FORM OF
APOLLO BIOPHARMACEUTICS, INC.
500,000 Units
UNDERWRITING AGREEMENT
NEIDIGER, TUCKER, BRUNER, INC.
000 Xxxxx Xxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
WESTPORT RESOURCES INVESTMENT SERVICES, INC.
000 Xxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
(as Representatives of the Several
Underwriters named in Schedule I hereto)
1997
-----------------,
Gentlemen:
Apollo Biopharmaceutics, Inc., a Delaware corporation
(the "Company"), proposes to issue and sell to the several
Underwriters named in Schedule I hereto (collectively the
Underwriters"), on whose behalf Neidiger, Tucker, Bruner,
Inc. ("NTB") and Westport Resources Investment Services,
Inc. ("WRIS") are acting as representatives (the
Representatives"), 500,000 Units (the "Firm Units"), each
Unit consisting of two shares of the Common Stock, par value
$.02 per share, of the Company ("Common Stock"), and one
redeemable warrant ("Redeemable Warrant"), entitling the
holder thereof to purchase one share of Common Stock.
Pursuant to, and subject to certain conditions set forth in,
the Warrant Agreement between the Company and American Stock
Transfer and Trust Company (the "Warrant Agent"), each
Redeemable Warrant is exercisable for a period of five (5)
years after the effective date of the Registration Statement
(as defined herein) at an initial exercise price (subject to
adjustment as provided in the Warrant Agreement) of
$ ( %) of the initial public offering price
-------------- ---
of the Firm Units), and is redeemable at the Company's
election for a period of four (4) years commencing 12 months
after the effective date of the Registration Statement. The
Underwriters will have the option to purchase from the
Company up to 75,000 additional Units (the "Option Units")
solely to cover over-allotments in the sale of the Firm
Units. In addition, the Company proposes to sell to you
individually, and not in your capacity as Representatives,
at the Closing Date (as hereinafter defined) 5-year warrants
(the Representatives' Warrants") to purchase, for 120% of
the public offering price of the Firm Units, an aggregate of
50,000 Units which sale of the Representatives' Warrants
will be consummated on the Closing Date in accordance with
the terms and conditions of the Representatives' Warrant
Agreement (the "Representatives' Warrant Agreement") in the
form filed as an exhibit to the Registration Statement. The
Warrant component of the Units underlying the
Representatives' Warrants are to be substantially identical
to the Redeemable Warrants, except that, so long as the
Representatives' Warrants are held by the Representatives or
any affiliate thereof, the Representatives' Warrants shall
not be redeemable by the Company. The Representatives'
Warrants, and the Units issuable upon exercise of the
Representatives' Warrants and the components of such Units
are hereinafter referred to as the "Representatives'
Securities."
The Firm Units, and any Option Units purchased pursuant
to this Underwriting Agreement, together with the underlying
shares of Common Stock and Redeemable Warrants, are
collectively referred to herein as the "Securities." The
Securities and the Representatives' Securities are more
fully described in the Registration Statement and Prospectus
referred to below. The term "Underwriters" refers to any
individual member of the underwriting syndicate and includes
any parties substituted for an Underwriter under Section
---
hereof.
The Representatives warrant to the Company that: (a)
the Representatives are authorized to enter into this
Agreement on behalf of the several Underwriters; and (b) the
several Underwriters are willing, severally and not jointly,
to purchase the number of Firm Units set forth opposite
their respective names in Schedule I.
In consideration of the mutual agreements contained
herein and the interests of the parties in the transactions
contemplated hereby, the parties hereto confirm their
agreement as follows:
1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with,
each Underwriter as of the date hereof, and as of the
Closing Date and each Option Closing Date (as hereinafter
defined), if any, as follows:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") a
registration statement on Form SB-2 (File No. )
-----------
for the registration of the Securities and the
Representatives' Securities in conformity with the
requirements of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations of the Commission. No
amendment thereto has been filed and none will be filed with
the Commission to which Representatives shall object after
having been furnished with a copy thereof. Except as the
context may otherwise require, such registration statement,
including the prospectus, Part II, and all schedules and
exhibits thereto (including all other documents and
information filed or incorporated by reference as a part
thereof), as amended at the time when it becomes effective,
including any information deemed to be a part thereof
pursuant to paragraph (b) of Rule 430(A) under the Act, is
herein referred to as the
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"Registration Statement" and the
prospectus constituting Part I of the Registration Statement
when it becomes effective, with any changes made to such
prospectus after the effective date of the Registration
Statement pursuant to Rule 424(b) under the Act is herein
referred to as the "Prospectus." Any prospectus included in
the Registration Statement and any amendments thereto prior
to the effective date of the Registration Statement is
referred to herein as the "Preliminary Prospectus." For
purposes of this Agreement, "Rules and Regulations" means
the rules and regulations adopted by the Commission under
either the Act or the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), as the context requires.
For purposes of this Agreement, all references to the
Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the
Commission pursuant to XXXXX.
(b) No order preventing or suspending the use of
any Preliminary Prospectus has been issued by the Commission
or any state of the United States or other regulatory body
and no proceedings therefore have been instituted or are
pending or, to the best knowledge of the Company after due
inquiry, threatened. Each Preliminary Prospectus at the
time of filing thereof conformed in all material respects
with the requirements of the Act and the Rules and
Regulations and did not contain any untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading; provided, however, that this
representation and warranty does not apply to statements in
or omission from, any Preliminary Prospectus in reliance
upon, and in conformity with, written information furnished
to the Company by you or by any Underwriter directly or
through you, specifically for use in the preparation
thereof.
(c) When the Registration Statement becomes
effective, and at all times subsequent thereto up to an
including the Closing Date and each Option Closing Date, if
any, and during such longer period as the Prospectus as may
be required to be delivered in connection with sales by the
Underwriters or a dealer, the Registration Statement, any
post effective amendment thereto and the Prospectus, each as
amended or supplemented, shall comply in all material
respects with the requirements of the Act and the Rules and
Regulations and will not contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing
shall not apply to statements in, or omissions from, any
such document in reliance upon, and in conformity with,
written information furnished to the Company by you or by
any Underwriter directly or through you, specifically for
use in the preparation thereof.
(d) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware, with full power and authority (corporate
and other) to own or lease its properties and conduct its
business as described in the Prospectus, and is duly
qualified to do business and is in good standing in each
jurisdiction in which the character of the business
conducted by it or the location of the properties owned or
leased by it makes such qualification necessary, except
where the failure to do so would not have a
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material adverse effect. The Company holds all material licenses,
certificates, permits, consents, orders and approvals or
other authorizations necessary to lease or own, as the case
may be, and to operate its property and conduct its business
as described in the Prospectus. None of the activities or
businesses of the Company is in violation of any law, rule,
regulation or order of the United States, any state, county
or locality, or of any agency or body of the United State or
of any state, county or locality, other than violations
which would not have a material adverse effect upon the
Company.
(e) The capitalization of the Company shall be as
set forth in the Prospectus under the caption
"Capitalization" and the Common Stock, Redeemable Warrants
and the Representatives' Securities conform or will conform
to the description thereof contained in the caption
"Description of Securities" in the Prospectus. The Company
will have the adjusted capitalization as set forth therein
in the Prospectus on the Closing Date and each Option
Closing Date, if any, based upon the assumptions set forth
therein (except that the effects of the exercise of the
Underwriters' over- allotment option are not reflected
therein). The Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it
to issue any capital stock, warrants, options or other
securities, or any rights with respect thereto, except for
this Agreement, the Warrant Agreement and the
Representatives' Warrant Agreement or as described in the
Prospectus. All issued and outstanding securities of the
Company have been duly authorized and validly issued and are
fully paid and non-assessable and 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 was issued in violation
of the preemptive rights of any holders of any security of
the Company or similar contractual rights granted by or
binding upon the Company. The Securities and the
Representatives' Securities are not and will not be subject
to any preemptive or other similar rights of any stockholder
of the Company or any other person, have been duly
authorized and, when issued, paid for and delivered in
accordance with the terms hereof (and to the extent
applicable, of the Warrant Agreement and the
Representatives' Warrant Agreement), will be validly issued,
fully paid, and non-assessable and will conform to the
description thereof contained in the Prospectus; the holders
thereof will not be subject to any liability solely as such
holders; all corporate action required to be taken for the
authorization, issuance, and sale of the Securities and the
Representatives' Securities have been duly and validly
taken; and the certificates evidencing the Securities will
be in due and proper form.
(f) To the best of the Company's knowledge and
information, each firm of accountants which certify the
financial statements included in the Registration Statement
is an independent certified public accountant as required by
the Act and Rules and Regulations. The financial statements
(including the related notes and schedules) included in the
Registration Statement, each Preliminary Prospectus and the
Prospectus present fairly the financial condition, the
results of operations and cash flows of the Company at the
dates and for the periods indicated and have been prepared
in accordance with generally accepted accounting principles
and accounting requirements of the Act and the Rules and
Regulations applied on a consistent basis throughout the
periods indicated. Since the date of the financial
statements included in the Registration Statement and the
Prospectus, the Company has not experienced any adverse
change
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or any development suggesting the likelihood of a
future material adverse change in or affecting the condition
of the Company, financial or otherwise. The financial
information set forth in the Prospectus under the headings
"Selected Financial Data," "Capitalization," and
"Management's Discussion and Analysis of Financial Condition
and Results of Operations," present fairly the information
set forth therein and has been compiled on a basis
consistent with that of the audited financial statements
included in the Registration Statement, any Preliminary
Prospectus and Prospectus.
(g) The Company has filed with the appropriate
federal, state and local governmental agencies, and all
foreign countries and political subdivisions thereof, all
tax returns, including franchise tax returns, which are
required to be filed or has duly obtained extensions of time
for the filing thereof and has paid all taxes shown on such
returns and all assessments received by it to the extent
that the same have become due. The provisions for income
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 foreign and domestic
taxes, whether or not disputed, and for all periods to and
including the dates of such financial statements. The
Company has not executed or filed with any taxing authority,
foreign or domestic, any agreement extending the period for
assessment or collection of any income taxes and is not a
party to any pending action or proceeding by any foreign or
domestic governmental agency for assessment or collection of
taxes; and no claims for assessment or collection of taxes
have been asserted against the Company.
(h) The Company's business and properties are
adequately insured by insurors of recognized financial
responsibility against loss or damage by fire and other
appropriate risks (including computer failure); the
Company's performance is adequately guaranteed by bonding
firms of recognized financial responsibility in accordance
with all requirements under its agreements and all
applicable regulations and rules applicable to its
agreements; and the Company maintains such other insurance
and performance guaranty bonds as are prudent or customarily
maintained by companies of comparable size and in the same
or similar business and in the same or similar localities;
the Company has not been refused any insurance or bonding
coverage sought or applied for; and the Company has no
reason to believe that it will not be able to renew its
existing insurance coverage and performance guaranty bonds
as and when such coverage expires or to obtain similar
coverage from similar insurors and bonding firms as may be
necessary to continue its business at a cost that would not
materially and adversely affect the condition (financial or
otherwise), business prospects, net worth or results of
operations of the Company, except as described in or
contemplated by the Prospectus.
