UNDERWRITING AGREEMENT
between
NICHE PHARMACEUTICALS, INC.
and
XXXXXXXX XXXXXX & CO., INC.
Dated: , 1997
120243.3
1,300,000 Shares of Common Stock
NICHE PHARMACEUTICALS, INC.
UNDERWRITING AGREEMENT
New York, New York
, 1997
Xxxxxxxx Xxxxxx & Co., Inc.
000 Xxxxxx Xxxx
Xxxxxxxx, X.X. 00000
Dear Sirs:
The undersigned, NICHE PHARMACEUTICALS, INC., a Delaware
corporation (the "Company"), hereby confirms its agreement with XXXXXXXX XXXXXX
& CO., INC. (being referred to herein as "you," the "Representative" or the
"Underwriter"), as follows:
1. Purchase and Sale of Securities.
1.1 Firm Shares.
1.1.1 Purchase of Firm Shares. On the basis of the
representations and warranties and subject to the terms and conditions contained
herein, the Company will issue and sell to the Underwriter 1,300,000 shares (the
"Firm Shares") of the Company's Common Stock, $.01 par value per share (the
"Common Stock"), and the Underwriter agrees to purchase from the Company all of
such shares, at a purchase price of $5.00 per Firm Share. There will be an
underwriting discount of ten percent. The total gross discount and
non-accountable expense allowance shall be subject to approval by the National
Association of Securities Dealers, Inc. ("NASD").
1.1.2 Delivery and Payment. Delivery of and payment for the
Firm Shares shall be made at 10:00 A.M., New York time, on or before the fifth
business day following the effective date (the "Effective Date") of the
Registration Statement (as hereinafter defined), or at such other time as shall
be agreed upon by the Representative and the Company, at the offices of Xxxxxxxx
Xxxxxx & Co., Inc. or at such other place as shall be agreed upon by the
Representative and the Company. The date of delivery and payment for the Firm
Shares is called the "Closing Date." Payment for the Firm Shares shall be made
on the Closing Date by certified or bank cashier's check(s) in New York Clearing
House (next day) funds, payable to the order of the Company upon delivery to the
Representative of certificates (in form and substance complying with applicable
law and satisfactory to the Representative) representing the Firm Shares for the
account of the Underwriter.
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The Firm Shares shall be registered in such names and shall be in such
denominations as the Representative may request in writing at least two (2) full
business days prior to the Closing Date. The Company shall permit the
Representative to examine and package the Firm Shares for delivery at least one
(1) full business day prior to the Closing Date. The Company shall not be
obligated to sell or deliver the Firm Shares, except upon tender of payment by
the Underwriter for all the Firm Shares.
1.2 Overallotment Option.
1.2.1 Grant of Option. For the purposes of covering any
overallotments in connection with the distribution and sale of the Firm Shares,
the Underwriter is hereby granted an option (the "Overallotment Option") to
purchase up to an additional 195,000 shares of Common Stock (the "Option
Shares") from the Company. The Firm Shares and the Option Shares are hereinafter
collectively referred to as the "Shares." The purchase price to be paid for each
Option Share shall be the same as the price paid for each Firm Share pursuant to
Section 1.1.1 hereof.
1.2.2 Exercise of Option. The Overallotment Option may be
exercised by the Representative as to all or any part of the Option Shares at
any time, from time to time, within forty-five (45) days after the Effective
Date. The Underwriter shall not be under any obligation to purchase any Option
Shares prior to the exercise of the Overallotment Option. The Overallotment
Option granted hereby may be exercised by the giving of oral, written or
telegraphic notice (any such oral notice to be confirmed by letter or telecopy
within 24 hours of such oral notice) to the Company by the Representative
setting forth the number of Option Shares to be purchased, the date and time for
delivery of and payment for the Option Shares and stating that the Option Shares
referred to therein are to be used for the purpose of covering overallotments in
connection with the distribution and sale of the Firm Shares. If such notice is
given two (2) full business days prior to the Closing Date, the date set forth
therein for such delivery and payment shall be the Closing Date. If such notice
is given thereafter, the date set forth therein for such delivery and payment
shall not be earlier than five (5) full business days after the date of the
notice. If such delivery and payment for the Option Shares does not occur on the
Closing Date, the date and time of the closing for such Option Shares shall be
as set forth in the notice (the "Option Closing Date"). Upon exercise of the
Overallotment Option, the Company shall convey to the Underwriter the number of
Option Shares specified in such notice, and, subject to the terms and conditions
set forth herein, the Underwriter shall purchase all of the Option Shares.
1.2.3 Delivery and Payment. Payment for the Option Shares
shall be made by certified or bank cashier's check(s) in New York Clearing House
(next day) funds, payable to the order of the
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Company and shall be made at the offices of the Representative or at such other
place as shall be agreed upon by the Representative and the Company, upon
delivery to you of certificates representing the Option Shares being purchased
for the account of the Underwriter. The certificates representing the Option
Shares to be delivered shall be in such denominations and registered in such
authorized names as the Representative requests not less than two (2) full
business days prior to the Closing Date or the Option Closing Date, as the case
may be. The Company will permit the Underwriter to examine and package the
Option Shares for delivery at the aforesaid office of the Company's transfer
agent or correspondent not less than one (1) full business day prior to such
Closing Date.
1.3 Representative's Warrants.
1.3.1 Purchase and Sale. The Company shall issue and sell to
you and/or to such persons as you may designate, on the Closing Date, warrants
for the purchase of an aggregate of 130,000 shares of Common Stock (the
"Representative's Warrants") for an aggregate purchase price of $100.00. The
Representative's Warrants and the shares of Common Stock issuable upon exercise
of the Representative's Warrants are hereinafter referred to collectively as the
"Representative's Securities." The Shares and the Representative's Securities
are hereinafter referred to collectively as the "Securities."
1.3.2 Delivery and Payment. Delivery and payment for the
Representative's Warrants shall be made on the Closing Date. The Company shall
deliver to the Representative, upon payment therefor, certificates for the
Representative's Warrants in the authorized name or names and in such authorized
denominations as the Representative may request. The Representative's Warrants
shall be exercisable for a period of three years commencing one year after the
Effective Date at an initial exercise price of $7.50 per share and shall be
substantially in the form of the Representative's common stock purchase warrant
attached hereto as Exhibit A.
2. Representations and Warranties of the Company. The Company represents
and warrants to the Underwriter that:
2.1 Filings under Securities Laws.
2.1.1 Pursuant to the Act. The Company has filed with the
Securities and Exchange Commission (the "Commission") a registration statement
and an amendment or amendments thereto, on Form SB-2 (Registration No.
333-17767), including any related prospectus subject to completion (a
"Preliminary Prospectus"), for the registration of the Securities under the
Securities Act of 1933, as amended (the "Act"), which registration statement and
amendment or amendments have been prepared by the Company in conformity with
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the requirements of the Act, and the rules and regulations of the Commission
under the Act (the "Regulations"). Except as the context may otherwise
require, such registration statement, as amended, on file with the
Commission at the time the registration statement becomes effective (including
the prospectus, financial statements, schedules, exhibits and all other
documents filed as a part thereof or incorporated therein and all information
deemed to be a part thereof as of such time pursuant to paragraph (b) of Rule
430A of the Regulations), is hereinafter called the "Registration Statement,"
and the form of the final prospectus dated the Effective Date (or, if
applicable, the form of final prospectus filed with the Commission pursuant to
Rule 424 of the Regulations), is hereinafter called the "Prospectus." The
Registration Statement has been declared effective on or prior to the effective
date of this Agreement.
2.1.2 Pursuant to the Exchange Act. The Company has filed with
the Commission a Form 8-A Registration Statement (File No. 0-_____) providing
for the registration under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), of the shares of Common Stock. Such registration of the Common
Stock has been declared effective by the Commission on the date hereof.
2.2 No Stop or Other Orders. Neither the Commission, nor any state
regulatory authority, has issued any order preventing or suspending the use of
any Preliminary Prospectus or has instituted or threatened to institute any
proceedings with respect to such an order.
2.3 Disclosures in Registration Statement.
2.3.1 Representation as to Contents. At the time the
Registration Statement became effective and at all times subsequent thereto up
to the Closing Date and any Option Closing Date, the Registration Statement and
the Prospectus shall contain all material statements that are required to be
stated therein in accordance with the Act and the Regulations, and shall in all
material respects conform to the requirements of the Act and the Regulations;
neither the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, on such dates, shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. When any Preliminary Prospectus was first
filed with the Commission (whether filed as part of the Registration Statement
for the registration of the Securities or any amendment thereof or pursuant to
Rule 424(a) of the Regulations) and when any amendment thereof or supplement
thereto was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied or will comply in all
material respects with the applicable provisions of the Act and the Regulations,
and did not
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and will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The representation and warranty made in this Section 2.3.1 does
not apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company with respect to the
Underwriter expressly for use in the Registration Statement, Preliminary
Prospectus, or Prospectus or any amendment thereof or supplement thereto. The
Company acknowledges that the information referred to in the immediately
preceding sentence consists solely of the information under the heading
"Underwriting" "Risk Factors-NASD Complaint against Underwriter and Others
Alleging violations of Exchange Act and NASD Rules of Fair Practice" and "Risk
Factors - Private Investigation Concerning Trading in Securities of Issuer
Underwritten by Underwriter" in the Prospectus.
2.3.2 Disclosure Regarding Contracts. The description in the
Registration Statement and the Prospectus of contracts, instruments and other
documents is accurate in all material respects and presents fairly the
information required to be disclosed therein. There are no contracts,
instruments or other documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed with the Commission as
exhibits to the Registration Statement, which have not been so described or
filed. Each contract, instrument and other document (however characterized or
described) to which the Company is a party or by which its property or business
is or may be bound or affected and which is referred to in the Prospectus, or
is material to its business, has been duly and validly executed, is in full
force and effect and is enforceable against the parties thereto in accordance
with its terms and none of such contracts, instruments or documents has been
assigned by the Company. Neither the Company nor, to the best knowledge of the
Company, any other party thereto is in default thereunder and no event has
occurred which, with the lapse of time or the giving of notice, or both, would
constitute a default by the Company thereunder.
2.3.3 Prior Securities Transactions. No securities of the
Company have been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by, or under common control
with the Company (or any predecessor), within three years prior to the date
hereof, except as disclosed in the Registration Statement.
2.4 Changes After Dates in Registration Statement.
2.4.1 No Material Adverse Change. Since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, except as otherwise specifically stated therein, (i) there has been
no material adverse
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change in the condition, financial or otherwise, or in the results of
operations, assets, properties, business or business prospects of the Company,
including, but not limited to, any material loss of, or interference with, its
business from fire, storm, explosion, flood or other casualty, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, whether or not arising in the ordinary course of business, and
(ii) there have been no transactions entered into by the Company, other than
those in the ordinary course of business, which are material with respect to the
condition, financial or otherwise, or to the results of operations, business or
business prospects of the Company.
2.4.2 Recent Securities Transactions, Etc. Subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, and except as may otherwise be indicated or contemplated
herein or therein, the Company has not (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money; or (ii)
declared or paid any dividend or made any other distribution on or in respect to
its capital stock.
