2,750,000 Units
PROGENITOR, INC.
FORM OF UNDERWRITING AGREEMENT
_______ __, 1997
XXXXXX BROTHERS INC.
GENESIS MERCHANT GROUP SECURITIES
As Representatives of the Several Underwriters
c/x XXXXXX BROTHERS INC.
Three World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Progenitor, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell an aggregate of 2,750,000 units (the "Initial Units"), each
consisting of (i) one share (the "Share") of common stock, par value $.001 per
share (the "Common Stock"), of the Company and (ii) one warrant that entitles
the holder to purchase one share of the Common Stock (the "Warrant"), to the
several Underwriters named in Schedule I hereto (the "Underwriters") for whom
Xxxxxx Brothers Inc. ("Xxxxxx") and Genesis Merchant Group Securities are acting
as representatives (collectively, the "Representatives"). In addition, solely
for the purpose of covering over-allotments, the Company proposes to grant to
the several Underwriters, upon the terms and conditions set forth in Section 2
hereof, an option to purchase up to an additional 412,500 Units (the "Option
Units"). The Initial Units and the Option Units, and the Shares and the
Warrants comprising such Initial Units and Option Units, are hereinafter
collectively referred to as the "Units." The Shares of Common Stock issuable
upon exercise of the Warrants are hereinafter referred to as the "Warrant
Shares." The Shares and Warrants included in the Units are hereinafter
collectively referred to as the "Securities."
The Company and the Underwriters agree that up to 100,000 of the Units
to be purchased by the Underwriters (the "Reserved Units") shall be reserved for
sale by the Underwriters to certain eligible employees, directors and other
persons and entities having business relationships with the Company, as part of
the distribution of the Units by the Underwriters, subject to the terms of this
Agreement, the applicable rules, regulations and interpretations of the National
Association of Securities Dealers, Inc. and all other applicable laws, rules and
regulations. To the
extent that such Reserved Units are not so purchased by such eligible
employees, directors and other persons and entities having business
relationships with the Company, such Reserved Units may be offered to the
public as part of the public offering contemplated hereby.
The Units are being sold concurrently with the acquisition of Mercator
Genetics, Inc., a Delaware corporation ("Mercator"), by the Company. The
acquisition is being effected pursuant to an Agreement and Plan of
Reorganization, dated as of February 14, 1997 (the "Merger Agreement"), by and
among the Company, MG Merger Sub Corp., a Delaware corporation and a wholly
owned subsidiary of the Company ("Merger Sub"), and Mercator. Pursuant to the
Merger Agreement, the Company will acquire all of the issued and outstanding
capital stock of Mercator (the "Merger"). At the time the Merger is consummated
(the "Effective Time of the Merger") and pursuant to the Merger Agreement,
Merger Sub will be merged with and into Mercator, with Mercator as the surviving
corporation. The Merger Agreement, this Agreement, the Warrant Agreement and
the Securities are collectively referred to herein as the "Transaction
Documents."
The Company wishes to confirm as follows its agreements with you and
the other Underwriters on whose behalf you are acting in connection with the
several purchases by the Underwriters of the Units:
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-1 (No. 333-5369) covering the registration
of the Units, the Shares, the Warrants and the Warrant Shares under the
Securities Act of 1933, as amended (the "1933 Act"), including the related
preliminary prospectus, or prospectuses, and either (A) has prepared and
filed, prior to the effective date of such registration statement, an
amendment to such registration statement, including a final prospectus or (B)
if the Company has elected to rely upon Rule 430A ("Rule 430A") of the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"), will prepare and file a prospectus, in accordance with the
provisions of Rule 430A and Rule 424(b) ("Rule 424(b)") of the 1933 Act
Regulations, promptly after execution and delivery of this Agreement.
Additionally, if the Company has elected to rely upon Rule 434 ("Rule 434")
of the 1933 Act Regulations, the Company will prepare and file a term sheet
(a "Term Sheet") in accordance with the provisions of Rule 434 and Rule
424(b), promptly after execution and delivery of this Agreement. The
information, if any, included in such prospectus or in such Term Sheet, that
was omitted from such registration statement at the time it became effective
but that is deemed to be part of such registration statement at the time it
becomes effective (a) pursuant to paragraph (b) of Rule 430A, is referred to
herein as the "Rule 430A Information," or (b) pursuant to
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paragraph (d) of Rule 434, is referred to herein as the "Rule 434
Information." Each prospectus used before the time such registration
statement became effective, and any prospectus that omitted, as applicable,
the Rule 430A Information or the Rule 434 Information that was used after
effectiveness and prior to the execution and delivery of this Agreement is
herein called a "preliminary prospectus." Such registration statement,
including the exhibits thereto, at the time it became effective and
including, if applicable, the Rule 430A Information or the Rule 434
Information, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such
filing the term Registration Statement shall include the Rule 462(b)
Registration Statement. The final prospectus in the form first furnished to
the Underwriters for use in connection with the offering of the Units is
herein referred to as the "Prospectus." If Rule 434 is relied upon, the term
"Prospectus" shall refer to the preliminary prospectus last furnished to the
Underwriters in connection with the offering of the Units, together with the
Term Sheet, and all references to the date of the Prospectus shall mean the
date of the Term Sheet. For purposes of this Agreement, all references to
the Registration Statement, any preliminary prospectus, the Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy, if any, filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("XXXXX").
2. AGREEMENTS TO SELL AND PURCHASE. Upon the basis of the
representations, warranties and agreements contained herein and subject to all
the terms and conditions set forth herein, the Company hereby agrees to issue
and sell to each Underwriter and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $[ ] per
Unit (the "Purchase Price Per Unit"), the number of Initial Units set forth in
Schedule I opposite the name of such Underwriter under the column "Number of
Initial Units to be Purchased from the Company" (or such number of Initial Units
increased as set forth in Section 10 hereof).
Upon the basis of the representations, warranties and agreements
contained herein and subject to all the terms and conditions set forth herein,
the Company hereby grants an option (the "Over-Allotment Option") to the
Underwriters to purchase from the Company, at the Purchase Price Per Unit, up to
an aggregate of 412,500 Option Units. Option Units may be purchased solely for
the purpose of covering over-allotments made in connection with the offering of
the Units. Such option shall expire at 5:00 P.M., New York time, on the 30th
day after the date of this Agreement (or, if such 30th day shall be a Saturday
or Sunday or a holiday, on the next business day thereafter when the New York
Stock Exchange is open for trading). Such Over-Allotment Option may be
exercised at
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any time or from time to time until its expiration. Upon any exercise of the
Over-Allotment Option, each Underwriter, severally and not jointly, agrees to
purchase from the Company that proportion of the total number of Option Units
as is equal to the percentage of Initial Units that such Underwriter is
purchasing from the Company (or such number of Initial Units increased as set
forth in Section 10 hereof), subject to such adjustments as you may determine
to avoid fractional Units.
3. TERMS OF PUBLIC OFFERING. The Company has been advised by you
that the Underwriters propose to make a public offering of the Units as soon
after the Registration Statement and this Agreement have become effective as
in your judgment is advisable and initially to offer the Units upon the terms
set forth in the Prospectus.
4. DELIVERY OF THE UNITS AND PAYMENT THEREFOR. Delivery to the
Underwriters of and payment for the Initial Units shall be made at the office
of Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois), 000 Xxxx Xxxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, at 9:00 A.M., Chicago time, on the
third (fourth, if the pricing occurs after 4:30 p.m. (Eastern Time) on any
given day) business day after the date hereof (unless postponed in accordance
with the provisions of Section 10 hereof) (the "Closing Date"). The place of
closing for the Initial Units and the Closing Date may be varied by agreement
among you and the Company.
Delivery to the Underwriters of and payment for any Option Units to be
purchased by the Underwriters shall be made at the aforementioned office of
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois) at such time on such date (an
"Option Closing Date"), which may be the same as the Closing Date but shall in
no event be earlier than the Closing Date nor earlier than two nor later than
ten business days after the giving of the notice hereinafter referred to, as
shall be specified in a written notice from you on behalf of the Underwriters to
the Company of the Underwriters' determination to purchase a number, specified
in such notice, of Option Units. The place of closing for any Option Units and
the Option Closing Date for such Option Units may be varied by agreement between
you and the Company.
Certificates for the Securities comprising the Initial Units and for
the Securities comprising any Option Units to be purchased hereunder shall be
registered in such names and in such denominations as you shall request by
written notice (it being understood that a facsimile transmission shall be
deemed written notice) prior to 9:30 A.M., New York time, on the second business
day preceding the Closing Date or any Option Closing Date, as the case may be.
