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EXHIBIT 1.1
1,200,000 SHARES
ZEVEX INTERNATIONAL, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
November 21, 1997
WEDBUSH XXXXXX SECURITIES, INC.
EVEREN SECURITIES, INC.
As Representatives of the several Underwriters
c/o Wedbush Xxxxxx Securities
0000 Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Gentlemen:
Zevex International, Inc., a Delaware corporation (the "Company")
proposes to issue and sell to you and other firms and corporations named in
Schedule A attached hereto (the "Underwriters," which term shall also include
any underwriter substituted as provided in Section 10 hereof), for which you are
acting as representatives ("Representatives"), One Million Two Hundred Thousand
(1,200,000) shares of the Company's Common Stock (the "Primary Securities"). In
addition, the selling securityholders named in Schedule B hereto (the "Selling
Securityholders") propose to grant to the Underwriters an option to purchase,
for the purpose of covering over-allotments, Thirty Thousand (30,000) shares of
the Company's Common Stock (the "Secondary Shares") and warrants to purchase up
to One Hundred Fifty Thousand (150,000) shares of the Company's Common Stock
(the "Warrants" and, together with the shares to be acquired upon the exercise
thereof, if any, and the Secondary Shares, the "Over-Allotment Securities"). The
Primary Securities and the Over-Allotment Securities are collectively referred
to below as the "Securities." The Company and the Selling Securityholders agree
with the several Underwriters as set forth below.
1. Representations, Warranties and Certain Covenants of the
Company. The Company represents and warrants to, and the Company also covenants
and agrees with, each of the Underwriters as follows:
(a) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form
S-1 (No. 333-37189), including a preliminary prospectus, relating to
the Securities and such amendments to the registration statement and
prospectus included therein as may have been required to the date
hereof. The Company will file with the Commission either: (i) prior to
effectiveness of such registration statement, a further amendment
thereto, including a form of prospectus, and if required after
effectiveness of such registration statement, a final prospectus in
accordance with Rule 424(b) of the rules and regulations ("Rules and
Regulations") under the Securities Act of 1933, as amended (the "Act"),
or (ii) after effectiveness of such registration statement, a final
prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations. Any such preliminary prospectus and any prospectus
included in the registration statement at the time it becomes effective
that omits information pursuant to Rule
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430A of the Rules and Regulations, is referred to herein as a
"preliminary prospectus"; such registration statement, as it may have
been amended at the time when it becomes effective, including financial
statements, exhibits, and the information, if any, deemed to be a part
of such registration statement by virtue of Rule 430A of the Rules and
Regulations, is referred to herein as the "Registration Statement"; and
such final form of prospectus, in the form in which it was first filed
pursuant to Rule 424(b) of the Rules and Regulations or, if no filing
pursuant to Rule 424(b) of the Rules and Regulations is made, in the
form included in the Registration Statement at the time it becomes
effective, is referred to herein as the "Prospectus."
(b) The Commission has not issued, nor has it had cause
to issue, an order preventing or suspending the use of any preliminary
prospectus and each such preliminary prospectus has conformed in all
material respects to the requirements of the Act and the Rules and
Regulations and has not included any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. At the date
of this Agreement, when the Registration Statement becomes effective
and at the Closing Date (as defined below) (i) the Registration
Statement and Prospectus and any amendments or supplements thereto will
contain all statements that are required to be stated therein by the
Act and the Rules and Regulations and will in all material respects
conform to the requirements of the Act and the Rules and Regulations,
(ii) the Registration Statement will not include any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, and (iii) the Prospectus will not include any untrue
statement of a material fact and will not omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations, warranties or agreements as to information contained
in or omitted from the Registration Statement or Prospectus or any such
amendment or supplement in reliance upon, and in conformity with,
written information furnished to the Company by the Underwriters
expressly for use therein.
(c) The consolidated financial statements of the Company
set forth in the Registration Statement and Prospectus present fairly,
in all material respects, the financial condition of the Company and
its subsidiary, Zevex, Inc. (the "Subsidiary") as of the dates
indicated and the results of operations and cash flows for the periods
therein specified in conformity with generally accepted accounting
principles consistently applied throughout the periods involved (except
as otherwise stated therein).
(d) Each of the Company and the Subsidiary has been duly
organized and is validly existing in good standing under the laws of
its jurisdiction of incorporation. Each of the Company and the
Subsidiary has all requisite power and authority to own, lease and
operate its properties and to conduct its business as is described in
the Prospectus. Each of the Company and the Subsidiary is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required
except where the failure to so qualify will not have a material adverse
effect on the Company and the Subsidiary taken as a whole.
(e) The authorized, issued and outstanding capital stock
of the Company is as set forth under the caption "Capitalization" in
the Prospectus and the issued and outstanding shares of Common Stock of
the Company have been duly authorized and validly issued and are fully
paid and nonassessable. The sale of the Securities has been duly
authorized and after issuance of and payment for the Securities in
accordance with this Agreement, the Securities will be validly issued,
fully paid and nonassessable; the Underwriters will acquire good and
marketable title to the Securities (other than the Securities sold by
Selling Securityholders), free and clear of any adverse claims
whatsoever, and the holders of the Common Stock of the Company are not
entitled to any preemptive rights. All of the issued and outstanding
shares of the capital stock of the Subsidiary, which have been duly
authorized and validly issued, are fully paid and nonassessable and are
owned beneficially and of record by the Company free and clear of all
liens, claims or encumbrances whatsoever. Except as disclosed in the
Prospectus and the financial statements of the
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Company, and the related notes thereto, included in the Prospectus,
neither the Company nor the Subsidiary has outstanding any options or
warrants to purchase, any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its
capital stock or any such options, warrants, rights, convertible
securities or obligations. The Company's Common Stock has been approved
for listing and is listed on the American Stock Exchange ("AMEX").
(f) Except as contemplated in the Prospectus, subsequent
to the respective dates as of which information is given in the
Registration Statement and the Prospectus, neither the Company nor the
Subsidiary has incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, not in the ordinary
course of business, that are material to the Company and the Subsidiary
taken as a whole, and there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company, or any
material adverse change in the condition (financial or other),
business, properties, prospects, net worth or results of operations of
the Company and the Subsidiary taken as a whole.
(g) Except as set forth in the Prospectus, there is not
pending or, to the knowledge of the Company, threatened, any action,
suit or proceeding of which the Company or the Subsidiary is a party,
before or by any court or governmental agency or body, that would
result in any material adverse change in the condition (financial or
other), business, properties, prospects, net worth or results of
operations of the Company and the Subsidiary taken as a whole, or might
materially and adversely affect the properties or assets thereof.
(h) There are no contracts or documents that are required
to be filed as exhibits to the Registration Statement by the Act or by
the Rules and Regulations that have not been so filed.
(i) Except as set forth in the Prospectus, the Company
and the Subsidiary owns or has valid leasehold interests in all
properties and assets required for the operation of their business as
now conducted or as proposed to be conducted, including those described
in the Registration Statement and the Prospectus as being owned by
them; and each of the Company and the Subsidiary has good title to all
properties and assets owned by it material to its business. All leases
to which the Company or the Subsidiary is a party are valid, subsisting
and enforceable and no default by the Company or the Subsidiary has
occurred and is continuing thereunder; and each of the Company and the
Subsidiary enjoys peaceful and undisturbed possession under all such
leases to which it is a party as lessee.
(j) The Company has full right, power and authority to
enter into this Agreement and the Warrant Agreement, in the form of
Exhibit 1 hereto (the "Warrant Agreement"), and to perform all of its
obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and the Warrant Agreement by the Company
does not and will not violate, breach or conflict with the Articles of
Incorporation or bylaws of the Company or the Subsidiary or any
agreement to which the Company or the Subsidiary is a party or by which
the Company or the Subsidiary or any of their properties is bound or
any statute or order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or the Subsidiary
or any of their properties; and no consent, approval, authorization or
order of, or filing with, any court or governmental agency or body is
required in connection with the transactions contemplated hereby except
as may be required under the Act or state securities or "Blue Sky"
laws. This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding obligation of the
Company in accordance with its terms.
(k) The business of the Company and the Subsidiary, as
presently conducted, does not violate any patent, trademark, service
xxxx or proprietary interest of any other individual, corporation,
partnership or other business entity, the violation of which might have
a material adverse effect upon the Company and the Subsidiary taken as
a whole.
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(l) Except as set forth in the Registration Statement, the Company
does not own any shares of capital stock or any other securities of any
corporation or have any equity interest in any firm, partnership, association or
other entity or subsidiary.
2. Representations, Warranties and Covenants of the Selling
Securityholders. Each Selling Securityholder, severally and not jointly,
represents and warrants to, and covenants and agrees with, each of the
Underwriters as follows:
(a) Such Selling Securityholder has full power and
authority to enter into this Agreement, the Power of Attorney
appointing Xxxx X. Xxxxxxxxxxx and Xxxxxxx X. XxXxxxxx (in the case of
those Selling Securityholders who are selling the Secondary Shares) or
Xxxx X. Xxxxxxxxxxx and Xxxx Xxxxxx (in the case of those Selling
Securityholders who are selling the Warrants), and each of them, as
attorneys-in-fact (the "Power of Attorney") and the Custody Agreement
with U.S. Trust Company of California, N.A. as Custodian (the "Custody
Agreement"). All authorizations and consents necessary for the
execution and delivery by or on behalf of such Selling Securityholder
of this Agreement, the Power of Attorney and the Custody Agreement have
been given. Each of this Agreement, the Power of Attorney and the
Custody Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Securityholder and each of this Agreement,
the Power of Attorney and the Custody Agreement constitutes a valid and
binding agreement of such Selling Securityholder and is enforceable
against such Selling Securityholder in accordance with the terms hereof
and thereof.
(b) Such Selling Securityholder now has, and at the time
of delivery thereof hereunder will have, (i) good and marketable title
to the Securities to be sold by such Selling Securityholder hereunder,
free and clear of all liens, encumbrances and claims whatsoever (other
than pursuant to the Custody Agreement and the Power of Attorney), and
(ii) full legal right and power, and all authorizations and approvals
(other than those imposed by the Act and the securities or "Blue Sky"
laws of certain jurisdictions) required by law, to sell, transfer and
deliver such Securities to the Underwriters hereunder and to make the
representations, warranties and agreements made by such Selling
Securityholder herein. Upon the delivery of and payment for such
Securities hereunder, such Selling Securityholder will deliver good and
marketable title thereto, free and clear of all liens, encumbrances and
claims whatsoever.
(c) On the Closing Date, all stock transfer or other
taxes (other than income taxes), if any, that are required to be paid
in connection with the sale and transfer of the Securities to be sold
by such Selling Securityholder to the several Underwriters hereunder
will have been fully paid or provided for by such Selling
Securityholder and all laws imposing such taxes will have been fully
complied with.
(d) No consent, approval, authorization or order of, or
any filing with, any court or governmental agency or body is required
for the consummation by such Selling Securityholder of the transactions
on its part contemplated in this Agreement, the Power of Attorney or
the Custody Agreement, except as may be required under the Act or state
securities or "blue sky" laws.