2.5 Independent Accountants. To the best knowledge of the Company,
Xxxxx Xxxxxxxx, P.C., whose report is filed with the Commission as part of the
Registration Statement, are independent accountants as required by the Act and
the Regulations. The statements included in the Registration Statement with
respect to such accountants are true and correct in all material respects.
2.6 Financial Statements. The financial statements, including the notes
thereto and supporting schedules, if any, included in the Registration Statement
and Prospectus fairly present the financial position, the results of operations
and cash flows of the Company at the dates and for the periods to which they
apply; and such financial statements have been prepared in conformity with
United States generally accepted accounting principles, consistently applied
throughout the periods involved; and the supporting schedules, if any, included
in the Registration Statement present fairly the information required to be
stated therein. No other financial statements or schedules are required to be
included in the Registration Statement. The selected financial data set forth in
the Prospectus under the captions "Summary Financial Information" and
"Capitalization" fairly present the information set forth therein on the basis
stated in the Registration Statement.
2.7 Capitalization. As used herein, the term the "Preferred Stock"
shall mean the Preferred Stock, $.01 par value per share, of the Company. The
Company had at the date or dates indicated in the Registration Statement and
Prospectus duly authorized, issued and outstanding capitalization as set forth
in the Registration Statement and the Prospectus. Based on the assumptions
stated in
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the Registration Statement and the Prospectus, the Company will have on the
Closing Date the adjusted stock capitalization set forth therein. Except as set
forth in the Registration Statement and the Prospectus, on the Effective Date
and on the Closing Date and any Option Closing Date, there will be no options,
warrants, or other rights to purchase or otherwise acquire any authorized but
unissued shares of Common Stock or Preferred Stock or any security convertible
into shares of Common Stock or Preferred Stock, or any contracts or commitments
to issue or sell shares of Common Stock or Preferred Stock or any such options,
warrants, rights or convertible securities.
2.8 Representations Regarding Securities.
2.8.1 Outstanding Securities. All issued and outstanding
securities of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights of rescission
with respect thereto, and are not subject to personal liability by reason of
being such holders; and none of such securities were issued in violation of the
preemptive rights of any holder of any security of the Company or similar
contractual rights granted by the Company. The outstanding options and warrants
to purchase shares of Common Stock constitute the valid and binding obligations
of the Company, enforceable in accordance with their terms, except (i) such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, marshaling and/or similar laws, now or hereafter in
effect affecting creditors rights and remedies and (including such as made deny
giving effect to waivers of debtors' rights, (ii) as enforceability of any
indemnification provision may be limited under Federal and State laws, (iii)
that the remedy of specific performance and injunction and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the courts before which any proceeding therefor may be brought (regardless of
whether such enforceability is considered a proceeding in equity or in law). The
authorized Common Stock, the Preferred Stock and the outstanding options and
warrants to purchase shares of Common Stock conform to all statements relating
thereto contained in the Registration Statement and the Prospectus. The offers
and sales of the outstanding Common Stock, and the options and warrants to
purchase shares of Common Stock, were at all relevant times either registered
under the Act and applicable state securities or Blue Sky Laws or were exempt
from such registration requirements.
2.8.2 Securities Sold Hereunder. The Securities have been duly
authorized and, when issued and paid for, will be validly issued, fully paid and
non-assessable and the holders thereof are not and will not be subject to
personal liability by reason of being such holders; the Securities are not and
will not be subject to the preemptive rights of any holders of any security of
the Company or similar contractual rights granted by the Company; and
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all corporate action required to be taken for the authorization, issuance and
sale of the Securities has been duly and validly taken. When issued, the
Representative's Warrants will constitute valid and binding obligations of the
Company to issue and sell, upon exercise thereof and payment therefor, the
number and type of securities of the Company called for thereby and the
Representative's Warrants are enforceable against the Company in accordance with
their respective terms, except (i) such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, marshaling and/or
similar laws, now or hereafter in effect affecting creditors rights and remedies
and (including such as made deny giving effect to waivers of debtors' rights,
(ii) as enforceability of any indemnification provision may be limited under
Federal and State laws, (iii) that the remedy of specific performance and
injunction and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the courts before which any proceeding
therefor may be brought (regardless of whether such enforceability is considered
a proceeding in equity or in law).
2.9 No Registration Rights. No holder of any securities of the Company
or of any options or warrants of the Company exercisable for or convertible or
exchangeable into securities of the Company has the right to require the Company
to register any such securities of the Company under the Act or to include any
such securities in a registration statement to be filed by the Company,
including the Registration Statement, except as disclosed in the Prospectus.
2.10 Representations Regarding This Agreement. The Company has full
power and authority, corporate and otherwise, to enter into this Agreement. This
Agreement has been duly and validly authorized by the Company and constitutes
the valid and binding agreement of the Company, enforceable against it in
accordance with its terms, except (i) such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, marshaling and/or
similar laws, now or hereafter in effect affecting creditors rights and remedies
and (including such as made deny giving effect to waivers of debtors' rights,
(ii) as enforceability of any indemnification provision may be limited under
Federal and State laws, (iii) that the remedy of specific performance and
injunction and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the courts before which any proceeding
therefor may be brought (regardless of whether such enforceability is considered
a proceeding in equity or in law). The execution, delivery and performance by
the Company of this Agreement, the consummation by the Company of the
transactions herein contemplated and the compliance by the Company with the
terms and conditions hereof have been duly authorized by all necessary corporate
action and do not and will not, with or without the giving of notice or the
lapse of time or both, (i) result in a breach of, or conflict with any of
120243.3
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the terms and provisions of, or constitute a default under, or result in the
creation, modification, termination or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to the terms of,
any indenture, mortgage, deed of trust, note, loan or credit agreement or any
other agreement or instrument evidencing an obligation for borrowed money, or
any other agreement or instrument to which the Company is a party or by which
the Company may be bound or to which any of the property or assets of the
Company is subject, which breach, conflict or default would have a material
adverse effect on the condition (financial or other), business, prospects or
properties of the Company; (ii) result in any violation of the provisions of the
Certificate of Incorporation or the By-Laws of the Company; (iii) violate any
existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over the
Company or any of its properties or business; or (iv) have a material adverse
effect on any permit, license, certificate, registration, approval, consent or
franchise concerning the Company; except in the case of (i) or (iii), where such
default, breach, violation or effect, either singly or in the aggregate, would
not have material adverse effect on the financial condition or results of
operations.
2.11 No Improper Payments. Neither the Company nor, to its knowledge,
any director, officer, employee or agent of the Company has made any payment of
funds of the Company or received or retained any funds in violation of any law,
rule or regulation or of a character required to be disclosed in the Prospectus.
2.12 No Defaults; Violations. Except as set forth in the Prospectus, no
default exists in the due performance and observance of any material term,
covenant or condition of any license, contract, indenture, mortgage, deed of
trust, note, loan or credit agreement, or any other agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or
instrument to which the Company is a party or by which the Company may be bound
or to which any of the properties or assets of the Company is subject. The
Company is not in violation of any term or provision of its Certificate of
Incorporation or By-Laws. The Company is not in violation of any franchise,
license, permit, applicable law, rule, regulation, judgment or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over such
company or any of its properties or business, which violation would result in a
material adverse change in the condition (financial or other), business,
prospects or properties.
2.13 Corporate Power; Licenses; Consents.
2.13.1 Conduct of Business. The Company has all requisite
corporate power and authority, and has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
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regulatory officials and bodies to own or lease its properties and conduct
its business as described in the Prospectus, and such company is and has been
doing business in compliance with all such authorizations, approvals,
orders, licenses, certificates and permits and all federal, state and local
laws, rules and regulations, except where the failure to so comply would not
have a material adverse effect on the condition (financial or other),
business, prospects or properties of the Company.
2.13.2 Required Consents. The Company has obtained all
consents, authorizations, approvals and orders required in connection with the
execution and delivery of this Agreement and the performance of its obligations
hereunder. No consent, authorization or order of, and no filing with, any court,
government agency or other body is required for the valid issuance, sale and
delivery of the Securities pursuant to this Agreement and as contemplated by the
Prospectus, except those required under applicable federal and state securities
laws.
2.14 Title to Property; Insurance. The Company has good and marketable
title to, or valid and enforceable leasehold estates in, all items of real and
personal property (tangible and intangible) owned or leased by it, free and
clear of all liens, encumbrances, claims, security interests, defects and
restrictions (collectively, "Restrictions") of any material nature whatsoever,
other than those referred to in the Prospectus. The Company has adequately
insured its properties against loss or damage by fire or other casualty and
maintains such other insurance, in adequate amounts, as is usually maintained by
companies engaged in the same business or in similar businesses.
2.15 Litigation. Except as set forth in the Prospectus, there is no
action, suit, proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding pending or threatened against, or involving the
properties or business of, the Company which might materially and adversely
affect the financial position, prospects, value or the operation or the
properties or the business of the Company, or which question the validity of the
capital stock of the Company or this Agreement or of any action taken or to be
taken by the Company pursuant to, or in connection with, this Agreement. There
are no outstanding orders, judgments or decrees of any court, governmental
agency or other tribunal naming the Company and enjoining the Company from
taking, or requiring the Company to take, any action, or to which the Company,
or any of its properties or business, is bound or subject.
2.16 Organization; Good Standing. The Company has been duly
organized and is validly existing as a corporation and is in good standing under
the laws of its state of incorporation. The Company is duly qualified and
licensed and in good standing as a foreign corporation in each jurisdiction in
which ownership or leasing of any properties or the character of its operations
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requires such qualification or licensing, except where the failure to qualify
would not have a material adverse effect on the condition (financial or
otherwise) business prospects or properties of the Company.
2.17 Taxes. The Company has filed all returns (as hereinafter defined)
required to be filed with taxing authorities prior to the date hereof or has
duly obtained extensions of time for the filing thereof. The Company has paid
all taxes (as hereinafter defined) shown as due on such returns that were filed
and has paid all taxes imposed on or assessed against it, other than any which
the Company is contesting in good faith. The provisions for taxes payable, if
any, shown on the financial statements filed with or as part of the Registration
Statement are sufficient for all accrued and unpaid taxes, whether or not
disputed, and for all periods to and including the dates of such financial
statements. No issues have been raised (and are currently pending) by any taxing
authority in connection with any of the returns or taxes asserted as due from
the Company, and no waivers of statutes of limitation with respect to the
returns or collection of taxes have been given by or requested from the Company
or any subsidiary thereof. The term "taxes" means all federal, state, local,
foreign, and other net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees, assessments,
or charges of any kind whatever, together with any interest and any penalties,
additions to tax, or additional amounts with respect thereto. The term "returns"
means all returns, declarations, reports, statements, and other documents
required to be filed in respect to taxes.
2.18 Transactions Affecting Disclosure to NASD.
2.18.1 Finders' Fees. To the best knowledge of the Company,
there are no claims, payments, issuances, arrangements or understandings for
services in the nature of finders' or origination fees with respect to the sale
of the Securities hereunder or any other arrangements, agreements,
understandings, payments or issuances with respect to the Company that may
affect the Underwriter's compensation, as determined by NASD, other than
payments to the Representative of a placement agent fee with respect to the
Companies private placement of a $100,000 promissory note and 100,000 Common
Shares which closed on December 9, 1996.