(i) Except as disclosed in the Prospectus, there
is no litigation or governmental proceeding to which the
Company is a party or to which any property of the Company
is subject or which is pending in which the Company has been
served or, to the best knowledge of the Company, is
otherwise pending or threatened against the Company which,
if adversely determined, will result in any material adverse
change in the financial condition, results of operations,
business or prospects of the Company or which is required to
be disclosed in the Prospectus which has not been so
disclosed. To the best knowledge of the Company, no
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labor disturbance by the employees of the Company exists or is
imminent and which, if it now exists or comes to exist, is
expected materially to affect adversely the financial
condition, results of operations, business or prospects of
the Company or which is required to be disclosed in the
Prospectus.
(j) Each of this Agreement, the Warrant
Agreement, the Representatives' Warrant Agreement and the
Financial Consulting Agreement (as hereinafter
provided)constitutes the valid and binding agreement of the
Company enforceable against the Company in accordance with
its terms, except insofar as rights to indemnity and/or
contribution may be limited by federal or state securities
laws or the public policy underlying such laws and except as
enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors'
rights generally, and be subject to general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Each of
the Redeemable Warrants and the Representatives' Securities
have been duly and validly authorized by the Company and
upon their delivery in accordance herewith will be duly
issued and will be the legal, valid and binding obligations
of the Company. The shares of Common Stock underlying the
Redeemable Warrants and the Representatives' Securities have
been duly authorized and reserved for issuance upon the
exercise of such Warrants and when issued upon payment of
the exercise price therefor will be validly issued, fully
paid and nonassessable shares of Common Stock.
(k) The Company is not in violation of or in
default under (i) any term or provision of its Certificate
of Incorporation or Bylaws, as amended; (ii) any material
term or provision or any material financial covenants of any
indenture, mortgage, contract, commitment or other agreement
or instrument to which it is a party or by which it or any
of its property or business is or may be bound or affected;
or (iii) to its knowledge, 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
businesses the violation of which would have a material
adverse effect on the Company. The Company owns, possesses
or has obtained all governmental and other (including those
obtainable from third parties) licenses, permits,
certifications, registrations, approvals or consents and
other authorizations necessary to own or lease, as the case
may be, and to operate its properties, whether tangible or
intangible, and to conduct any of the business operations of
the Company as presently conducted (except where the
Company's failure to obtain such license, permit,
certification, registration, approval, consent or other
authorization would not materially adversely affect the
Company) and all such licenses, permits, certifications,
registrations, approvals, consents and other authorizations
are outstanding and in good standing, and there are no
proceedings pending or, to the best of the knowledge of the
Company, threatened, seeking to cancel, terminate or limit
such licenses, permits, certifications, registrations,
approvals or consents or other authorizations.
(l) The execution and delivery hereof or of the
Warrant Agreement, the Representatives' Warrant Agreement or
the Financial Consulting Agreement or consummation of the
transactions contemplated hereby or thereby will not result
in a violation of, or constitute
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a default that would be material to the business of the
Company under, the Company's Certificate of Incorporation
or Bylaws, as amended, or other governing documents
of the Company, or any material agreement, indenture
or other instrument, to which the Company is a
party or by which it is bound, or to which any
of its properties is subject, nor will the Company's
performance of its obligations hereunder, under the Warrant
Agreement or the Representatives' Warrant Agreement violate
any law, rule, administrative regulation or decree of any
court or any governmental agency or body having jurisdiction
over the Company or any of its properties, or result in the
creation or imposition of any lien, charge, claim or
encumbrance upon any property or asset of the Company.
Except for an order of the Commission declaring the
Registration Statement effective, and except for permits and
similar authorizations required under the securities or
"blue sky" laws of certain states of the United States and
for such permits and authorizations which have been
obtained, no consent approval, authorization or order of any
court, governmental agency or body or financial institution
is required in connection with the consummation of the
transactions contemplated by this Agreement, the Warrant
Agreement or the Representatives' Warrant Agreement.
(m) The descriptions in the Registration
Statement and the Prospectus of material contracts and other
documents are accurate in all material respects and present
fairly the information required to be disclosed, and there
are no contracts or other documents required to be described
in the Registration Statement or Prospectus or to be filed
as exhibits to the Registration Statement under the Act or
the Rules and Regulations which have not been so described
or filed as required. Each material contract or other
instrument (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 to which reference is made
in the Prospectus has been duly and validly executed by the
Company, is in full force and effect in all material
respects and is enforceable against the parties thereto in
accordance with its terms, subject, as to enforcement of
remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the
rights of creditors generally and the discretion of courts
in granting equitable remedies, and none of such contracts
or instruments has been assigned by the Company and neither
the Company nor, to the best knowledge of the Company, any
other party is in material default thereunder, which default
would have a material adverse effect on the business,
prospects, financial condition or results of operations of
the Company and, to the best knowledge of the Company, no
event has occurred which, with the lapse of time or the
giving of notice, or both, would constitute a default
thereunder, which would have a material adverse effect on
the business, prospects, financial condition or results of
operations of the Company. None of the material provisions
of such contracts or instruments violates any existing
applicable law, rule, regulation, judgement, order or decree
of any governmental agency or court having jurisdiction over
the Company or any of its assets or business including,
without limitation, those relating to health care or
employee benefits, which violation would have a material
adverse effect on the business, prospects, financial
condition or results of operations of the Company.
(n) Subsequent to the respective dates as of
which information is set forth in the Registration Statement
and Prospectus, and may be described in or contemplated by
the Prospectus, there has not been any material adverse
change in, or any adverse development that
7
materially affects, the business, properties, financial condition,
results of operations or prospects of the Company from the
date as of which information is given in the Prospectus; and
except as described in the Prospectus, the Company has not,
directly or indirectly, incurred any material liabilities or
obligations, direct or contingent, not in the ordinary
course of business, other than obligations related to the
offering of the Securities, or entered into any transaction
not in the ordinary course of business which is material to
the business of the Company and required to be disclosed in
the Prospectus. Except as described in or contemplated by
the Prospectus, there has not been any material change in
the capital stock of, or any incurrence of long-term debt
by, the Company, or any issuance or grant of options,
warrants or rights to purchase the capital stock of the
Company, or any declaration or payment of any dividend on
the capital stock of the Company from the date as of which
information will be given in the Prospectus.
(o) No breach or default by or of the Company or,
to the best knowledge of the Company after due inquiry, any
other party exists in the due performance and observance of
any term, covenant or condition of any material license,
contract, indenture, mortgage, installment sale agreement,
lease, deed of trust, voting trust agreement, stockholders
agreement, partnership agreement, note, loan or credit
agreement, purchase order, or any other material 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 it may be bound or to which
the property or assets (tangible or intangible) of the
Company is subject or affected.
(p) Except as described in the Prospectus, the
Company does not maintain, sponsor or contribute to any
program or arrangement that is an "employee pension benefit
plan," an "employee welfare benefit plan," or a
"multiemployer 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")
("ERISA Plans"). The Company does not maintain or
contribute (and has not previously maintained or
contributed) to a "defined benefit plan," as defined in
Section 3(35) 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
Code, that could subject the Company to any tax penalty on
prohibited transactions and that 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 or opinion letters have been received from the
Internal Revenue Service with respect to each ERISA Plan
which is intended to comply with Code Section 401(a),
stating that the form of such ERISA Plan and the attendant
trust are qualified thereunder. The Company has never
completely or partially withdrawn from a "multiemployer
plan."
(q) The Company has not taken and shall not take,
directly or indirectly, any action resulting in a violation
of Rule 10b-6 or Rule 10b-7 under the Exchange Act, or
designed to cause or result in, or which has constituted or
which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Securities.
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(r) To the best knowledge of the Company and
except as disclosed in the Prospectus, none of the patents,
patent rights, trademarks, service marks, trade names,
copyrights, technology, and know-how, and none of the
license or rights to the foregoing, presently owned or held
by the Company or used in or necessary to the conduct of its
business as now conducted or proposed to be conducted (all
of the foregoing, collectively, its "Intellectual
Properties"), are in dispute or are in any conflict with the
right of any other person or entity. To the best of
knowledge of the Company after due inquiry, the Company (i)
owns or has the right to use all of its Intellectual
Properties, free and clear of any liens, charges, claims,
encumbrances, pledges, security interests, defects or other
restrictions or equities of any kind whatsoever
(collectively, "Liens") without infringing upon or otherwise
acting adversely to the right or claimed right of any person
or other entity under or with respect to any of the
foregoing and (ii) except as set forth in the Prospectus, is
not obligated or under any liability whatsoever to make any
payment by way of royalties, fees, or otherwise to any owner
or licensee of, or other claimant to, any Intellectual
Properties with respect to the use thereof or in connection
with the conduct of its business or otherwise.
(s) To the Company's best knowledge and except as
disclosed in the Prospectus, the Company owns and has the
unrestricted right to use all trade secrets, know-how
(including all unpatented and/or unpatentable proprietary or
confidential information, systems, and procedures),
inventions, designs, processes, works of authorship,
computer programs, and technical data and information that
are material to the development, manufacture, operation and
sale of all products and services sold or otherwise
described or referred to in the Registration Statement and
the Prospectus proposed to be sold by the Company, free and
clear of and without violating any right, Liens or claim of
others, including without limitation former employers of its
employees; provided, however, that the possibility exists
that other persons or entities, completely independent of
the Company or its employees or agents, could have developed
trade secrets or items of technical information similar or
identical to those of the Company. The Company is not aware
of any such development of similar or identical trade
secrets or technical information by others.
(t) The Company has taken reasonable security
measures to protect the secrecy, confidentiality and value
of all of its Intellectual Properties in all material
respects.
(u) The Company has good and marketable title to,
or valid and enforceable leasehold estates in, all items of
real and personal property described or referred to in the
Prospectus to be owned or leased by it free and clear of all
Liens of any kind whatsoever, other than (i) those referred
to in the Prospectus and (ii) Liens for taxes not yet due
and payable.
(v) Except as disclosed in the Registration
Statement and the Prospectus, the Company has not issued,
sold or offered for sale within the last three years any
shares of its Common Stock, any right to acquire any shares
of Common Stock or any securities or instrument exercisable
for or convertible into any shares of Common Stock.