Such certificates shall be made available to you in New York, New York, as
requested by you in the aforesaid notice, for inspection and packaging not later
than 9:30 A.M., New York time, on the business day next preceding the Closing
Date or any
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Option Closing Date, as the case may be. The certificates evidencing the
Securities comprising the Initial Units and the Securities comprising any
Option Units to be purchased hereunder shall be delivered to you on the
Closing Date or the Option Closing Date, as the case may be, against payment
of the purchase price therefor by wire transfer of same day funds to the
account designated by the Company. It is understood that each Underwriter
has authorized you, for its account, to accept delivery of, acknowledge
receipt of, and make payment of the purchase price for, the Initial Units and
the Option Units, if any, which it has agreed to purchase. Xxxxxx,
individually and not as representative of the Underwriters, may (but shall
not be obligated to) make payment of the purchase price for the Initial Units
or the Option Units, if any, to be purchased by any Underwriter whose check
has not been received by the Closing Date or the Option Closing Date, as the
case may be, but such payment shall not relieve such Underwriter from its
obligations hereunder.
Each certificate evidencing each Warrant shall be substantially in the
form attached to the Warrant Agreement, dated as of __________ ___, 1997 between
American Stock Transfer & Trust Company, as Warrant Agent, and the Company (the
"Warrant Agreement").
5. AGREEMENTS OF THE COMPANY. The Company covenants and agrees with
the several Underwriters as follows:
(a) The Company will notify the Representatives
immediately, and confirm the notice in writing, (i) of the effectiveness of
the Registration Statement and any amendment thereto, (ii) of the receipt of
any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the suspension of qualification of the Securities for offering
or sale in any jurisdiction or the initiation of any proceedings for such
purpose and (v) during the period when the Prospectus is required to be
delivered under the 1933 Act or Securities Exchange Act of 1934, as amended
(the "1934 Act"), of any change, or any event or occurrence which could
result
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in such a change, in the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its Subsidiaries
(as defined in Section 6.e. below), considered as one enterprise, or the
happening of any event, including the filing of any information, documents or
reports pursuant to the 1934 Act, that makes any statement of a material fact
made in the Registration Statement or the Prospectus (as then amended or
supplemented) untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus in order to state a
material fact required by the 1933 Act or the 1933 Act Regulations to be
stated therein or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Prospectus to
comply with the 1933 Act, the 1933 Act Regulations or any other law. The
Company shall use its best efforts to prevent the issuance of any stop order
or order suspending the qualification or exemption of the Units, the Shares,
the Warrants or the Warrant Shares under any state securities or Blue Sky
laws, and, if at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption of the Securities under any state
securities or Blue Sky laws, the Company shall use every reasonable effort to
obtain the withdrawal or lifting of such order at the earliest possible time.
(b) The Company will give the Underwriters notice of
its intention to prepare or file any amendment to the Registration Statement
(including any post-effective amendment), any Rule 462(b) Registration
Statement, any Term Sheet or any amendment or supplement to the Prospectus
(including any revised prospectus or Term Sheet and preliminary prospectus which
the Company proposes for use by the Underwriters in connection with the offering
of the Units which differs from the prospectus on file at the Commission at the
time the Registration Statement becomes effective, whether or not such revised
prospectus or Term Sheet and preliminary prospectus is required to be filed
pursuant to Rule 424(b)), whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Underwriters with copies of any Rule 462(b)
Registration Statement, Term Sheet, amendment or supplement a reasonable amount
of time prior to such proposed filing or use, as the case may be, and will not
file any such Rule 462(b) Registration Statement, Term Sheet, amendment or
supplement or use any such prospectus to which the Underwriters or counsel for
the Underwriters shall object.
(c) The Company has furnished or will deliver to the
Underwriters and their counsel, without charge, as many signed and conformed
copies of the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference
therein) as the Underwriters may reasonably request. If applicable, the copies
of the Registration Statement and each amendment thereto furnished to the
Underwriters
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will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(d) The Company will furnish to each Underwriter,
without charge, from time to time during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request for the purposes contemplated by the 1933 Act, the 1934 Act,
the 1933 Act Regulations or the rules and regulations of the Commission under
the 1934 Act (the "1934 Act Regulations"). If applicable, the Prospectus and
any amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(e) The Company will comply with the 1933 Act and the
1933 Act Regulations so as to permit the completion of the distribution of the
Units as contemplated in this Agreement and in the Prospectus. If at any time
when a prospectus is required by the 1933 Act, the 1934 Act, the 1933 Act
Regulations or the 1934 Act Regulations to be delivered in connection with sales
of the Units, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 5(b) of the 1933 Act, such
amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectus comply with
such requirements and the Company will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may reasonably
request.
(f) During the period of five years hereafter, the
Company will furnish to you (i) as soon as available, a copy of each report of
the Company mailed to stockholders or filed with the Commission or the Nasdaq
National Market ("NASDAQ"), and (ii) from time to time such other information
concerning the Company as you may request.
(g) The Company will use its best efforts, in
cooperation with counsel to the Underwriters, to qualify the Xxxxx,
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the Shares, the Warrants and the Warrant Shares for offering and sale under
the applicable securities or Blue Sky laws of such states and other
jurisdictions of the United States as the Representatives may designate and
to maintain such qualifications in effect for so long as may be necessary for
the distribution of the Units or their components, but in any event for a
period of not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement; PROVIDED,
HOWEVER, that the Company shall not be obligated to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified. In each
jurisdiction in which the Units, the Shares, the Warrants and the Warrant
Shares have been so qualified, the Company will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be necessary for the distribution
of the Units or their components, but in any event for a period of not less
than one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement.
(h) The Company will make generally available to its
security holders as soon as practicable, but not later than 45 days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-
month period beginning not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in said Rule 158) of the
Registration Statement.
(i) The Company will use the net proceeds received by
it from the sale of the Units in the manner specified in the Prospectus under
"Use of Proceeds."
(j) If, at the time that the Registration Statement
becomes effective, any Rule 430A Information or Rule 434 Information shall have
been omitted therefrom, then immediately following the execution of this
Agreement, the Company will prepare, and file or transmit for filing with the
Commission in accordance with Rule 430A or Rule 434 and Rule 424(b), copies of a
Prospectus or Term Sheet containing such Rule 430A Information and Rule 434
Information, respectively, or, if required by Rule 430A, a post-effective
amendment to the Registration Statement (including an amended Prospectus),
containing such Rule 430A Information.
(k) If the Company elects to rely upon Rule 462(b),
the Company shall both file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) and pay the applicable fees in
accordance with Rule 111 of the 1933 Act Regulations by the earlier of (i) 10:00
P.M. Eastern Time on the date hereof and (ii) the time confirmations are sent or
given, as specified by Rule 462(b)(2).
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(l) The Company, during the period when the Prospectus
is required to be delivered under the 1933 Act or the 1934 Act, will file all
documents required to be filed with the Commission pursuant to Section 13, 14 or
15 of the 1934 Act within the time periods required by the 1934 Act and the 1934
Act Regulations.
(m) During a period of 180 days from the date of the
Prospectus, the Company will not, without the prior written consent of Xxxxxx,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
any share of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the 1933
Act with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Units to be sold
hereunder and any shares of Common Stock issued by the Company upon the exercise
of any Warrants, (B) any shares of Common Stock issued by the Company upon the
exercise of an option or warrant or the conversion of any security outstanding
on the date hereof and referred to in the Prospectus, (C) any shares of Common
Stock issued or options to purchase Common Stock granted pursuant to existing
employee benefit plans of the Company referred to in the Prospectus or (D) any
shares of Common Stock issued pursuant to any non-employee director stock plan.
(n) The Company has furnished or will furnish to you
"lock-up" letters, in form and substance satisfactory to you, signed by each of
its current officers and directors, each of its stockholders designated by you
and all stockholders and optionholders of Mercator.
(o) The Company will not waive, modify or amend, or
otherwise release Amgen Inc. ("Amgen") from its obligations under the sale
restrictions contained in, the Purchase Agreement, dated as of December 31,
1996, between the Company and Amgen, in each case without the prior written
consent of Xxxxxx.
(p) The Company will supply the Underwriters with
copies of all correspondence to and from, and all documents issued to and by,
the Commission in connection with the registration of the Securities under the
1933 Act.
(q) Prior to the Closing Date, the Company shall
furnish to the Underwriters, as soon as they have been prepared, copies of any
unaudited interim financial statements of the Company
9
and Mercator for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the
Prospectus.
(r) Prior to the Closing Date, the Company will issue
no press release or other communications directly or indirectly and hold no
press conference with respect to the Company or any of its Subsidiaries, the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of the Company or any of its Subsidiaries, or the offering of the
Units, without the prior written consent of the Representatives unless in the
judgment of the Company and its counsel, and after notification to the
Representatives, such press release or communication is required by law.
(s) The Company has not taken, nor will it take,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
the Units or any security of the Company to facilitate the sale or resale of the
Units or any other security of the Company.
(t) The Company will keep duly authorized and reserved
for issuance, upon exercise of the Warrants, a sufficient number of Warrant
Shares.