(e) All information with respect to such Selling
Securityholder provided in writing to the Company by such Selling
Securityholder expressly for use in the Registration Statement and the
Prospectus, (i) complied and will comply with all applicable provisions
of the Act and the Rules and Regulations, (ii) contains and will
contain all statements required to be stated therein in accordance with
the Act and the Rules and Regulations, and (iii) does not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
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(f) Other than as permitted by the Act and the Rules and
Regulations, such Selling Securityholder has not distributed and will
not distribute any preliminary prospectus, the Prospectus or any other
offering material in connection with the offering and sale of the
Securities. Such Selling Securityholder has not taken, directly or
indirectly, any action designed, or which might reasonably be expected,
to cause or result in, under the Act or otherwise, or which has caused
or resulted in, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(g) Certificates in negotiable form for the Securities to
be sold hereunder by such Selling Securityholder have been placed in
custody, for the purpose of making delivery of such Securities under
this Agreement, under the Custody Agreement for each Selling
Securityholder. Such Selling Securityholder agrees that the Securities
represented by the certificates held in custody for him, her or it
under the Custody Agreement are for the benefit of and coupled with and
subject to the interest of the Custodian, the Committee (as that term
is defined in the Power of Attorney), the Underwriters, each other
Selling Securityholder and the Company, that the arrangements made by
such Selling Securityholder for such custody and the appointment of the
Custodian and the Committee by such Selling Securityholder are
irrevocable, and that the obligations of such Selling Securityholder
hereunder shall not be terminated by operation of law, whether by the
death, disability, incapacity or liquidation of any Selling
Securityholder or the occurrence of any other event. If any Selling
Securityholder should die, become disabled or incapacitated or if any
other such event should occur before the delivery of the Securities
hereunder, certificates for the Securities shall be delivered by the
Custodian in accordance with the terms and conditions of the Power of
Attorney, Custody Agreement and this Agreement and actions taken by the
Custodian and the Committee pursuant to the Custody Agreement and the
Power of Attorney shall be as valid as if such death, disability,
incapacity or other event had not occurred, regardless of whether or
not the Custodian or the Committee, or either of them, shall have
received notice thereof.
(h) None of the proceeds received by such Selling
Securityholder from the sale of the Securities will be paid to a member
of the National Association of Securities Dealers, Inc. or any
affiliate of such member.
3. Sale and Purchase of the Securities.
(a) The Company hereby agrees to sell the Primary
Securities to the several Underwriters as set forth in Schedule A
attached hereto, and the several Underwriters, in reliance upon the
representations, warranties and agreements herein contained, but
subject to the conditions hereinafter stated, agree, severally and not
jointly, to purchase from the Company, at the place and the time
specified below, the respective aggregate numbers of Primary Securities
set forth in Schedule A opposite their respective names, plus any
additional Securities which such Underwriters may become obligated to
purchase pursuant to the provisions of Section 3(b) hereof, at a price
of $11.65625 per share of Common Stock.
(b) In addition, on the basis of the representations and
warranties herein contained, upon not less than five days' notice from
the Representatives to the Selling Securityholders, the Selling
Securityholders
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agree to sell to the Underwriters (but only for the purpose of covering
over-allotments in the sale of the Primary Securities), all or any
portion of the Over-Allotment Securities, as specified by the
Representatives in such Notice, at a price of $11.65625 per share of
Common Stock and $8.15625 per Warrant. The Company agrees to issue and
sell to the Underwriters the number of shares of the Company's Common
Stock issuable upon exercise of the Warrants included in the
Over-Allotment Securities so acquired and the Underwriters, in reliance
upon the representations, warranties and agreements herein contained,
agree, severally and not jointly, to exercise such warrants and
purchase such shares of Common Stock from the Company. Such shares of
Common Stock shall thereupon become Over-Allotment Securities. The
Over-Allotment Securities may be purchased on the Closing Date or at
any time or times thereafter so long as the notice to purchase is given
within a period of 45 days following the effective date of the
Registration Statement. Over-Allotment Securities shall be purchased by
each Underwriter in the proportion which the number of Primary
Securities set opposite the name of each Underwriter in Schedule A
hereto bears to the total number of Primary Securities. No
Over-Allotment Securities shall be delivered to or for the accounts of
the Underwriters unless the Primary Securities shall be simultaneously
delivered and paid for or shall theretofore have been delivered and
paid for as herein provided.
(c) The respective purchase obligation of each
Underwriter shall be subject to such adjustments as the Representatives
may in their absolute discretion make.
4. Terms of Offering and Authority to Use Prospectus. The terms
of the public offering by the Underwriters of the Securities to be purchased by
them shall be as set forth in the Registration Statement and the Prospectus.
The Company and the Selling Securityholders have authorized the
Representatives to use preliminary prospectuses and to make them available for
use by prospective Underwriters and dealers and authorize the Underwriters and
all dealers acquiring Securities from an Underwriter to use the Prospectus (as
amended or supplemented, if the Company shall have furnished any amendments or
supplements thereto) in connection with the sale of the Securities until the
earlier of completion of the public offering or the 90th day following
effectiveness of the Registration Statement.
5. Payment and Delivery.
(a) Payment for the Primary Securities which the
Underwriters agree to purchase hereunder shall be made to the Company
by bank cashier's checks payable in Los Angeles Clearing House funds at
the offices of Wedbush Xxxxxx Securities, Inc., 0000 Xxxxxxxx
Xxxxxxxxx, 0xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000, or, in the
case of payment to the Company, by wire transfer of immediately
available funds to such account as the Company shall designate in
writing, at 10:00 a.m., Pacific Time, on November 26, 1997, (unless
postponed in accordance with the provisions of Section 10 hereof), or
at the time, date (not later than seven full business days thereafter)
and place agreed upon by the Representatives and the Company, against
delivery to the Representatives for the respective accounts of the
several Underwriters of the Primary Securities in the form of
certificates for the securities comprising the Primary Securities. The
date and time of this payment and delivery (which may be postponed as
provided in Section 10 hereof) are sometimes referred to below as the
"First Closing Date."
(b) Payment for the Over-Allotment Securities which the
Underwriters have the right to purchase hereunder and payment to the
Company of the exercise price thereof shall be made to the Selling
Securityholders or the Company, as applicable, by bank cashier's check
or checks payable in Los Angeles Clearing House funds at the office
specified in the immediately preceding paragraph at the time or times
and on the date or dates specified in the notice or notices delivered
by the Representatives against delivery for the respective accounts of
the several Underwriters of the Over-Allotment Securities in the form
of certificates for the securities comprising the Over-Allotment
Securities. The dates and times of these
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payments and deliveries are herein singularly or collectively sometimes
referred to as the "Second Closing Date." The term "Closing Date"
refers to both the First Closing Date and the Second Closing Date.
(c) You, individually and not as Representatives of the
Underwriters, may (but shall not be obligated to) make payment to the
Company or the Selling Securityholders, as applicable, for Securities
to be purchased by any Underwriter whose check shall not have been
received by you at the date of payment therefor for the account of that
Underwriter. Any payment by you shall not relieve that Underwriter from
any of its obligations hereunder.
(d) The certificates for the Securities shall be
registered in the name or names and shall be in the denominations you,
as Representatives, at least three full business days prior to the
First Closing Date, in the case of the Primary Securities, and at least
three full business days prior to the Second Closing Date, in the case
of the Over-Allotment Securities, may request. The Company and the
Selling Securityholders agree to cause certificates for the Securities
to be delivered pursuant to this Agreement at your offices, at the
offices of The Depositary Trust Company, New York, New York, or at such
other places as may be designated by you as Representatives, and to be
made available for checking and packaging at one of the above offices
or such other places as may be designated by you as the Representatives
at least one full business day prior to the First Closing Date in the
case of the Primary Securities, and at least one full business day
prior to the Second Closing Date, in the case of the Over-Allotment
Securities.
6. Conditions of the Underwriters' Obligations. The several
obligations of the Underwriters hereunder are subject to the following
conditions:
(a) The Registration Statement shall have become
effective under the Act not later than (i) 2:00 p.m., Pacific Time, on
the day following the date of this Agreement or (ii) such other time
and date, but not later than 2:00 p.m, Pacific Time, on the second day
following the date of this Agreement, as may be approved by the
Underwriters (including the Representatives) that are obligated to
purchase an aggregate of more than 50% of the Securities; and, at the
Closing Date, no stop order suspending the effectiveness of the
Registration Statement or the qualifications of the Securities shall
have been issued and no proceedings for that purpose shall be pending
before or threatened by the Commission or any state securities or "Blue
Sky" commissioner or authority.
(b) At each Closing Date, (i) the representations and
warranties of the Company and the Selling Securityholders contained in
this Agreement shall be true and correct with the same effect as if
made on and as of such Closing Date and the Company and the Selling
Securityholders shall have performed all of the obligations and
complied with all of the conditions hereunder on their part to be
performed or complied with on or prior to the Closing Date; (ii) the
Registration Statement and the Prospectus and any amendments or
supplements thereto shall contain all statements required to be stated
therein in accordance with the Act and the Rules and Regulations and
shall in all material respects conform to the requirements thereof, and
neither the Registration Statement nor the Prospectus nor any amendment
or supplement thereto shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, not misleading; (iii)
there shall have been, since the respective dates as of which
information is given, no material adverse change in the business,
properties or condition (financial or otherwise), results of
operations, properties, prospects, capital stock, long-term debt or
general affairs of the Company from that set forth in the Registration
Statement and the Prospectus, except changes which the Registration
Statement indicates might occur after the effective date of the
Registration Statement, and neither the Company nor the Subsidiary
shall have incurred any material liabilities or material obligations,
direct or contingent, or entered into any material transaction,
contract or agreement not in the ordinary course of business other than
as referred to or contemplated in the Registration Statement; and, (iv)
except as set forth in the Prospectus, no action, suit or proceeding at
law or in equity shall be pending or threatened against the Company or
the Subsidiary which would be required to be set forth in the
Registration Statement, and no proceedings shall be pending or
threatened against the Company or the Subsidiary before or by any
commission, board or administrative agency in the United States or
elsewhere, wherein an unfavorable
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decision, ruling or finding would materially and adversely affect the
business, property, condition (financial or otherwise), results of
operations, properties, prospects, or general affairs of the Company
and the Subsidiary considered as a whole; and you shall have received
at each Closing Date, (i) a certificate of the principal executive
officer and the principal financial or accounting officer of the
Company, dated as of such Closing Date, evidencing compliance with the
provisions of this subsection (b), and confirming the accuracy of the
representations of the Company set forth in Section 1 hereof and
confirming that all conditions set forth herein have been met as of
such date, and (ii) a certificate from each Selling Securityholder,
dated as of such Closing Date, confirming the accuracy of the
representations of such Selling Securityholder set forth in Section 2
hereof and confirming that all conditions set forth herein to be met by
such Selling Securityholder have been met as of such date.
(c) No Underwriter shall have discovered and disclosed to
the Company prior to either Closing Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto,
contains an untrue statement of a fact that in the reasonable opinion
of the Representatives is material, or omits to state any material fact
required to be stated therein or necessary in order to make the
statements therein, not misleading.
(d) On each Closing Date you shall have received a signed
opinion, dated as of such date, of Xxxxxxx & XxXxxxxx, counsel to the
several Underwriters, with respect to the sufficiency of all corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby, and the Company and the Selling
Securityholders shall have furnished to such counsel such documents as
they may have requested for the purpose of enabling them to pass upon
such matters.
(e) On each Closing Date you shall have received the
signed opinion, dated as of such date, of Jones, Waldo, Xxxxxxxx &
XxXxxxxxx, counsel to the Company, in form reasonably satisfactory to
counsel for the Underwriters, together with signed or photostatic
copies thereof for each of the other Underwriters to the effect that:
(i) the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
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 taken as a whole;
(ii) except as set forth in the Registration
Statement, the Company does not own any shares of capital stock or any
other securities of any corporation or have any equity interest in any
firm, partnership, association or other entity or subsidiary. All of
the issued and outstanding shares of the capital stock of the
Subsidiary have been duly authorized and validly issued to the Company
and are fully paid and nonassessable.