9
(w) There are no agreements, claims, payments,
issuances, arrangements or understandings, whether oral or
written, for services in the nature of a finder's,
consulting or origination fee with respect to the sale of
the Securities or the Representatives' Securities or any
other agreements, claims, payments, issuances, arrangements
or understandings with respect to the Company or any of its
officers, directors, stockholders, partners, employees, or
affiliates that may affect the Underwriters' compensation,
as determined by the National Association of Securities
Dealers, Inc. ("NASD") or for which the Company or any
Underwriter may be responsible.
(x) The Units, the Common Stock and the
Redeemable Warrants have been duly registered under Section
12(g) of the Exchange Act. The Units, the Common Stock and
the Redeemable Warrants have been approved for inclusion in
the Automated Quotation System of the National Association
of Securities Dealers, Inc. ("NASDAQ") SmallCap Market.
(y) Neither the Company nor to best of the
Company's knowledge any officer, director or employee of or
agent acting on behalf of the Company has at any time (i)
made any contributions to any candidate for political office
in violation of law, or failed to disclose fully any
contributions to any candidate for political office in
accordance with any applicable statute, rule, regulation or
ordinance requiring such disclosure, (ii) made any payment
to any governmental officer or official, or other person
charged with similar public or quasi-public duties, other
than payments required or allowed by applicable law, (iii)
made any payment outside the ordinary course of business to
any purchasing or selling agent or person charged with
similar duties of any entity to which the Company sells or
from which the Company buys products for the purpose of
influencing such agent or person to buy products from or
sell products to the Company, or (iv) engaged in any
transaction on behalf of the Company, maintained any bank
account for the Company, or used any corporate funds of the
Company, except for transactions, bank accounts and funds
which have been and are reflected in the normally maintained
books and records of the Company.
(z) Except as set forth in the Prospectus, no
officer, director or principal stockholder of the Company,
nor any "affiliate" or "associate" (as these terms are
defined in Rule 405 promulgated under the Rules and
Regulations) of any of the foregoing persons or entities,
has or has had, either directly or indirectly, (i) an
interest in any person or entity that (A) furnishes or sells
services or products that are furnished or sold or are
proposed to be furnished or sold by the Company, or (B)
purchases from or sells or furnishes to the Company any
goods or services, or (ii) a beneficial interest in any
contract or agreement to which the Company is a party or by
which it may be bound or affected. Except as set forth in
the Prospectus under "Certain Transactions," there are no
existing or proposed agreements, arrangements,
understandings, or transactions between or among the Company
and any officer, director, or principal stockholder of the
Company, or any partner, affiliate or associate of any of
the foregoing persons or entities.
(aa) Any certificate signed by any officer of the
Company on behalf of the Company and delivered to the
Underwriters or to Underwriters' counsel shall be deemed a
10
representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
(bb) The minute books of the Company have been
made available to the Representatives and contain a complete
summary of all meetings and actions of the directors of the
Company since the time of its incorporation, and reflects
accurately in all material respects all transactions
referred to in such minutes.
(cc) No holders of any securities of the Company
or of any options, warrants, or other convertible or
exchangeable securities of the Company (i) have the right to
include any securities issued by the Company in the
Registration Statement or (ii) except and to the extent
described in the Prospectus, have the right to include any
securities issued by the Company in any registration
statement to be filed by the Company or to require the
Company to file a registration statement under the Act; and,
except and to the extent described in the Prospectus, no
person or entity holds any anti-dilution rights with
respect to any securities of the Company.
(dd) The Company has (i) entered into an
employment agreement with each of Dr. Xxxxxxxxx Xxxxxx,
Xxxxxx X. Xxxxxxx and Xxxx X. Xxxxx in the forms filed as
Exhibits 10.12, 10.14 and 10.13, respectively, to the
Registration Statement, and (ii) purchased term key-person
insurance on the life of Dr Xxxxxxxxx Xxxxxx in the amount
of $1,000,000, which policy names the Company as the
beneficiary thereof.
2. Purchase of the Units by the Several Underwriters;
Representatives' Warrants.
(a) Firm Units. On the basis of the
representations, warranties, covenants and agreements herein
contained, and subject to the terms and conditions set
forth, the Company agrees to sell to the Underwriters the
Firm Units, and subject to the terms and conditions herein,
the Underwriters agree, severally and not jointly, to
purchase from the Company, at the price per Unit of
$ , at the place and time hereinafter specified,
-----------
the number of Firm Units set forth opposite their respective
names in Schedule I hereto, subject to adjustment in
accordance with Section 12 hereof. The Underwriters agree
to release the Firm Units for resale to the public at the
price of $ per Firm Unit promptly, in the judgement
--------
of the Representatives, after the effective date of the
Registration Statement and on the terms set forth in the
Prospectus.
(b) Option Units. On the basis of the
representations, warranties, covenants and agreements herein
contained, and subject to the terms and conditions herein
set forth, for the sole purpose of covering any
over-allotments in connection with the distribution and sale
of the Firm Units as contemplated by the Prospectus, the
Company hereby grants the Underwriters an option to
purchase, severally and not jointly, up to 75,000 Option
Units. The purchase price per Unit to be paid for the
Option Units shall be the same price per Unit as for the
Option Units. The option granted hereby may be exercised as
to all or any part of the Option Units at any time or times
not more then 45 days subsequent to the effective date of
the Registration Statement. Nothing herein contained shall
obligate the Underwriters to make any over-allotments. No
11
Option Units shall be sold and delivered unless the Firm
Units previously have been, or simultaneously are, sold and
delivered.
(c) Representatives' Warrants. On the basis of
the Representatives' warranties, covenants and agreements
herein contained and subject to the terms and conditions set
forth herein and in the Representatives' Warrant Agreement
executed simultaneously herewith, the Company shall sell to
you individually, and/or your designees, and not as the
Representatives of the Underwriters, at the Closing Date,
for $100, Representatives' Warrants to purchase up to an
aggregate of 50,000 Units.
3. Delivery of and Payment for Units. Delivery of
certificates for the Firm Units and certificates for the
Option Units, to the extent that the option to purchase the
Option Units is exercised on or before the third Business
Day (as defined in Section hereof) prior to the Closing
---
Date, as well as the Representatives' Warrant Agreement and
Representatives' Warrants and the respective payments
therefore shall be made at the offices of Neidiger, Tucker,
Bruner, Inc., 000 Xxxxx Xxxxx, 0000 Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxx 00000 (or such other place as mutually may be
agreed upon by the Representatives and the Company), at
a.m., Denver, Colorado time, on the fourth full
---------
Business Day following the effective date of the
Registration Statement (the "Closing Date"); provided that
such date may be accelerated or extended by agreement of the
Company and the Representatives or postponed pursuant to the
provisions of Section 12 hereof.
The option to purchase Option Units granted in Section
2 hereof may be exercised during the term thereof by written
notice from the Representatives to the Company. Such notice
shall set forth the aggregate number of Option Units as to
which the option is being exercised and the time and date,
not earlier than either the Closing Date or the second
Business Day after the date on which the option shall have
been exercised nor later then the fifth Business Day after
the date of such exercise, as determined by Representatives,
when the Option Units are to be delivered (the "Option
Closing Date"). Delivery and payment for such Option Units
is to be at the offices set forth above for delivery and
payment of the Firm Units.
Delivery of certificates for the Firm Units and any
Option Units shall be made by or on behalf of the Company
through the facilities of the Depository Trust Company
("DTC") to the Representatives, for the respective accounts
of the Underwriters, against payment by the Representatives
of the purchase price therefor by federal funds or by
certified or official bank check payable in Denver Clearing
House Funds to the order of the Company. Certificates for
the Units shall be registered in such names and
denominations as the Representatives shall have requested at
least two full Business Days prior to the applicable Closing
Date, and shall be made available for checking and packaging
at a location as may be designated by the Representatives at
least one full Business Day prior to such Closing Date.
Time shall be of the essence, and delivery at the time and
place specified in this Underwriting Agreement is a further
condition to the obligations of each underwriter.
12
4. Covenants. The Company covenants and agrees with
each Underwriter as follows:
(a) The Company shall comply with the provisions
of and make all requisite filings with the Commission
pursuant to Rule 430A and Rule 424(b) under the Act and
notify you in writing of all such filings. The Company
shall use its best efforts to cause the Registration
Statement and any amendment thereto to become effective and,
upon notification from the Commission that the Registration
Statement or any amendment thereto has become effective,
shall so advise you immediately, in writing. The Company
shall notify you promptly of any request by the Commission
for any amendment or of supplement to the Registration
Statement or the Prospectus or for additional information;
the Company shall carefully prepare and file with the
Commission promptly upon your request, any amendment of or
supplement to the Registration Statement or Prospectus
which, in your reasonable opinion, may be necessary or
advisable in connection with the distribution of the
Securities; and the Company shall not file any amendment of
or supplement to the Registration Statement or the
Prospectus which is not approved by you after reasonable
notice from the Company to you, which approval shall not be
unreasonably withheld or delayed. The Company shall advise
you immediately of the issuance by the Commission, any state
securities commission or any other regulatory body of any
stop order or other order suspending the effectiveness of
the Registration Statement, suspending or preventing the use
of any Preliminary Prospectus or the Prospectus or
suspending the qualification of the Securities for offering
or sale in any jurisdiction, or of the institution of any
proceedings for any such purpose; and the Company shall use
its best efforts to prevent the issuance of any stop order
or other such order and, should a stop order or other such
order be issued, to obtain as soon as possible the lifting
thereof.
(b) The Company shall cooperate with you and your
counsel in connection with the registration or qualification
of the Securities for sale under the securities or "blue
sky" laws of such jurisdictions as the Representatives shall
designate and the continuance of such qualification in
effect for so long a period as the Representatives may
reasonably request, except the Company shall not be required
to qualify as a foreign corporation or in any jurisdiction
where it is not already so qualified or to execute a general
consent to service of process in actions other then those
arising out of the offer and sale of the Securities or to
take any action which would subject it to taxation in any
jurisdiction where it is not now so subject.
(c) Within the time during which a Prospectus
relating to the Securities required to be delivered under
the Act, the Company shall comply with all requirements
imposed upon it by the Act and the Exchange Act, as now and
hereafter amended, and by the Rules and Regulations, as from
time to time in force, so far as is necessary to permit the
continuance of sales of or dealings in the Securities as
contemplated by the provisions hereof and the Prospectus.
If during such period any event occurs as a result of which
the Prospectus as then amended or supplemented would include
an untrue statement of a material fact or would omit to
state a material fact necessary to make the statements
therein, in light of the circumstances then existing, not
misleading, or if during such period it is otherwise
necessary, in the opinion of the Company or in your opinion,
to amend the Registration Statement or supplement the
Prospectus to comply with the Act, the Company or you, as
the case may be, shall promptly notify the other party and
the Company shall amend the Registration Statement or
supplement the
13
Prospectus to comply with the Act, the Company or you, as the
case may be, shall promptly notify the other party and the
Company shall amend the Registration Statement or supplement the
Prospectus (at the expense of the Company) so as to correct such
statement or omission or effect such compliance.