2.18.2 Payments Within Twelve Months. The Company has made any
direct or indirect payments (in cash, securities or otherwise) (i) to any
person, as a finder's fee, investing fee or otherwise, in consideration of such
person raising capital for the Company or introducing to the Company persons who
provided capital to the Company, (ii) to any NASD member, or (iii) to any person
or
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entity that has any direct or indirect affiliation with an NASD member within
the twelve month period prior to December 12, 1996, the date on which the
Registration Statement was filed with the Commission (the "Filing Date") or
thereafter, other than payments to the Representatives.
2.18.3 Use of Proceeds. None of the net proceeds of the
offering will be paid by the Company to any participating NASD member or any of
its affiliates or associated persons. The Underwriter shall approve the
Company's proposed "Use of Proceeds" of the offering.
2.18.4 Insiders' NASD Affiliation. No officer, director or
holder of five percent (5%) or more of any class of securities of the Company
has any direct or indirect affiliation or association with any NASD member. No
beneficial owner of the unregistered securities of the Company has any direct or
indirect affiliation or association with any NASD member. The Company will
advise the Representative and the NASD if the Company becomes aware that any 5%
or greater shareholder, or any officer or director, of the Company becomes an
affiliate or associated person of an NASD member.
2.19 Internal Accounting Controls. The Company maintains, and the
Company will continue to maintain, a system of internal accounting control
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
2.20 Nasdaq Listing. As of the Effective Date, the Shares have been
approved for listing on the National Association of Securities Dealers Automated
Quotation ("Nasdaq") SmallCap Market System [and the Boston Stock Exchange].
2.21 Intangibles. The Company owns or possesses the requisite licenses
or rights to use all trademarks, service marks, service names, trade names,
patents and patent applications, copyrights and other rights (collectively, the
"Intangibles") owned or used by it. The Intangibles owned or used by the Company
has been registered in the United States Patent and Trademark Office and/or the
United States Copyright Office and have been fully maintained and are in full
force and effect. There is no claim or action by any person, or proceeding
pending or, to the knowledge of the Company, threatened, and the Company has not
received any notice of conflict with the asserted rights of others, which
challenges the exclusive
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right of the Company with respect to any Intangibles used in the conduct of the
business of the Company. To the knowledge of the Company, neither its
Intangibles, nor its current products, services and processes infringe on any
intangibles held by any third party. To the best knowledge of the Company, no
others have infringed or are infringing upon the Intangibles of the Company.
2.22 Employee Matters.
2.22.1 Relations With Employees. The Company has generally
enjoyed a satisfactory relationship with its employees and is in compliance with
all federal, state and local laws and regulations respecting the employment of
its employees and employment practices, terms and conditions of employment and
wages and hours relating thereto. There are no pending investigations involving
the Company by the U.S. Department of Labor or any other governmental agency
responsible for the enforcement of such federal, state or local laws and
regulations. There is no unfair labor practice charge or complaint against the
Company pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or threatened against
or involving the Company or any predecessor entity, and none has ever occurred.
No issue concerning representation exists respecting the employees of the
Company and no collective bargaining agreement or modification thereof is
currently being negotiated by the Company. No grievance or arbitration
proceeding is pending or threatened under any expired or existing collective
bargaining agreement of the Company, if any.
2.22.2 Employee Benefit Plans. Other than as set forth in the
Registration Statement, the Company does not maintain, sponsor or contribute to,
nor is it required to maintain, sponsor or contribute to, any program or
arrangement that is an "employee pension benefit plan," an "employee welfare
benefit plan," or a, "multi-employer plan" (each, an "ERISA Plan") as such terms
are defined in Sections 3(2), 3(1) and 3(37), respectively, of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The Company has at
any time maintained or contributed to a defined benefit plan, as defined in
Section 3(35) of ERISA. If the Company does maintain or contribute to a defined
benefit plan, any termination of the plan on the date hereof would not give rise
to liability under Title IV of ERISA. No ERISA Plan (or any trust created
thereunder) has engaged in a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), which could subject the Company to any tax penalty for
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to any such ERISA Plan.
Determination letters have been received from the Internal Revenue Service with
respect to each ERISA Plan that is intended to comply with Code Section 401(a),
stating that such ERISA Plan and
120243.3
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the attendant trust are qualified thereunder. The Company has not ever
completely or partially withdrawn from a "multi-employer plan."
2.23 Investment Company Representations. The Company is not an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
2.24 Officer's Certificate. Any certificate signed by any duly
authorized officer of the Company and delivered to you or to your counsel shall
be deemed a representation and warranty by such Company to the Representative as
to the matters covered thereby.
2.25 Lock-Up Agreements With Insiders. The Company has caused to be
duly executed legally binding agreements enforceable in accordance with their
respective terms, except (a) such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, marshaling and/or similar
laws, now or hereafter in effect affecting creditors rights and remedies and
(including such as made deny giving effect to waivers of debtors' rights, (b) as
enforceability of any indemnification provision may be limited under Federal and
State laws, (c) that the remedy of specific performance and injunction and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the courts before which any proceeding therefor may be brought
(regardless of whether such enforceability is considered a proceeding in equity
or in law) pursuant to which (i) the persons listed on Appendix I hereto and
their family members and affiliates (as defined in the securities laws)
(collectively, the "Insiders") agree not to sell any shares of Common Stock or
warrants or options to purchase Common Stock or securities convertible into
Common Stock owned by them (either pursuant to Rule 144 of the Regulations or
otherwise) for a period of two years following the Effective Date and (ii) the
persons listed on Appendix II hereto and their family members and affiliates (as
defined in the securities laws) (collectively, the "Non-Insider Shareholders")
agree not to sell any shares of Common Stock or warrants or options to purchase
Common Stock or securities convertible into Common Stock owned by them (either
pursuant to Rule 144 of the Regulations or otherwise) for a period of six (6)
months following the Effective Closing Date, except in any such case with the
prior written consent of the Representative (other than by the laws of descent
and distribution). In order to enforce such agreements, the Company shall impose
stop transfer instructions with respect to all such shares of Common Stock or
warrants or options to purchase Common Stock or securities convertible into
Common Stock until the end of the applicable period.
120243.3
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2.26 No Stabilization or Manipulation. Neither the Company, nor any of
its officers, directors or controlling persons, has taken, or will take,
directly or indirectly, any action designed, or which reasonably might be
expected, to cause or result, under the Act, the Exchange Act or otherwise, in,
or that has constituted, stabilization or manipulation of the price of any
security of the Company or to facilitate the sale or resale of the Shares.
2.27 Subsidiaries. The representations and warranties made by the
Company in this Agreement shall, in the event that it has one or more
subsidiaries (the "subsidiary(ies)") also apply and be true with respect to each
subsidiary, individually (except as the context otherwise requires) and taken as
a whole with the respective company of which it is a subsidiary and all other
subsidiaries thereof, as if each representation and warranty contained herein
made specific reference to each subsidiary each time the term "Company" was
used. Except as described in the Prospectus, the Company does not own any
interest in any corporation, partnership, joint venture, trust or other business
entity.
2.28 Other Agreements. The Company shall enter into three-year
employment contracts with each of Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxx and adopt
a 1996 Senior Executive Stock Option Plan, as described in the Prospectus, with
terms subject to the Underwriter's approval.
3. Representative's Representations and Warranties.
The Representative represents and warrants to the Company that:
3.1 Organization: Good Standing. The Representative has been duly
organized and is validly existing as a corporation and is in good standing under
the laws of its state of incorporation.
3.2 Corporate Power; Licenses; Consents. The Representative is
registered as a broker-dealer with the Securities and Exchange Commission and in
each state where such registration is required where the Representative acts as
a broker-dealer.
3.3 Binding Obligation; Enforceability. This Agreement and the
transactions contemplated hereby have been duly authorized by, an executed on
behalf of the Representative and constitute the valid and binding obligations of
the Representative, enforceable in accordance with its terms, except (i) such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, marshaling and/or similar laws, now or hereafter in
effect affecting creditors rights and remedies and (including such as made deny
giving effect to waivers of debtors' rights, (ii) as
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enforceability of any indemnification provision may be limited under Federal and
State laws, (iii) that the remedy of specific performance and injunction and
other forms of equitable relief may be subject to the equitable defenses and to
the discretion of the courts before which any proceeding therefor may be brought
(regardless of whether such enforceability is considered a proceeding in equity
or in law).
4. Covenants of the Company. The Company covenants and agrees with the
Underwriter as follows:
4.1 Amendments to Registration Statement. The Company shall deliver to
the Representative, prior to filing, any amendment or supplement to the
Registration Statement or Prospectus proposed to be filed after the Effective
Date and shall not file any such amendment or supplement to which the
Representative shall reasonably object.
4.2 Federal Securities Laws.
4.2.1 Compliance. During the time when a Prospectus is
required to be delivered under the Act, the Company shall use all reasonable
efforts to comply with all requirements imposed upon it by the Act, the
Regulations and the Exchange Act and by the regulations under the Exchange Act,
as from time to time in force, so far as necessary to permit the continuance of
sales of or dealings in the Shares in accordance with the provisions hereof and
the Prospectus. If at any time when a Prospectus relating to the Shares is
required to be delivered under the Act, any event shall have occurred as a
result of which, in the opinion of counsel for the Company or counsel for the
Underwriter, the Prospectus, as then amended or supplemented, 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, in light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company shall notify the Representative promptly and prepare and file with the
Commission, subject to Section 4.1 hereof, an appropriate amendment or
supplement in accordance with Section 10 of the Act.
4.2.2 Filing of Final Prospectus. The Company shall file
the Final Prospectus (in form and substance satisfactory to the Representative)
with the Commission pursuant to the requirements of Rule 424 of the Regulations.
4.2.3 Exchange Act Registration. For a period of five years
from the Effective Date, the Company will use its best efforts to maintain
registration of the Common Stock under the provisions of the Exchange Act.
120243.3
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4.2.4 Financial Printer. The Preliminary Prospectuses shall
be printed by a financial printer selected by the Company and approved by the
Underwriter.
4.3 Blue Sky Filings. The Company shall endeavor in good faith, in
cooperation with the Representative and its counsel, at or prior to the time the
Registration Statement becomes effective, to qualify the Shares for offering and
sale under the securities laws of such jurisdictions as the Representative may
reasonably designate, provided 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 would be required to qualify to do business as a
foreign corporation. In each jurisdiction where such qualification shall be
effected, the Company shall, unless the Representative agrees that such action
is not at the time necessary or advisable, use all reasonable efforts to file
and make such statements or reports at such times as are or may be required by
the laws of such jurisdiction. All blue sky work shall be undertaken by Xxxxxx
Xxxxxxxx Frome & Xxxxxxxxxx LLP, counsel to the Underwriter, and the Company
shall pay for all related expenses and disbursements incurred by such counsel.