(iii) each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, 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 taken as a whole;
(iv) the authorized capital stock of the Company
conforms as to legal matters to the description thereof contained in
the Prospectus;
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(v) the shares of Common Stock (including the
Securities, other than the Warrants, to be sold by the Selling
Securityholders) outstanding prior to the issuance of the Securities to
be sold by the Company have been duly authorized and are validly
issued, fully paid and nonassessable;
(vi) the Securities to be sold by the Company
have been duly authorized and, when issued and delivered in accordance
with the terms of this Agreement, will be validly issued, fully paid
and nonassessable, and the issuance of such Securities will not be
subject to any preemptive or similar rights and the shares of Common
Stock to be issued upon exercise of the Warrants by the Underwriters,
when issued and delivered in accordance with the terms of the Warrants,
will be duly authorized, validly issued, fully paid and nonassessable,
and the issuance of such shares will not be subject to any preemptive
or similar rights;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company;
(viii) the execution and delivery by the Company
of, and the performance by the Company of its obligations under, this
Agreement will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or the
Subsidiary or, to such counsel's knowledge, any agreement or other
instrument binding upon the Company or the Subsidiary that is material
to the Company and the Subsidiary, taken as a whole, or, to the best of
such counsel's knowledge, any judgment, or decree of any governmental
body, agency or court having jurisdiction over the Company or the
Subsidiary, and no consent, approval, authorization or order of or
qualification with any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement,
except such as may be required by the securities or "blue sky" laws of
the various states in connection with the offer and sale of the
Securities by the Underwriters;
(ix) the statements (1) in the Prospectus under
the captions "Risk Factors--Possible Rule 144 Sales," "Risk
Factors--Impact of Anti-Takeover Measures in New Delaware Corporation;
Possible Issuance of Preferred Stock; Classified Board,"
"Business--Manufacturing Capabilities--Manufacturing Contracts," the
final paragraph of "Management--Directors, Executive Officers and
Certain Key Employees," "Management--Amended 1993 Stock Option Plan,"
"Management--Profit Sharing Plan," "Management--Employee Stock
Ownership Plan," "Description of Capital Stock" and "Shares Eligible
for Future Sale" and (2) in the Registration Statement in Item 14
(which opinion shall be accompanied by the signed opinion, dated as of
the same date, of Xxxxxx, North & Western, with respect to the
statements in the Prospectus under the caption "Business--Patents,
Trademarks and Other Proprietary Rights"), in each case insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein;
(x) such counsel does not know of any legal or
governmental proceeding pending or threatened to which the Company or
the Subsidiary is a party or to which any of the properties of the
Company or the Subsidiary is subject that are required to be described
in the Registration Statement or the Prospectus and which are not so
described or of any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required;
(xi) the Company is not an "investment company"
or an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended;
(xii) such counsel is of the opinion that the
Registration Statement and Prospectus (except for financial statements
and schedules included therein as to which such counsel need not
express any opinion) comply as to form in all material respects with
the Act and the Rules and Regulations; to such counsel's knowledge,
except for financial statements and schedules as to which such counsel
need not express any opinion, the Registration Statement and the
prospectus included therein at the time the
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Registration Statement became effective did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and to such counsel's knowledge, except for financial
statements and schedules as to which such counsel need not express any
opinion, the Prospectus, as of its date and as of the date of the
opinion, did not and does not contain any untrue statement of a
material fact or omitted or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(xiii) to the best of such counsel's knowledge,
there are no outstanding options, warrants or other rights calling for
the issuance of, and no commitments, plans or arrangements to issue,
any shares of capital stock of the Company or any security convertible
into or exchangeable for capital stock of the Company, except as
disclosed in the Prospectus;
(xiv) the certificates for the Securities comply
with the provisions of Delaware law and have been duly approved by the
Board of Directors of the Company;
(xv) the Registration Statement has become
effective under the Act and, to the best knowledge of such counsel, no
stop order proceedings suspending the effectiveness of the Registration
Statement have been instituted or threatened or are pending under the
Act;
(xvi) the Warrant Agreement has been duly
authorized, executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable in accordance
with its terms, except as limited by bankruptcy, reorganization or
similar laws affecting creditors' rights generally; the Warrant
Agreement, upon payment by the Representatives to the Company of
$1,000, will be validly issued, fully paid and nonassessable; and the
shares of Common Stock of the Company to be delivered upon exercise of
the Warrant Agreement have been duly reserved for issuance and if, as
and when issued and paid for in accordance with the provisions of the
Warrant Agreement, will be validly issued, fully paid and
nonassessable; and
(xvii) such counsel has participated in conferences
with officers and other representatives of the Company, representatives
of the independent public accountants of the Company and
representatives of the Underwriters and their counsel, at which the
contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon,
and does not assume any responsibility for, the accuracy, completeness
or fairness of the statements contained in the Registration Statement
and the Prospectus (except as set forth above) and has not made any
independent check or verification thereof, on the basis of the
foregoing (relying as to materiality upon the statements of officers
and other representatives of the Company), no facts have come to such
counsel's attention that have made such counsel aware that either the
Registration Statement or any amendment (including any post-effective
amendment) thereto at the time such Registration Statement or amendment
became effective, and as of the Closing Date contained or contains 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 or any amendment or
supplement thereto as of their respective dates and as of the Closing
Date contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that
such counsel need express no opinion with respect to the financial
statements, schedules and other financial data included in the
Registration Statement or the Prospectus.
(f) On the Second Closing Date you shall have received
the signed opinion, dated as of such date, of counsel to the Selling
Securityholders, in form reasonably satisfactory to counsel to the
Underwriters, together with signed or photostatic copies thereof for
each of the other Underwriters, to the effect that:
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(i) this Agreement has been duly authorized,
executed and delivered by or on behalf of each of the Selling
Securityholders;
(ii) the execution and delivery by each Selling
Securityholder of, and the performance by such Selling Securityholder
of its obligations under, this Agreement, the Custody Agreement and
Powers of Attorney of such Selling Securityholder will not contravene
any provision of applicable law, or the certificate of incorporation or
by-laws of such Selling Securityholder (if such Selling Securityholder
is a corporation), or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon such Selling Securityholder
or, to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over such Selling Securityholder, and no consent, approval,
authorization or order of or qualification with any governmental body
or agency is required for the performance by such Selling
Securityholder of its obligations under this Agreement, the Custody
Agreement or Power of Attorney of such Selling Securityholder, except
such as may be required by the securities or "blue sky" laws of the
various states in connection with the offer and sale of the Securities;
(iii) each of the Selling Securityholders has
valid marketable title to the Securities to be sold by such Selling
Securityholder and has the legal right and power, and all authorization
and approval required by law, to enter into this Agreement, the Custody
Agreement and Power of Attorney of such Selling Securityholder and to
sell, transfer and deliver the Securities to be sold by such Selling
Securityholder;
(iv) the Custody Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling
Securityholder and is a valid and binding agreement of such Selling
Securityholder; and
(v) delivery of the Securities to be sold by
each Selling Securityholder pursuant to this Agreement will pass
marketable title to such Securities free and clear of any security
interests, claims, liens, equities and other encumbrances.
(g) At the time of the signing of this Agreement and on
each Closing Date, you shall have received a signed letter, dated,
respectively, as of each such date, from each of Xxxxxxx, Xxxxxxxx &
Company, Daines & Xxxxxxxxx P.C., and Ernst & Young LLP in form and
substance satisfactory to you, together with, in each case, signed or
photostatic copies thereof for each of the other Underwriters, to the
effect that:
(i) they are (or were in respect of the period
covered by the Company's financial statements audited by them)
independent auditors with respect to the Company within the meaning of
the Act and the published Rules and Regulations thereunder;
(ii) in their opinion, the financial statements
and schedules audited by them and included in the Registration
Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the published Rules
and Regulations thereunder.
Any such letter from Ernst & Young LLP shall also be to the effect
that:
(i) on the basis of procedures referred to in
such letter, including a reading of the latest available interim
financial statements of the Company, inquiries of officials of the
Company responsible for financial and accounting matters and the
performance of procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial
statements as described in SAS No. 71, Interim Financial Information,
nothing caused them to believe that:
(A) at the date of the latest available
internal balance sheet of the Company and at a subsequent
specified date not more than five days prior to the date of
such letter,
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there was any change in the capital stock or long-term debt of
the Company or any decrease in net current assets or net
assets as compared with amounts shown in the September 30,
1997, unaudited balance sheet included in the Registration
Statement, except in all instances for changes or decreases
that the Registration Statement discloses have occurred or may
occur or as may be set forth in such letter; or
(B) for the period from the date of the
latest available internal balance sheet of the Company to a
subsequent specified date not more than five days prior to the
date of such letter, there was any change in the capital
stock, increase in long-term debt or decrease in consolidated
net current assets or stockholders' equity of the Company;
(ii) they have inquired of certain officials of the
Company who have responsibility for financial and accounting matters
and those officials stated that the unaudited financial statements for
the month ended October 31, 1997, are in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements; and
(iii) they shall have carried out certain procedures
specified by you and shall have disclosed to you their findings with
respect to the amounts, percentages and financial information specified
by you and set forth in the Registration Statement and the Prospectus
and derived from general accounting and financial records of the
Company.
Any changes (increases or decreases) in the items set forth in these
letters which, in the reasonable judgment of the Representatives, are
materially adverse with respect to the financial position or results of
operations of the Company and the Subsidiary taken as a whole shall be
deemed to constitute a failure of the Company to comply with the
conditions to the obligations of the Underwriters hereunder.
(h) On or prior to the First Closing Date, the Company shall
execute and deliver to the Representatives the Warrant Agreement.
(i) All proceedings taken at or prior to each Closing Date in
connection with the sale of the Securities shall be satisfactory in
form and substance to you and Xxxxxxx & XxXxxxxx, counsel to the
several Underwriters, and at the time of signing this Agreement and on
the Closing Date, you and such counsel shall have received each and
every additional document, letter, opinion, certificate or other item
dated and executed in a manner reasonably satisfactory to you and such
counsel, as you or such counsel may reasonably request in connection
with the Prospectus, the Registration Statement, the offer and sale of
the Securities hereunder, or proceedings at the Closing Date.
If any of the conditions herein provided for in this Section shall not
have been fulfilled as of the date indicated, all obligations of the several
Underwriters under this Agreement may be cancelled by the Representatives by
notifying the Company and the Selling Securityholders of such cancellation on or
prior to the applicable Closing Date.
7. Covenants of the Company and the Selling Securityholders.
7.1 The Company covenants and agrees as follows:
(a) To use its best efforts to bring about the
effectiveness of the Registration Statement and not, at any
time, whether before or after the effective date, file any
amendment to the Registration Statement or Prospectus or
supplement thereto of which you shall not previously have been
advised and furnished with a copy or to which you or your
counsel reasonably shall have objected or which is not in
compliance with the Act and the Rules and Regulations, and as
soon as the Company is advised thereof, to advise the
Representatives and confirm this advice in writing (i) when
the Registration Statement has become effective and (ii) of
the issuance by the Commission or any state securities or
"blue sky" commissioner or authority of any order suspending
the effectiveness of the
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Registration Statement or any qualification of the Securities
or prohibiting the sale of the Securities or the initiation or
threatening of any proceedings for any such purpose.
(b) To deliver, on or before the effective date
of the Registration Statement and from time to time thereafter
until the earlier of completion of the offering or 90 days
following effectiveness of the Registration Statement, without
charge, to the Representatives and to send to the several
Underwriters, at such office or offices as the Representatives
may designate, as many copies of the preliminary prospectus
and Prospectus as the Representatives may reasonably request.