(d) The Company shall make generally available to
its security holders and to the registered holders of the
Redeemable Warrants (and shall deliver to you), in the
manner contemplated by Rule 158(b) under the Act, as soon as
practicable but in any event not later then 45 days after
the end of its fiscal quarter in which the first anniversary
date of the effective date of Registration Statement occurs,
an earnings statement satisfying the requirements of Section
11(a) of the Act covering a period of at least 12
consecutive months beginning after the effective date of the
Registration Statement.
(e) For a period of five (5) years from the
effective date of the Registration Statement, the Company
will deliver to you on a timely basis (i) a copy of each
report, including, without limitation, reports on Form 8-K,
10-C, 10-K (or 10-KSB) and 10-Q (or 10-QSB) or any successor
form and exhibits thereto filed with or furnished by the
Company to the Commission, any securities exchange or the
National Association of Securities Dealers, Inc. ("NASD") on
the date each such report or document is so filed or
furnished; (ii) as soon as practicable, copies of any
reports or communications (financial or other) of the
Company mailed to its security holders; (iii) as soon as
practicable, a copy of any Schedule 13D, 13G, 14D-1, 13E-3
or 13E-4 (or any successor form) received or prepared by the
Company from time to time; and (iv) such additional
information concerning the business and financial condition
of the Company as you may from time to time reasonably
request and which can be prepared or obtained by the Company
without unreasonable effort or expense.
(f) The Company shall furnish or cause to be
furnished to the Representatives or on the Representatives'
order, without charge, at such place as the Representatives
may designate, copies of each Preliminary Prospectus, the
Registration Statement and any pre-effective or
post-effective amendments thereto (two of which copies shall
be manually signed and shall include all exhibits), the
Prospectus, and all amendments and supplements thereto,
including any Prospectus prepared after the effective date
of the Registration Statement, in each case as soon as
available and in such quantities as the Representatives may
request.
(g) For a period of twelve months following the
Closing Date, the Company shall not, directly or indirectly,
without the Representatives' prior written consent, offer,
issue, sell, grant any option to purchase, or otherwise
dispose of or contract to dispose of (or announce any offer,
sale, grant of an option to purchase of other disposition),
for value or otherwise, any shares of Common Stock or other
equity securities of the Company or any securities
convertible into or exchangeable or exercisable for shares
of Common Stock, or other such equity securities, except the
Securities, the Representatives' Securities, those options
to purchase shares of
14
Common Stock issued under the
Company's 1996 Directors' Stock Option Plan and those other
options to purchase shares of Common Stock (collectively,
the "Options") and shares of Common Stock issued upon
exercise of the Options, as said Options are described in
the Prospectus.
(h) The Company shall cause each of its officers,
directors and such other shareholders designated by the
Representatives to furnish to the Representatives, on or
prior to the Closing Date, a binding agreement, in form and
substance reasonably satisfactory to Representatives'
counsel, pursuant to which each such person shall agree not
to, directly or indirectly, publicly sell or otherwise
publicly dispose or contract to dispose (or announce any
offer, sale, grant of any option to the purchase or other
disposition) of any shares of Common Stock or other equity
securities of the Company owed by them of record or
beneficially during the thirteen month period following the
Closing Date, without your prior written approval.
(i) The Company shall not take, or permit any of
its officers of directors or shareholders or any affiliate
(within the meaning of the term "affiliate" in the Rules and
Regulations) to take, directly or indirectly, any action
designed to or which has constituted or might reasonably be
expected to cause or result, under the Exchange Act or
otherwise, in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or
resale of the Securities; and has not effected any sales of
shares of Common Stock or other securities that are required
to be disclosed in response to Item 26 of Part II of the
Registration Statement.
(j) The Company shall apply the net proceeds from
the sale of the Securities in the manner, and subject to the
conditions, set forth under "Use of Proceeds" in the
Prospectus. No portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by
the Company.
(k) The Company shall timely file all such
reports, forms and other documents as may be required
(including, without limitation, a Form SR as may be required
pursuant to Rule 463 under the Act) from time to time under
the Act, the Exchange Act, and the Rules and Regulations,
and all such reports, forms and documents filed shall comply
as to form and substance with the applicable requirements
under the Act, the Exchange Act, and the Rules and
Regulations.
(l) The Company shall use its best efforts to
maintain the inclusion of the Units, the Common Stock and
the Redeemable Warrants in the NASDAQ SmallCap Market and
the listing of the Units, the Common Stock and the
Redeemable Warrants on the Boston Stock Exchange. If at any
time the Common Stock qualifies for inclusion on the
National Market System of NASDAQ (the "NASDAQ NMS"), the
Company will use its best efforts to obtain and maintain
such inclusion in the NASDAQ NMS for so long as the Common
Stock qualifies.
(m) For a period of three years from the Closing
Date, the Company shall (i) furnish to the Representative,
as and to the extent reasonably requested by the
Representative, at the Company's sole expense, with copies
of the Company's stock transfer sheets relating to the
Company's securities, and a current list of the holders of
all of the Company's securities,
15
and including a list of the beneficial owners of
securities held by Depository Trust
Company; and (ii) retain such accounting firm as the
Company's independent public accountants as shall be
reasonable/acceptable to the Representatives.
(n) The Company shall take all necessary actions,
on an expedited basis, to be included effective with the
Closing Date in Standard and Poor's Corporate Records, Stock
Quotes and Stock Guide published by Standard and Poor's
Corporation and to continue such inclusion for a period of
not less than seven years from the Closing Date.
(o) Until that date which is 60 days after the
effective date of the Registration Statement the Company
shall not, without the prior written consent of the
Representatives issue, directly or indirectly, any press
release or other communication or hold any press conference
with respect to the Company or its activities or the
offering contemplated hereby, other than trade releases
issued in the ordinary course of the Company's business
consistent with past practices with respect to the Company's
operations or such releases as counsel for the
Representatives and the Company have advised are necessary
to comply with applicable law.
(p) Until after the earlier of (i) six years from
the date hereof, and (ii) the sale to the public of all of
the Representatives' Securities, the Company shall maintain
the effectiveness of the Registration Statement on Form SB-2
(or other appropriate form, including, without limitation,
Form S-3) covering the Representatives' Securities.
(q) For a period of 3 years from the effective
date of the Registration Statement, the Company agrees that
NTB shall have the right to designate one person as an
advisor to the Company's Board of Directors. Such advisor
will be reimbursed for his or her expenses in attending
meetings of the Board of Directors and will receive cash
compensation equal to that received by any other outside
director but will have no power to vote as a director. Such
person shall be indemnified by the Company against any claim
arising out of his or her participation in meetings of the
Board of Directors to the same extent as directors. During
the stated 3 year period, the Representatives' advisor to
the Company's Board of Directors will be (i) invited to
attend all meetings of the Company's Board of Directors;
(ii) provided with a copy of all Actions by Unanimous
Written Consent of the Board of Directors in Lieu of an
Actual Meeting; (iii) furnished with a copy of all public
filings by the Company and Company press releases as
released; (iv) updated by the Company's management, on at
least a quarterly basis, regarding the Company's activities,
prospects and financial condition; and (v) advised
immediately of material events to the extent consistent with
applicable law. During the subject 3 year period, the
Company shall hold meetings of its Board of Directors at
intervals of not less than once each calendar quarter. Any
advisor to the Company's Board of Directors designated by
NTB shall be acceptable to the Company, which acceptance
shall not be unreasonably withheld.
(r) Upon the exercise of any Redeemable Warrants
after , 1998 (12 months after the effective
---------------
date of the Registration Statement), and assuming that the
16
Company desires assistance to solicit the exercise of the
Redeemable Warrants, the Company will pay NTB a solicitation
fee of 5% of the aggregate exercise price of such Redeemable
Warrants which are exercised through its efforts and with
its assistance, if (i) the market price of the Common Stock
is greater than the exercise price of the Redeemable
Warrants on the date of exercise, (ii) written confirmation
by the warrantholder that the exercise of the Redeemable
Warrant was solicited by NTB and that NTB is designated to
receive the solicitation fee, (iii) the Redeemable Warrant
is not held in a discretionary account, (iv) disclosure of
compensation arrangements has been made in documents
provided to the warrantholder (such as the Prospectus) both
as part of the original offering and at the time of exercise
and (v) the solicitation of the Warrant was not in violation
of Rule 10b-6 promulgated under the Exchange Act.
Notwithstanding the foregoing, the Company hereby retains
the right to provide notice of redemption of the Redeemable
Warrants in accordance wit the terms of the Warrant
Agreement and (ii) the parties hereby acknowledge and agree
that NTB shall have no authority to solicit the exercise of
any Redeemable Warrant unless such solicitation is requested
in writing by the Company.
(s) For a period of 12 months from the effective
date of the Registration Statement, the Company shall not
authorize or otherwise effect any change in the compensation
to any officer and/or director of the Company without 30
days' prior written notice to the Representatives.
(t) On the Closing Date, the Company shall enter
into a consulting agreement ("Financial Consulting
Agreement"), retaining NTB, individually, and not as
Representatives of the Underwriters, as financial consultant
to the Company for a period of 36 months for a fee of
$70,000 payable in full on the Closing Date.