4.4 Delivery of Filings to Underwriter. The Company shall deliver to
the Underwriter, without charge, from time to time during the period when the
Prospectus is required to be delivered under the Act or the Exchange Act, such
number of copies of each Preliminary Prospectus and the Prospectus as the
Underwriter may reasonably request and, immediately after the Registration
Statement or any amendment or supplement thereto is filed, deliver to the
Representative two (2) executed original Registration Statements, including
exhibits, and all post-effective amendments thereto and copies of documents
filed therewith or incorporated therein by reference and all executed original
consents of certified experts.
4.5 Effectiveness and Events Requiring Notice to the Representative.
The Company shall use its best efforts to cause the Registration Statement to
remain effective until the later of the completion by the Underwriter of the
distribution of the Shares (but in no event more than 9 months after the date on
which the Registration Statement shall have been declared effective) or 25 days
after the date on which the Registration Statement shall have been declared
effective and shall notify the Representative immediately and shall promptly
confirm the notice in writing of (i) the effectiveness of the Registration
Statement and any amendment thereto, (ii) the issuance by the Commission of any
stop order or of the initiation, or the threatening, of any proceeding for that
purpose, (iii) the issuance by any state securities commission of any
proceedings for the suspension of the qualification of the Shares for offering
or sale in any jurisdiction or of the initiation, or the threatening, of any
proceeding for that purpose, (iv) the mailing and delivery to the Commission for
filing of any amendment or supplement to the Registration Statement or
120243.3
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Prospectus, (v) the receipt of any comments or request for any additional
information from the Commission, and (vi) the happening of any event during
the period described in Section 4.4 hereof that makes any statement of a
material fact made in the Registration Statement or the Prospectus untrue or
that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company shall make every reasonable effort to
obtain promptly the lifting of such order.
4.6 Unaudited Financials. The Company shall furnish to the
Representative as early as practicable prior to the date hereof and the Closing
Date, but no later than two (2) full business days prior thereto, a copy of the
latest available unaudited interim financial statements (the "Unaudited
Financials") of the Company prepared in a manner consistent with that included
in the Registration Statement (which in no event shall be as of a date more than
sixty (60) days prior to the Effective Date) which have been read by the
Company's independent accountants, as stated in their letter to be furnished
pursuant to Section 5.3 hereof.
4.7 Reports to the Underwriters.
4.7.1 Periodic Reports, Etc. For a period of five (5) years
following the Effective Date, the Company shall, simultaneously with the release
or filing thereof, as the case may be, furnish to the Representative, (i) copies
of such financial statements and other periodic and special reports as the
Company from time to time furnishes generally to holders of any class of its
securities, (ii) a copy of each periodic report the Company shall be required to
file with the Commission, (iii) a copy of every press release and every news
item and article with respect to the Company or its affairs which was released
by the Company, (iv) copies of each Form SR filed by the Company, (v) a copy of
each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the
Company, and (vi) such additional documents and information with respect to the
Company and the affairs of any future subsidiaries of the Company as the
Representative may from time to time reasonably request.
4.7.2 Transfer Sheets. For a period of three years from the
Closing Date, the Company will furnish to the Representative at the Company's
sole expense such transfer sheets of the Company's securities as the
Representative may request, including the daily, weekly and monthly consolidated
transfer sheets of the transfer agent of the Company.
4.8 Delivery of Representative's Warrants. On the Closing
Date, the Company shall execute and deliver to the Representative
120243.3
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the Representative's Warrants substantially in the form filed as Exhibit __ to
the Registration Statement.
4.9 Payment of Expenses.
4.9.1 General Expenses. The Company shall pay on each of the
Closing Date and any Option Closing Date to the extent not paid at the Closing
Date, all expenses incident to the performance of the obligations of the Company
under this Agreement, including, but not limited to, (i) the preparation,
printing, filing and mailing (including the payment of postage with respect to
such mailing) of the Registration Statement, the Preliminary Prospectuses and
the Prospectus and the printing and mailing of this Agreement and related
documents, including the cost of all copies thereof and any amendments or
supplements thereto supplied to the Underwriter in quantities as may be required
by the Underwriter, (ii) the printing, engraving, issuance and delivery of the
Shares and the Representative's Warrants, including any transfer taxes and other
taxes payable thereon, (iii) the qualification of the Shares under state or
foreign securities or Blue Sky laws, including the costs of printing and mailing
the "Preliminary Blue Sky Memorandum," and all amendments and supplements
thereto, fees and disbursements for the Underwriter's Blue Sky counsel, which
fees shall not exceed an aggregate of $35,000.00 ($15,000.00 of which has
already been paid),and fees and disbursements of local counsel, if any, retained
for such purpose, (iv) applications for assignments of a rating of the Shares by
qualified rating agencies, (v) filing fees, costs and expenses incurred in
registering the offering with the NASD, (vi) costs of placing "tombstone"
advertisements in publications that shall be reasonably selected by the
Representative, (vii) fees and disbursements of the transfer agent, (viii) the
Company's expenses associated with "due diligence" meetings arranged by the
Representative; (ix) the preparation, binding and delivery of four transaction
bound volume sets for the Representative; (x) any listing of the Shares on the
Nasdaq SmallCap Market System or on any securities exchange or any listing in
Standard & Poor's Corporation Records or Xxxxx'x OTC Industrial Manual, and (xi)
all other costs and expenses incident to the performance of its obligations
hereunder that are not otherwise specifically provided for in this Section
4.9.1. Since an important part of the public offering process is for the Company
to appropriately and accurately describe both the background of the principals
of the Company and the Company's competitive position in its industry, the
Company will engage, if requested by the Underwriter, and will pay for, an
investigative search firm of the Representative's choice to conduct an
investigation of principals of the Company and its predecessors and affiliates
designated by the Representative. The Representative may deduct from the net
proceeds of the offering payable to the Company on the Closing Date, or on any
Option Closing Date, the expenses set forth herein to be paid by the Company. If
this Agreement shall not be carried out for any reason
120243.3
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whatsoever, the Company shall remain liable for all of its actual out-of-pocket
expenses pursuant to this Section 4.9.1.
4.9.2 Representatives' Expenses. In addition to the expenses
payable pursuant to Section 4.9.1, the Company shall pay to the Representative a
non-accountable expense allowance in an amount not to exceed (i) $195,000 on the
Closing Date, and (ii) $29,250 on the final Option Closing Date, in each case by
certified or bank cashier's check or, at the election of the Representative, by
deduction from the proceeds of the offering contemplated hereby. If the offering
contemplated by this Agreement is not consummated for any reason, the Company
shall be liable for the accountable expenses of the Representatives, including,
but not limited to, legal fees, Blue Sky counsel fees, and "road show" and due
diligence expenses, to a maximum of $200,000, less any payments previously made
therefor.
4.10 Application of Net Proceeds. The Company shall apply the net
proceeds from the offering received by it in a manner consistent with the
application described under the caption "Use of Proceeds" in the Prospectus and
shall file such reports with the Commission with respect to the sale of the
Shares and the application of the proceeds therefrom as may be required pursuant
to Rule 463 under the Act.
4.11 Delivery of Earnings Statements to Security Holders. The
Company shall make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth full calendar
month following the Effective Date, an earnings statement (which need not be
certified by independent public or independent certified public accountants
unless required by the Act or the Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Act) covering a period of
at least twelve (12) consecutive months beginning on the date immediately after
the Effective Date.
4.12 Reservation of Shares. The Company shall reserve and keep
available that maximum number of its authorized but unissued shares of Common
Stock as is issuable upon the exercise of the Representative's Warrants.
4.13 Board of Directors. For a period of three years from the Effective
Date, the Company will (i) pay a financial consulting fee to the Underwriter, to
be accrued at the rate of $2,777.78 per month (which shall be prepaid in its
entirety on the Closing Date); and (ii) recommend and use its best efforts to
elect a designee of the Underwriter as a member of its Board of Directors. If
for whatever reason the Underwriter does not designate a member of the Company's
Board of Directors, the Underwriter shall nevertheless have the right to send a
representative (who need not be the same individual from meeting to meeting) to
observe each meeting of the Board of Directors. The Company agrees to give the
Underwriter
120243.3
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written notice of each such meeting and to provide the Underwriter with an
agenda and minutes of the meeting no later than the time it gives such notice
and provides such items to the other directors. The Company agrees to provide
such director or representative of the Underwriter: (i) the same compensation
and expense reimbursement as would be paid to non-officer directors of the
Company; and (ii) the same indemnification and insurance protection as is
afforded generally to officers and directors of the Company.
4.14 Press Releases. The Company shall not issue a press release or
engage in any other publicity until twenty-five (25) days after the Effective
Date, without the Representative's prior written consent, which consent shall
not be unreasonably withheld.
4.15 Nasdaq Maintenance. For a period of five years from the date
hereof, the Company shall use its best efforts to maintain the listing of the
Common Stock on the Nasdaq SmallCap Market [and the Boston Stock Exchange] for
not less than five years, unless otherwise agreed to by the Underwriter.
4.16 Key Person Life Insurance. For a period of at least three years
following the Effective Date, the Company shall maintain key person life
insurance with an insurance company which is reasonably satisfactory to the
Representative in an amount no less than $2 million in the aggregate on the
lives of each of Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxx, naming the Company as the
sole beneficiary thereof.
4.17 Disqualification of Form S-1 (or other appropriate form). For a
period equal to seven years from the date hereof, the Company will not take any
action or actions which may prevent or disqualify the Company's use of Form S-1
(or other appropriate form) for the registration under the Act of the shares
underlying the Representative's Warrants.
4.18 Transfer Agent. The Company shall retain a transfer agent
acceptable to the Underwriter for the Common Stock for a period of five years
following the Effective Date.
4.19 Accountants. For a period of three years from the Effective Date,
the Company will not effect a change in its accounting firm without the prior
written consent of the Representative, which consent will not be unreasonably
withheld, except that no such consent is required if the new firm is a member of
the so-called "Big Six."
4.20 Professional Services. The Company shall retain attorneys and
accountants acceptable to the Underwriter to assist the Company in preparation
of the Registration Statement and the Prospectus. If requested by the
Underwriter, the Company will retain a financial public relations firm and/or an
advertising
120243.3
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agency to assist in the preparation of the Registration Statement and Prospectus
and for up to two years after the Effective Date.
4.21 Sale of Securities. The Company will not, without obtaining the
prior written of the Representative, (i) issue or sell in any manner, whether by
private placement, public offering or otherwise, any of its securities, other
than the Representative's Warrants, Common Stock upon the exercise of the
Representative's Warrants or any other currently outstanding warrant or option,
options (and Common Stock, upon the exercise thereof) under the Company's stock
option plans as currently in effect, or securities issued in connection with an
acquisition or corporate combination, for a period of two years following the
Closing Date, or (ii) permit or cause a private or public sale or private or
public offering of any of its securities (in any manner, including pursuant to
Rule 144 under the Act) owned nominally or beneficially by (A) any of the
Insiders for a period of two years following the Closing Date or (B) any of the
Non-Insider Shareholders for a period of six months following the Closing Date.
4.22 Exercise Price of Options/Warrants. For a period of twelve months
after the Effective Date, the Company will not grant or issue options to
purchase more than 150,000 shares of the Company's Common Stock pursuant to the
Company's 1996 Non-Senior Executive Stock Option Plan, and the exercise price of
such options shall not be less than the fair market value of the Common Stock on
the date of the grant.