(c) To furnish each of the Representatives,
without charge, one executed copy of the Registration
Statement (including exhibits) and of any amendments thereto
and to furnish the Representatives, without charge, a
reasonable number of conformed copies of the Registration
Statement (excluding exhibits) and of any amendments thereto.
(d) To furnish each of the Representatives with
a copy of each proposed amendment or supplement before
amending or supplementing the Registration Statement or the
Prospectus.
(e) Until the earlier of completion of the
offering or 90 days following effectiveness of the
Registration Statement, if any event shall occur as a result
of which it shall be necessary to amend or supplement the
Prospectus in order to make the statements therein, in light
of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, forthwith to prepare and furnish,
at its own expense, to the Underwriters and to dealers (whose
names and addresses the Representatives will furnish to the
Company) to whom Securities may have been sold by the
Representatives and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the
statements in the Prospectus, as so amended or supplemented,
will not, in light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading.
(f) To make generally available to the Company's
security holders, as soon as practicable, but not later than
fifteen months after the end of the Company's current fiscal
quarter, an earnings statement (which need not be audited)
covering a period of twelve months beginning after the
effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of the last paragraph
of Section 11(a) of the Act.
(g) For a period of three years following the
date of this Agreement, to supply to the Representatives, and
to each other Underwriter who may so request in writing,
copies of such financial statements and other periodic and
special reports as the Company may from time to time furnish
generally to holders of any class of its securities, and to
furnish each of the Representatives a copy of each annual
report on Form 10-K which it files with the Commission.
(h) To cooperate with the Representatives in an
endeavor to qualify the Securities for offer and sale under
the "blue sky" laws of such jurisdictions of the United States
as the Representatives may request, and to pay, or reimburse
if paid by the Representatives, fees and disbursements of
counsel for the Underwriters and all other expenses and filing
fees in connection therewith; provided, however, that the
Company shall not be required to file any general consent to
service of process or to qualify as a foreign corporation or
as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation as doing
business in any jurisdiction.
(i) For a period of three years following the
date of this Agreement, to comply to the best of its ability
with the Act, the Rules and Regulations and the Securities
Exchange Act of 1934, as amended, and the rules and
regulations thereunder so as to permit the continuance of
sales and dealings in the Common Stock of the Company.
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(j) To apply the net proceeds from the sale of
the Securities in accordance with the statement made under
"Use of Proceeds" in the Prospectus.
(k) To supply the Representatives 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 Act.
7.2 The Company covenants and agrees to pay, or reimburse
if paid by the Representatives, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated,
all costs and expenses incident to the entry into and performance under
this Agreement by the Company, and without limiting the generality of
the foregoing, all costs and expenses incident to (a) the issuance,
purchase, sale and delivery of the Securities to the Underwriters, (b)
the registration of the Securities and preparing, printing and shipping
the Registration Statement and the underwriting documents, (c) the
filing fees of the Commission, the National Association of Securities
Dealers, Inc. and state securities and "blue sky" commissioners and
authorities in connection with the Registration Statement and this
Agreement, and the fees, disbursements and expenses of counsel in
connection with state securities or "blue sky" matters, (d) the fees
and disbursements of counsel and accountants for the Company, (e) the
furnishing to the Representatives and the other Underwriters of copies
of the Registration Statement, any preliminary prospectus, the
Prospectus, this Agreement, the Blue Sky Survey (preliminary and
final), and of the documents required by paragraphs (b), (c), (d) and
(e) of Section 7.1, to be so furnished, including costs of preparing,
printing and shipment, (f) the preparation, printing, mailing,
delivery, filing and distribution by the Company of all supplements and
amendments to the Prospectus required by paragraph (e) of Section 7.1,
(g) the furnishing to the Representatives and the other Underwriters of
all reports and financial statements required by paragraphs (f) and (g)
of Section 7.1, and (h) the holding of informational meetings related
to the offer and sale of the Securities, other than the Underwriters'
expenses for air transportation and hotel accommodations. Except as set
forth above, the Representatives will pay the fees and costs of their
counsel, the costs of "tombstone" advertisements and their travel and
lodging costs incident to the due diligence and informational meetings.
If the sale of any of the Securities to the several Underwriters
pursuant to this Agreement is not consummated for any reason, the
Company will reimburse the several Underwriters for their out-of-pocket
expenses (including fees and expenses of counsel) in an amount not to
exceed $100,000, incurred by the Underwriters in connection with this
Agreement or in investigating, preparing to market or marketing the
Securities.
Each Selling Securityholder, severally and not jointly, agrees
to pay or cause to be paid all taxes, if any, on the transfer and sale
of the Securities being sold by such Selling Securityholder.
7.3 The Company, Xxxx Xxxxxx and Xxxx X. Xxxxxx
(shareholders of the Company) and each of the Selling Securityholders,
severally and not jointly, covenant and agree that it will not offer to
sell, sell, contract to sell, pledge or otherwise dispose of, directly
or indirectly, any shares of Common Stock of the Company, or securities
convertible or exchangeable for, or any rights to purchase or acquire,
Common Stock, or enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of
Common Stock other than as provided in this Agreement or as
contemplated by the Registration Statement, for a period of 180 days
after the effective date of the Registration Statement, without the
prior written consent of the Representatives; provided, however, that
Xxxx Xxxxxx and Xxxx X. Xxxxxx shall have a demand registration right,
for a period of two years commencing February 1, 1998, with respect to
350,000 shares of Common Stock issuable upon the exercise of warrants
held by them on the date hereof. The Company also will, at or prior to
the First Closing Date, furnish you with a written agreement of each of
the persons listed on Schedule C hereto to the effect that they will
not offer to sell, sell or otherwise dispose of any shares of Common
Stock or securities convertible into or exchangeable for, or any rights
to purchase or acquire, Common Stock, for a period of 180 days after
the effective date of the Registration Statement, without the prior
written consent of the Representatives. This Section 7.3 shall not
apply to the transactions contemplated hereby or to the granting of
options or sale of Common Stock pursuant to the Company's Amended 1993
Stock Option Plan.
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7.4 Each of the Selling Securityholders will, prior to or
concurrent with the execution and delivery of this Agreement, deliver
to the Representatives an executed copy of the Power of Attorney and
Custody Agreement relating to such Selling Securityholder.
8. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each
Underwriter (including specifically each person who may be substituted
for an Underwriter as provided in Section 10 hereof) and each person,
if any, who controls any Underwriter within the meaning of Section 15
of the Act, from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them
may become subject under the Act or any other statute or at common law
or otherwise, and except as provided below, will reimburse each of the
Underwriters and each such controlling person, if any, for any legal or
other expenses incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement, in any preliminary prospectus or in the
Prospectus or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus or the omission or alleged
omission to state therein a material fact necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading, unless the untrue statement or omission or
alleged untrue statement or omission was made in such Registration
Statement, preliminary prospectus or Prospectus in reliance upon and in
conformity with information furnished in writing to the Company by you
or any Underwriter or any Selling Securityholder through you expressly
for use therein. Promptly after receipt by any Underwriter or any
person controlling the Underwriter of notice of the commencement of any
action in respect of which indemnity may be sought against the Company
under this Section 8, the Underwriter will notify the Company in
writing of the commencement thereof, and, subject to the provisions
stated below, the Company shall assume the defense of the action
(including the employment of counsel, who shall be counsel reasonably
satisfactory to such Underwriter or such person, as the case may be,
and the payment of expenses) insofar as such action shall relate to any
alleged liability in respect of which indemnity may be sought against
it. Any Underwriter or any controlling person shall have the right to
employ separate counsel in the action and to participate in the defense
thereof, but the fees and expenses of its counsel shall not be at the
expense of the Company unless the employment of that counsel has been
specifically authorized by the Company. The Company shall not be liable
to indemnify any person for any settlement of any action effected
without the Company's consent.
(b) Each Selling Securityholder, severally and not
jointly, will indemnify and hold harmless each Underwriter (including
specifically each person who may be substituted for an Underwriter as
provided in Section 10 hereof) and each person, if any, who controls
any Underwriter within the meaning of Section 15 of the Act, from and
against any and all losses, claims, damages, expenses or liabilities,
joint or several, to which they or any of them may become subject under
the Act or any other statute or at common law or otherwise, and except
as provided below, will reimburse each of the Underwriters and each
such controlling person, if any, for any legal or other expenses
incurred by them or any of them in connection with investigating or
defending any actions whether or not resulting in any liability,
insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, in any preliminary prospectus or in the
Prospectus or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus or the omission or alleged
omission to state therein a material fact necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading, but only in so far as such untrue statement
or omission or alleged untrue statement or omission was made in such
Registration Statement, preliminary prospectus or Prospectus (if used
within the time period set forth in Section 7.1(b) hereof) in
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reliance upon and in conformity with information furnished in writing
to the Company by such Selling Securityholder expressly for use
therein. Promptly after receipt by any Underwriter or any person
controlling the Underwriter of notice of the commencement of any action
in respect of which indemnity may be sought against a Selling
Securityholder under this Section 8, the Underwriter will notify such
Selling Securityholder in writing of the commencement thereof, and,
subject to the provisions stated below, such Selling Securityholder may
assume the defense of the action (including the employment of counsel,
who shall be counsel reasonably satisfactory to such Underwriter or
such person, as the case may be, and the payment of expenses) insofar
as such action shall relate to any alleged liability in respect of
which indemnity may be sought against it. Any Underwriter or any
controlling person shall have the right to employ separate counsel in
the action and to participate in the defense thereof, but the fees and
expenses of its counsel shall not be at the expense of such Selling
Securityholder unless the employment of that counsel has been
specifically authorized by such Selling Securityholder. Each Selling
Securityholder shall not be liable to indemnify any person for any
settlement of any action effected without such Selling Securityholder's
consent.
(c) Each Underwriter will severally, and not jointly,
indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed the Registration Statement, each person,
if any, who controls the Company within the meaning of Section 15 of
the Act and each Selling Securityholder and each person, if any, who
controls such Selling Securityholder within the meaning of Section 15
of the Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them
may become subject under the Act or any other statute or at common law
or otherwise, and, except as provided below, will reimburse the Company
and each such director, officer or controlling person and each Selling
Securityholder for any legal or other expenses incurred by them or any
of them in connection with investigating or defending any actions
whether or not resulting in any liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, in any
preliminary prospectus or in the Prospectus or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or
the Prospectus or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
but only insofar as any such untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by you
or any Underwriter through you expressly for use therein. Promptly
after receipt of notice of the commencement of any action in respect of
which indemnity may be sought against one or more Underwriters under
this Section 8, the indemnified party will notify the Representatives
in writing of the commencement thereof, and the Underwriter or
Underwriters against whom indemnity may be sought shall, subject to the
provisions stated below, assume the defense of the action (including
the employment of counsel, who shall be counsel reasonably satisfactory
to the Company and the Selling Securityholders, as applicable, and the
payment of expenses) insofar as such action shall relate to any alleged
liability in respect to which indemnity my be sought against the
Underwriter or Underwriters. The Company and each director, officer or
controlling person and each Selling Securityholder shall have the right
to employ separate counsel in any action and to participate in the
defense thereof, but the fees and expenses of their counsel shall not
be at the expense of any Underwriter unless the employment of that
counsel has been specifically authorized by the Underwriter or
Underwriters obligated to defend the action. The Underwriter against
whom indemnity may be sought shall not be liable to indemnify any
person for any settlement of any action effected without the
Underwriter's consent.
(d) It is agreed that the only information supplied by
the Underwriters in writing for use in the Registration Statement, the
preliminary prospectus or the Prospectus are set forth in the last
paragraph on the cover of the Prospectus, the first paragraph under the
table under the heading "Underwriting" and the third paragraph under
the table under the heading "Underwriting" in the Prospectus and that
no information
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has been omitted from the Registration Statement in reliance on
information supplied by the Underwriters in writing.