(u) The Company will use its best efforts to maintain
the quotation of the Common Stock (including the Shares) and the Warrants on
NASDAQ and will file with NASDAQ all documents and notices required by NASDAQ of
companies that have securities that are traded in the over-the-counter market
and quotations for which are reported by NASDAQ.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
(a) When the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto becomes
effective, at the date of the Prospectus, if different, and at the Closing Date
and the Option Closing Date, as the case may be, the Registration Statement, the
Rule 462(b) Registration Statement and any amendments and supplements thereto
complied or will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and did not and will 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 not misleading.
The Prospectus and any supplements or amendments thereto will not at the date of
the Prospectus, at the date of any such supplements or amendments, or at the
Closing Date or the Option Closing Date, if any, include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the
10
light of the circumstances under which they were made, not misleading. If
Rule 434 is used, the Company will comply with the requirements of Rule 434
and the Prospectus shall not be "materially different," as such term is used
in Rule 434, from the Prospectus included in the Registration Statement at
the time it became effective. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus relating to any Underwriter made in
reliance upon and in conformity with information furnished to the Company in
writing by or on behalf of any Underwriter, through you expressly for use in
the Registration Statement or Prospectus. The Company has not distributed
any offering materials in connection with the offering or sale of the Units
other than the Registration Statement, the preliminary prospectus, the
Prospectus, the Term Sheet, if applicable, or any other materials, if any,
permitted by the 1933 Act or the 1933 Act Regulations.
(b) Each preliminary prospectus and the prospectus
filed as part of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act Regulations
and, if applicable, each preliminary prospectus and the Prospectus delivered to
the Underwriters for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
(c) The accountants who certified the applicable
financial statements of the Company and Mercator included in the Registration
Statement are each independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(d) The financial statements included in the
Registration Statement and the Prospectus present fairly the financial position
of the Company and Mercator as of the dates indicated and the results of its
operations for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis; and no supporting schedules are required to be included in the
Registration Statement. The pro forma financial statements included in the
Registration Statement and the Prospectus have been prepared in conformity with
the standards set forth in Rule 11-02 of Regulation S-X of the Commission and on
a basis consistent with such historical financial statements and give effect to
assumptions made on a reasonable basis and present fairly the historical and
proposed transactions contemplated by the Registration Statement and the
Prospectus and this Agreement. The summary and selected financial information
and data set forth in the Prospectus (historical and pro forma) are prepared on
an accounting basis consistent with such financial statements.
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(e) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (i) there has been no material adverse change or any development
involving a prospective material adverse change in or affecting the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business, (ii) except with
respect to the Merger, there have been no transactions entered into by the
Company or its Subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company and its Subsidiaries,
considered as one enterprise, and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or any of its
Subsidiaries on any class of their respective capital stock. Neither the
Company nor Mercator has any material contingent obligations which are not
specifically disclosed in the their respective financial statements that are
included in Registration Statement. The term "Subsidiary" means any subsidiary
of the Company and includes, for purposes of this Agreement, Mercator and any of
its subsidiaries, on a pro forma basis assuming the Merger has been consummated
as of the date hereof.
(f) The Company and each of its Subsidiaries has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware with corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Prospectus and, in the case of the Company, to enter into and perform its
obligations under this Agreement and the other Transaction Documents; and the
Company and each of its Subsidiaries is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not, singly or in the aggregate, have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its Subsidiaries, considered as one enterprise.
(g) All of the issued and outstanding shares of
capital stock of, or other ownership interests in, each Subsidiary have been
duly authorized and validly issued, are fully paid and non-assessable and are
owned, directly or through subsidiaries, by the Company free and clear of any
security interest, mortgage, pledge, lien, charge, claim or encumbrance. Except
as described in the Prospectus, there are no outstanding subscriptions, options,
warrants, commitments, convertible or exchangeable securities or other rights to
acquire
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any shares of capital stock of, or ownership interests in, any Subsidiary of
the Company and there are no commitments, plans or arrangements to do so.
Except as described in the Prospectus, neither the Company nor any of its
Subsidiaries owns, directly or indirectly, any shares of stock or any other
equity or long-term debt securities of any corporation or has any equity
interest in any firm, partnership, joint venture, association or other entity.
(h) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus under "Capitalization"
(except for subsequent issuances, if any, pursuant to this Agreement or pursuant
to reservations, agreements, employee or director benefit plans or the exercise
of convertible securities referred to in the Prospectus); the shares of issued
and outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable and have not been issued in
violation of or are not otherwise subject to any preemptive or other similar
rights; the Shares and Warrant Shares have been duly authorized for issuance
and, upon their respective issuance and delivery pursuant to the terms set forth
in the Prospectus, this Agreement and the Warrant Agreement, will be validly
issued and fully paid and non-assessable; the Warrants have been duly authorized
for issuance and, upon their issuance and delivery pursuant to the terms set
forth in the Prospectus, this Agreement and the Warrant Agreement, will be
validly issued; the Company has duly authorized the inclusion of the Shares and
the Warrants in the Units; the Company has or, no later than the Closing Date,
will have duly authorized and reserved for issuance upon the exercise of the
Warrants a sufficient number of Warrant Shares; the certificates evidencing the
Securities are in due and proper form under Delaware law; the authorized capital
stock of the Company, including the Securities, conforms to all statements
relating thereto contained in the Prospectus; and the issuance of the Securities
and the Warrant Shares are not subject to preemptive or other similar rights.
There are no outstanding subscriptions, options, warrants, convertible or
exchangeable securities or other rights granted to or by the Company to purchase
shares of Common Stock or other securities of the Company and there are no
commitments, plans or arrangements to issue any shares of Common Stock or any
security convertible into or exchangeable for Common Stock, in each case other
than as described in the Prospectus.
(i) Except as disclosed in the Registration Statement
and except as would not, singly or in the aggregate, reasonably be expected to
have a material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise, (A) each of the Company and its
Subsidiaries is in compliance with all applicable Environmental Laws (as defined
below), (B) each of the Company and its Subsidiaries has all permits,
authorizations and approvals required
13
under any applicable Environmental Laws and is in compliance with the
requirements of such permits, authorizations and approvals, (C) there are no
pending or, to the best knowledge of the Company, threatened Environmental
Claims against the Company or any of its Subsidiaries and (D) under
applicable law, there are no circumstances with respect to any property or
operations of the Company or any of its Subsidiaries that are reasonably
likely to form the basis of an Environmental Claim against the Company or any
of its Subsidiaries.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) Federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgement, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.
(j) Neither the Company nor any of its Subsidiaries is
in violation of its respective charter or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, deed, trust,
note, lease, sublease, voting agreement, voting trust, or other instrument or
agreement to which the Company or any of its Subsidiaries is a party or by which
any of them may be bound, or to which any of the property or assets of the
Company or any of its Subsidiaries is subject; and the execution and delivery of
each of this Agreement and the other Transaction Documents by the Company, and
the execution and delivery of each of the Transaction Documents by each of
Merger Sub and Mercator (each a "Merger Party"), to the extent each is a party
thereto, the performance by the Company of all of the provisions of this
Agreement and the other Transaction Documents, the performance of each of the
Merger Parties of all of the provisions of the Transaction Documents, to the
extent each is a party thereto, and the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents have been
duly authorized by all necessary corporate action on the part of the Company and
each of the Merger Parties, as applicable, and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its Subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, deed, trust, note, lease, sublease, voting agreement,
voting trust or other instrument or agreement to which
14
the Company or any of its Subsidiaries is a party or by which any of them may
be bound, or to which any of the property or assets of the Company or any of
its Subsidiaries is subject, nor will such action result in any violation of
the provisions of the respective charter or bylaws of the Company or any of
its Subsidiaries or any applicable statute, law, rule, regulation, ordinance,
decision, directive or order.
(k) No labor dispute with the employees of the Company
or any of its Subsidiaries exists or, to the best knowledge of the Company, is
imminent; and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its Subsidiaries' principal
suppliers, manufacturers or contractors which might, singly or in the aggregate,
be expected to result in any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise.
(l) There is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened, against or affecting the
Company or any of its Subsidiaries, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which, singly or in
the aggregate, might result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries, considered as one enterprise, or
which, singly or in the aggregate, might materially and adversely affect any of
their respective properties or assets or which might materially and adversely
affect the consummation of the Transaction Documents; all pending legal or
governmental proceedings to which the Company or any of its Subsidiaries is a
party or of which any of their respective properties or assets is the subject
which are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, are, considered in the aggregate,
not material; and there are no contracts or documents of the Company or any of
its Subsidiaries which are required to be filed as exhibits to the Registration
Statement by the 1933 Act or by the 1933 Act Regulations which have not been so
filed.