4.23 Insiders Sales. During the three year period following the
Effective Date, the Underwriter shall have the right to purchase for the
Underwriter's account or to sell for the account of any of the Company's
officers or directors, by any persons or entities currently owning shares or
options to purchase five percent or more of the shares of Common Stock on the
Effective Date, or by the Insiders, any securities of the Company sold by the
Insiders pursuant to Rule 144 under the Act. Each of the Insiders will agree to
offer the Underwriter the exclusive opportunity to purchase or sell such
securities on terms at least as favorable to the Insiders as they can secure
elsewhere.
5. Conditions of the Underwriter's Obligations. The obligations of the
Underwriter to purchase and pay for the Shares, as provided herein, shall be
subject to the continuing accuracy of the representations and warranties of the
Company as of the date hereof and as of each of the Closing Date and any Option
Closing Date to the accuracy of the statements of officers of the Company made
pursuant to the provisions hereof and to the performance by the Company of its
obligations hereunder and to the following conditions:
5.1 Regulatory Matters.
120243.3
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5.1.1 Effectiveness of Registration Statement. The
Registration Statement shall have become effective not later than 5:00 P.M.,
New York time, on the date of this Agreement or such later date and time as
shall be consented to in writing by you, and, at each of the Closing Date and
any Option Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for the purpose
shall have been instituted or shall be pending or contemplated by the Commission
and any request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of Xxxxxx Xxxxxxxx Frome
& Xxxxxxxxxx LLP, counsel to the Underwriter.
5.1.2 NASD Clearance. On or before the Effective Date, the
Representative shall have received clearance from the NASD as to the amount of
compensation allowable or payable to the Underwriter as described in the
Registration Statement.
5.1.3 No Blue Sky Stop Orders. No order suspending the sale of
the Shares in any jurisdiction designated by you pursuant to Section 4.3 hereof
shall have been issued either on the Closing Date or any Option Closing Date,
and no proceedings for that purpose shall have been instituted or shall be
contemplated.
5.2 Counsel Matters.
5.2.1 Closing Date Opinion of Counsel. On the Closing Date,
the Representative shall have received the favorable opinion of Certilman Balin
Xxxxx & Xxxxx, LLP, counsel to the Company, dated the Closing Date, addressed to
the Underwriter and in form and substance satisfactory to Xxxxxx Xxxxxxxx Frome
& Xxxxxxxxxx LLP, counsel to the Underwriter, to the effect that:
(i) The Company has been duly organized and is
validly existing as a corporation and is in good standing under the laws of its
state of incorporation and is duly qualified and licensed and in good standing
as a foreign corporation in Texas, which to the knowledge of such counsel is the
only jurisdiction in which its ownership or leasing of any properties or the
character of its operations requires such qualification or licensing (except
where the failure to be so qualified or licensed would not have a material
adverse effect on the Company).
(ii) The Company has all requisite corporate power
and authority, and, to such counsel's knowledge, has all necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental or regulatory officials and bodies, to own or lease its
properties and to conduct its business as described in the Prospectus, and, to
such counsel's knowledge, is in compliance with all such authorizations,
approvals, orders, licenses, certificates and permits and all federal, state and
local laws, rules and regulations. The Company has all requisite corporate
120243.3
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power and authority to enter into this Agreement and to carry out the terms and
conditions hereof. To such counsel's knowledge, no consents, approvals,
authorizations or orders of, and no filing with any court or governmental agency
or body (other than such as may be required under the Act and applicable Blue
Sky laws), is required for the valid authorization, issuance, sale and
delivery of the Securities, and the consummation of the transactions and
agreements contemplated by this Agreement and the Representative's Warrants,
and as contemplated by the Prospectus or, if required, all such authorizations,
approvals, consents, orders, registrations, licenses and permits have been duly
obtained and are in full force and effect and have been disclosed to the
Representatives.
(iii) All issued and outstanding securities
of the Company have been duly authorized and validly issued and are fully
paid and non-assessable; to such counsel's knowledge, the holders thereof have
no rights of rescission with respect thereto and are not subject to personal
liability by reason of being such holders; and, to such counsel's knowledge,
none of such securities were issued in violation of the preemptive rights of
any holders of any security of the Company or similar contractual rights
granted by the Company. The outstanding options and warrants, if any, to
purchase shares of Common Stock constitute the valid and binding obligations
of the Company, enforceable in accordance with their respective terms,
except (i) such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, marshaling and/or similar laws, now
or hereafter in effect affecting creditors rights and remedies and (including
such as made deny giving effect to waivers of debtors' rights, (ii) as
enforceability of any indemnification provision may be limited under Federal
and State laws, (iii) that the remedy of specific performance and
injunction and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the courts before which any proceeding
therefor may be brought (regardless of whether such enforceability is
considered a proceeding in equity or in law). Prior to the completion of the
offering, the offers and sales of the outstanding Common Stock and options and
warrants to purchase shares of Common Stock have been at all relevant times
either registered under the Act and the applicable state securities or Blue
Sky Laws or exempt from such registration requirements. The authorized and
outstanding capital stock of the Company is as set forth under the caption
"Capitalization" in the Prospectus.
(iv) The Securities have been duly authorized
and, when issued, paid for and delivered in accordance herewith, will be validly
issued, fully paid and non-assessable; the holders thereof are not and will not
be subject to personal liability by reason of being such holders. The Securities
are not and will not be subject to the preemptive rights of any holders of any
security of the Company pursuant to the provisions of the Company's
120243.3
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Certificate of Incorporation or, to such counsel's knowledge, similar
contractual rights granted by the Company. All corporate action required to be
taken for the authorization, issuance and sale of the Securities has been duly
and validly taken. When issued, the Representative's Warrants will constitute
valid and binding obligations of the Company to issue and sell, upon exercise
thereof and payment therefor, the number and type of securities of the Company
called for thereby and the Representative's Warrants, when issued, will be
enforceable against the Company in accordance with their terms, except (a) such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, marshaling and/or similar laws, now or hereafter in
effect affecting creditors rights and remedies and (including such as made deny
giving effect to waivers of debtors' rights, (b) as enforceability of any
indemnification provision may be limited under Federal and State laws, (c) that
the remedy of specific performance and injunction and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of the
courts before which any proceeding therefor may be brought (regardless of
whether such enforceability is considered a proceeding in equity or in law).
(v) To such counsel's knowledge, except as set
forth in the Prospectus, or for Common Shares included in the Prospectus, no
holders of any securities of the Company or of any options, warrants or
securities of the Company exercisable for or convertible or exchangeable into
securities of the Company has the right to require the Company to register any
such securities under the Act or to include any such securities in a
registration statement to be filed by the Company.
(vi) The Shares have been approved for listing on
Nasdaq SmallCap Market System [and the Boston Stock Exchange].
(vii) This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except (a) such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, marshaling and/or similar
laws, now or hereafter in effect affecting creditors rights and remedies and
(including such as made deny giving effect to waivers of debtors' rights, (b) as
enforceability of any indemnification provision may be limited under Federal and
State laws, (c) that the remedy of specific performance and injunction and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the courts before which any proceeding therefor may be brought
(regardless of whether such enforceability is considered a proceeding in equity
or in law). The Representative's Warrants have been duly and validly authorized,
executed and delivered by the Company and constitute the valid and binding
obligations of the Company, enforceable against the Company in
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accordance with their terms, except (a) such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, marshaling and/or
similar laws, now or hereafter in effect affecting creditors rights and remedies
and (including such as made deny giving effect to waivers of debtors' rights,
(b) as enforceability of any indemnification provision may be limited under
Federal and State laws, (c) that the remedy of specific performance and
injunction and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the courts before which any proceeding
therefor may be brought (regardless of whether such enforceability is considered
a proceeding in equity or in law).
(viii) The execution, delivery and performance of
this Agreement and the Representative's Warrants, the issuance and sale of the
Securities, the consummation of the transactions contemplated hereby and thereby
and the compliance by the Company with the terms and provisions hereof and
thereof, do not and will not, with or without the giving of notice or the lapse
of time, or both, (a) to such counsel's knowledge, conflict with, or result in a
breach of, any of the terms or provisions of, or constitute a default under, or
result in the creation or modification of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company pursuant to the
terms of, any material mortgage, deed of trust, note, indenture, loan, contract,
commitment or other material agreement or instrument known to such counsel, to
which the Company is a party or by which the Company or any of its properties or
assets may be bound, (b) result in any violation of any of the provisions of the
Certificate of Incorporation or the By-Laws of the Company, (c) to such
counsel's knowledge, violate any statute or any judgment, order or decree, rule
or regulation applicable to the Company of any court, domestic or foreign, or of
any federal, state or other regulatory authority or other governmental body
having jurisdiction over the Company, its properties or assets, or (d) to such
counsel's knowledge have a material adverse effect on any permit, license,
certification, registration, approval, consent, or franchise of the Company.
(ix) The Registration Statement, each Preliminary
Prospectus and the Prospectus and any post-effective amendments or supplements
thereto (other than the financial statements and notes thereto and other
financial, numerical, accounting and statistical data included therein or
omitted therefrom, as to which no opinion need be rendered) comply as to form in
all material respects with the requirements of the Act and the Regulations. The
Securities and all other securities issued or issuable by the Company conform in
all material respects to the description thereof contained in the Registration
Statement and the Prospectus. All statements in the Prospectus (other than those
set forth under the caption "Underwriting, "Risk Factors-NASD Complaint Against
Underwriter and Others Alleging Violations of Exchange Act and NASD Rules of
Fair Practice" and "Risk Factors-Private Investigation Concerning
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Trading and Securities of Issuer Underwritten by Underwriter") have been
reviewed by such counsel and, insofar as they refer to statements of law,
descriptions of statutes, licenses, rules or regulations, or legal conclusions
are correct in all material respects. Each statute or regulation or legal or
governmental proceeding required to be described in the Prospectus is not
described as required, and all contracts, instruments or other documents known
to such counsel, of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement are so described or filed as required.
(x) Such counsel has participated in one or more
personal or telephonic conferences with officers and other representatives of
the Company, representatives of the independent public accountants for the
Company, the Representative and/or counsel to the Underwriter at which the
contents of the Registration Statement and Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (except as otherwise
expressly set forth in its opinion), on the basis of the foregoing (relying as
to the factual matters upon the statements of officers and other representatives
of the Company and State officials) no facts have come to the attention of such
counsel that caused it to believe that the Registration Statement (other than
the financial statements and notes thereto and other financial, numerical,
statistical and accounting data included therein, or omitted therefrom, as to
which no opinion is requested or need be rendered) as amended or supplemented,
at the time such Registration Statement became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading (other
than information omitted therefrom in reliance on Rule 430A under the Act), or
the Prospectus (other than the financial statements and notes thereto and other
financial, numerical, statistical and accounting data included therein, or
omitted therefrom, as to which no opinion is requested or need be rendered) as
amended or supplemented, as of its date, contained an untrue statement of
material fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(xi) The Registration Statement is effective
under the Act and to such counsel's knowledge no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted, are pending or are threatened under the
Act or applicable state securities laws.