(e) In order to provide for just and equitable
contribution under the Act in any case in which (i) any indemnified
party makes claim for indemnification pursuant to this Section 8, but
it is judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the
fact that the express provisions of this Section 8 provide for
indemnification in such case, or (ii) contribution under the Act may be
required on the part of any indemnified party; then the Company, each
Selling Securityholder and any such Underwriter shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be
subject (which shall, for all purposes of this Agreement, include, but
not be limited to, all costs of defense and investigation and all
attorneys' fees) in either such case (after contribution from others)
in such proportions so that all such Underwriters are responsible in
the aggregate for that portion of such losses, claims, damages or
liabilities as is determined by multiplying the total amount of such
losses, claims, damages or liabilities times the difference between the
public offering price and the purchase price to the Underwriter and
dividing the product thereof by the public offering price, and the
Company and the Selling Securityholders shall be responsible for the
portion of such losses, claims, damages or liabilities as determined by
multiplying the total amount of such losses, claims, damages or
liabilities times the purchase price to the Underwriters and dividing
the product thereof by the public offering price; provided, however,
that the contribution of each contributing Underwriter shall not be in
excess of its proportionate share (based on the ratio of the number of
Securities purchased by such Underwriter to the number of Securities
purchased by all contributing Underwriters) of the portion of such
losses, claims, damages or liabilities for which the Underwriters are
responsible and the contribution of the Company and each Selling
Securityholder shall not be in excess of their proportionate share
(based on the ratio of the number of Securities sold by the Company or
such Selling Securityholder to the total number of Securities sold) of
the portion of such losses, claims, damages or liabilities for which
the Company and the Selling Securityholders are responsible. No person
guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
is not guilty of such fraudulent misrepresentation. The foregoing
contribution agreement shall in no way affect the contribution
liabilities of any person having liability under Section 11 of the Act
other than the Company, the Selling Securityholders and the
Underwriters. If the full amount of the contribution specified in this
paragraph is not permitted by law, then the Company and the Selling
Securityholders and any Underwriter, as the case may be, shall be
entitled to contribution from the Company and the Selling
Securityholders and/or the Underwriters, as the case may be, to the
full extent permitted by law.
9. Effective Date and Termination.
(a) This Agreement shall become effective at 10:00 a.m.,
Pacific Time, on the first full business day following the day on which
the Registration Statement becomes effective or at the time of the
initial public offering of any of the Securities by the Underwriters
after the Registration Statement becomes effective, whichever time
shall first occur. The time of the initial public offering shall mean
the time of the release by you, for publication, of the first newspaper
advertisement, which is subsequently published, relating to the
Securities, or the time at which the Securities are first generally
offered by the Underwriters to dealers by letter or telegram, whichever
shall first occur. You may prevent this Agreement from becoming
effective without liability of any party to any other party, except as
otherwise provided in Sections 9(b) and (c), by giving notice as
indicated below in Section 9(b) prior to the time when this Agreement
would otherwise become effective as herein provided.
(b) This Agreement, except for Sections 7.2, 8, 11, 12
and 13, may be terminated by the Representatives by notifying the
Company and the Selling Securityholders at any time at or prior to the
First Closing Date, and the option referred to in Section 4(b) hereof,
if exercised, may be cancelled at any time prior to the Second Closing
Date, if, in the Representatives' judgment, payment for and delivery of
the
17
18
Securities is rendered impracticable or inadvisable by reason of (i)
the Company having sustained a material loss, whether or not insured,
by reason of fire, earthquake, flood, accident or other calamity, or
from any labor dispute or court or government action, order or decree,
(ii) trading in securities on the New York Stock Exchange, the American
Stock Exchange or Nasdaq-NMS having been suspended or limited, (iii)
material governmental restrictions having been imposed on trading in
securities generally, (iv) a banking moratorium having been declared by
Federal or California or New York state authorities, (v) an outbreak of
major international hostilities or other national or international
calamity having occurred, (vi) the passage by the Congress of the
United States or by any state legislative body, of any act or measure,
or the adoption or proposed adoption of any orders, rules, legislation
or regulations by any governmental body or any authoritative accounting
institute or board, or any governmental executive, which is believed
likely by the Representatives to have a material adverse impact on the
business, financial condition or financial statements of the Company or
the market for the securities offered hereby, (vii) any material
adverse change having occurred, since the respective dates as of which
information is given in the Registration Statement and Prospectus, in
the condition of the Company, financial or otherwise, or in the
earnings, affairs or business prospects of the Company, whether or not
arising in the ordinary course of business which, in your judgment,
makes it impracticable or inadvisable to offer or deliver the
Securities on the terms contemplated by the Prospectus, or (viii) any
of the conditions specified in Section 6 hereof not having been
fulfilled or waived in writing by the Representatives, at or prior to
the Closing Date, when and as required by this Agreement to be
fulfilled.
(c) If this Agreement shall be terminated pursuant to any
of the provisions hereof, except as provided in Sections 7.2 and 8,
neither the Company nor the Selling Securityholders shall be under any
liability to any Underwriter nor shall any Underwriter be under any
liability to the Company or the Selling Securityholders, except that no
Underwriter which shall have failed or refused to purchase the
Securities agreed to be purchased by it hereunder, without some reason
sufficient hereunder to justify its cancellation or termination of its
obligations hereunder, shall be relieved of liability to the Company,
to the Selling Securityholders or to the other Underwriters for damages
occasioned by its default.
10. Default of Underwriters. If one or more of the Underwriters
shall fail or refuse (other than for a reason sufficient to justify the
termination of this Agreement) to purchase on the First Closing Date or the
Second Closing Date the aggregate number of Primary Securities or Over-Allotment
Securities agreed to be purchased by such Underwriter or Underwriters and the
aggregate number of Primary Securities or Over-Allotment Securities agreed to be
purchased by the Underwriter or Underwriters shall not exceed 10% of the total
number of Primary Securities or Over-Allotment Securities (as the case may be)
to be sold hereunder to the Underwriters, then each of the non-defaulting
Underwriters shall be obligated to purchase these Primary Securities or
Over-Allotment Securities on the terms herein set forth in proportion to their
respective obligations hereunder. In that case, the Representatives and the
Company shall have the right to postpone the First Closing Date or the Second
Closing Date (as the case may be) for a period of not more than seven days in
order that necessary changes and arrangements may be effected.
If one or more of the Underwriters shall fail or refuse (other than for
a reason sufficient to justify the termination of this Agreement) to purchase on
the First Closing Date or the Second Closing Date the aggregate number of
Primary Securities or Over-Allotment Securities agreed to be purchased by such
Underwriter or Underwriters and the aggregate number of Primary Securities or
Over-Allotment Securities agreed to be purchased by such Underwriter or
Underwriters shall exceed 10% of the total number of Primary Securities or
Over-Allotment Securities (as the case may be) to be sold hereunder to the
Underwriters, then the non-defaulting Underwriters shall have the right to
purchase, or procure one or more Underwriters reasonably acceptable to the
Company, to purchase, in such proportions as they may agree upon and upon the
terms herein set forth, the Primary Securities or Over-Allotment Securities
which such defaulting Underwriter or Underwriters agreed to purchase, and this
Agreement shall be carried out accordingly. If such other Underwriters do not
exercise this right within twenty-four hours after receiving notice of the
default, then the Company shall be entitled to an additional period of
twenty-four hours within which to procure another party or parties satisfactory
to the Representatives to purchase or agree to purchase these Primary Securities
or Over-Allotment Securities on the terms herein set forth. In any such case,
the Representatives and the Company shall have the right to postpone the First
Closing Date or the Second Closing Date (as the case may be) for a period of not
more than seven
18
19
days in order that necessary changes and arrangements may be effected. If this
paragraph becomes applicable and neither the non-defaulting Underwriters nor the
Company shall make arrangements within the period stated for the purchase of the
Primary Securities or Over-Allotment Securities which the defaulting Underwriter
or Underwriters agreed to purchase, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter to the Company or the
Selling Securityholders and without liability on the part of the Company or the
Selling Securityholders except as provided in Sections 7.2 and 8. The provisions
of this Section 10 shall not in any way affect the liability of any defaulting
Underwriter to the Company or the Selling Securityholders arising out of the
default.
11. Representations and Agreement to Remain in Effect. The
expense, reimbursement and indemnification agreements contained in Sections 7, 8
and 9 shall survive any termination of this Agreement; and the representations,
warranties and covenants of the Company and the Selling Securityholders 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 of the
Underwriters, the Company, any controlling person, director or officer of the
Company or the Underwriters, or the Selling Securityholders, and (ii) delivery,
acceptance of and payment for the Securities under this Agreement.
12. Parties in Interest. This Agreement has been and is made
solely for the benefit of the Underwriters, the Company and the Selling
Securityholders, and their respective successors and assigns, to the extent
expressed herein, for the benefit of persons controlling any of the Company, any
of Selling Securityholders or any of the Underwriters, directors and officers of
the Company and their respective successors and assigns, and no other person,
partnership, association or corporation shall acquire or have any right under or
by virtue of this Agreement. The term "successors and assigns" shall not include
any purchaser of Securities from any Underwriter merely because of such
purchase.
13. Notices, Headings, Applicable Law. Except as otherwise
provided in this Agreement, all statements, requests, notices and other
communications hereunder shall be in writing and shall be mailed, delivered,
telegraphed or sent by facsimile transmission and confirmed to the
Representatives at the address set forth above, attention: Investment Banking
(facsimile number: (000) 000-0000); and if to the Company or the Selling
Securityholders to Xxxx X. Xxxxxxxxxxx, President, ZEVEX International, Inc.,
0000 XXXXX Xxxx Xxxx, Xxxx Xxxx Xxxx, Xxxx 00000 (facsimile number: (801)
264-1051). Any party may change the address at which it is to receive
communications hereunder upon notice to the other parties as provided above. The
headings in this Agreement have been inserted as a matter of convenience and
reference and are not a part of this Agreement. The Agreement shall be construed
in accordance with the internal laws, and not the laws pertaining to choice or
conflict of laws, of the State of California.
19
20
Please confirm that the foregoing correctly sets forth the agreement
among us.
Sincerely yours,
ZEVEX INTERNATIONAL, INC.
By __________________________________
Title:
SELLING SECURITYHOLDERS
XXXX X. XXXXXXXXXXX
XXXXX X. XxXXXXX
XXXXXXX X. XxXXXXXX
XXXX XXXXXX
XXXX X. XXXXXX
XXXXXXX X. XXXXXXX
XXXXX X. XXXXXXX
XXXX XXXXX
XXXXXX X. AND XXXX X. XXXXX
XXXXXX X. XXXXX
XXXX AND XXXXXXXX XXXXXXXX
XXXXXX X. XXXXXXXX
XXXXXX X. XxXXXXXX
XXXXXX X. XXXXXX
XXXXXX X. XXXXX, FAMILY TRUST
SNAKE EYES INVESTMENT, X.X.
XXX X. XXXXXX
XXX X. XXXXXX
XXXXXXX WAFER
By __________________________________
Attorney-in-Fact
Confirmed and Accepted as of the
date first above written.
WEDBUSH XXXXXX SECURITIES, INC.
EVEREN SECURITIES, INC.
By____________________________________
For themselves and as the Representatives
of the several Underwriters.