(m) Except with respect to the Protest filed with the
United States Patent and Trademark Office ("PTO") as described in the
Prospectus, each of the Company and its Subsidiaries owns or is licensed to use
all patents, patent applications, inventions, trademarks, trade names,
applications for registration of trademarks, service marks, service xxxx
applications, copyrights, know-how, manufacturing processes, formulae, trade
secrets, licenses and rights in any thereof and any other intangible property
and assets (herein called the "Proprietary Rights") which are material to the
business of the Company and its Subsidiaries,
15
considered as one enterprise, as now conducted and as proposed to be
conducted, in each case as described in the Prospectus. The description of
the Proprietary Rights in the Prospectus is correct in all material respects
and fairly and correctly describes the Company's and its Subsidiaries' rights
with respect thereto. Except with respect to the Protest filed with the PTO
as described in the Prospectus, the Company does not have any knowledge of,
and the Company has not given or received any notice of, any pending
conflicts with or infringement of the rights of others with respect to any
Proprietary Rights or with respect to any license of Proprietary Rights.
Except with respect to the Protest filed with the PTO as described in the
Prospectus, no action, suit, arbitration, or legal, administrative or other
proceeding, or investigation is pending, or, to the best knowledge of the
Company, threatened, which involves any Proprietary Rights and is material to
the business of the Company and its Subsidiaries as now conducted and as
proposed to be conducted, in each case as described in the Prospectus.
Neither the Company nor any of its Subsidiaries is subject to any judgment,
order, writ, injunction or decree of any court or any Federal, state, local,
foreign or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, or any arbitrator, and has not
entered into and is not a party to any contract which restricts or impairs
the use of any such Proprietary Rights in a manner which would have a
material adverse effect on the use of any of the Proprietary Rights. To the
best knowledge of the Company, no Proprietary Rights used by the Company or
any of its Subsidiaries, and no services or products sold by the Company or
any of its Subsidiaries, conflict with or infringe upon any proprietary
rights available to any third party. Neither the Company nor any of its
Subsidiaries has received written notice of any pending conflict with or
infringement upon such third-party proprietary rights. Neither the Company
nor any of its Subsidiaries has entered into any consent, indemnification,
forbearance to xxx or settlement agreement with respect to Proprietary Rights
other than in the ordinary course of business. Except as specifically
disclosed in the Prospectus, no claims have been asserted by any person with
respect to the validity of the Company's or any of its Subsidiaries'
ownership or right to use the Proprietary Rights and, to the best knowledge
of the Company, there is no reasonable basis for any such claim to be
successful. The Proprietary Rights are valid and enforceable and no
registration relating thereto has lapsed, expired or been abandoned or
cancelled or is the subject of cancellation or other adversarial proceedings,
and all applications therefore are pending and are in good standing. Each of
the Company and its Subsidiaries has complied, in all material respects, with
its contractual obligations relating to the protection of the Proprietary
Rights used pursuant to licenses. To the best knowledge of the Company, no
person is infringing on or violating the Proprietary Rights owned or used by
the Company or any of its Subsidiaries.
16
(n) No registration, authorization, approval,
qualification or consent of any court or governmental authority or agency is
necessary in connection with the offering, issuance or sale of the Units, the
Shares, the Warrants and the Warrant Shares hereunder, except such as may be
required under the 1933 Act or the 1933 Act Regulations or state securities or
Blue Sky laws (or such as may be required by the National Association of
Securities Dealers, Inc. ("NASD")).
(o) The Company and each of its Subsidiaries possesses
and is operating in compliance with all licenses, certificates, consents,
authorities, approvals and permits (collectively, "permits") from all state,
Federal, foreign and other regulatory agencies or bodies necessary to conduct
the business now operated by it, and neither the Company nor any of its
Subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such permit or any circumstance which would lead it to
believe that such proceedings are reasonably likely which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
materially and adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise.
(p) Each Merger Party has, to the extent each is or
will be a party thereto, all requisite corporate power and authority to execute,
deliver and perform its respective obligations under each of the Transaction
Documents; each of the Transaction Documents has been duly and validly
authorized, executed and delivered by the Merger Parties, to the extent each is
a party thereto, and each constitutes a valid and binding obligation of each
such Merger Party enforceable against each such Merger Party in accordance with
its terms except as rights to indemnity and contribution hereunder may be
limited by Federal or state securities laws or the public policy underlying such
laws; and neither the Company nor Merger Sub nor, to the best knowledge of the
Company, Mercator is in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any of the Transaction
Documents, which default would have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company and its Subsidiaries, considered as one enterprise.
(q) The Merger has been duly authorized by the Merger
Parties and the Merger has been approved by stockholders of Mercator holding the
requisite number of shares required to approve the Merger; insofar as the
Prospectus contains summaries of the Merger Agreement, the Merger and the other
transactions and agreements ancillary thereto, such summaries are in all
material respects accurate.
17
(r) The Company has delivered to the Representatives
true and correct copies of each of the Transaction Documents that have been
executed and delivered prior to the date of this Agreement and each other
Transaction Document in the form substantially as it will be executed and
delivered on or prior to the Closing Date, together with all related agreements
and all schedules and exhibits thereto, and there have been no amendments,
alterations, modifications or waivers of any of the provisions of any of the
Transaction Documents since their date of execution or from the form in which
they have been delivered to the Representatives; there exists as of the date
hereof (after giving effect to the transactions contemplated by the Transaction
Documents) no event or condition that would constitute a default or an event of
default (in each case as defined in the applicable Transaction Document) under
any of the Transaction Documents which would reasonably be expected to result in
a material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise, or materially adversely effect the
ability of each of the Merger Parties to consummate the Merger and the
transactions contemplated by the Merger Agreement.
(s) Except as described in the Prospectus, there are
no persons with registration or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise registered by the
Company or any of its Subsidiaries under the 1933 Act.
(t) No order preventing or suspending the use of any
preliminary prospectus has been issued and no proceedings for that purpose are
pending, threatened, or, to the knowledge of the Company, contemplated by the
Commission; and to the best knowledge of the Company, no order suspending the
offering of the Units, the Shares, the Warrants and the Warrant Shares in any
jurisdiction designated by the Underwriters pursuant to Section 5(g) of this
Agreement has been issued and, to the best knowledge of the Company, no
proceedings for that purpose have been instituted or threatened or are
contemplated.
(u) The Company and its Subsidiaries have good and
marketable title to their respective properties, free and clear of all material
security interests, mortgages, pledges, liens, charges, encumbrances, claims and
equities of record. The properties of the Company and its Subsidiaries are, in
the aggregate, in good repair (reasonable wear and tear excepted), and suitable
for their respective uses. Any real properties held under lease by the Company
or any of its Subsidiaries are held by the Company or such Subsidiary under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of the Company
and its Subsidiaries, considered as one enterprise.
18
(v) The Company and its Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(w) The Company and its Subsidiaries have conducted
and are conducting their respective businesses in compliance with all applicable
Federal, state, local and foreign statutes, laws, rules, regulations,
ordinances, codes, decisions, decrees, directives and orders, except where the
failure to do so would not, singly or in the aggregate, have a material adverse
effect on the condition, financial or otherwise, or on the earnings, business
affairs or business prospects of the Company and its Subsidiaries, considered as
one enterprise.
(x) To the best of the Company's knowledge, neither
the Company nor any of its Subsidiaries nor any employee or agent of the Company
or any of its Subsidiaries has made any payment of funds of the Company or any
of its Subsidiaries or received or retained any funds in violation of any law,
rule or regulation, which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.
(y) The Company is not now, and after sale of the
Units to be sold by it hereunder and application of the net proceeds from such
sale as described in the Prospectus under the caption "Use of Proceeds" will not
be, an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(z) All offers and sales of capital stock of the
Company and its Subsidiaries prior to the date hereof were at all relevant times
duly registered or exempt from the registration requirements of the 1933 Act and
were duly registered or subject to an available exemption from the registration
requirements of the applicable state securities or Blue Sky laws.
(aa) The Common Stock and the Warrants are registered
pursuant to Section 12(g) of the 1934 Act. Each of the Common Stock (including
the Shares) and the Warrants have been duly authorized for quotation on NASDAQ.
The Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock or the Warrants under the 1934
Act or delisting the Common Stock or the Warrants from NASDAQ, nor
19
has the Company received any notification that the Commission or NASDAQ is
contemplating terminating such registration or listing.
(bb) Neither the Company or any of its Subsidiaries
nor, to its knowledge, any of their respective officers, directors or affiliates
has taken, and at the Closing Date and at any later Option Closing Date, neither
the Company or any of its Subsidiaries nor, to its knowledge, any of their
respective officers, directors or affiliates will have taken, directly or
indirectly, any action which has constituted, or might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Units.
(bc) The Company and its Subsidiaries maintain
insurance of the types and in amounts adequate for their respective businesses
and consistent with insurance coverage maintained by similar companies in
similar businesses, including but not limited to, insurance covering product
liability and real and personal property owned or leased against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect.
(dd) The Company and its Subsidiaries have filed all
material tax returns required to be filed, which returns are true and correct in
all material respects, and neither the Company nor any of its Subsidiaries is in
default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or otherwise assessed,
other than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without interest which were
payable pursuant to said returns or any assessments with respect thereto.