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(xii) To such counsel's knowledge, there is no
claim or action by any person pertaining to, or proceeding, pending or
threatened, which challenges the exclusive rights of the Company with respect to
any Intangibles used in the conduct of its business (including, but not limited
to, any such licenses or rights described in the Prospectus as being owned or
possessed by the Company).
(xiii) To such Counsel's knowledge, except as
described in the Prospectus, no default exists in the due performance and
observance of any term, covenant or condition of any material license, contract,
indenture, mortgage, deed of trust, note, loan or credit agreement, or any other
material agreement, instrument or other document evidencing an obligation for
borrowed money, or any other material agreement, instrument or other document to
which the Company is a party or by which the Company may be bound or to which
any of the properties or assets of the Company is subject. To such Counsel's
knowledge, the Company is not in violation of any term or provision of its
Certificate of Incorporation or By-Laws, or, to the best of such counsel's
knowledge, any material franchise, license, permit, applicable law, rule,
regulation, judgment or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
business, except as described in the Prospectus.
(xiv) To such counsel's knowledge, except as set
forth in the prospectus, there are no claims, payments, issuances, arrangements
or understandings for services in the nature of a finder's or origination fee
with respect to the sale of the Securities hereunder or financial consulting
arrangements or any other arrangements, agreements, understandings, payments or
issuances that may affect the Underwriter's compensation, as determined by the
NASD, in connection with the order and sale of the Shares.
(xv) To such counsel's knowledge, except as
described in the Prospectus, the Company does not own any interest in any
corporation, partnership, joint venture, trust or other business entity.
(xvi) To such counsel's knowledge, except as set
forth in the Prospectus, there is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or
threatened against the Company, which would have a material adverse effect on
the Company.
5.2.2 Option Closing Date Opinion of Counsel. On the Option
Closing Date, if any, the Representative shall have received the opinion of
Certilman Balin Xxxxx & Xxxxx, LLP, counsel to the Company, and dated the Option
Closing Date, addressed to the Underwriter and in form and substance reasonably
satisfactory to
120243.3
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Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP, counsel to the Underwriter, confirming,
as of the Option Closing Date, the statements made by such counsel to the
Company in their opinion delivered on the Closing Date.
5.2.3 Reliance. In rendering such opinions, such
counsel may rely (i) as to matters involving the application of laws other than
the laws of the United States, the General Corporation Law of the States of
Delaware and New York and jurisdictions in which they are admitted, to the
extent such counsel deems proper and to the extent specified in such opinion,
if at all, upon an opinion or opinions (in form and substance satisfactory to
Underwriter's counsel) of other counsel reasonably acceptable to Underwriter's
counsel, familiar with the applicable laws, (ii) as to matters of fact, to the
extent they deem proper, (A) on certificates or other written statements of
responsible officers of the Company and (B) on certificates or other written
statements of officers or departments of various jurisdictions having custody
of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall
be delivered to Underwriter's counsel, (iii) as to matters described in the
Prospectus under "Risk Factors - Uncertainty of Protection of Patents and
Proprietary Rights" and "Business-Patents and Proprietary Rights", on advice of
Xxxxxxxx & Xxxxxxx, LLP (which has been re-confirmed as of the opinion date) and
(iv) as to matter described in the Prospectus under "Risk Factors - Uncertainty
of Third Party Reimbursement and Product Pricing", "Risk Factors - Consumer
Loans and Governmental Regulation", "Business-Governmental Regulations" and
"Business-Third Party Reimbursement", on advice of Arent & Fox (which has been
re-confirmed as of the opinion date). Such opinions of counsel shall include a
statement to the effect that they may be relied upon by the Underwriter and
counsel for the Underwriter. Such opinion may assume the due authorization,
execution and delivery of all documentation referred to therein by the parties
thereto other than the Company.
5.2.4 Subsidiaries. In the event that the Company has one or
more subsidiaries (the "subsidiaries"), the opinions referred to in this Section
5.2 shall also be given with respect to each subsidiary (except as the context
otherwise requires), as if the provisions calling for such opinions made
specific reference to each subsidiary each time the term "Company" was used.
5.3 Cold Comfort Letter. At the time this Agreement is executed, and at
each of the Closing Date and any Option Closing Date, you shall have received a
letter, addressed to the Underwriter and in form and substance satisfactory in
all respects (including the non-material nature of the changes or decreases, if
any, referred to in clause (iii) below) to you and to Xxxxxx Xxxxxxxx Frome &
Xxxxxxxxxx LLP, counsel to the Underwriter, from Xxxxx Xxxxxxxx, P.C., dated,
respectively, as of the date of this
120243.3
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Agreement, as of the Closing Date and as of any Option Closing Date:
(i) Confirming that they are independent
accountants with respect to the Company and its subsidiaries (collectively, the
"Entities") within the meaning of the Act and the applicable Regulations;
(ii) Stating that in their opinion the financial
statements of the Entities (including the unaudited financial information for
the Company) included in the Registration Statement and Prospectus comply as to
form in all material respects with the applicable accounting requirements of the
Act and the Regulations;
(iii) Stating that, based on performance of the
procedures specified by the American Institute of Certified Public Accountants
for a review of the latest available unaudited interim financial statements of
the Entities (as defined in SAS No. 71 Interim Financial Interpretation) with an
indication of the date of such unaudited financial statements, a reading of the
latest available minutes of the stockholders and Boards of Directors of the
Entities and the various committees of the Boards of Directors of the Entities,
consultations with officers and other employees of the Entities responsible for
financial and accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to believe that (a)
the unaudited financial statements of the Entities, included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Regulations or are not fairly
presented in conformity with generally accepted accounting principles applied on
a basis substantially consistent with that of the audited financial statements
of the Company included in the Registration Statement, (b) at a date not later
than five (5) days prior to the Effective Date, Closing Date or any Option
Closing Date, as the case may be, there was any change in the capital stock or
long-term debt of the Company, or any decrease in the stockholders' equity of
the Company as compared with amounts shown in the most recent balance sheet
included in the Registration Statement, other than as set forth in or
contemplated by the Registration Statement, or, if there was any decrease,
setting forth the amount of such decrease, and (c) during the period from
January 1, 1996 to a specified date not later than five (5) days prior to the
Effective Date, Closing Date or Option Closing Date, if any, as the case may be,
there was any decrease in revenues or net earnings (or increase in net loss per
share) of the Company or net earnings (or increase in net loss per share) of the
Company per share of its common stock, in each case as compared with the
corresponding period in the preceding year and as compared with the
corresponding period in the preceding quarter, other than as set forth in or
contemplated by the Registration Statement, or, if there was any such decrease
(or increase, as the case may be), setting forth the amount of such decrease;
120243.3
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(iv) Stating that they have compared specific
dollar amounts, numbers of shares, percentages of revenues and earnings,
statements and other financial information pertaining to the Entities set forth
in the Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the general
accounting records, including work sheets, of the Entities, 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;
(v) Stating that they have not (and are not
aware) during the immediately preceding five year period brought to the
attention of the management of any of the Entities any reportable condition with
respect to the Company's internal controls related to internal structure, design
or operation, as defined in the Statement on auditing Standards No. 60 --
"Communication of Internal Control Structure Related Matters Noted in an Audit;"
and
(vi) Statements as to such other matters incident
to the transactions contemplated hereby as you may reasonably
request.
5.4 Certificates.
5.4.1 Officers' Certificates. At each of the Closing Date and
any Option Closing Date the Representative shall have received a certificate of
the Company signed by its respective Chief Executive Officer and Principal
Accounting Officer, dated the Closing Date or any Option Closing Date, as the
case may be, respectively, to the effect that the Company has performed all
covenants and complied with all conditions required by this Agreement to be
performed or complied with by the Company prior to and as of the Closing Date,
or any Option Closing Date, as the case may be, and that the conditions set
forth in Section 5.5 hereof have been satisfied as of such date and that, as of
the Closing Date and any Option Closing Date, as the case may be, the
representations and warranties of the Company set forth in Section 2 hereof are
true and correct. In addition, the Representative shall have received such other
and further certificates of officers of the Company, and such other evidence
including certified copies of applicable documentation, as the Representative
may reasonably request.
5.4.2 Secretary's Certificate. At each of the Closing Date and
the Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary of the Company, dated the
Closing Date or any Option Closing Date, as the case may be, respectively,
certifying (i) that the Certificate of Incorporation and By-Laws,
120243.3
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as amended, of the Company are true and complete, have not been modified and are
in full force and effect, (ii) that the resolutions relating to the offering
contemplated by this Agreement are in full force and effect and have not been
modified, (iii) all correspondence between the Company or its counsel and the
Commission, (iv) all correspondence between the Company or its counsel and
Nasdaq and (v) as to the incumbency of the officers of the Company. The
documents referred to in such certificate shall be attached to such certificate.
5.5 No Material Changes. Prior to and on each of the Closing Date and
any Option Closing Date, (i) there shall have been no material adverse change or
development involving a prospective material change in the condition or
prospects or the business activities, financial or otherwise, of the Company
from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus, (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the Company
from the latest date as of which the financial condition of the Company is set
forth in the Registration Statement and the Prospectus which is materially
adverse to the Company, (iii) the Company shall not be in default under any
provision of any instrument relating to any outstanding indebtedness which
default would have a material adverse effect on the Company, (iv) no material
amount of the assets of the Company shall have been pledged or mortgaged, except
as set forth in the Registration Statement and Prospectus, (v) no action, suit
or proceeding, at law or in equity, shall be pending or threatened against the
Company or affecting any of its property or business before or by any court or
federal or state commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding may materially adversely affect the
business, operations, prospects or financial condition or income of the Company,
except as set forth in the Registration Statement and Prospectus, (vi) no stop
order shall have been issued under the Act and no proceedings therefor shall
have been initiated or threatened by the Commission, and (vii) the Registration
Statement and the Prospectus and any amendments or supplements thereto shall
contain all material statements that are required to be stated therein in
accordance with the Act and the Regulations and shall conform in all material
respects to the requirements of the Act and the Regulations, and neither the
Registration Statement nor the Prospectus nor any amendment or supplement
thereto shall contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
5.6 Delivery of Representative's Warrants. The Company shall have
delivered to the Representative executed copies of the Representative's
Warrants, registered in such authorized names and in such authorized
denominations as the Representative shall have requested.
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5.7 Opinion of Counsel for the Underwriter. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP, counsel to the Underwriter, and you
shall have received from such counsel a favorable opinion, dated the Closing
Date and any Option Closing Date, with respect to such of these proceedings as
you may reasonably require. On or prior to the Effective Date, the Closing Date
and any Option Closing Date, as the case may be, counsel for the Underwriter
shall have been furnished with such documents, certificates and opinions as they
may reasonably require for the purpose of enabling them to review or pass upon
the matters referred to in this Section 5.7, or in order to evidence the
accuracy, completeness or satisfaction of any of the representations, warranties
or conditions herein contained.