20
21
SCHEDULE A
UNDERWRITERS
Number of
Underwriter Securities
Wedbush Xxxxxx Securities, Inc...................................... 420,000
EVEREN Securities, Inc. ............................................ 420,000
Xxxxx & Company..................................................... 30,000
X.X. Xxxxxxx & Sons, Inc. .......................................... 30,000
Advest Inc. ........................................................ 20,000
Xxxxxxx, Xxxxxx & Co. .............................................. 20,000
Cruttenden Xxxx Incorporated........................................ 20,000
X.X. Xxxxxxxx & Co. ................................................ 20,000
Xxxxxxxxxx & Co. Inc. .............................................. 20,000
Xxxx X. Xxxxxxx and Co. Inc. ....................................... 20,000
XX Xxxxxxxx & Co., Inc. ............................................ 20,000
The Ohio Company.................................................... 20,000
Pennsylvania Merchant Group Ltd. ................................... 20,000
Sands Brothers & Co., Ltd. ......................................... 20,000
The Xxxxxxx Companies Incorporated.................................. 20,000
Southwest Securities, Inc. ......................................... 20,000
Sutro & Co. Incorporated............................................ 20,000
Vector Securities International, Inc. .............................. 20,000
GBS Financial Corp. ................................................ 10,000
TriQuest Financial Inc. ............................................ 10,000
---------
Total.................................................... 1,200,000
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22
SCHEDULE B
SELLING SECURITYHOLDERS
Selling Number of Shares Number of
Securityholder of Stock to be Sold Warrants to be Sold
Xxxx X. Xxxxxxxxxxx 10,000
Xxxxx X. XxXxxxx 10,000
Xxxxxxx X. XxXxxxxx 10,000
Xxxxxxx X. Xxxxxxx 7,500
Xxxxx X. Xxxxxxx 7,500
Xxxx Xxxxx 3,750
Xxxxxx X. and Xxxx X. Xxxxx 15,000
Xxxxxx X. Xxxxx 15,000
Xxxx and Xxxxxxxx Xxxxxxxx 7,500
Xxxxxx X. Xxxxxxxx 7,500
Xxxxxx X. XxXxxxxx 15,000
Xxxxxx X. Xxxxxx 30,000
Xxxxxx X. Xxxxx, Family Trust 3,750
Snake Eyes Investment, L.C. 7,500
Xxx X. Xxxxxx 12,000
Xxx X. Xxxxxx 3,000
Xxxxxxx Wafer 15,000
22
23
SCHEDULE C
LIST OF SECURITYHOLDERS
Name Number of Securities
---- --------------------
None
23
24
EXHIBIT 1
WARRANT AGREEMENT
24
25
VOID AFTER 5:00 P.M., NEW YORK TIME, ON NOVEMBER __, 2002, OR IF NOT A BUSINESS
DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING
BUSINESS DAY.
WARRANT TO PURCHASE
100,000
SHARES OF COMMON STOCK
OF
ZEVEX INTERNATIONAL, INC.
No. W-__
This certificates that, for and in consideration of services rendered and
in connection with the public offering of Common Stock of the Company named
below (the "Offering") and other good and valuable consideration,
__________________________ (the "Representative") and its registered, permitted
assigns (collectively, the "Warrantholder"), is entitled to purchase from ZEVEX
International, Inc., a corporation incorporated under the laws of the State of
Delaware (the "Company"), subject to the terms and conditions hereof, at any
time on or after 9:00 a.m., New York time, on November __, 1998 and before 5:00
p.m., New York time on November __, 2002 (or, if such day is not a Business Day,
at or before 5:00 p.m., New York time, on the next following Business Day), up
to 100,000 fully paid and nonassessable shares of Common Stock of the Company at
the Exercise Price (as defined herein). The Exercise Price and the number of
shares purchasable hereunder are subject to adjustment from time to time as
provided in Article 3 hereof.
26
ARTICLE 1
DEFINITION OF TERMS
As used in this Warrant, the following capitalized terms shall have the
following respective meanings:
(a) Business Day: A day other than a Saturday, Sunday or other day
on which banks in the State of New York are authorized by law to remain Closed.
(b) Common Stock: Common Stock, $0.001 par value, of the Company.
(c) Common Stock Equivalents: Securities that are convertible into
or exercisable for shares of Common Stock.
(d) Demand Registration: See Section 6.2.
(e) Exchange Act: The Securities Exchange Act of 1934, as amended.
(f) Exercise Price: $__________ per Warrant Share, 120% of the
initial price to public in the Offering as set forth on the cover page of the
Prospectus with respect to the Offering as such Price may be adjusted from time
to time pursuant to Article 3 hereof.
(g) Expiration Date: 5:00 p.m., New York time on November __, 2002
or if such day is not a Business Day, the next succeeding day which is a
Business Day.
(h) 25% Holder: At any time as to which a Demand Registration is
requested, the Holder and/or the holders of any other Warrants and/or the
holders of Warrant Shares who have the right to acquire or hold, as the case may
be, not less than 25% of the continued total of Warrant Shares issuable and
Warrant Shares outstanding at the time such Demand registration is requested.
(i) Holder: A Holder of Registrable Securities.
(j) NASD: National Association of Securities Dealers, Inc.
(k) Net Issuance Exercise Date: See Section 2.2.
(l) Net Issuance Right: See Section 2.3.
(m) Net Issuance Warrant Shares: See Section 2.3.
(n) Person: An individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or agency
thereof.
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(o) Piggyback Registration: See Section 6.1.
(p) Prospectus: Any prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and all other amendments and supplements
to the Prospectus, including post-effective amendments and all materials
incorporated by reference in such Prospectus.
(q) Public Offering: A public offering of any of the Company's
equity or debt securities pursuant to a Registration Statement under the
Securities Act.
(r) Registration Expenses: Any and all expenses incurred in
connection with any registration or action incident to performance of or
compliance by the Company with Article 6, including, without limitation, (i) all
SEC, national securities exchange and NASD registration and filing fees; all
listing fees and all transfer agent fees; (ii) all fees and expenses of
complying with state securities or blue sky laws (including the fees and
disbursements of counsel of the underwriters in connection with blue sky
qualifications of the Registrable Securities); (iii) all printing, mailing,
messenger and delivery expenses; (iv) all fees and disbursements of counsel for
the Company and of its accountants, including the expenses of any special audits
and/or "cold comfort" letters (provided that the Company shall not be required
to incur expenses in respect of such special audits or "cold comfort" letters in
excess of $15,000) required by or incident to such performance and compliance;
and (v) any disbursements of underwriters customarily paid by issuers or sellers
of securities including the reasonable fees and expenses of any special experts
retained by the underwriters in connection with the requested registration, but
excluding underwriting discounts and commissions, brokerage fees and transfer
taxes, if any, and fees of counsel or accountants retained by the holders of
Registrable Securities to advise them in their capacity as Holders of
Registrable Securities.
(s) Registrable Securities: Any Warrant Shares issued to the
Representative and/or its designees or transferees and/or other securities that
may be or are issued by the Company upon exercise of the Warrants, including
those which may thereafter be issued by the Company in respect of any such
securities by means of any stock splits, stock dividends, recapitalizations,
reclassifications or the like, and as adjusted pursuant to Article 3 hereof;
provided, however, that as to any particular security contained in Registrable
Securities, such securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such Registration Statement; or (ii) they shall
have been sold to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act.
(t) Registration Statement: Any Registration Statement of the
Company filed or to be filed with the SEC which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including all
amendments (including post-effective amendments) and supplements thereto, all
exhibits thereto and all material incorporated therein by reference.
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(u) SEC: The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.
(v) Securities Act: The Securities Act of 1933, as amended.
(w) Warrantholder: The person(s) or entity(ies) to whom this Warrant
is originally issued, or any successor in interest thereto, or any assignee or
transferee thereof, in whose name this Warrant is registered upon the books to
be maintained by the Company for that purpose.
(x) Warrants: This Warrant, all other warrants issued on the date
hereof and all other warrants that may be issued in its or their place (together
evidencing the right to purchase an aggregate of up to 100,000 shares of Common
Stock), originally issued as set forth in the definition of Registrable
Securities.
(y) Warrant Shares: Common Stock, Common Stock Equivalents and other
securities purchased or purchasable upon exercise or conversion of the Warrants.
ARTICLE 2
DURATION AND EXERCISE OF WARRANT
2.1 Duration of Warrant
The Warrantholder may exercise this Warrant at any time and from
time to time after 9:00 a.m., New York time, on November __, 1998 and before
5:00 p.m., New York time, on the Expiration Date (which is the date five years
after the effective date of the Offering). If this Warrant is not exercised on
the Expiration Date, it shall become void, and all rights hereunder shall
thereupon cease.
2.2 Method of Exercise
(a) The Warrantholder may exercise this Warrant, in whole or in
part, by presentation and surrender of this Warrant to the Company at its
corporate office at 0000 XXXXX Xxxx Xxxx, Xxxx Xxxx Xxxx, Xxxx 00000 or at the
office of its stock transfer agent, if any, with the Exercise Form annexed
hereto duly executed and, in the event of an exercise for cash pursuant to
Section 2.3(a), accompanied by payment of the full Exercise Price for each
Warrant Share to be purchased.
(b) Upon receipt of this Warrant with the Exercise Form fully
executed and, in the event of an exercise for cash pursuant to Section 2.3(a),
accompanied by payment of the aggregate Exercise Price for the Warrant Shares
for which this Warrant is then being exercised, the Company shall cause to be
issued certificates for the total number of whole shares of Common Stock
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for which this Warrant is being exercised (adjusted to reflect the effect of the
anti-dilution provisions contained in Article 3 hereof, if any, and as provided
in Section 2.5 hereof) in such denominations as are requested for delivery to
the Warrantholder, and the Company shall thereupon deliver such certificates to
the Warrantholder. A net issuance exercise pursuant to Section 2.3(b) shall be
effective upon receipt by the Company of this Warrant together with the
aforesaid written statement, or on such later date as is specified therein (the
"Net Issuance Exercise Date"), and, at the election of the Holder hereof may be
made contingent upon the closing of the sale of the Warrant Shares in a Public
Offering. The Warrantholder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise as of the time of receipt of
the Exercise Form and payment in accordance with the preceding sentence, in the
case of an exercise for cash pursuant to Section 2.3(a), or as of the Net
Issuance Exercise Date, in the case of a net issuance exercise pursuant to
Section 2.3(b), notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Warrantholder. If at the time
this Warrant is exercised, a Registration Statement is not in effect to register
under the Securities Act the Warrant Shares issuable upon exercise of this
Warrant, the Company may, in the case of an exercise for cash pursuant to
Section 2.3(a) or in the case of a net issuance exercise prior to the
satisfaction of any holding period required by Rule 144 promulgated under the
Securities Act require the Warrantholder to make such representations, and may
place such legends on certificates representing the Warrant Shares, as may be
reasonably required in the opinion of counsel to the Company to permit Warrant
Shares to be issued without such registration.
(c) In case the Warrantholder shall exercise this Warrant with
respect to less than all of the Warrant Shares that may be purchased under this
Warrant, the Company shall execute as of the exercise date (or, if later, the
Net Issuance Exercise Date) a new warrant in the form of this Warrant for the
balance of such Warrant Shares and deliver such new warrant to the Warrantholder
within 30 days following the exercise date (or, if later, the Net Issuance
Exercise Date).
(d) The Company shall pay any and all stock transfer and similar
taxes which may be payable in respect of the issuance of any Warrant Shares.
2.3 Exercise of Warrant
(a) Right to Exercise for Cash. This Warrant may be exercised by the
Holder by delivery of payment to the Company, for the account of the Company, by
cash, by certified or bank cashier's check or by wire transfer, of the Exercise
Price for the number of Warrant Shares specified in the Exercise Form in lawful
money of the United States of America.