(ee) Except as described in the Prospectus, to the
best of the Company's knowledge, there are no rulemaking or similar proceedings
before The United States Food and Drug Administration or comparable Federal,
state, local or foreign government bodies which involve or affect the Company or
any of its Subsidiaries, which, if the subject of an action unfavorable to the
Company or such Subsidiary, could involve a prospective material adverse change
in or effect on the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its Subsidiaries,
considered as one enterprise.
(ff) Neither the Company nor any of its Subsidiaries
has received any communication (whether written or oral) relating to the
termination or threatened termination or modification or threatened modification
of any material consulting, licensing, marketing, research and development,
cooperative or any similar agreement, including, without limitation, the
collaborative research and license agreements listed under the sections of the
20
Prospectus entitled, "Business--Corporate Agreements," "Business--Technology
Agreements," "Business--License Agreements" and "Business--Advanced Technology
Program Grant." Each such agreement is in effect substantially as described in
such sections of the Prospectus.
(gg) To the knowledge of the Company, if any full-time
employee of the Company or any of its Subsidiaries identified in the Prospectus
has entered into any non-competition, non-disclosure, confidentiality or other
similar agreement with any party other than the Company or any such Subsidiary,
such employee is neither in violation thereof nor is expected to be in violation
thereof as a result of the business conducted or expected to be conducted by the
Company and its Subsidiaries as described in the Prospectus or such person's
performance of his obligations to the Company or any of its Subsidiaries; and
neither the Company nor any of its Subsidiaries has received written notice that
any consultant or scientific advisor of the Company or any of its Subsidiaries
is in violation of any non-competition, non-disclosure, confidentiality or
similar agreement.
7.INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless
(i) each Underwriter and (ii) each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act (any of the persons referred to
in this clause (ii) being hereinafter referred to as a "controlling person") and
(iii) the respective directors, officers, partners and employees of any of the
Underwriters or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Person") to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities and expenses whatsoever (including, without limitation, all
reasonable costs of pursuing, investigating and defending any claim, suit or
action or any investigation or proceeding by any governmental agency or body,
commenced or threatened, including the reasonable fees and expenses of counsel
to any Indemnified Person), directly or indirectly, caused by, related to, based
upon or arising out of or in connection with (A) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any amendment thereto, including the Rule 430A Information and Rule 434
Information, if applicable, (B) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading or caused by, related to, based upon, arising
out of or in connection with any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances
21
under which they were made, not misleading, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to such Underwriter furnished in writing to the
Company by or on behalf of any Underwriter through you expressly for use in
connection therewith or (C) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any
manner to, the Units or the Warrant Shares or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability, expense or action arising out of or based upon matters
covered by clause (A) or (B) above (PROVIDED that the Company shall not be
liable under this clause (C) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such loss, claim, damage,
liability, expense or action resulted directly from any such acts or failures
to act undertaken or omitted to be taken by such Underwriter through its
gross negligence or willful misconduct); PROVIDED, HOWEVER, that the
indemnification contained in this paragraph (a) with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter (or
related Indemnified Person) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Securities by such
Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the 1933 Act or
the 1933 Act Regulations, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in
such preliminary prospectus was corrected in the Prospectus (or any amendment
or supplement thereto), PROVIDED that the Company has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely
basis to permit such delivery or sending.
(b) If any action, suit or proceeding shall be brought
against any Indemnified Person in respect of which indemnity may be sought
against the Company, such Indemnified Person shall promptly notify the parties
against whom indemnification is being sought (the "indemnifying parties"), and
such indemnifying parties shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. Such Indemnified
Person shall have the right to employ separate counsel in any such action, suit
or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the indemnifying parties have agreed in writing to pay such fees and
expenses, (ii) the indemnifying parties have failed to assume the defense and
employ counsel or (iii) the named parties to any such action, suit,
investigation or proceeding (including any impleaded parties) include both such
Indemnified Person and the indemnifying parties and representation of such
Indemnified Person and any indemnifying party by the same counsel would, in the
22
reasonable judgment of the Indemnified Person, be inappropriate due to actual or
potential differing interests between them (in which case the indemnifying party
shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Indemnified Person). It is understood, however,
that the indemnifying parties shall, in connection with any one such action,
suit or proceeding or separate but substantially similar or related actions,
suits or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys (in addition to any local counsel) at any
time for all such Indemnified Persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by Xxxxxx, and that all such fees and expenses shall be reimbursed as
they are incurred. The indemnifying parties shall not be liable for any
settlement of any such action, suit or proceeding effected without their written
consent, which consent shall not be unreasonably withheld, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the indemnifying parties agree to indemnify and
hold harmless any Indemnified Person, to the extent provided in the preceding
paragraph, from and against any loss, claim, damage, liability or expense by
reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its officers
who sign the Registration Statement and any person who controls the Company
within the meaning of Section 15 of the 1933 Act, to the same extent as the
foregoing indemnity from the Company to each Indemnified Person, but only with
respect to information relating to such Underwriter furnished in writing by or
on behalf of such Underwriter through Xxxxxx expressly for use in the
Registration Statement, the Prospectus or any preliminary prospectus, or any
amendment or supplement thereto. If any action, suit, investigation or
proceeding shall be brought against the Company, any of its directors, any such
officer or any such controlling person based on the Registration Statement, the
Prospectus or any preliminary prospectus, or any amendment or supplement
thereto, and in respect of which indemnity may be sought against any Underwriter
pursuant to this paragraph (c), such Underwriter shall have the rights and
duties given to the Company by paragraph (b) above, and the Company, its
directors, any such officer and any such controlling person shall have the
rights and duties given to the Indemnified Persons by paragraph (a) above. The
indemnity and contribution obligations of the Underwriters set forth in this
Section 7 shall be in addition to any liability or obligation the Underwriters
may otherwise have to the Company.
(d) If the indemnification provided for in this
Section 7 is unavailable to, or insufficient to hold harmless, an indemnified
party under paragraphs (a) or (c) hereof in respect of
23
any losses, claims, damages, liabilities or expenses referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or judicial determination, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Underwriters on the other hand, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus or,
if Rule 434 is used, the corresponding location on the Term Sheet. The
relative fault of the Company on the one hand and the Underwriters on the
other hand 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 on the one hand or by the Underwriters on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission or any failure of the nature
referred to in Section 7(f) hereof. The indemnity and contribution
obligations of the Company set forth herein shall be in addition to any
liability or obligation the Company may otherwise have to any Indemnified
Person.
(e) The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by a pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating any claim or defending
any such action, suit or proceeding. Notwithstanding the provisions of this
Section 7, no Underwriter (or any of its related Indemnified Persons) shall be
required to contribute (whether pursuant to subsection (c) or (d) or otherwise)
any amount in excess of the underwriting discount applicable to the Securities
underwritten by such Underwriter. No person guilty of fraudulent
misrepresentation
24
(within the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 7 are several in proportion to the respective numbers of Units
set forth opposite their names in Schedule I hereto (or such numbers of Units
increased as set forth in Section 10 hereof) and not joint.
(f) The Company agrees to indemnify and hold harmless
each Indemnified Person to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities and expenses whatsoever (including,
without limitation, all reasonable costs of pursuing, investigating and
defending any claim, suit or action or any investigation or proceeding by any
governmental agency or body, commenced or threatened, including the reasonable
fees and expenses of counsel to any Indemnified Person), directly or indirectly,
caused by, related to, based upon or arising out of or in connection with the
failure of eligible employees, directors and other persons and entities having
business relationships with the Company to pay for and accept delivery of
Reserved Units which were subject to a properly confirmed agreement to purchase.
(g) No indemnifying party shall, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such action, suit or proceeding.
(h) Any losses, claims, damages, liabilities or
expenses for which an indemnified party is entitled to indemnification or
contribution under this Section 7 shall be paid by the indemnifying party to the
indemnified party as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any Indemnified Person, the Company,
its directors or officers or any person controlling the Company, (ii) acceptance
of any Securities and payment therefor hereunder and (iii) any termination of
this Agreement.
8.CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Initial Securities hereunder are subject to the
following conditions:
(a) The Registration Statement, including any Rule
462(b) Registration Statement, shall have become effective on the date hereof;
no stop order suspending the effectiveness of the
25
Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission. If the
Company has elected to rely upon Rule 430A, Rule 430A Information previously
omitted from the effective Registration Statement pursuant to Rule 430A shall
have been transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period and the Company shall have provided
evidence satisfactory to the Underwriters of such timely filing, or a
post-effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule
430A. If the Company has elected to rely upon Rule 434, a Term Sheet shall
have been transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period.
(b) The Underwriters shall have received:
(c)The favorable opinion, dated as of the Closing Date,
of Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
A. The Company and each of its Subsidiaries has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
State of Delaware.