5. Payment of Expenses. The Company shall pay, on
each of the Closing Date and each Option Closing Date (to
the extent not paid at the Closing Date), all expenses and
fees (other than fees and expenses of Underwriters' counsel,
except as provided in clause (iv) below) incident to the
performance of the obligations of the Company under this
Agreement, the Warrant Agreement, the Representatives'
Warrant Agreement, the Financial Consulting Agreement,
including without limitation (i) the fees and expenses of
accountants and counsel for the Company, (ii) all costs and
expenses incurred in connection with the preparation,
duplication, printing (including mailing and handling
charges), filing, delivery, and mailing (including the
payment of postage with respect thereto) of the Registration
Statement and the Prospectus and any amendments and
supplements thereto and the copying, mailing (including the
payment of postage with respect thereto), and delivery of
this Agreement, the Agreement Among Underwriters, the
Selected Dealer Agreements, and related documents, including
the cost of all copies thereof and of the Preliminary
Prospectuses and of the Prospectus and any amendments
thereof or supplements thereto supplied to the Underwriters
and such dealers as the Underwriters may request, in the
quantities requested, (iii) the printing, engraving,
issuance and delivery of the Securities, including, but not
limited to (x) the purchase by the Underwriters of the
Securities and the purchase by the Representatives of the
Representatives' Warrants from the Company, and (y) the
consummation by the Company of any of its obligations under
this
17
Agreement, the Warrant Agreement, the Representatives'
Warrant Agreement, the Financial Consulting Agreement as
required herein, and (z) resale of the Securities by the
Underwriters in connection with the distribution
contemplated hereby, (iv) the qualification of the
Securities and the Representatives' Securities under state
or foreign securities or "Blue Sky" laws and determination
of the status of such securities under legal investment
laws, including the costs of printing and mailing the
"Preliminary Blue Sky Memorandum," the "Supplemental Blue
Sky Memorandum," and the "Legal Investment Survey," if any,
and disbursements and reasonable fees of counsel in
connection therewith, (v) advertising costs and expenses,
and costs and expense in connection with bound volumes and
prospectus memorabilia and "tomb-stone" advertisement
expenses, (vi) costs and expenses in connection with Company
counsel's due diligence investigations, including without
limitation the fees of any independent counsel or consultant
retained, (vii) fees and expenses of the Warrant Agent and
of the transfer agent and registrar for the Securities,
(viii) the fees payable to the Commission and the NASD, and
(ix) the fees and expenses incurred in connection with the
listing or quotation, as the case may be, of the Securities
on the NASDAQ SmallCap Market, the Boston Stock Exchange and
any other exchange or market system. In addition, the
Company shall also pay you, individually, and not in your
capacity as Representative, at the applicable Closing Date,
a non-accountable expense allowance equal to 3% of the
initial public offering price of the Securities purchased on
such Closing Date (including Option Units purchased pursuant
to the option granted pursuant to Section 2 hereof). If the
sale of the Units provided for herein is not consummated by
reason of any termination of this Agreement pursuant to
Section 8(b) hereof, or by reason any failure, refusal or
inability on the part of the Company to perform any
agreement on its part to be performed hereunder or because
any condition of the Underwriters' obligations set forth in
Section herein is not fulfilled, the Company shall
---
reimburse NTB for all of its accountable out-of-pocket
expenses (including fees and disbursements of its counsel)
actually incurred in connection with the investigation,
preparing to market and marketing of the Units or in
contemplation of performing Representatives' obligations
hereunder, such reimbursement not to exceed $50,000,
inclusive of the $20,000 previously paid to NTB by the
Company. You acknowledge that $20,000 has been paid to you
by the Company to be applied against the stated
non-accountable expense allowance as well as $86,539
previously paid by the Company to First United Equities
Corporation. You agree to promptly repay the Company as to
any portion of the $20,000 advanced to you which is not
necessary to reimburse you for your out-of- pocket expenses
actually incurred if the sale of the Securities, as
contemplated by this agreement, is not consummated for any
reason.
6. Conditions of the Underwriters' Obligations. The
obligations of the several Underwriters to purchase and pay
for the Securities described in Section 2(a) and 2(b) hereof
shall be subject, in the Representatives sole discretion, to
the continuing accuracy of the representations and
warranties of the Company herein as of the date hereof and
as of the Closing Date and each Option Closing Date, if any,
as if they had been made on and as of such Closing Date as
if made on and as of such Closing Date, to the accuracy of
the statements of the Company's officers made pursuant to
the provisions hereof, to the performance by the Company of
its covenants and obligations hereunder and to the following
further conditions:
18
(a) The Registration Statement shall have become
effective and no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no
proceedings for that 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 (to be provided in the Registration Statement or
otherwise) shall have been complied with to the reasonable
satisfaction of Representative. If the Company has elected
to rely upon Rule 430A of the Rules and Regulations, the
price of the Securities and any price-related information
previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to
the Commission for filing pursuant to Rule 424(b) of the
Rules and Regulations within the prescribed time period, and
prior to Closing Date the Company shall have provided
evidence satisfactory to the Representatives of such timely
filing, or a post-effective amendment providing information
shall have been promptly filed and declared effective in
accordance with the requirements of Rule 430A of the Rules
and Regulations.
(b) The Representatives shall not have advised
the Company that the Registration Statement, or any
amendment thereto, contains an untrue statement of fact
that, in the Representatives' opinion, is material, or omits
to state a fact that, in the Representatives' opinion, is
material and is required to be stated therein or is
necessary to make the statements therein not misleading, or
that the Prospectus, or any supplement thereto, contains an
untrue statement of fact that, in the Representatives'
opinion, is material, or omits to state a fact that, in the
Representatives' opinion, is material and is required to be
stated therein or is necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(c) On or prior to each Closing Date, the
Representatives shall have received from Underwriters'
counsel, such opinion or opinions with respect to the
organization of the Company, the validity of the Securities,
the Representatives' Warrants, the Registration Statement,
the Prospectus, and other related matters as the
Representatives may request and Underwriters' counsel shall
have received such documents and information as they request
to enable them to pass upon such matters.
(d) On the Closing Date, there shall have been
delivered to the Representatives the favorable opinion
(addressed to you as the Representatives) of Xxxxxx & Dodge
LLP, counsel to the Company ("Company Counsel"), dated the
Closing Date, and in form and substance satisfactory to
Underwriters' counsel and stating that it may be relied upon
by Underwriters' counsel in giving their opinion, if
required by you, covering the matters on Annex A attached
hereto.
(e) On the Closing Date, there shall have been
delivered to you the favorable opinion (addressed to you as
the Representative) of Xxxxxxxx & Sunstein, patent counsel
to the Company ("Patent Counsel"), dated the Closing Date,
and in form and substance satisfactory to Underwriters'
counsel and stating that it may be relied upon by
Underwriters' counsel in giving their opinion, if required
by you, covering the matters on Annex B attached hereto.
19
(f) At each Option Closing Date, if any, there shall have
been delivered to you the favorable opinions (addressed to you as the
Representatives) of Company Counsel and Patent Counsel, respectively, each
dated the Option Closing Date, and in form and substance satisfactory to
Underwriters' counsel, confirming as of each Option Closing Date the
statements made by such counsel in its opinion delivered on the Closing Date.
(g) On or prior to each of the Closing Date and each Option
Closing Date, if any, Underwriters' counsel shall have been furnished 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
Section 7(c), or in order to evidence the accuracy, completeness, or
satisfaction of any of the representations, warranties or conditions of the
Company.
(h) Prior to each of the Closing Date and each Option Closing
Date, if any, (i) there shall have been no material adverse effect on the
Company, (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 Prospectus that is materially adverse to the Company; (iii) the
Company shall not be in material breach or material default under any
provision of any instrument relating to any outstanding indebtedness; (iv)
the Company shall not have issued any securities (other than as described in
the Registration Statement and other than the Securities and the
Representatives' Securities) or declared or paid any dividend or made any
distribution in respect of its capital stock of any class and there shall not
have been any change in the capital stock or any material change in the debt
(long or short term) or liabilities or obligations of the Company (contingent
or otherwise); (v) 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; (vi) no action, suit or proceeding, at law or in equity,
shall have been pending or threatened (or circumstances giving rise to same)
against the Company, or involving or affecting its business or properties,
before or by any court or federal, state or foreign commission, board or
other administrative agency wherein an unfavorable decision, ruling or
finding could have a material adverse effect on the Company, except as set
forth in the Registration Statement and Prospectus; and (vii) no stop order
shall have been issued under the Act and no proceedings therefor shall have
been initiated, threatened or contemplated by the Commission.
(i) At each of the Closing Date and each Option Closing Date, if
any, the Underwriters shall have received a certificate of the Company,
signed by the principal executive officer and by the chief financial or chief
accounting officer of the Company, dated the Closing Date or Option Closing
Date, as the case may be, to the effect that each of such persons have
carefully examined the Registration Statement, the Prospectus and this
Agreement, and that:
1. The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing
Date or such Option Closing Date, as the case may be, and the Company
has complied, in all material respects, with all agreements and
covenants and satisfied, in all material respects, all conditions
contained in this Agreement on its part to be performed
20
or satisfied at or prior to such Closing Date or Option Closing Date,
as the case may be;
2. No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no
proceedings for that purpose have been instituted or are pending or,
to the best of each of such person's knowledge after due inquiry, are
contemplated or threatened under the Act;
3. the Registration Statement and the Prospectus and each
amendment and each supplement thereto, if any, contain all statements
and information required to be included therein, and none of the
Registration Statement, the Prospectus, or any amendment or supplement
thereto includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading and neither the Preliminary Prospectus
or any supplement thereto included any untrue statement of a material
fact or omitted 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; except that
such certification may expressly exclude statements or omissions made
in reliance upon and in conformity with written information furnished
to the Company with respect to the Underwriters by or on behalf of the
Underwriters expressly for use in such Preliminary Prospectus,
Registration Statement or Prospectus; and
4. Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, (a) the
Company shall not have incurred, up to and including the Closing Date
or the Option Closing Date, as the case may be, other than in the
ordinary course of its business consistent with past practice, any
material liabilities or obligations, direct or contingent; (b) the
Company shall not have paid or declared any dividends or other
distributions on its capital stock; (c) the Company shall not have
entered into any transactions not in the ordinary course of business
consistent with past practice; (d) there shall not have been any change
in the capital stock or long-term debt or any increase in the short-term
borrowings (other than any increase in the short-term borrowings in the
ordinary course of business consistent with past practice) of the
Company; (e) the Company shall not have sustained any material loss or
material damage to its property or assets, whether or not insured;
(f) there shall be no litigation which is pending or threatened (or
circumstances giving rise to same) against the Company or any
affiliated party that is required to be set forth in an amended or
supplemented Prospectus and that has not been so set forth; and (g)
there shall not have occurred any event required to be set forth in an
amended or supplemented Prospectus that shall not have been set forth.
21
References to the Registration Statement and the Prospectus in this
subsection (i) are to such documents as amended and supplemented at the date
of such certificate.
(j) By the Closing Date, the Representatives shall have received
clearance from the NASD as to the amount of compensation allowable or payable
to the Underwriters, as described in the Registration Statement.
(k) At the time this Agreement is executed, the Underwriters shall
have received a letter, dated the date hereof, addressed. to the Underwriters
in form and substance satisfactory (including as to the non-material nature
of the changes or decreases, if any, referred to in clause (iii) below) in
all respects to the Underwriters and Underwriters' Counsel, from Xxxxxxx
Xxxxxx & Co. LLP covering the matters set forth on Annex C attached hereto.
(l) On the date of execution of this Agreement and on the Closing
Date and each Option Closing Date, if any, the Underwriters shall have
received from Xxxxxxx Xxxxxx & Co. LLP a letter, dated as of the Closing Date
or such Option Closing Date, as the case may be, to the effect that they
reaffirm that the statements made in the letter furnished pursuant to
subsection (k) of this Section, except that the specified date referred to
therein as of which the examination made by them as described therein shall
have been made shall be a date not more that five days prior to Closing Date
or such Option Closing Date, as the case may be, and if the Company has
elected to rely on Rule 430A of the Rules and Regulations, to the further
effect that they have carried out procedures as specified in clause (v) of
subsection (k) of this Section with respect to certain amounts, percentages
and financial information as specified by the Representatives and deemed to
be a part of the Registration Statement pursuant to Rule 430A(b) and have
found such amounts, percentages and financial information to be in agreement
with the records specified in such clause (v).