(b) Right to Exercise on a Net Issuance Basis. In lieu of exercising
this Warrant for cash pursuant to Section 2.3(a), the Holder shall have the
right to exercise this Warrant or any portion thereof (the "Net Issuance Right")
into shares of Common Stock as provided in this Section 2.3(b) at any time or
from time to time during the period specified in Section 2.1 hereof by the
surrender of this Warrant to the Company, with a duly executed and completed
Exercise Form
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30
marked to reflect net issuance exercise. Upon exercise of the Net Issuance Right
with respect to a particular number of shares subject to this Warrant and noted
on the Exercise Form (the "Net Issuance Warrant Shares"), the Company shall
deliver to the Holder (without payment by the Holder of any Exercise Price or
any cash or other consideration) (X) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing the value
of this Warrant (or the specified portion hereof) on the Net Issuance Exercise
Date, which value shall be determined by subtracting (A) the aggregate Exercise
Price of the Net Issuance Warrant Shares immediately prior to the exercise of
the Net Issuance Right from (B) the aggregate fair market value of the Net
Issuance Warrant Shares issuable upon exercise of this Warrant (or the specified
portion hereof) on the Net Issuance Exercise Date (as herein defined) by (Y) the
fair market value of one share of Common Stock on the Net Issuance Exercise Date
(as herein defined).
Expressed as a formula such net issuance exercise shall be computed as
follows:
X = B-A
---
Y
Where: X = the number of shares of Common Stock that may be issued
to the Holder
Y = the fair market value (FMV) of one share of
Common Stock as of the Net Issuance Exercise Date
A = the aggregate Exercise Price (i.e., Net Issuance Warrant
Shares x Exercise Price)
B = the aggregate FMV (i.e., FMV x Net Issuance Warrant
Shares)
(c) Determination of Fair Market Value. For purposes of this Section
2.3, "fair market value" of a share of Common Stock as of the Net Issuance
Exercise Date shall mean:
(i) If the Net Issuance Right is exercised in connection
with a Public Offering, and if the Company's Registration Statement relating to
such Public Offering has been declared effective by the SEC, then the initial
"Price to Public" specified in the final Prospectus with respect to such
offering.
(ii) If the Net Issuance Right is not exercised in
connection with and contingent upon a Public Offering, then as follows:
(A) If the Common Stock is traded on a securities
exchange, the fair market value of a share of the Common Stock shall be deemed
to be the average of the closing
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prices of the Common Stock on such exchange over the 20 consecutive trading days
ending five business days prior to the Net Issuance Exercise Date;
(B) If the Common Stock is traded on the Nasdaq National
Market or the Nasdaq SmallCap Market, the fair market value of a share of the
Common Stock shall be deemed to be the average of the last reported sales prices
of the Common Stock on such Market over the 30-day period ending five business
days prior to the Net Issuance Exercise Date;
(C) If the Common Stock is traded over-the-counter other
than on the Nasdaq National Market or the Nasdaq SmallCap Market, the fair
market value of a share of the Common Stock shall be deemed to be the average of
the closing bid prices of the Common Stock over the 30-day period ending five
business days prior to the Net Issuance Exercise Date; and
(D) If there is no public market for the Common Stock,
then the fair market value of a share of the Common Stock shall be determined by
mutual agreement of the Warrantholder and the Company, and if the Warrantholder
and the Company are unable to so agree, at the Company's sole expense, by an
investment banker of national reputation selected by the Company and reasonably
acceptable to the Warrantholder.
2.4 Reservation of Shares
The Company hereby agrees that at all times there shall be reserved
for issuance and delivery upon exercise of this Warrant such number of shares of
Common Stock or other shares of capital stock of the Company from time to time
issuable upon exercise of this Warrant. All such shares shall be duly
authorized, and when issued upon such exercise, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale (except as contemplated
by Sections 2.2(b) and 5.2) and free and clear of all preemptive rights.
2.5 Fractional Shares
The Company shall not be required to issue any fraction of a share
of its capital stock in connection with the exercise of this Warrant, and in any
case where the Warrantholder would, except for the provisions of this Section
2.5, be entitled under the terms of this Warrant to receive a fraction of a
share upon the exercise of this Warrant, the Company shall, upon the exercise of
this Warrant, pay to the Warrantholder an amount in cash equal to the fair
market value of such fractional share as of the exercise date (or, if applicable
and a later date, the Net Issuance Exercise Date).
2.6 Listing
Prior to the issuance of any shares of Common Stock upon exercise of
this Warrant, the Company shall secure the listing of such shares of Common
Stock upon each national securities exchange or automated quotation system, if
any, upon which shares of Common Stock are then listed
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(subject to official notice of issuance upon exercise of this Warrant) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock from time to time issuable upon the
exercise of this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, and shall maintain such
listing of, any other shares of capital stock of the Company issuable upon the
exercise of this Warrant if and so long as any shares of the same class shall be
listed on such national securities exchange or automated quotation system.
ARTICLE 3
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article 3.
3.1 Mechanical Adjustments
(a) If at any time prior to the exercise of this Warrant in full,
the Company shall (i) declare a dividend or make a distribution on the Common
Stock payable in shares of its capital stock (whether shares of Common Stock or
of capital stock of any other class); (ii) subdivide, reclassify or recapitalize
its outstanding Common Stock into a greater number of shares; (iii) combine,
reclassify or recapitalize its outstanding Common Stock into a smaller number of
shares; or (iv) issue any shares of its capital stock by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or a merger in which the Company is the continuing corporation),
the number of Warrant Shares issuable upon exercise of the Warrant and/or the
Exercise Price in effect at the time of the record date of such dividend,
distribution, subdivision, combination, reclassification or recapitalization
shall be adjusted so that the Warrantholder shall be entitled to receive the
aggregate number and kind of shares which, if this Warrant had been exercised in
full immediately prior to such event, the Warrantholder would have owned upon
such exercise and had been entitled to receive by virtue of such dividend,
distribution, subdivision, combination, reclassification or recapitalization.
Any adjustment required by this Section 3.1(a) shall be made successively
immediately after the record date, in the case of a dividend or distribution, or
the effective date, in the case of a subdivision, combination, reclassification
or recapitalization, to allow the purchase of such aggregate number and kind of
shares.
(b) If at any time prior to the exercise of this Warrant in full,
the Company shall fix a record date for the issuance or making of a distribution
to all holders of the Common Stock (including any such distribution to be made
in connection with a consolidation or merger in which the Company is to be the
continuing corporation) of evidences of its indebtedness, any other securities
of the company or any cash, property or other assets (excluding a combination,
reclassification or recapitalization referred to in Section 3.1(a), regular cash
dividends or cash
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distributions paid out of net profits legally available therefor and in the
ordinary course of business or subscription rights, options or warrants for
Common Stock or Common Stock Equivalents (excluding those referred to in Section
3.1(b)) (any such nonexcluded event being herein called a "Special Dividend"),
the Exercise Price shall be decreased immediately after the record date for such
Special Dividend to a price determined by multiplying the Exercise Price then in
effect by a fraction, the numerator of which shall be the then current market
price of the Common Stock (as defined in Section 3.1(e)) on such record date
less the fair market value (as determined by the Company's Board of Directors)
of the evidences of indebtedness, securities or property, or other assets issued
or distributed in such Special Dividend applicable to one share of Common Stock
or of such subscription rights or warrants applicable to one share of Common
Stock and the denominator of which shall be such then current market price per
share of Common Stock (as so determined). Any adjustments required by this
Section 3.1 (b) shall be made successively whenever such a record date is fixed
and in the event that such distribution is not so made, the Exercise Price shall
again be adjusted to be the Exercise Price that was in effect immediately prior
to such record date.
(c) If at any time prior to the exercise of this Warrant in full,
the Company shall make a distribution to all holders of the Common Stock of
stock of a subsidiary or securities convertible into or exercisable for such
stock, then in lieu of an adjustment in the Exercise Price or the number of
Warrant Shares purchasable upon the exercise of this Warrant, each
Warrantholder, upon the exercise hereof at any time after such distribution,
shall be entitled to receive from the Company, such subsidiary or both, as the
Company shall determine, the stock or other securities to which such
Warrantholder would have been entitled if such Warrantholder had exercised this
Warrant immediately prior thereto, all subject to further adjustment as provided
in this Article 3, and the Company shall reserve, for the life of the Warrant,
such securities of such subsidiary, or other corporation; provided, however,
that no adjustment in respect of dividends or interest on such stock or other
securities shall be made during the term of this Warrant or upon its exercise.
(d) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to paragraph (b) of this Section 3.1, the Warrant
Shares shall simultaneously be adjusted by multiplying the number of Warrant
Shares then issuable upon exercise of each Warrant by the Exercise Price in
effect on the date thereof and dividing the product so obtained by the Exercise
Price, as adjusted.
(e) For the purpose of any computation under this Section 3.1, the
current market price per share of Common Stock at any date shall be deemed to be
the average of the daily closing prices for 20 consecutive trading days
commencing 30 trading days before such date. The closing price for each day
shall be the last sale price regular way or, in case no such reported sales take
place on such day, the average of the last reported bid and asked prices regular
way, in either case on the principal national securities exchange on which the
Common Stock is admitted to trading or listed, or if not listed or admitted to
trading on such exchange, the representative closing bid price as reported by
Nasdaq, or other similar organization if Nasdaq is no longer reporting such
information, or if not so available, the fair market price as determined in good
faith by the Board of Directors of the Company.
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34
(f) No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least five cents
($.05) in such price; provided, however, that any adjustments which by reason of
this paragraph (f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 3.1 shall be made to the nearest cent or to the nearest one-hundredth of
a share, as the case may be. Notwithstanding anything in this Section 3.1 to the
contrary, the Exercise Price shall not be reduced to less than the then existing
par value of the Common Stock as a result of any adjustment made hereunder.
(g) In the event that at any time, as a result of any adjustment
made pursuant to Section 3.1(a), the Warrantholder thereafter shall become
entitled to receive any shares of the Company other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Section 3.1(a) or this Section 3.1(g).
3.2 Notices of Adjustment
Whenever the number of Warrant Shares or the Exercise Price is
adjusted as herein provided, the Company shall prepare and deliver forthwith to
the Warrantholder a certificate signed by its President, and by any Vice
President, Treasurer or Secretary, setting forth the adjusted number of shares
purchasable upon the exercise of this Warrant and the Exercise Price of such
shares after such adjustment setting forth a brief statement of the facts
requiring such adjustment, and setting forth the computation by which such
adjustment was made.
3.3 No Adjustment for Dividends
Except as provided in Section 3.1 of this Agreement, no adjustment
in respect of any cash dividends shall be made during the term of this Warrant
or upon the exercise of this Warrant.
3.4 Preservation of Purchase Rights in Certain Transactions
In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock (other than a subdivision or
combination of the outstanding Common Stock and other than a change in the par
value of the Common Stock) or in case of any consolidation or merger of the
Company with or into another corporation (other than merger with a subsidiary in
which the Company is the continuing corporation and that does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in the
case of any sale, lease, transfer or conveyance to another corporation of the
property and assets of the Company as an entirety or substantially as an
entirety, the Company may, as a condition precedent to such transaction cause
such successor or purchasing corporation, as the case may be, to execute with
the Warrantholder an agreement granting the Warrantholder the right thereafter,
upon payment of the Exercise Price in effect immediately prior
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to such action, to receive upon exercise of this Warrant the kind and amount of
shares and other securities and property which he would have owned or have been
entitled to receive after the happening of such reclassification, change,
consolidation, merger, sale, or conveyance had this Warrant been exercised
immediately prior to such action. In the event that in connection with any such
reclassification, capital reorganization, change, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for, or of, a security
of the Company other than Common Stock, any such issue shall be treated as an
issue of Common Stock covered by the provisions of Article 3. The provisions of
this Section 3.4 shall similarly apply to successive reclassifications, capital
reorganizations, consolidations, mergers, sales or conveyances.