B. The Company and each of its Subsidiaries has corporate power and
authority to conduct its business as described in the Registration Statement and
the Prospectus and, in the case of the Company, to enter into and perform its
obligations under this Agreement and the Warrant Agreement.
C. To the best of their knowledge and information, the Company and each
of its Subsidiaries is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on
the Company and its Subsidiaries, considered as one enterprise.
D. The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus under "Capitalization" (except for
subsequent issuances, if any, pursuant to reservations, agreements, employee
or director benefit plans or the exercise of convertible securities referred
to in the Prospectus),
26
excluding Pro Forma and Pro Forma As Adjusted information. The shares of
issued and outstanding capital stock of the Company, including the Common
Stock, have been duly authorized and validly issued and are fully paid and
non-assessable and, to the best of their knowledge and information, have not
been issued in violation of or are not otherwise subject to any preemptive
rights or other similar rights.
E. The Shares and the Warrant Shares have been duly authorized for issuance
and, upon their respective issuance and delivery pursuant to the terms set forth
in the Prospectus, this Agreement and the Warrant Agreement, will be validly
issued, fully paid and non-assessable; the Warrants have been duly authorized
for issuance and, upon their issuance and delivery pursuant to the terms set
forth in the Prospectus, this Agreement and the Warrant Agreement, will be
validly issued; the Company has duly authorized the inclusion of the Shares and
the Warrants in the Units; the Company has duly authorized and reserved for
issuance upon the exercise of the Warrants a sufficient number of Warrant
Shares; and the issuance of the Securities and the Warrant Shares are not
subject to preemptive rights.
F. All of the issued and outstanding shares of capital stock of, or other
ownership interests in, each Subsidiary have been duly authorized and validly
issued, are fully paid and non-assessable and, except as described in the
Prospectus, are owned, directly or through subsidiaries, by the Company.
G. To the best of their knowledge and information, except as described in
the Prospectus, there are no outstanding options, warrants or other rights
granted to or by the Company or any of its Subsidiaries to purchase shares of
Common Stock or other securities of the Company or any of its Subsidiaries and
there are no commitments, plans or arrangements to issue any shares of Common
Stock or other securities.
H. Each of this Agreement and the Warrant Agreement has been duly
authorized, executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company.
27
I. Each Merger Party has, to the extent each is or will be a party thereto,
all requisite corporate power and authority to execute, deliver and perform
their respective obligations under each of the Transaction Documents; each of
the Transaction Documents has been duly and validly authorized, executed and
delivered by the Merger Parties, to the extent each is a party thereto, and each
constitutes a valid and binding obligation of each such Merger Party.
J. The Merger has been duly authorized by the Merger Parties and the Merger
has been approved by stockholders of Mercator holding the requisite number of
shares required to approve the Merger; insofar as the Prospectus contains
summaries of the Merger Agreement, the Merger and the other transactions and
agreements ancillary thereto, such summaries are in all material respects
accurate and complete.
K. At the time the Registration Statement became effective and at the
Closing Date, the Registration Statement (other than the financial statements,
and related notes thereto, and other financial information included therein, as
to which no opinion need be rendered) complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations.
L. The form of certificate used to evidence each of the Securities is in
due and proper form and complies with all applicable statutory requirements
of Delaware law.
M. To the best of their knowledge and information, there are no legal or
governmental proceedings pending or threatened which are required to be
disclosed in the Registration Statement other than those disclosed therein, and
all pending legal or governmental proceedings to which the Company or any of its
Subsidiaries is a party or to which any of their respective properties is
subject which are not described in the Registration Statement, including
ordinary
28
routine litigation incidental to the business, are, considered in the
aggregate, not material.
N. The information in the Prospectus under "Risk Factors--Shares
Eligible for Future Sale; Registration Rights; Possible Adverse Effect on
Stock Price," "Management--Employment Agreements,"
"Management--Directors' Compensation," "Management--Executive
Compensation," "Management--Stock Plans," "Management--Cancellation and
Regrant of Options," "Certain Transactions," "Description of Securities"
and "Shares Eligible for Future Sale," to the extent that it constitutes
matters of law, summaries of legal matters, documents or proceedings, or
legal conclusions, has been reviewed by them and is correct in all
material respects and fairly and correctly presents the information called
for with respect thereto.
O. To the best of their knowledge and information, there is no
agreement, contract or other document of a character required to be
described or referred to in the Registration Statement or to be filed as
an exhibit thereto other than those described or referred to therein or
filed as exhibits thereto, the descriptions thereof or references thereto
are correct in all material respects and fairly and correctly present the
information called for with respect thereto; and to the best of their
knowledge and information, no default exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, loan agreement,
deed, trust, note, lease, sublease, voting trust, voting agreement or
other instrument or agreement of the Company or any of its Subsidiaries.
P. No authorization, approval, consent or order of any court or
governmental authority or agency is required in connection with the
offering, issuance or sale of the Units, the Shares, the Warrants and the
Warrant Shares, except such as may be required under the 1933 Act or the
1933 Act Regulations or state securities or Blue Sky laws or such as may
be required by the NASD; and the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
herein and the compliance by the Company with its obligations hereunder
will not conflict with or constitute a breach of, or default under, or
result in the creation or imposition of
29
any lien, charge or encumbrance upon any property or assets of the Company
or any of its Subsidiaries pursuant to, any contract, indenture, mortgage,
loan agreement, note, deed, trust, lease, sublease, voting trust, voting
agreement or other instrument or agreement to which the Company or any of
its Subsidiaries is a party or by which it or any of them may be bound, or
to which any of their respective property or assets is subject, nor will
such action result in any violation of the provisions of the charter or
bylaws of the Company or any of its Subsidiaries, or any applicable
statute, law, rule, regulation, ordinance, code, decision, directive or
order.
Q. Except as described in the Prospectus, to the best of their knowledge
and information, there are no persons with registration or other similar
rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.
R. The Company is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
S. To the best of their knowledge and information, each of the Company
and its Subsidiaries is in compliance with, and conducts its business in
conformity with, all applicable laws and regulations relating to the
operation of its business as described in the Registration Statement,
except to the extent that any failure so to comply or conform would not
have a material adverse effect upon the business or condition, financial
or otherwise, of the Company and its Subsidiaries, considered as one
enterprise.
T. The Registration Statement has become effective under the 1933 Act;
any required filing of the Prospectus, and any supplements thereto or the
Term Sheet, pursuant to Rule 424(b) and if applicable, Rule 434, has been
made in the manner and within the time period required; and to their best
knowledge and information, no stop order suspending the effectiveness of
the Registration Statement or any part thereof has been issued and no
proceedings therefor have been instituted or are pending or contemplated
under the 1933 Act.
30
In rendering such opinion, such counsel may rely (w) as to
matters of patent law, on the opinion of Xxxxxx & Xxxxxxx, patent counsel
to the Company, given pursuant to Section 8(b)(ii) hereof, (x) as to
matters of local law, on opinions of local counsel, (y) as to matters
relating to Mercator, on opinions of counsel for Mercator and (z) except,
as otherwise provided in the opinion, as to matters of fact, on
certificates of officers of the Company and its Subsidiaries and of
governmental officials, in which case their opinion is to state that they
are so doing and that the Underwriters are justified in relying on such
opinions of certificates, and copies of said opinions of certificates are
to be attached to the opinion.
(b) The favorable opinion, dated as of the Closing Date,
of Xxxxxx & Xxxxxxx, patent counsel to the Company, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
A. The statements in the Prospectus relating to United States patent
matters, under the captions "Risk Factors -- Uncertainty of Patents and
Proprietary Rights"; "Business -- The Company's Genomics System";
"Business --Discovery Programs"; and "Business -- Patents and Proprietary
Rights"; insofar as such statements constitute matters of law, legal
conclusions, or summaries of legal matters or proceedings, are correct in
all material respects and present fairly the information purported to be
shown.
B. With respect to the United States patent applications referred to in
the Registration Statement which are listed in Schedules E and G, the
sections of the Registration Statement entitled "Risk Factors --
Uncertainty of Patents and Proprietary Rights"; "Business -- The Company's
Genomics System" "Business --Discovery Programs"; and "Business -- Patents
and Proprietary Rights", at the time the Registration Statement became
effective, did not contain any untrue statement of material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, not misleading.
C. With respect to the United States patent applications referred to in
the Prospectus which are listed in Schedules E and G, the sections of the
Prospectus entitled "Risk Factors -- Uncertainty of Patents and
Proprietary Rights"; "Business -- The Company's Genomics System";
"Business -- Discovery Programs"; and "Business --
31
Patents and Proprietary Rights", as of the date of the Prospectus and as
of the Closing Date, do not contain any untrue statement of material fact
or omit to state a material fact necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading.
D. With respect to U.S. patent matters, nothing has come to such
counsel's attention which would lead them to believe that the sections of
the Registration Statement entitled "Risk Factors -- Uncertainty of
Patents and Proprietary Rights"; "Business -- The Company's Genomics
System"; "Business -- Discovery Programs; and "Business -- Patents and
Proprietary Rights", at the time the Registration Statement became
effective, contained any untrue statement of material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein, not misleading.