(m) On each of the Closing Date and each Option Closing Date, if
any, there shall have been duly tendered to the Representatives for its
account and the several Underwriters' accounts, certificates representing the
appropriate numbers and types of Representatives' Securities and Securities,
as the case may be, against payment therefor as provided herein.
(n) No order suspending the sale of the Securities in any
jurisdiction designated by the Representatives pursuant to subsection ( ) of
--
Section hereof shall have been issued on either the Closing Date or the
-----
Option Closing Date, if any, and no proceedings for that purpose shall have
been instituted or shall be contemplated.
(o) On or before the Closing Date, the Company shall have executed
and delivered the Warrant Agreement to the Warrant Agent, with a fully
executed original copy to the Representative, and shall have executed and
delivered to the Representatives, (i) the Representatives' Warrant Agreement,
in the form attached hereto as Exhibit A, and (ii) the Representatives'
Warrants, in such denominations and to such designees (who must be officers
of the Representative) as shall have been requested by the Representatives.
22
(p) On or before Closing Date, the Units, the Common Stock and the
Redeemable Warrants each shall have been duly approved for quotation on the
NASDAQ SmallCap Market and listing on the Boston Stock Exchange, subject to
official notice of issuance.
(q) Since the effective date of the Registration Statement, the
Company shall not have sustained any loss by fire, flood, accident or other
calamity, nor shall it have become a party to or the subject of any
litigation, individually or in the aggregate, which is materially adverse to
the Company, nor shall there have been a material adverse change in the
general affairs, business, key personnel, capitalization, financial position
or net worth of the Company, whether or not arising in the ordinary course of
business, which loss, litigation or change, in your reasonable judgment,
shall render it inadvisable to proceed with the delivery of the Securities.
(r) Subsequent to the date of this Agreement or, if earlier, the
dates as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of any
supplement thereto), there shall not have been (i) any change or decrease
specified in the letter or letters referred to in paragraph (f) of this
Section or (ii) any change, or any development involving a prospective
-----
change, in or affecting the business or properties of the Company the effect
of which, in any case referred to in clause (i) or (ii) above, is, in the
judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto).
(s) On or prior to the date of this Agreement, the NASD shall have
approved the terms of the Underwriters' participation in the distribution of
the Securities described in Sections 2(a) and 2(b) to be sold pursuant to the
Registration Statement and the Prospectus.
(t) At or prior to the Closing Date, the Representatives' Warrant
Agreement shall have been entered into by the Company and you, and the
Representatives' Warrants shall have been sold to you and issued to you
and/or your designees pursuant to the Representatives' Warrant Agreement.
(u) At or prior to the Closing Date, you shall have received the
written agreements and representations described in Section 4( ), ( ) and
--- ---
( ) hereof.
---
(v) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents as
the Representatives may reasonably request.
If any of the conditions specified in this Section shall not
----
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects
23
reasonably satisfactory in form and substance to the Representatives and
counsel for the Representatives, this Agreement and all obligations of the
Underwriters hereunder may be canceled at, or at any time prior to, the
Closing Date by the Representatives. Notice of such cancellation shall be
given to the Company in writing, or by telephone or facsimile and confirmed
in writing.
If any representation or warranty of the Company herein shall not
be true and correct, or if any other material condition to the Underwriters'
obligations hereunder to be fulfilled prior to or at the Closing Date or the
relevant Option Closing Date, as the case may be, is not so fulfilled, the
Representatives may terminate this Agreement or, if the Representatives so
elect, waive any such conditions that have not been fulfilled or extend the
time for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of the
Underwriters (for purposes of this Section 8 "Underwriter" shall include the
officers, directors, stockholders, partners, employees, agents, and counsel
of each Underwriter, including specifically each person who may be
substituted for an Underwriter as provided in Section 12 hereof), and each
person, if any, who controls such Underwriter (each, a "controlling person")
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, from and against any and all losses, claims, damages, expenses, or
liabilities, joint or several (and actions, proceedings, investigations and
inquiries in respect thereof), whatsoever (including but not limited to any
and all expenses whatsoever incurred in investigating, preparing or defending
against any litigation commenced or threatened, or any claim whatsoever)
(collectively, "Losses"), as such are incurred, to which the Underwriter or
such controlling person 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) Section 1 of
this Agreement, the Registration Statement, any Preliminary Prospectus or the
Prospectus (as from time to time amended and supplemented); (ii) any
post-effective amendment or amendments or any new registration statement or
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Securities; or (iii) any application or other document
or written communication (in this Section collectively called "application")
executed by the Company or based upon written information furnished by the
Company or on behalf of the Company filed 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, the NASD or any other
securities association, the NASDAQ SmallCap Market or any other securities
exchange; or arise out of or are based upon the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading (in the case of the Prospectus, in
light of the circumstances under which they were made), provided however,
that the Company will not be liable in any such case to the extent that any
such Losses arise out of or are based upon any such untrue statement or
omission or alleged untrue statement or omission made therein in reliance
upon and in strict conformity with written
24
information furnished to the Company with respect to any underwriter by or on
behalf of such underwriter expressly for use in the Registration Statement,
any Preliminary Prospectus or Prospectus, or any amendment thereof or
supplement thereto, or in any application, as the case may be; provided
further, that with respect to any untrue statement or omission, or any
alleged untrue statement or omission, made in any Preliminary Prospectus, the
indemnity agreement contained in this Section 8 shall not inure to the
benefit to any Underwriter (or to the benefit of any person controlling any
such Underwriter) from whom the person asserting any such Losses purchased
the Securities concerned to the extent that any such Losses result from the
fact that a copy of the Prospectus was not sent or given to such person at or
prior to the written confirmation of the sale of such Securities as required
by the Act, and if the untrue statement or omission has been corrected in the
Prospectus, unless such failure to deliver the Prospectus was the result of
noncompliance by the Company with its obligations under Section ( )
---- --
hereof. The Company will not, without the prior written consent of each
Underwriter settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such
underwriter or any person who controls such underwriter is a party to such
claim, action, suit or proceeding), unless the settlement or compromise or
consent includes an unconditional release of such Underwriter and each such
controlling person from all liability arising out of such claim, action, suit
or proceeding, reasonably satisfactory in form and substance to the
Representative.
The indemnity agreement in this subsection (a) shall be in addition
to any liability that the Company may have at common law or otherwise.
(b) Each Underwriter agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement (whether on his own behalf
or pursuant to a power of attorney), and each other person, if any, who
controls the Company within the meaning of the Act and the Exchange Act, to
the same extent as the foregoing indemnity from the Company to each
Underwriter, but only with respect to statements or omissions, if any, made
in the Registration Statement, any Preliminary Prospectus or Prospectus or
any amendment thereof or supplement thereto or in any application made in
reliance upon written information relating to such Underwriter furnished to
the Company by or on behalf of such Underwriter expressly for use in such
Registration Statement, any Preliminary Prospectus or Prospectus or any
amendment thereof or supplement thereto or in any such application. The
Company acknowledges that the corporate names set forth on the front cover
page and the information under the caption "Underwriting" in the Registration
Statement, any Preliminary Prospectus and the Prospectus relating to the
Securities filed by the Company (insofar as such information relates to the
Underwriters) constitutes the only information furnished by the Underwriters
to the Company for inclusion in the Registration Statement, any Preliminary
Prospectus, and the Prospectus.
The indemnity agreement in this subsection (b) shall be in addition
to any liability that the several Underwriters may have at common law or
otherwise.
25
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of any claim or the commencement of any
action, suit or proceeding, the indemnified party shall, if a claim in
respect thereof is to be made against one or more indemnifying parties under
such subsection, notify each indemnifying party in writing of the claim or
commencement of that action; and the failure to notify the indemnifying party
shall not relieve it from any liability that it may have to an indemnified
party otherwise then under such subsection. In case any such action is
brought against any indemnified party, and it notifies an indemnifying party
or parties of the commencement thereof, the indemnifying party or parties
will be entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have
the right to employ its or their own counsel in any such case but the fees
and expenses of such counsel shall be at the expense of such indemnified
party or patties unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying parties in connection with the
defense of such action at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory
to such indemnified party to have charge of the defense of such action within
a reasonable period of time after notice of commencement of the action, (iii)
such indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them that are different from or additional
to those available to one or all of the indemnifying parties (in which case
the indemnifying parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties) or (iv) counsel to
the indemnifying parties shall have concluded that a conflict exists between
the indemnified party or parties and the indemnifying parties, in any of
which events such fees and expenses of additional counsel shall be borne by
the indemnifying parties. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement
of any claim or action effected without its written consent unless such
consent was unreasonably withheld or delayed.
(d) In order to provide for just and equitable contribution in any
case in which (i) an indemnified xxxxx makes a claim for indemnification
pursuant to this Section, 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 the express provisions of this Section provide for indemnification
in such case, or (ii) contribution under the Act may be required on the part
of any indemnified party, then each indemnifying party shall contribute to
the amount paid as or payable by such indemnified party as a result of such
losses, claims, damages, expenses or liabilities (or actions in respect
thereof) referred to in subsection (a) or (b) above and (A) in such
proportion as is appropriate to reflect the relative benefits received by
each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the Securities, or (B) if
the allocation provided by clause (A) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (A) above but also the relative fault of each
of the contributing parties, on the one hand, and the party to be indemnified
on the other hand in
26
connection with the statements or omissions that resulted in such Losses, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the underwriters shall be deemed to be in same
proportion that the total net proceeds from the offering of the Securities
(before deducting expenses other then the non- accountable expense Losses
received by the Company and the total underwriting discounts and commissions
received by the underwriters bear to one another. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by
the Underwriters, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an indemnified party as a result of
the Losses (or actions in respect thereof) referred to above in this
subdivision (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Securities underwrite by it and distributed to the public exceeds
the amount of any damages that such Underwriter has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section, each person, if any, who controls the Company
within the meaning of the Act, each officer of the Company who has signed the
Registration Statement, and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to this
subparagraph (d). Any party entitled to contribution agrees that, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect to which a claim for contribution may be made
against another party or parties under this subparagraph (d), notify such
party or parties from whom contribution may be sought, but the omission so to
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder
or otherwise than under this subparagraph (d), or to the extent that such
party or parties were not adversely affected by such omission. The
contribution agreement set forth above shall be in addition to any
liabilities that any indemnifying party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant
hereto, shall be deemed to be representations, warranties and agreements at
the Closing Date and the applicable Option Closing Date, as the case may be,
and such representations, warranties and agreements of the Company and the
respective indemnity agreements contained in Section hereof, shall remain
----
operative and in full force and effect regardless of any investigation made
by or on behalf of any Underwriter, the Company, or any controlling person of
any Underwriter or the Company, and shall survive termination of this
Agreement and the issuance and delivery of the Securities to the Underwriters
and the Representatives' Securities to the Representatives, as the case may
be.