5.8 Conditions to Obligation of the Company. The obligation of the
Company to deliver the shares of Commmon Stock to the Underwriter hereunder
shall be subject to the conditions that the Registration Statement shall have
become effective not later than 5:00 p.m., New York City time, on the next day
following the date of this Agreement, or such other time and date, not later
than 5:00 p.m., New York City time, on the seventh day thereafter, as may be
approved by the Company, and no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for that purpose
shall have been instituted or shall be pending or contemplated by the Commission
at the Closing Date.
In case of any of the conditions specified in this Section 5.8 shall
not be fulfilled, this Agreement may be terminated by the Company by giving
notice to you. Any such termination shall be without liability of the
Underwriter to the Company; provided, however, that in event of any such
termination the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
Company under this Agreement and shall be responsible for such costs and
expenses in accordance with Section 4.9.2.
6. Indemnification.
6.1 Indemnification of the Underwriter.
6.1.1 By the Company. Subject to the conditions set forth
below, the Company agrees to indemnify and hold harmless the Underwriter, its
directors, officers and employees and each person, if any, who controls the
Underwriter (a "controlling person") 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 (including but not limited to any and all
legal or other expenses reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever) to which they or any of them
120243.3
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may become subject under the Act, the Exchange Act or any other statute or at
common law or otherwise or under the laws of foreign countries, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in (i) the Registration Statement, any Preliminary Prospectus or
the Prospectus (as from time to time each may be amended or supplemented); (ii)
in any post-effective amendment or amendments or any new registration statement
and prospectus in which is included securities of the Company issued or issuable
upon exercise of the Representatives' Warrants; or (iii) any application or
other document or written communication (in this Section 6 collectively called
"application") executed by the Company or based upon written information
furnished by the Company in any jurisdiction in order to qualify the Securities
under the securities laws thereof or filed with the Commission, any state
securities commission or agency, or Nasdaq or any securities exchange; or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to any of the Underwriter by or on behalf
of such Underwriter expressly for use in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or in any application, as the case may be; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of the Representative, or any person controlling the
Representative, if a copy of the Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) was not
set or given by or on behalf of the Representative to the person asserting such
losses, claims, damages or liabilities, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Shares to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage or liability. The
Company agrees promptly to notify the Representative of the commencement of any
litigation or proceedings against the Company or any of their respective
officers, directors or controlling persons in connection with the issue and sale
of the Securities or in connection with the Registration Statement or the
Prospectus.
6.1.2 Procedure. If any action is brought against the
Underwriter or any controlling person in respect of which indemnity may be
sought against the Company pursuant to Section 6.1.1, the Underwriter shall
promptly notify the Company in writing of the institution of such action, but
the failure to so notify the Company shall not relieve them from any liability
they may have hereunder, unless such failure results in the forfeiture by the
Company of material substantive rights and defenses, and the Company shall
assume the defense of such action, including the
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employment and fees of counsel (subject to the reasonable approval of such
Underwriter) and payment of actual expenses incurred in connection therewith.
Such Underwriter or controlling person 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 Underwriter or such controlling person unless
(i) the employment of such counsel shall have been authorized in writing by the
Company in connection with the defense of such action, (ii) the Company shall
not have employed counsel to have charge of the defense of such action, or (iii)
such indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional to
those available to the Company (in which case the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events the fees and expenses of not more than one
additional firm of attorneys selected by such Underwriter and/or controlling
person shall be borne by the Company. Notwithstanding anything to the contrary
contained herein, if an Underwriter or controlling person shall assume the
defense of such action as provided above, the Company shall have the right to
approve the terms of any settlement of such action which approval shall not be
unreasonably withheld.
6.2 Indemnification of the Company. The Underwriter agrees to indemnify
and hold harmless the Company, its directors, officers, agents, employees and
controlling persons, against any and all loss, liability, claim, damage and
expense described in the foregoing indemnity from the Company to the Underwriter
set forth in Section 6.1.1, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions directly
relating to the transactions effected by the Underwriter in connection with this
offering, made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any amendment or supplement thereto, or in any application in
reliance upon, and in strict conformity with, written information furnished to
the Company with respect to an Underwriter by such Underwriter expressly for use
in such Preliminary Prospectus, the Registration Statement or the Prospectus or
any amendment or supplement thereto or in any such application. In case any
action shall be brought against the Company based on any Preliminary Prospectus,
the Registration Statement or Prospectus or any amendment or supplement thereto
or any application, and in respect of which indemnity may be sought against the
Underwriter, such Underwriter shall have the rights and duties given to the
Company, and the Company shall have the rights and duties given to the
Underwriter, by the provisions of Section 6.1.2.
6.3 Contribution.
6.3.1 Contribution Rights. In order to provide for
just and equitable contribution under the Act in any case in which (i) any
person entitled to indemnification under this Section 6
120243.3
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makes claim for indemnification pursuant hereto but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 6 provides for indemnification in such case, or (ii)
contribution under the Act, the Exchange Act or otherwise may be required on the
part of any such person in circumstances for which indemnification is provided
under this Section 6, then, and in each such case, each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement (i) in such proportion as is appropriate to reflect the
relative benefits received, or sought to be received, by the Company on the one
hand and the Underwriter on the other hand from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Underwriter on the other hand; provided,
however, that, 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 was not guilty of such fraudulent misrepresentation. Notwithstanding
the provisions of this Section 6.3, the Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the sum of (a) the amount paid by such Underwriter to the Company
as its purchase price for such Shares plus (b) the amount of any damages which
such Underwriter has otherwise been required to pay in respect of such losses,
liabilities, claims, damages and expenses. For purposes of this Section 6, each
respective director, officer and employee of any Underwriter, and each
respective person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act shall have the same rights to contribution as such
Underwriter.
6.3.2 Contribution Procedure. Within fifteen (15) days after
receipt by any party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party (the
"contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding is brought
against any party, and such party notifies a contributing party or its
representative of the commencement thereof within the aforesaid (15) fifteen
days, the contributing party will be entitled to
120243.3
-36-
participate therein with the notifying party and any other contributing party
similarly notified. Any such contributing party shall not be liable to any party
seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of such contributing party. The contribution provisions contained in
this Section 6 are intended to supersede, to the extent permitted by law, any
right to contribution under the Act, the Exchange Act or otherwise available.
7. Covenants of the Representative. The Representative, covenants and
agrees with the Company as follows:
7.1 Compliance with NASD Rules of Fair Practice. The
representative hereby agrees to comply with the National Association of
Securities Dealers Regulation, Inc.'s Rules of Fair Practice.
7.2 Waiver of "Lock-Up". The Representative shall not consummate any
transactions with the Company's bridge lender described in the Prospectus, or
waive the "lock-up" applicable to such bridge lender's securities until the
Company has complied with its undertaking to the Registration Statement to file
"sticker" supplements to the Prospectus pursuant to Rule 424(c) of the Act, or
to file a post-effective amendment to the to Registration Statement.
8. Representations and Agreements to Survive Delivery. Except as the context
otherwise requires, all representations, warranties and agreements contained in
this Agreement shall be deemed to be representations, warranties and agreements
at the Closing Date and any Option Closing Date, and such representations,
warranties and agreements of the Underwriter and the Company, including the
indemnity agreements contained in Section 6 hereof, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
any of the Underwriter, the Company or any controlling person of any thereof,
and shall survive termination of this Agreement or the issuance and delivery of
the Shares to the Underwriter.
9. Effective Date of This Agreement and Termination Thereof.
9.1 Effective Date. This Agreement shall become effective upon its
execution, except that you may, at your option, delay its effectiveness until
11:00 A.M., New York time, on the first full business day following the
Effective Date or at the time of the initial public offering of the Shares,
whichever is earlier. The time of the initial public offering, for the purpose
of this Section 9 shall mean the time, after the Registration Statement becomes
effective, of the release by you for publication of the first newspaper
advertisement which is subsequently published relating to the Shares or the
time, after the Registration
120243.3
-37-
Statement becomes effective, when the Shares are first released by you for
offering to the public by the Underwriter or dealers by letter or telegram,
whichever shall first occur. You may prevent this Agreement from becoming
effective without liability to any other party, except as noted below, by giving
the notice indicated below in this Section 9 before the time this Agreement
becomes effective. You agree to give the undersigned notice of the commencement
of the offering described herein.
9.2 Termination. You shall have the right to terminate this Agreement
at any time prior to the Closing Date, (i) if any domestic or international
event or act or occurrence has materially disrupted, or in your opinion will in
the immediate future materially disrupt, general securities markets in the
United States; (ii) if trading on the New York Stock Exchange or the American
Stock Exchange, or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required in the over-the-counter
market by the NASD or by order of the Commission or any other government
authority having jurisdiction, (iii) if the United States shall have become
involved in a war or material hostilities, (iv) if a banking moratorium has been
declared by a New York State or federal authority, (v) if a moratorium on
foreign exchange trading has been declared which materially adversely affects
the United States securities market, (vi) if the Company shall have sustained a
material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage
or other calamity or malicious act which, whether or not such loss shall have
been insured, will, in your opinion, make it inadvisable to proceed with the
delivery of the Shares, (vii) if Xxxxx X. Xxxxxxx or Xxxxxx X. Xxxx shall no
longer serve or be available to serve the Company in their respective
capacities, (viii) if the Company has breached any of its representations,
warranties or obligations hereunder, or failed to expeditiously proceed with the
offering or to cooperate with you in requesting effectiveness of the
Registration Statement at such time as you may deem appropriate, or (ix) if the
Underwriter shall have become aware after the date hereof of such a material
adverse change in the condition (financial or otherwise), business or prospects
of the Company, or such material adverse change in general market conditions as
in your judgment would make it impracticable to proceed with the offering, sale
and/or delivery of the Shares or to enforce contracts made by the Underwriter
for the sale of the Shares.
9.3 Notice. If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 9, the
Company shall be notified on the same day as such election is made by you by
telephone or telecopy, confirmed by letter.
9.4 Expenses. In the event that this Agreement shall not be
carried out for any reason whatsoever within the time specified
120243.3
-38-
herein or any extensions thereof pursuant to the terms herein, the obligations
of the Company to pay the expenses related to the transactions contemplated
herein shall be governed by Section 4.9 hereof.
9.5 Indemnification. Notwithstanding any contrary provision contained
in this Agreement, any election hereunder or any termination of this Agreement,
and whether or not this Agreement is otherwise carried out, the provisions of
Section 6 shall not be in any way affected by such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
10. Miscellaneous.
10.1 Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be mailed,
delivered or telecopied and confirmed:
If to the Underwriter or the Representative:
Xxxxxxxx Xxxxxx & Co., Inc.
000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
Copy to: Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
If to the Company:
Niche Pharmaceuticals, Inc.
000 Xxxxx Xxx
X.X. Xxx 000
Xxxxxxx, Xxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
Copy to: Certilman Balin Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx Xxxxxxx, Esq.
120243.3
-39-
10.2 Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
10.3 Amendment. This Agreement may only be amended by a
written instrument executed by each of the parties hereto.
10.4 Entire Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in connection with this
Agreement) constitute the entire agreement of the parties hereto with respect to
the subject matter hereof, and supersede all prior agreements and understandings
of the parties, oral and written, with respect to the subject matter hereof.
10.5 Binding Effect. This Agreement shall inure solely to the benefit
of and shall be binding upon the Underwriter, the Company and the controlling
persons, directors and officers referred to in Section 6 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained.