E. With respect to U.S. patent matters, nothing has come to such
counsel's attention which would lead them to believe that the sections of
the Prospectus entitled "Risk Factors -- Uncertainty of Patents and
Proprietary Rights"; "Business -- The Company's Genomics System";
"Business -- Discovery Programs"; and "Business -- Patents and Proprietary
Rights", as of the date of the Prospectus and as of the Closing Date,
contain any untrue statement of material fact or omit to state a material
fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
F. To the best of such counsel's knowledge, except as described in the
Prospectus, and with the exception of proceedings before the U.S. Patent
and Trademark Office, there are no pending, or threatened, legal or
governmental proceedings relating to U.S. Patent No. 5,032,407 or to any
U.S. patent application referred to in the Prospectus which is listed in
Schedules E and G.
G. To the best of such counsel's knowledge, the License Agreements
listed in Schedule I grant the Company or a Subsidiary of the Company, as
applicable, rights in the U.S. patents and patent applications referred to
in the Prospectus which are listed in Schedules D and G, and such License
Agreements are validly binding and enforceable
32
under Federal case law relating to the licensing of patent rights.
H. To the best of such counsel's knowledge, the Company or a Subsidiary
of the Company, as applicable, owns the U.S. patent applications referred
to in the Prospectus which are listed in Schedule E.
I. To the best of such counsel's knowledge, except as described in the
Prospectus, no third party has any rights to U.S. Patent No. 5,032,407 or
to any U.S. patent application referred to in the Prospectus which is
listed in Schedules E and X.
X. To the best of such counsel's knowledge, no interference has been
declared or provoked with respect to U.S. Patent No. 5,032,407 or with
respect to any U.S. patent application referred to in the Prospectus which
is listed in Schedules E and G.
K. To the best of such counsel's knowledge, there have been no
inventorship challenges with respect to U.S. Patent No. 5,032,407 or with
respect to any U.S. patent application referred to in the Prospectus which
is listed in Schedules E and G.
L. To the best of such counsel's knowledge, no third party is infringing
U.S. Patent No. 5,032,407.
M. To the best of such counsel's knowledge, neither the Company nor any
of its Subsidiaries has received any notice challenging the Company's or
any of such Subsidiaries' rights to U.S. Patent No. 5,032,407 or to any
U.S. patent application referred to in the Prospectus which is listed in
Schedules E and G.
N. To the best of such counsel's knowledge, neither the Company nor any
of its Subsidiaries has received any notice challenging the validity or
enforceability of U.S. Patent No. 5,032,407.
O. While there can be no guarantee that any particular patent
application will issue as a patent, each of the U.S. patent applications
referred to in the Prospectus which is listed in
33
Schedules E and G was properly filed, and is being properly and diligently
prosecuted, in the U.S. Patent and Trademark Office.
P. To the best of such counsel's knowledge, without any searches
specifically having been conducted, or having been required to have been
conducted, for the purpose of rendering such counsel's opinion, while
there can be no guarantee that any particular patent application will
issue as a patent, each of the U.S. patent applications referred to in the
Prospectus which is listed in Schedules E and G discloses patentable
subject matter.
Q. To the best of such counsel's knowledge, no liens have been recorded
against the Company or any of its Subsidiaries with respect to any U.S.
patent applications referred to in the Prospectus which are listed in
Schedule E.
R. To the best of such counsel's knowledge, no claim has been asserted
against the Company or any of its Subsidiaries relating to the potential
infringement of, or conflict with, any patents, trademarks, copyrights,
trade secrets, or proprietary rights, of others.
S. While there can be no assurance that any of the Company's U.S. patent
applications relating to certain leptin receptors will issue as patents,
or that any such patent, if issued, would be broad enough to cover leptin
receptors of Millennium or others, there is a reasonable basis for the
Company's continued efforts in seeking the broadest allowable claims from
the U.S. Patent and Trademark Office, including claims broad enough to
cover leptin receptors of Millennium or others.
T. To the best of such counsel's knowledge, for each U.S. patent
application listed in Schedules E and G, all information known, to date,
to be "material to patentability", as defined in 37 C.F.R. Section
1.56(b), has been disclosed, or will be disclosed pursuant to 37 C.F.R.
Section 1.97, to the U.S. Patent and Trademark Office.
(c) The favorable opinion, dated as of the Closing Date,
of Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois), counsel for the Underwriters
with respect to the issuance and sale of the Securities, the Registration
34
Statement and the Prospectus and such other related matters as the Underwriters
shall reasonably request.
(d) In giving their opinions required by subsections
(b)(i) and (b)(iii), respectively, of this Section 8, Xxxxxxxx & Xxxxxxxx LLP
and Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois) shall each additionally
state that nothing has come to their attention that leads them to believe that
the Registration Statement (except for financial statements, and related notes
thereto, and other financial information included therein, as to which counsel
need make no statement), at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements, and related notes thereto,
and other financial information included therein, as to which counsel need make
no statement), as of its date (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriters by the Company for use in
connection with the offering of the Units which differs from the Prospectus on
file at the Commission at the time the Registration Statement becomes effective,
in which case at the time it is first provided to the Underwriters for such use)
or at the Closing Date or the Option Closing Date, as the case may be, included
or includes an 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.
(a) (i) There shall not have been, since the date
hereof or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, (ii) the
representations and warranties of the Company in Section 6 hereof shall be true
and correct with the same force and effect as though expressly made at and as of
the Closing Date, except to the extent that any such representation or warranty
relates to a specific date, (iii) the Company shall have complied in all
material respects with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Closing Date, (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or threatened by the
Commission and (v) the Representatives shall have received a certificate, dated
the Closing Date and signed by the President or
35
any Vice President and the chief financial or accounting officer of the
Company to the effect set forth in clauses (i), (ii), (iii) and (iv) above.
(b) At the time of the execution of this Agreement,
the Underwriters shall have received from each of Coopers & Xxxxxxx L.L.P. and
Ernst & Young LLP, independent public accountants to the Company and Mercator,
respectively, a letter dated such date, in form and substance satisfactory to
the Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(c) The Underwriters shall have received from each of
Coopers & Xxxxxxx L.L.P. and Ernst & Young LLP a letter, dated as of the Closing
Date, to the effect that they reaffirm the statements made in their letter
furnished pursuant to subsection (d) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to the
Closing Date.
(d) The Common Stock (including the Shares) and the
Warrants shall have been approved for quotation on NASDAQ.
(e) In the event that the Underwriters exercise their
option provided in Section 2 hereof to purchase all or any portion of the Option
Units, the representations and warranties of the Company contained herein and
the statements in any certificates furnished by the Company hereunder shall be
true and correct as of the Option Closing Date and, at the relevant Option
Closing Date, the Underwriters shall have received:
i) A certificate, dated such Option Closing Date,
of the President or any Vice President of the Company and of the chief financial
or accounting officer of the Company confirming that the certificate delivered
at the Closing Date pursuant to Section 8(c) hereof remains true and correct as
of such Option Closing Date.
ii) The favorable opinion of Xxxxxxxx & Xxxxxxxx
LLP, in form and substance satisfactory to counsel for the Underwriters, dated
such Option Closing Date, relating to the Option Units to be purchased on such
Option Closing Date and otherwise to the same effect as the opinion required by
Sections 8(b)(i) and 8(b)(iv) hereof.
36
iii) The favorable opinion of Xxxxxx & Xxxxxxx,
in form and substance satisfactory to counsel for the Underwriters, dated
such Option Closing Date, to the same effect as the opinion required by
Section 8(b)(ii) hereof.
iv) The favorable opinion of Skadden, Arps,
Slate, Xxxxxxx & Xxxx (Illinois), counsel for the Underwriters, dated such
Option Closing Date, relating to the Option Units to be purchased on such
Option Closing Date and otherwise to the same effect as the opinion required
by Sections 8(b)(iii) and 8(b)(iv) hereof.
v) A Letter from each of Coopers & Xxxxxxx
L.L.P. and Ernst & Young LLP, in form and substance satisfactory to the
Underwriters and dated such Option Closing Date, substantially the same in
form and substance as their letter furnished to the Underwriters pursuant to
Section 8(e) hereof, except that the "specified date" in each letter
furnished pursuant to this Section 8(g)(5) shall be a date not more than
three business days prior to such Option Closing Date.
(f) At the date of this Agreement, except as set
forth in Schedule II hereto, the Underwriters shall have received lock-up
agreements in form and substance satisfactory to the Underwriters by all of
the stockholders and optionholders of Mercator and by the persons listed on
Schedule III hereto.
(g) Counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably request for
the purpose of enabling them to pass upon the issuance and sale of the Units
as herein contemplated and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties or the fulfillment of
any of the conditions herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Units as herein
contemplated shall be satisfactory in form and substance to the Underwriters
and counsel for the Underwriters.