27
9. Effective Date. This Agreement shall become effective at 10:00
a.m., Denver time, on the earlier of (i) the first full business day
following the date the Registration Statement becomes effective or (ii) at
such time after the Registration Statement becomes effective as the
Representative, in its discretion, shall release the Firm Units for the sale
to the public; provided, however, that the provisions of Sections , and
--- ---
of this Agreement shall at all times be effective. For purposes of this
---
Section, the Securities to be purchased hereunder shall be deemed to have
been so released upon the earlier of dispatch by the Representatives of
telegrams to securities dealers releasing such Securities for offering or the
release by the Representatives for publication of the first newspaper
advertisement that is subsequently published relating to the Securities.
10. Termination.
(a) The Representatives shall have the right to terminate this
Agreement by providing written notice thereof to the Company at any time
prior to the delivery of any payments for the Securities if prior to such
time any of the following occurs: (i) the Company shall have failed, refused
or been unable to perform any agreement on its part to be performed hereunder
unless compliance therewith or performance or satisfaction thereof shall have
been expressly waived in writing by the Representatives; (ii) any other
condition of the obligations of the Underwriters hereunder is not fulfilled;
(iii) there shall have occurred any material adverse change, since the
respective dates as of which information is given in the Prospectus, in or
affecting the business or financial condition of the Company or the Company's
earnings, business affairs, management or prospects of the Company, whether
or not arising in the ordinary course of its business; (iv) there shall have
occurred an outbreak of major hostilities (or an escalation thereof) in which
the United States is involved, a declaration by the United States of a
national emergency or war or other calamity or crisis the effect of which on
financial markets is such as to result, in your judgment, in a material
impairment of this Agreement by making it impracticable or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by
the Prospectus (exclusive of any supplement thereto); (v) there shall have
occurred suspension of trading in securities on the New York Stock Exchange,
the American Stock Exchange, the Boston Stock Exchange or the NASDAQ market
system or minimum or maximum prices shall have been established on any of
said Exchange or market system; (vi) a banking moratorium shall have been
declared by federal or state authorities; (vii) there shall have occurred any
action by any federal, state or local government or agency in respect to
monetary or fiscal affairs or regulations affecting pharmaceuticals which in
the reasonable opinion of the Representatives have a material adverse effect
on the securities markets in the United States or the business prospects of
the Company or business generally; or (viii) if Dr. Xxxxxxxxx Xxxxxx no
longer serves the Company in her present capacity.
(b) If this Agreement is terminated by the Representatives in
accordance with the provisions of subsection (a) above, neither party shall
have any further obligation to the other party except that (i) the Company
shall be responsible for any unpaid expenses under Section ( ) up through
--- ---
the date of such termination (it being understood that the aggregate amount
of expenses payable pursuant to this Section shall not exceed the aggregate
amount of
28
accountable expenses incurred by the Representatives) and (ii) both parties
shall continue to have the obligations set forth in Section of
---
this Agreement. Notwithstanding any contrary provision contained in this
Agreement, if this Agreement shall not be carried out within the time
specified herein, or any extension thereof granted to the Representatives, by
reason of any failure on the part of the Company to perform any undertaking
or satisfy any condition of this Agreement by it to be performed or satisfied
(including, without limitation, pursuant to Section or Section hereof
--- ---
hereof) then the Company shall promptly reimburse and indemnify the
Representatives for the expenses payable under Section ( ), including
--- ----
Blue Sky filing fees. 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 and Section 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.
11. Substitution of the Underwriters. If one or more of the
Underwriters shall fail (otherwise than for a reason sufficient to justify
the termination of this Agreement under the provisions of Section ,
---
Section or Section hereof) to purchase the Securities which it or
--- ---
they are obligated to purchase on such date under this Agreement (the
"Defaulted Securities"), the Representatives shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted Securities in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(a) if the anticipated net proceeds to the Company from the
Defaulted Securities does not exceed 10% of the total anticipated net
proceeds to the Company from the Firm Securities to be purchased on such
date, the non-defaulting Underwriters shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the anticipated net proceeds to the Company from the
Defaulted Securities exceeds 10% of the total anticipated net proceeds to the
Company from the Firm Securities to be purchased on such date, this Agreement
shall terminate without liability on the part of any non-defaulting
Underwriters or the Company.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of any default by such
Underwriter under this Agreement.
In the event of any such default that does not result in a
termination of this Agreement, the Representatives shall have the right to
postpone the Closing Date for a period not exceeding seven Business Days in
order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements.
12. Default by the Company. If the Company shall fail at the Closing
Date or any Option Closing Date, as applicable, to sell and deliver the
respective numbers and types of
29
Securities that it is obligated to sell hereunder on such date, then this
Agreement shall terminate (or, if such default shall occur with respect to
any Option Securities to be purchased on an Option Closing Date, the
Underwriters may at the Representatives' option, by notice from the
Representatives to the Company, terminate the Underwriters' obligation to
purchase Option Securities from the Company on such date) without any
liability on the part of any non-defaulting party other than pursuant to
Sections 6, 8 and 11 hereof. No action taken pursuant to this Section shall
relieve the Company from liability, if any, in respect of such default.
13. Notices. All notices and communications hereunder, except as
herein otherwise specifically provided, shall be in writing and shall be
deemed to have been duly given if mailed by certified or registered mail,
return receipt requested, sent via an established, reputable overnight
courier service, or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed to the Representatives in care
of Neidiger, Tucker, Bruner, Inc. at 000 Xxxxx Xxxxx, 0000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxx 00000, Attn: Xx. Xxxxxxx X. Xxxxxxxx, Senior Vice
President, with a copy to Xxxx X. Xxxxxxx, P.C., 310 Plaza Level, 0000
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000, Attn: Xxxx X. Xxxxxxx, Esq. Notices
to the Company shall be directed to Apollo Biopharmaceutics, Inc., One
Xxxxxxx Square, Building 200, Suite 2200, Xxxxxxxxx, Xxxxxxxxxxxxx 00000,
Attn: Dr. Xxxxxxxxx Xxxxxx with a copy to Xxxxxx & Dodge LLP, Xxx Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attn: Xxxxxxx Xxxxxx, Esq.
14. Parties. This Agreement shall inure solely to the benefit of and
shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 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. No purchaser of Securities from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Colorado, without
giving effect to its choice of law or conflict of laws principles.
16. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Colorado without giving any
effect to any choice of law or conflict of law provision or rule whether of
the State of Colorado or any other jurisdiction that would cause the
application of the laws of any jurisdiction other than the State of Colorado.
The parties agree to the exclusive jurisdiction of the courts of the State
of Colorado or of the United States of America for the District of Colorado,
and irrevocably submit to such jurisdiction, which jurisdiction shall be
exclusive, in connection with any action brought by any party hereto relating
to this Agreement or the transactions which are the subject matter hereof.
30
17. Entire Agreement: Amendments. This Agreement and the
Representatives' Warrant Agreement constitute the entire agreement of the
parties hereto and supersede all prior written or oral agreements,
understandings, and negotiations with respect to the subject matter hereof,
including without limitation a letter of intent dated April , 1997
----
between the Company and NTB. This Agreement may not be amended except in a
writing signed by the Representatives and the Company.
18. Severability. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement. The parties agree, however,
that in the event any provision of this Agreement shall be declared invalid
or unenforceable, the parties shall negotiate a new provision achieving to
the extent possible the purpose of the invalid provision.
31
19. Definition of Business Day. For purposes of this Agreement,
"Business Day" means any day on which the New York Stock Exchange, Inc. is
open for trading.
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
among the Company and each of the several Underwriters.
Very truly yours,
APOLLO BIOPHARMACEUTICS, INC.
By
-------------------------------------------------
Xxxxxxxxx Xxxxxx, Ph.D.
President and Chief Executive Officer
Confirmed and accepted
as of the date first above written:
NEIDIGER, TUCKER, BRUNER, INC. and
WESTPORT RESOURCES INVESTMENT
SERVICES, INC.
As Representatives of the several Underwriters
named in the attached Schedule I hereto
By: NEIDIGER, TUCKER, BRUNER, INC.
By
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Xxxxxxx X. Xxxxxxxx
Senior Vice President
By: WESTPORT RESOURCES INVESTMENT
SERVICES, INC.
By
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Name:
Title:
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SCHEDULE I
Number of Firm
Name of Underwriter Units to be Purchased
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Neidiger, Tucker, Bruner, Inc. . . . . . . . . . . .
Westport Resources Investment Services, Inc. . . . .
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TOTAL 500,000
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ANNEX A
Matters to be Covered in the Opinion of
Xxxxxx & Dodge LLP, Counsel for the Company
1. The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware and
is duly qualified to do business and is in good standing as a foreign
corporation in the commonwealth of Massachusetts, which, to our knowledge, is
the only jurisdiction in which its ownership or leasing of any properties or
the character of its operations requires such qualification. The Company has
all corporate power and authority necessary to own or hold its properties and
conduct the business in which it is presently engaged as described in the
Prospectus. To our knowledge, the Company does not own an interest in any
corporation, partnership, joint venture, trust or other business entity.
2. The Company's authorized capitalization consists of 20,000,000
shares of Common Stock, $.02 par value per share, and 1,000,000 shares of
Preferred Stock, $0.01 par value per share. All of the issued and outstanding
shares of capital stock of the Company have been duly and validly authorized
and issued and are fully paid and non-accessible with no personal liability
attaching to the ownership thereof. The Shares being delivered on the date
hereof upon issuance and delivery and payment therefor in the manner
described in the Underwriting Agreement are, and the Redeemable Warrant
Shares and the Representatives' Warrant Shares, when issued upon exercise in
accordance with the terms of the Warrant Agreement and the Representatives'
Warrant Agreement will be, duly and validly authorized and issued, fully paid
and non-accessible with no personal liability to the ownership
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thereof. The statements made in the Prospectus under the caption
`Description of Securities' insofar as they purport to constitute summaries
of the terms for the Company's capital stock and securities convertible or
exercisable for such capital stock (including the Securities), constitute
accurate summaries of the terms of such capital stock in all material
respects and fairly present in all material respects the terms of such
securities.
