieve the Company from any
liability it may have other than pursuant to this Section 8(a) and shall relieve
the Company from liability pursuant to this Section 8(a) only to the extent the
Company is materially prejudiced thereby), and the Company shall promptly assume
the defense of such action, including the employment of counsel (satisfactory to
such indemnified party or parties) and payment of expenses. Such indemnified
party or parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless the employment of such counsel shall
have been authorized in writing by the Company in connection with the defense of
such action or the Company shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties to have charge of the defense
of such action or such indemnified party or parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses shall be
borne by the Company, and the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties. Anything
in this paragraph to the contrary notwithstanding, the Company shall not be
liable for any settlement of any such claim or action effected without its
written consent, which shall not be unreasonably withheld. The Company shall
not, without the prior written consent of each indemnified party that is not
released as described in this sentence, settle or compromise any action, or
permit a default or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, in respect of which indemnity may be
sought hereunder (whether or not any indemnified party is a party thereto),
unless such settlement, compromise, consent, or termination includes an
unconditional release of each indemnified party from all liability in respect of
such action. The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against the Company or any of its
officers or directors in connection with the sale of the Shares, the
Registration Statement, any Preliminary Prospectus, any Rule 430A Prospectus, or
the Prospectus, or any amendment or supplement thereto, or any application.
(b) The Underwriter agrees to indemnify and hold harmless the Company,
each director of the Company, each officer of the Company who shall have signed
the Registration Statement, counsel of the Company and each other person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, to the same extent as the foregoing indemnity
from the Company to the Underwriter in Section 8(a), but only with respect to
statements or omissions, if any, made in the Registration Statement, any
Preliminary Prospectus, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any application in
reliance upon, and in conformity with, written information furnished to the
Company as stated in this Section 8(b) with respect to the Underwriter by or on
behalf of the Underwriter expressly for inclusion in the Registration Statement,
any Preliminary Prospectus, or the Prospectus, or any amendment or supplement
thereto, or in any application, as the case may be; provided, however, that the
obligation of the Underwriter to provide indemnity under the provisions of this
Section 8(b) shall be limited to the gross amount of the commission received by
the Underwriter of the Offering. For all purposes of this Agreement, the
information relating to when the Underwriter registered and became a member of
the NASD and the Underwriter's participation in prior offerings constitute the
only information furnished in writing by the Underwriter expressly for inclusion
in the Registration Statement, any Preliminary Prospectus, or the Prospectus (as
from time to time amended or supplemented), or any amendment or supplement
thereto, or in any application, as the case may be. If any action shall be
brought against the Company, or any other person so indemnified based on the
Registration Statement, any Preliminary Prospectus, or the Prospectus, or any
amendment or supplement thereto, or on any application, and in respect of which
E-18
indemnity may be sought against the Underwriter pursuant to this Section 8(b),
the Underwriter shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the indemnified parties, by the provisions of Section 8(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Sections 8(a) or
8(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case or (ii) any indemnified or indemnifying party seeks
contribution under the Act, the Exchange Act, or otherwise, then the Company
(including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed the Registration
Statement, any controlling person of the Company and counsel of the Company), as
one entity and the Underwriter (including for this purpose any contribution by
or on behalf of an indemnified party) as a second entity, shall contribute to
the losses, liabilities, claims, damages, and expenses whatsoever to which any
of them may be subject, in such proportions as are appropriate to reflect the
relative benefits received by the Company and the Underwriter; provided,
however, that if applicable law does not permit such allocation, then other
relevant equitable considerations such as the relative fault of the Company and
the Underwriter in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses shall also be considered. The
relative benefits received by the Company and the Underwriter shall be deemed to
be in the same proportion as (x) the total proceeds from the Offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and (y) the underwriting discounts and commissions received by
the Underwriter, in each case as set forth in the table on the cover page of the
Prospectus and in the footnotes thereto. The relative fault, in the case of an
untrue statement, alleged untrue statement, omission, or alleged omission, shall
be determined by, among other things, whether such statement, alleged statement,
omission, or alleged omission relates to information supplied by the Company or
by the Underwriter, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission. The Company and the Underwriter agree
that it would be unjust and inequitable if the respective obligations of the
Company and the Underwriter for contribution were determined by pro rata or per
capita allocation of the aggregate losses, liabilities, claims, damages, and
expenses (even if the Underwriter and the other indemnified parties were treated
as one entity for such purpose) or by any other method of allocation that does
not reflect the equitable considerations referred to in this Section 8(c). No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 8(c),
each person, if any, who controls the Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and each officer, director,
stockholder, employee, agent, and counsel of the Underwriter shall have the same
rights to contribution as the Underwriter and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement, each director of the Company and counsel of the Company shall have
the same rights to contribution as the Company, subject in each case to the
provisions of this Section 8(c). Anything in this Section 8(c) to the contrary
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notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section 8(c) is intended to supersede any right to contribution under the Act,
the Exchange Act, or otherwise.
9. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
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representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the First Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Company, and the
Underwriter, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by, or on behalf of, the Underwriter or any indemnified
person, or by, or on behalf of, the Company, or any person or entity which is
entitled to be indemnified under Section 8(b), and shall survive termination of
this Agreement or the delivery of the Shares to the purchasers and the
Underwriter's Option to the Underwriter. In addition, the provisions of Sections
5(a), 6, 8, 9, 10 and 12 shall survive termination of this Agreement, whether
such termination occurs before or after the First Closing Date or any Additional
Closing Date, as the case may be.
10. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
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(a) This Agreement shall become effective upon its execution except
that you, at your option, may delay the effectiveness of this Agreement until
the earlier of (i) 11:00 A.M. New York time on the first full business day
following the day on which the Registration Statement becomes effective under
the Act and (ii) the commencement of the public offering by you of the Stock.
In addition to the right to terminate this Agreement pursuant to Section 7
hereof, you shall have the right to terminate this Agreement at any time prior
to the First Closing Date or any Additional Closing Date, as the case may be, by
giving notice to the Company, (i) if any domestic or international event, act,
or occurrence has materially disrupted, or, in your opinion, will in the
immediate future materially disrupt, the securities markets; or (ii) if there
shall have been a general suspension of, or a general limitation on prices for,
trading in securities on the New York Stock Exchange, the American Stock
Exchange or in the over-the-counter market; or (iii) if there shall have been an
outbreak or increase in the level of major hostilities or other national or
international calamity; or (iv) if a banking moratorium has been declared by a
state or federal authority; or (v) if a moratorium in foreign exchange trading
by major international banks or persons has been declared; or (vi) if there
shall have been a material interruption in the mail service or other means of
communication within the United States; or (vii) if the Company or the
Subsidiary shall have sustained a material or substantial loss by fire, flood,
accident, hurricane, earthquake, theft, sabotage, or other calamity or malicious
act, whether or not such loss shall have been insured, or from any labor dispute
or court or government action, order, or decree, which will, in your opinion,
make it inadvisable to proceed with the offering, sale, or delivery of the
Shares; or (viii) if any material governmental restrictions shall have been
imposed on trading in securities in general, which restrictions are not in
effect on the date hereof; or (ix) if there shall be passed by the Congress of
the United States or any state legislature any act or measure, or adopted by any
governmental body, authoritative accounting institute or board, or governmental
executive any orders, rules, or regulations, which you believe likely to have a
material adverse effect on the business, financial condition, or financial
statements of the Company and the Subsidiary or the market for any of the
Company's securities; or (x) if there shall have been a material adverse change
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in the market for the Company's securities or securities in general or in
political, financial, or economic conditions as in your judgment makes it
inadvisable to proceed with the offering, sale, and delivery of the Shares on
the terms contemplated by the Prospectus.
(b) If you elect to prevent this Agreement from becoming effective, as
provided in this Section 10, or to terminate this Agreement, you shall notify
the Company promptly by telephone or telecopy, confirmed by letter.
(c) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Sections 5(a), 6, 8, 9, 10 and 12 shall not be in any way affected
by such termination or failure to carry out the terms of this Agreement or any
part hereof.