10.6 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of New York,
without giving effect to conflict of laws rules of such State. Any action,
proceeding or claim against any of the parties hereto arising out of or relating
in any way to this Agreement shall be brought and enforced in the courts of the
State of New York or the federal court for the Southern District of New York,
and the parties hereto irrevocably submit to such jurisdiction, which
jurisdiction shall be exclusive. The parties hereto hereby waive any objection
to such exclusive jurisdiction and that such courts represent an inconvenient
forum. Except as otherwise provided in this Agreement, the prevailing party(ies)
in any such action shall be entitled to recover from the other party(ies) all of
its or their reasonable attorneys' fees and expenses relating to such action or
proceeding and/or incurred in connection with the preparation therefor.
10.7 Execution in Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto.
10.8 Waiver, Etc. The failure of any of the parties hereto to
at any time enforce any of the provisions of this Agreement shall not be deemed
or construed to be a waiver of any such provision,
120243.3
-40-
nor to in any way affect the validity of this Agreement or any provision hereof
or the right of any of the parties hereto to thereafter enforce each and every
provision of this Agreement. No waiver of any breach, non-compliance or
non-fulfillment of any of the provisions of this Agreement shall be effective
unless set forth in a written instrument executed by the party or parties
against whom or which enforcement of such waiver is sought; and no waiver of any
such breach, non-compliance or non-fulfillment shall be construed or deemed to
be a waiver of any other or subsequent breach, non-compliance or
non-fulfillment.
120243.3
-41-
If the foregoing correctly sets forth the understanding
between the Underwriter and 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,
NICHE PHARMACEUTICALS, INC.
By:
Name:
Title:
Accepted as of the date first above written.
Melville, New York
XXXXXXXX XXXXXX & CO., INC.
By:
Name:
Title:
120243.3
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APPENDIX I
[Insiders]
120243.3
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APPENDIX II
[Non-Insider Shareholders]
120243.3
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TABLE OF CONTENTS
Page
1. Purchase and Sale of Securities..........................................................................1
1.1 Firm Shares.....................................................................................1
1.1.1 Purchase of Firm Shares.......................................................1
1.1.2 Delivery and Payment..........................................................1
1.2 Overallotment Option............................................................................2
1.2.1 Grant of Option...............................................................2
1.2.2 Exercise of Option............................................................2
1.2.3 Delivery and Payment..........................................................2
1.3 Representative's Warrants.......................................................................3
1.3.1 Purchase and Sale.............................................................3
1.3.2 Delivery and Payment..........................................................3
2. Representations and Warranties of the Company............................................................3
2.1 Filings under Securities Laws...................................................................3
2.1.1 Pursuant to the Act...........................................................3
2.1.2 Pursuant to the Exchange Act..................................................4
2.2 No Stop or Other Orders.........................................................................4
2.3 Disclosures in Registration Statement...........................................................4
2.3.1 Representation as to Contents.................................................4
2.3.2 Disclosure Regarding Contracts................................................5
2.3.3 Prior Securities Transactions.................................................5
2.4 Changes After Dates in Registration Statement...................................................5
2.4.1 No Material Adverse Change....................................................5
2.4.2 Recent Securities Transactions, Etc...........................................6
2.5 Independent Accountants.........................................................................6
2.6 Financial Statements............................................................................6
2.7 Capitalization..................................................................................6
2.8 Representations Regarding Securities............................................................7
2.8.1 Outstanding Securities........................................................7
2.8.2 Securities Sold Hereunder.....................................................7
2.9 No Registration Rights..........................................................................8
2.10 Representations Regarding This Agreement........................................................8
2.11 No Improper Payments............................................................................9
2.12 No Defaults; Violations.........................................................................9
2.13 Corporate Power; Licenses; Consents.............................................................9
2.13.1 Conduct of Business...........................................................9
2.13.2 Required Consents............................................................10
2.14 Title to Property; Insurance...................................................................10
2.15 Litigation.....................................................................................10
2.16 Organization; Good Standing....................................................................10
2.17 Taxes..........................................................................................11
2.18 Transactions Affecting Disclosure to NASD......................................................11
2.18.1 Finders' Fees................................................................11
2.18.2 Payments Within Twelve Months................................................11
2.18.3 Use of Proceeds..............................................................12
2.18.4 Insiders' NASD Affiliation...................................................12
2.19 Internal Accounting Controls...................................................................12
2.20 Nasdaq Listing....................................................................................12
120243.3
(i)
Page
2.21 Intangibles....................................................................................12
2.22 Employee Matters...............................................................................13
2.22.1 Relations With Employees.....................................................13
2.22.2 Employee Benefit Plans.......................................................13
2.23 Investment Company Representations.............................................................14
2.24 Officer's Certificate..........................................................................14
2.25 Lock-Up Agreements With Insiders...............................................................14
2.26 No Stabilization or Manipulation...............................................................15
2.27 Subsidiaries...................................................................................15
2.28 Other Agreements...............................................................................15
3. Representative's Representations and Waranties. . . . . . 15
3.1 Organization: Good Standing. . . . . . . . . . . . . 15
3.2 Corporate Power; Licenses; Consents. . . . . . . . . 15
3.3 Binding Obligation; Enforceability. . . . . . . . . . 15
4. Covenants of the Company................................................................................16
4.1 Amendments to Registration Statement...........................................................16
4.2 Federal Securities Laws........................................................................16
4.2.1 Compliance...................................................................16
4.2.2 Filing of Final Prospectus...................................................17
4.2.3 Exchange Act Registration....................................................17
4.2.4 Financial Printer............................................................17
4.3 Blue Sky Filings...............................................................................17
4.4 Delivery of Filings to Underwriter.............................................................17
4.5 Effectiveness and Events Requiring Notice to the
Representative.................................................................................18
4.6 Unaudited Financials...........................................................................18
4.7 Reports to the Underwriters....................................................................18
4.7.1 Periodic Reports, Etc........................................................18
4.7.2 Transfer Sheets..............................................................19
4.8 Delivery of Representative's Warrants..........................................................19
4.9 Payment of Expenses............................................................................19
4.9.1 General Expenses.............................................................19
4.9.2 Representatives' Expenses....................................................20
4.10 Application of Net Proceeds....................................................................20
4.11 Delivery of Earnings Statements to Security
Holders........................................................................................20
4.12 Reservation of Shares..........................................................................21
4.13 Board of Directors.............................................................................21
4.14 Press Releases.................................................................................21
4.15 Nasdaq Maintenance.............................................................................21
4.16 Key Person Life Insurance......................................................................21
4.17 Disqualification of Form S-1 (or other appropriate
form)..........................................................................................22
4.18 Transfer Agent.................................................................................22
4.19 Accountants....................................................................................22
4.20 Professional Services..........................................................................22
4.21 Sale of Securities.............................................................................22
4.22 Exercise Price of Options/Warrants.............................................................22
120243.3
(ii)
Page
4.23 Insiders Sales.................................................................................23
5. Conditions of the Underwriter's Obligations.............................................................24
5.1 Regulatory Matters.............................................................................24
5.1.1 Effectiveness of Registration Statement......................................24
5.1.2 NASD Clearance...............................................................24
5.1.3 No Blue Sky Stop Orders......................................................24
5.2 Counsel Matters................................................................................24
5.2.1 Closing Date Opinion of Counsel..............................................24
5.2.2 Option Closing Date Opinion of Counsel.......................................30
5.2.3 Reliance.....................................................................30
5.2.4 Subsidiaries.................................................................31
5.3 Cold Comfort Letter............................................................................31
5.4 Certificates...................................................................................32
5.4.1 Officers' Certificates.......................................................32
5.4.2 Secretary's Certificate......................................................33
5.5 No Material Changes............................................................................33
5.6 Delivery of Representative's Warrants..........................................................34
5.7 Opinion of Counsel for the Underwriter.........................................................34
5.8 Conditions to Obligation of the Company........................................................34
6. Indemnification.........................................................................................35
6.1 Indemnification of the Underwriter.............................................................35
6.1.1 By the Company...............................................................35
6.1.2 Procedure....................................................................36
6.2 Indemnification of the Company.................................................................36
6.3 Contribution...................................................................................37
6.3.1 Contribution Rights..........................................................37
6.3.2 Contribution Procedure.......................................................38
7. Covenants of the Representative.........................................................................38
7.1 Compliance with NASD Rules of Fair Practice...........................................38
7.2 Waiver of "Lock-Up" . . . . . . . . . . . . . . .
. 38
8. Representations and Agreements to Survive Delivery......................................................38
9. Effective Date of This Agreement and Termination
Thereof.................................................................................................39
9.1 Effective Date.................................................................................39
9.2 Termination....................................................................................39
9.3 Notice.........................................................................................40
9.4 Expenses.......................................................................................40
9.5 Indemnification................................................................................40
10. Miscellaneous...........................................................................................41
10.1 Notices........................................................................................41
10.2 Headings.......................................................................................41
10.3 Amendment......................................................................................41
120243.3
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Page
10.4 Entire Agreement...............................................................................41
10.5 Binding Effect.................................................................................42
10.6 Governing Law; Jurisdiction....................................................................42
10.7 Execution in Counterparts......................................................................42
10.8 Waiver, Etc....................................................................................42
120243.3
(iv)
INDEX OF DEFINITIONS
Term Section
Act...........................................................................................................2.1.1
Application...................................................................................................5.1.1
Asset Purchase Agreement.......................................................................................2.28
Closing Date..................................................................................................1.1.2
Code.........................................................................................................2.22.2
Commission....................................................................................................2.1.1
Common Stock....................................................................................................1.1
Company......................................................................................Introductory Paragraph
Controlling Person............................................................................................6.1.1
Control Persons................................................................................................2.25
Effective Date................................................................................................1.1.2
ERISA........................................................................................................2.22.2
ERISA Plan...................................................................................................2.22.2
Exchange Act..................................................................................................2.1.2
Firm Shares...................................................................................................1.1.1
Insiders.......................................................................................................2.25
Intangibles....................................................................................................2.21
Merger.........................................................................................................2.27
NASD..........................................................................................................1.1.1
Non-Insider Shareholders.......................................................................................2.25
Nasdaq.........................................................................................................2.20
Option Closing Date...........................................................................................1.2.2
Option Shares.................................................................................................1.2.1
Overallotment Option..........................................................................................1.2.1
Preferred Stock.................................................................................................2.7
Preliminary Prospectus........................................................................................2.1.1
Prospectus....................................................................................................2.1.1
Registration Statement........................................................................................2.1.1
Regulations...................................................................................................2.1.1
Representative...............................................................................Introductory Paragraph
Representative's Securities...................................................................................1.3.1
Representative's Warrants.....................................................................................1.3.1
Restrictions...................................................................................................2.14
Returns........................................................................................................2.17
Securities....................................................................................................1.3.1
Shares........................................................................................................1.2.1
Subsidiaries...................................................................................................2.27
Taxes..........................................................................................................2.17
Unaudited Financials............................................................................................4.6
Underwriter..................................................................................Introductory Paragraph
You..........................................................................................Introductory Paragraph
120243.3
(v)