3. Upon the consummation of the initial public offering, there will
be no preemptive or other rights to subscribe for or to purchase or rights of
first refusal or participation with respect to any shares of Common Stock
pursuant to the Company's charter or by-laws or any agreement or other
instrument known to us. Except as described in the Prospectus and as
provided in the Company charter and by-laws, there are no restrictions upon
the voting or transfer of any shares of Common Stock pursuant to any
agreement or other instrument known to us.
4. To our knowledge, but without inquiry into the dockets of any
court, commission, regulatory body, administrative agency or other
governmental body, and except as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company is a party or
to which any property or assets of the Company is subject which, if
determined adversely to the Company are reasonably likely to have a Material
Adverse Effect on the business or prospects of the Company taken as a whole.
1
5. The Registration Statement has been declared effective under the
Securities Act and, to our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose is pending or threatened by the Commission.
6. The Registration Statement and the Prospectus and any further
amendments or supplements thereto made by the Company prior to the date
hereof (other than the financial statements, financial and statistical
information, pro forma financial information and related schedules and notes
thereto, as to which we express no opinion) comply as to form in all material
respects with the requirements of the Securities Act and the Rules and
Regulations.
7. To our knowledge, there are no contracts or other documents that
are required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations
that have not been described or filed as exhibits to the Registration
Statement.
8. The Company has full right, power, and authority to execute and
deliver the Underwriting Agreement, the Warrant Agreement, the Redeemable
Warrants, the Representatives'Warrant Agreement and the Representatives'
Warrants and to consummate the transactions contemplated thereby.
9. Each of the Underwriting Agreement, the Warrant Agreement, the
Redeemable Warrants, the Representatives' Warrants Agreement and the
Representatives' Warrants has been duly authorized, executed, and delivered
by the Company. Each of the Underwriting Agreement, the Warrant Agreement,
the Redeemable Warrants, the Representatives'Warrant Agreement and the
Representatives' Warrant constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
10. The issuance and sale of the Securities being delivered on the
date hereof by the Company, the compliance by the Company with all of the
provisions of the Underwriting Agreement, the Warrant Agreement, the
Redeemable Warrants, the Representatives' Warrant Agreement and the
Representatives' Warrant and the consummation of the transactions
contemplated thereby will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default, an
event of default, or an event which, with notice or lapse of time or both,
would constitute a default or event of default under, any indenture,
mortgage, deed of trust, loan agreement, or other agreement or instrument
filed as an exhibit to the Registration Statement, nor will such actions
result in any violation of the provisions of the charter or by-laws of the
Company or any material statute, order, rule or regulation or, to our
knowledge, any judgment, order or decree of any court or governmental agency
or body having jurisdiction over the Company or any of its properties or
assets, except for such conflicts, breaches, violations and defaults as are
not reasonably likely, individually or in the aggregate, to have (a) a
Material Adverse Effect on the business or prospects of the Company; or (b)
any adverse effect on the consummation of the transactions contemplated by
the Underwriting Agreement, the Warrant Agreement, the Redeemable Warrants,
the Representatives' Warrant Agreement and the Representatives' Warrants.
Except for the registration of the Securities under
2
the Securities Act, and such consents, approvals, authorizations,
registrations, or qualifications as may be required under the Exchange Act
and applicable state or foreign securities laws in connection with the
purchase and distribution of the Securities by the underwriters thereof, no
consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the issuance
and sale of the Securities being delivered on the date hereof by the Company,
the compliance by the Company with all of the provisions of the Underwriting
Agreement, the Warrant Agreement, the Redeemable Warrants, the
Representatives' Warrant Agreement and the Representatives' Warrants or the
consummation of the transactions contemplated thereby.
11. To our knowledge, except as described under the caption "Shares
Eligible for Future Sale - Registration Right" in the Preliminary Prospectus
and except for registration rights applicable to the Representatives'
Warrants there are no contracts, agreements or understandings in effect on
the date hereof between the Company and any person owning securities of the
Company granting such person the right to require the Company to include such
securities in the Registration Statement or in any other registration
statement filed by the Company under the Securities Act.
12. The Common Stock, the Redeemable Warrants and the Redeemable
Warrant Shares issued and sold by the Company have been accepted for listing
by The Nasdaq SmallCap Market upon official notice of issuance of the shares
by the Company to The Nasdaq SmallCap Market.
In connection with the preparation of the Registration Statement and the
Prospectus, we have participated in conferences with officers and
representatives of the Company and the independent accountants of the
Company, at which conferences we have made inquiries of such persons and
others and discussed the contents of the Registration Statement and the
Prospectus. While the limitations inherent in the independent verification
of factual matters and the character of determinations involved in the
registration process are such that we are not passing upon and do not assume
any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (except
as specifically stated elsewhere in this opinion), nothing has come to our
attention that has caused us to believe that the Registration Statement, as
of its effective date, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading (except that we
express no view or opinion with respect to the financial statements and
schedules or other financial and statistical data included in the
Registration Statement), and nothing has come to our attention that has
caused us to believe that the Prospectus, as of its date and as of the
Closing Date, contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(except that we express no view or opinion with respect to the financial
statements and schedules or other financial and statistical data included in
the Prospectus).
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ANNEX B
Matters to be Covered in the Opinion of Xxxxxxxx & Sunstein
1. Such counsel represents the Company in certain matters relating
to intellectual property, including patents and proprietary rights;
2. Such counsel is familiar with the technology and processes used
by the Company in its business and the manner of its use and has read the
portions of the Registration Statement and the Prospectus entitled "Risk
Factors--Technological Uncertainty; Early State of Product Development; No
Assurance of Regulatory Approvals," "Risk Factors--Development of New
Technologies and Products," "Risk Factors--No Assurance of United States or
Foreign Regulatory Approval; Government Regulation," "Risk Factors--Uncertain
Ability to Protect Proprietary Technology," "Business--Products in
Development" and "Business--Intellectual Property Rights" (the "Intellectual
Property Portion");
3. To the extent that the Intellectual Property Portion contains
descriptions of the Company's patent applications and patent applications
licensed to the Company (collectively the "Applications") and patents issued
to or otherwise owned or licensed by it (collectively the "Patents"), such
descriptions are accurate and do not omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading;
4. Such counsel has reviewed the Patents and Applications which
Patents and Applications are described in the Intellectual Property Portion,
and based upon such review, a review of the prior art references made known
to counsel and discussions with Company personnel, such counsel is aware of
no valid United States or foreign issued patent that is or would be infringed
by the activities of the Company in the manufacture, use or sale of any
product or proposed product or other material as described in the Prospectus
and made or used according to the Patents or the Applications;
5. The Applications have been properly prepared and filed on behalf
of the Company or its strategic partners, as the case may be, and are being
diligently pursued by the Company or its strategic partners, as the case may
be; each of the Applications is assigned or licensed to the Company or its
strategic partners, as the case may be; to such counsel's knowledge, no other
entity or individual has any right in or to any of the inventions claimed in
any of the Applications or patents sought to be issued therefrom; and each
of the Applications discloses patentable subject matter; and
6. Such counsel is aware of no pending or threatened judicial,
administrative or other proceedings by governmental authorities or others
relating to the Patents or Applications challenging the validity or scope of
the Patents or Applications (other than customary prosecution proceedings
relating to the Applications).
1
Such counsel shall also state that it has no reason to believe that the
information contained in the Intellectual Property Portion of the
Registration Statement or the Prospectus, as of its effective date, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the information contained in the Intellectual Property
Portion of the Prospectus, as of its date or the date of such opinion,
included or includes any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering any such opinion, such counsel may rely as to matters of
fact, to the extent they deem proper, on certificates and written statements
of responsible officers of the Company and public officials, provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel.
References to the Registration Statement and the Prospectus in this
Annex shall include any amendment or supplement thereto at the date of such
opinion.
2
ANNEX C
Matters to be Covered in the Comfort Letter
of Xxxxxxx X. Xxxxxx & Co.
1. Confirming that they are independent certified public accountants
with respect to the Company within the meaning of the Act and the applicable
Rules and Regulations;
2. Stating that it is their opinion that the financial statements
and supporting schedules of the Company included in the Registration
Statement comply as to form, in all material respects, with the applicable
accounting requirements of the Act and the Rules and Regulations thereunder
and that the Representatives may rely upon the opinion of Xxxxxxx Xxxxxx &
Co. LLP with respect to the financial statements and supporting schedules
included in the Registration Statement;
3. Stating that, on the basis of a limited review that included a
reading of the latest available unaudited interim consolidated financial
statements of the Company (with an indication of the date of the latest
available unaudited interim financial statements), a reading of the latest
available minutes of the stockholders and board of directors and the various
committees of the boards of directors of the Company, consultations with
officers and other employees of the Company responsible for financial and
accounting mailers and other specified procedures and inquiries, nothing has
come to their attention that would lead them to believe that (A) the pro
forma financial information contained in the Registration Statement and
Prospectus does not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and Regulations
or is not fairly presented in conformity with generally accepted accounting
principles applied on a basis consistent with that of the audited financial
statements of the Company or the unaudited pro forma financial information
included in the Registration Statement, (B) the unaudited financial
statements and supporting schedules of the Company 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 Rules and
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, or (C) at a specified date not more than five days
prior to the effective date of the Registration Statement, there has been any
change in the capital stock or long-term debt of the Company, or any decrease
in the stockholders' equity or net current assets or net assets of the
Company as compared with amounts shown in the balance sheet included in the
Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any change or decrease, setting
forth the amount of such change or decrease, and (D) during the period from
to a specified date not more than five days prior to the effective
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date of the Registration Statement, there was any increase or decrease in net
revenues, net earnings or increase in net earnings per common share of the
Company, in each case as compared with the corresponding period beginning
other than as set forth in or contemplated by the Registration
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Statement, or, if there was any such decrease or increase, setting forth the
amount of such decrease or increase;
1
4. Stating that they have compared specific dollar amounts, numbers
of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company 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 Company and excluding any questions
requiring an interpretation by legal counsel, 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;
5. Stating that they have not during the immediately preceding five
year period (or such shorter period as the Company shall have been in
existence) brought to the attention of any of the Company's management any
"material weakness," as defined in Statement of Auditing Standard No.60
"Communication of Internal Control Structure Related Matters Noted in an
Audit," in any of the Company's internal controls;
6. Stating that they have in addition carried out certain specified
procedures, not constituting an audit, with respect to certain pro forma
financial information which is included in the Registration Statement and the
Prospectus and that nothing has come to their attention as a result of such
procedures that caused them to believe such unaudited pro forma financial
information does not comply in form in all respects with the applicable
accounting requirements of Item 301 Regulation S-B or that the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of that information; and
7. Statements as to such other matters incident to the transaction
contemplated hereby as the Representatives may request.
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EXHIBIT A
(See Exhibit 10.16 to this Registration Statement.)