11. NOTICES. All communications hereunder, except as may be otherwise
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specifically provided herein, shall be in writing and shall be delivered
personally, transmitted by facsimile transmission confirmed in writing within
three business days thereafter, or sent by prepaid overnight air courier or
registered or certified mail, postage prepaid, return receipt requested, if sent
to you at 000 X. 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xx. Xxxxxxx
Xxxx, Facsimile: (000) 000-0000, with a copy to Squadron, Ellenoff, Plesent &
Xxxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx
X. Xxxx, Esq., Facsimile: (000) 000-0000; or if sent to the Company, at 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxx, Chief
Financial Officer, Facsimile: (000) 000-0000, with a copy to Xxxxxxxxx & Zivian,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxxxxx, Esq.,
Facsimile: (000) 000-0000. All notices hereunder shall be deemed to have been
given (a) when delivered, if delivered personally, or sent by facsimile
transmission and, in the case of facsimile transmission, confirmed in writing
within three business days thereafter, or sent by prepaid overnight air courier
or (b) three business days following the mailing thereof, if mailed by
registered or certified mail, postage prepaid, return receipt requested, in any
such case at the address set forth in this Section 11, or such other address or
addresses as a party may have advised the other party in the manner provided in
this Section 11.
12. PARTIES. This Agreement shall inure solely to the benefit of, and
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shall be binding upon, the Underwriter, the Company, and the persons and
entities referred to in Section 8 who are entitled to indemnification or
contribution, and their respective successors, legal representatives, and
assigns (which shall not include any buyer, as such, of the Shares), and no
other person shall have or be construed to have any legal or equitable right,
remedy, or claim under or in respect of or by virtue of this Agreement or any
provision herein contained.
13. CONSTRUCTION. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
------------
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS.
TIME IS OF THE ESSENCE IN THIS AGREEMENT.
14. CONSENT TO JURISDICTION. THE COMPANY IRREVOCABLY CONSENTS TO THE
-----------------------
JURISDICTION OF XXX XXXXXX XX XXX XXXXX XX XXX XXXX AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT
OF, OR RELATING TO, THIS AGREEMENT, ANY DOCUMENT OR INSTRUMENT DELIVERED
PURSUANT TO, IN CONNECTION WITH, OR SIMULTANEOUSLY WITH THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, THE ESCROW AGREEMENT OR ANY SUBSCRIPTION
AGREEMENT, OR A BREACH OF
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THIS AGREEMENT OR ANY SUCH DOCUMENT OR INSTRUMENT. IN ANY SUCH ACTION OR
PROCEEDING, THE COMPANY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, OR
OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE IN ACCORDANCE WITH
SECTION 11. WITHIN 30 DAYS AFTER SUCH SERVICE, OR SUCH OTHER TIME AS MAY BE
MUTUALLY AGREED UPON IN WRITING BY THE ATTORNEYS FOR THE PARTIES TO SUCH ACTION
OR PROCEEDING, THE COMPANY SHALL APPEAR OR ANSWER SUCH SUMMONS, COMPLAINT, OR
OTHER PROCESS. SHOULD THE COMPANY FAIL TO APPEAR OR ANSWER WITHIN SUCH 30-DAY
PERIOD OR SUCH EXTENDED PERIOD, AS THE CASE MAY BE, THE COMPANY SHALL BE DEEMED
IN DEFAULT AND JUDGMENT MAY BE ENTERED AGAINST THE COMPANY FOR THE AMOUNT AS
DEMANDED IN ANY SUMMONS, COMPLAINT, OR OTHER PROCESS SO SERVED.
If the foregoing correctly sets forth the understanding between you and the
Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
SIGA PHARMACEUTICALS, INC.
BY:
-------------------------------
NAME:
TITLE:
ACCEPTED AS OF THE DATE FIRST ABOVE
WRITTEN IN NEW YORK, NEW YORK
SUNRISE SECURITIES CORP.
BY:
------------------------------------
NAME:
TITLE:
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