(h) The NASD shall not have raised any objection
with respect to the fairness and reasonableness of the underwriting terms and
arrangements.
(i) There shall have been no amendments,
alterations, modifications or waivers of any provisions of the Transaction
Documents since the date of the execution and delivery thereof by the parties
thereto other than those which are disclosed in the Registration Statement or
the Prospectus or any supplement thereto or which under the 1933 Act are not
required to be
37
disclosed in the Prospectus or any supplement thereto and which have been
disclosed to the Underwriters prior to the date hereof.
(j) Each of the Merger Parties shall, to the extent
each is a party thereto, have complied in all material respects with all
agreements and covenants in the Transaction Documents and performed all
conditions specified therein that the terms thereof require to be complied
with or performed at or prior to the Effective Time of the Merger, except to
the extent that such compliance or performance has been waived by the other
parties to the applicable Transaction Documents.
(k) On or prior to the Closing Date, the Company
and Mercator shall have received the requisite approval or approvals of the
Merger Agreement and the Merger. Except as set forth in the Prospectus, no
such approval or approvals impose on the Company, its Subsidiaries or any
affiliate thereof any condition that adversely affects the ability of the
Company, its Subsidiaries and affiliates to conduct their businesses as the
same are described in the Prospectus or adversely affects the ability of the
Underwriters to market the Units on the terms and in the manner contemplated
by the Prospectus.
(l) The certificate of merger with respect to the
Merger shall have been filed with the Secretary of State of the State of
Delaware and shall have become effective, the Merger shall have occurred and
all other transactions contemplated by the Transaction Documents to be
consummated at or prior to the Effective Time of the Merger shall have been
consummated prior to the consummation of the purchase and sale of the Units
hereunder at the Closing Date.
(m) Except as is disclosed to the Underwriters in
writing, the representations and warranties of the Company and Mercator set
forth in the Transaction Documents shall be true, accurate and complete in
all material respects.
(n) Any certificate or document signed by any
officer of the Company and delivered to you, as Representatives of the
Underwriters, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Company to each Underwriter as to the
statements made therein.
(o) If any condition specified in this Section 8
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option Units,
on an Option Closing Date which is after the Closing Date, the obligations of
the several Underwriters to purchase the relevant Option Units, may be
terminated by the Representatives by notice to the Company at any time at or
prior to the Closing Date or such an Option Closing Date, as the case may be,
and such termination shall be without liability of any party to any other
38
party except as provided in Section 9 and except that Sections 6 and 7 shall
survive any such termination and remain in full force and effect.
9.EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it
of its obligations hereunder: (i) the preparation, printing or reproduction,
and filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each preliminary prospectus, the
Prospectus, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight and
charges for counting and packaging) of such copies of the Registration
Statement, each preliminary prospectus, the Prospectus, and all amendments or
supplements to any of them as may be reasonably requested for use in
connection with the offering and sale of the Units; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the
Securities, including any stamp taxes in connection with the original
issuance and sale of the Securities; (iv) the printing (or reproduction) and
delivery of this Agreement, the Warrant Agreement the preliminary and
supplemental Blue Sky Memoranda and all other agreements or documents printed
(or reproduced) and delivered in connection with the original issuance and
sale of the Units; (v) the registration of the Common Stock and the Warrants
under the 1934 Act and the quotation of the Common Stock (including the
Shares) and the Warrants on NASDAQ; (vi) the registration or qualification of
the Units, the Shares, the Warrants and the Warrant Shares for offer and sale
under the securities or Blue Sky laws of the several states as provided in
Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental
Blue Sky Memoranda and such registration and qualification); (vii) the filing
fees and the reasonable fees and expenses of counsel for the Underwriters
incident to securing any required review by the NASD; (viii) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; (ix) the cost and
charges of any transfer agent or registrar for the Common Stock and the
warrant agent for the Warrants; and (x) all costs and expenses of the
Underwriters, including the fees and disbursements of counsel for the
Underwriters, in connection with matters related to the Reserved Units which
are designated by the Company for sale to employees, directors and other
persons and entities having a business relationship with the Company.
If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 10 or pursuant to clauses (ii), (iii), (iv) and
(v) of Section 11 hereof) or if this Agreement shall be terminated by the
Underwriters because of any
39
failure or refusal on the part of the Company to comply, in any material
respect, with the terms or fulfill, in any material respect, any of the
conditions of this Agreement, the Company agrees to reimburse the
Representatives for all reasonable out-of-pocket expenses (including
reasonable fees and expenses of counsel for the Underwriters) incurred by you
in connection herewith.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by or on behalf of the
parties hereto; or (ii) if, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the Units may
commence, when notification of the effectiveness of the Registration Statement
or such post-effective amendment has been released by the Commission. Until
such time as this Agreement shall have become effective, it may be terminated by
the Company, by notifying you, or by you, as Representatives of the several
Underwriters, by notifying the Company.
If one or more of the Underwriters shall fail on the Closing Date
to purchase the Initial Units which it or they are obligated to purchase
under this Agreement (the "Defaulted Units"), 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 Units 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 number of Defaulted Units does not
exceed 10% of the number of Initial Units, 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 number of Defaulted Units exceeds 10% of
the number of Initial Units, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter or the Company.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company
shall have the right to postpone the Closing Date for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other
40
documents or arrangements. As used herein, the term "Underwriter" includes
any person substituted for an Underwriter under this Section 10.
Any notice under this Section 10 may be given by telegram, telecopy
or telephone but shall be subsequently confirmed by letter.
11.TERMINATION OF AGREEMENT. a. The Underwriters may terminate
this Agreement, by notice to the Company, at any time at or prior to the
Closing Date or Option Closing Date, as the case may be, (i) if there has
been, since the date of this Agreement or since the respective dates as of
which information is given in the Registration Statement, any material
adverse change or any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business, (ii) if there has occurred any change in the
financial markets in the United States or elsewhere or any outbreak of
hostilities or escalation thereof or other calamity or crisis the effect of
which is such as to make it, in your judgement, impracticable or inadvisable
to market the Securities or to enforce contracts for the sale of the Units,
(iii) if trading in the Common Stock or the Warrants has been suspended by
the Commission, or if trading generally on the American Stock Exchange, the
New York Stock Exchange or in the over-the-counter markets has been
suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by such exchange
or markets or by order of the Commission or any other governmental authority,
or if a banking moratorium has been declared by either Federal or New York
authorities, (iv) the enactment, publication, decree or other promulgation of
any Federal or state statute, regulation, rule or order of any court or other
governmental authority which in your judgement materially and adversely
affects or may materially or adversely affect the business or operations of
the Company and its Subsidiaries, considered as one enterprise, or (v) the
taking of any action by any Federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your judgement has a
material adverse effect on the securities markets in the United States, and
would in your judgement make it impracticable or inadvisable to market the
Units or to enforce any contract for the sale thereof. Notice of such
termination may be given by telegram, telecopy or telephone and shall be
subsequently confirmed by letter.
(a) If this Agreement is terminated pursuant to
this Section 11, such termination shall be without liability of any party to
any other party except as provided in Section 9 and provided further that
Sections 6 and 7 shall survive such termination and remain in full force and
effect.
41
12. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set
forth in the last paragraph on the cover page, the legend concerning over-
allotments on the inside front cover page and the concessions and reallowance
figures appearing under the caption "Underwriting" in any preliminary prospectus
and in the Prospectus constitute the only information furnished by or on behalf
of the Underwriters through you as such information is referred to in Sections
5(a) and 7 hereof.
13. MISCELLANEOUS. Except as otherwise provided in Sections 5, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company at the office of
the Company at 0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, Attention: Xxxxxxxx
X. Given, President and Chief Executive Officer; or (ii) if to you, as
Representatives of the several Underwriters, care of Xxxxxx Brothers Inc.,
Three World Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 000-000-0000), with a copy, in the case of any notice
pursuant to Section 8 hereof, to the Director of Litigation, Office of the
General Counsel, Xxxxxx Brothers Inc., 3 World Financial Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed within the State of New
York. This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
15. SUCCESSORS. This Agreement has been and is made solely for the
benefit of the several Underwriters, the Company, its directors and officers,
the other persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the
term "successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Securities in his
status as such purchaser.
42
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
PROGENITOR, INC.
By: ----------------------------------
President and Chief
Executive Officer
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
XXXXXX BROTHERS INC.
GENESIS MERCHANT GROUP SECURITIES
As Representatives of the Several Underwriters
By: XXXXXX BROTHERS INC.
By:---------------------------------
43
SCHEDULE I
PROGENITOR, INC.
Number of Initial
Units Purchased
UNDERWRITER FROM THE COMPANY
------------ ------------------
Xxxxxx Brothers Inc. . . . . . . . . . . . . . . . . .
Genesis Merchant Group Securities. . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . .
--------------
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