3.5 Form of Warrant After Adjustments
The form of this Warrant need not be changed because of any
adjustments in the Exercise Price or the number or kind of the Warrant Shares,
and Warrants theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in this Warrant, as initially
issued.
3.6 Treatment of Warrantholder
Prior to due presentment for registration of transfer of this
Warrant, the Company may deem and treat the Warrantholder as the absolute owner
of this Warrant (notwithstanding any notation of ownership or other writing
hereon) for all purposes and shall not be affected by any notice to the
contrary.
ARTICLE 4
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
4.1 No Rights as Shareholders; Notice to Warrantholders
Nothing contained in this Warrant shall be construed as conferring
upon the Warrantholder or his or its transferees the right to vote or to receive
dividends or to consent or to receive notice as a shareholder in respect of any
meeting of shareholders for the election of directors of the Company or of any
other matter, or any rights whatsoever as shareholders of the Company. The
Company shall give notice to the Warrantholder by registered mail if at any time
prior to the expiration or exercise in full of the Warrants, any of the
following events shall occur:
(a) the Company shall authorize the payment of any dividend payable
in any securities upon shares of Common Stock or authorize the making of any
distribution (other than a cash dividend excluded from the definition of
"Special Dividend" by the second parenthetical comment set forth in Section
3.1(b)) to all holders of Common Stock;
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(b) the Company shall authorize the issuance to all holders of
Common Stock of any additional shares of Common Stock or Common Stock
Equivalents or of rights, options or warrants to subscribe for or purchase
Common Stock or Common Stock Equivalents or of any other subscription rights,
options or warrants;
(c) a dissolution, liquidation or winding up of the Company shall be
proposed; or
(d) a capital reorganization or reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock and
other than a change in the par value of the Common Stock) or any consolidation
or merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or change of Common Stock
outstanding) or in the case of any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an entirety.
Such giving of notice shall be initiated (i) at least 10 Business Days
prior to the date fixed as a record date or effective date or the date of
closing of the Company's stock transfer books for the determination of the
shareholders entitled to such dividend, distribution or subscription rights, or
for the determination of the shareholders entitled to vote on such proposed
merger, consolidation, sale, conveyance, dissolution, liquidation or winding up.
Such notice shall specify such record date or the date of closing the stock
transfer books, as the case may be. Failure to provide such notice shall not
affect the validity of any action taken in connection with such dividend,
distribution or subscription rights, or proposed merger, consolidation, sale,
conveyance, dissolution, liquidation or winding up.
4.2 Lost, Stolen, Mutilated or Destroyed Warrants
If this Warrant is lost, stolen, mutilated or destroyed, the Company
may, on such terms as to indemnity or otherwise as it may in its reasonable
judgment impose (which shall, in the case of a mutilated Warrant, including the
surrender thereof), issue a new Warrant of like denomination and tenor as, and
in substitution for, this Warrant.
ARTICLE 5
SPLIT-UP, COMBINATION, EXCHANGE AND
TRANSFER OF WARRANTS AND WARRANTY SHARES
5.1 Split-Up, Combination and Exchange of Warrants
This Warrant may be split-up, combined or exchanged for another
Warrant or Warrants containing the same terms to purchase a like aggregate
number of Warrant Shares. If the Warrantholder desires to split-up, combine or
exchange this Warrant, he or it shall make such request
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in writing delivered to the Company and shall surrender to the Company this
Warrant and any other Warrants to be so split-up, combined or exchanged. Upon
any such surrender for a split-up, combination or exchange, the Company shall
execute and deliver to the person entitled thereto a Warrant or Warrants, as the
case may be, as so requested. The Company shall not be required to effect any
split-up, combination or exchange which will result in the issuance of a Warrant
entitling the Warrantholder to purchase upon exercise a fraction of a share of
Common Stock or a fractional Warrant. The Company may require such Warrantholder
to pay a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any split-up, combination or exchange of Warrants.
5.2 Restrictions on Transfer, Restrictive Legends
Except for transfers of a Warrant by operation of law or by reason
of the reorganization of the issuer, no Warrant may be sold, transferred,
assigned or hypothecated prior to November ____, 1998 (which is the date one
year after the effective date of the Offering), other than Warrants transferred
to an underwriter or dealer participating in the Offering or to an officer or
partner of such a participant. Each Warrant (and each Warrant issued upon direct
or indirect transfer of or in substitution for any Warrant) issued prior to
November ___, 1998, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
OF THIS WARRANT PRIOR TO NOVEMBER ____, 1998 IS
RESTRICTED."
In addition, except as otherwise permitted by this Section 5.2, each
Warrant shall (and each Warrant issued upon direct or indirect transfer or in
substitution for any Warrant issued pursuant to Section 5.1 shall) be stamped or
otherwise imprinted with a legend in substantially the following form:
"THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT."
Except as otherwise permitted by this Section 5.2, each stock certificate
for Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
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REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT."
Notwithstanding the foregoing, the Warrantholder may require the Company
to issue a Warrant or a stock certificate for Warrant Shares, in each case
without a legend, if the issuance of such Warrant is not in contravention of the
initial sentence of this Section 5.2 and (i) the issuance of such Warrant Shares
has been registered under the Securities Act, (ii) such Warrant or such Warrant
Shares, as the case may be, have been registered for resale under the Securities
Act or sold pursuant to Rule 144 under the Securities Act (or a successor
thereto) or (iii) the Warrantholder has received an opinion of counsel (who may
be house counsel for such Warrantholder) reasonably satisfactory to the Company
that such registration is not required with respect to such Warrant or such
Warrant Shares, as the case may be.
ARTICLE 6
REGISTRATION UNDER THE SECURITIES ACT OF 1933
6.1 Piggyback Registration
(a) Right to include Registrable Securities. If at any time or from
time to time prior to the second anniversary of the Expiration Date (which is
the date seven years after the effective date of the Offering), the Company
proposes to register any of its securities under the Securities Act on any form
for the registration of securities under such Act, whether or not for its own
account (other than by a registration statement on Form S-8 or other form which
does not include substantially the same information as would be required in a
form for the general registration of securities or would not be available for
the Registrable Securities) (a "Piggyback Registration"), it shall as
expeditiously as possible give written notice to all Holders of its intention to
do so and of such Holders' rights under this Section 6.1. Such rights are
referred to hereinafter as "Piggyback Registration Rights." Upon the written
request of any such Holder made within 20 days after receipt of any such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such Holder), the Company shall include in the Registration Statement the
Registrable Securities which the Company has been so requested to register by
the Holders thereof and the Company shall keep such registration statement in
effect and maintain compliance with each federal and state law or regulation for
the period necessary for such Holder to effect the proposed sale or other
disposition (but in no event for a period greater than 90 days).
(b) Withdrawal of Piggyback Registration by Company. If, at any time
after giving written notice of its intention to register any securities in a
Piggyback Registration but prior to the effective date of the related
Registration Statement, the Company shall determine for any reason not to
register such securities, the Company shall give notice of such determination to
each Holder and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such Piggyback Registration. All best
efforts obligations of the Company pursuant
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to Section 6.4 shall cease if the Company determines to terminate prior to such
effective date any registration where Registrable Securities are being
registered pursuant to this Section 6.1.
(c) Piggyback Registration of Underwritten Public Offering. If a
Piggyback Registration involves an offering by or through underwriters, then (i)
all Holders requesting to have their Registrable Securities included in the
Company's Registration Statement must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and conditions as apply
to other selling shareholders and (ii) any Holder requesting to have his or its
Registrable Securities included in such Registration Statement may elect in
writing, not later than three Business Days prior to the effectiveness of the
Registration Statement filed in connection with such registration, not to have
his or its Registrable Securities so included in connection with such
registration.
(d) Payment of Registration Expenses for Piggyback Registration. The
Company shall pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to a Piggyback Registration Right
contained in this Section 6. 1.
(e) Priority in Piggyback Registration. If a Piggyback Registration
involves an offering by or through underwriters, the Company, except as
otherwise provided herein, shall not be required to include Registrable Shares
therein if and to the extent the underwriter managing the offering reasonably
believes in good faith and advises each Holder requesting to have Registrable
Securities included in the Company's Registration Statement that such inclusion
would materially adversely affect such offering; provided that (i) if other
selling shareholders without contractual registration rights have requested
registration of securities in the proposed offering, the Company will reduce or
eliminate such securities held by selling shareholders without registration
rights before any reduction or elimination of Registrable Securities; and (ii)
any such reduction or elimination (after taking into account the effect of
clause (i)) shall be pro rata to all other selling shareholders with contractual
registration rights.
6.2 Demand Registration
(a) Request for Registration. If, at any time prior to the
Expiration Date (which is the date five years after the effective date of the
Offering), any 25% Holders request that the Company file a registration
statement under the Securities Act, as soon as practicable thereafter the
Company shall use its best efforts to file a registration statement with respect
to all Warrant Shares that it has been so requested to include and to obtain the
effectiveness thereof, and shall take all other action necessary under federal
or state law or regulation to permit the Warrant Shares that are held and/or
that may be acquired upon the exercise of the Warrants specified in the notices
of the Holders or holders hereof to be sold or otherwise disposed of, and the
Company shall maintain such compliance with each such federal and state law and
regulation for the period necessary for such Holders or holders to effect the
proposed sale or other disposition; provided, however, the Company shall be
entitled to defer such registration for a period of up to 60 days if and to the
extent that its Board of Directors shall determine that such registration would
interfere with a pending corporate
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transaction. The Company shall also promptly give written notice to the Holders
and the holders of any other Warrants and/or the holders of any Warrant Shares
who or that have not made a request to the Company pursuant to the provisions of
this Section 6.2(a) of its intention to effect any required registration or
qualification, and shall use its best efforts to effect as expeditiously as
possible such registration or qualification of all such other Warrant Shares
that are then held and/or that may be acquired upon the exercise of the
Warrants, the Holder or holders of which have requested such registration or
qualification, within 15 days after such notice has been given by the Company,
as provided in the preceding sentence. The Company shall be required to effect a
registration or qualification pursuant to this Section 6.2(a) on one occasion
only.
(b) Payment of Registration Expenses for Demand Registration. The
Company shall pay all Registration Expenses in connection with the Demand
Registration.
(c) Selection of Underwriters. If any Demand Registration is
requested to be in the form of an underwritten offering, the managing
underwriters shall be Wedbush Xxxxxx Securities and __________ and the other
co-manager (if any) and the independent price required under the rules of the
NASD (if any) shall be selected and obtained by the Holders of a majority of the
Warrant Shares to be registered. Such selection shall be subject to the
Company's consent, which consent shall not be unreasonably withheld. All fees
and expenses (other than Registration Expenses otherwise required to be paid) of
any managing underwriter, any co-manager or any independent underwriter or other
independent price required under the rules of the NASD shall be paid for by such
underwriters or by the Holders or holders whose shares are being registered. If
Wedbush Xxxxxx Securities and __________ should decline to serve as managing
underwriter, the Holders of a majority of the Warrant Shares to be registered
may select and obtain one or more managing underwriters. Such selection shall be
subject to the Company's consent, which shall not be unreasonably withheld.
(d) Procedure for Requesting Demand Registration. Any request for a
Demand Registration shall specify the aggregate number of Registrable Securities
proposed to be sold and the intended method of disposition. Within 10 days after
receipt of such a request the Company will give written notice of such
registration request to all Holders and, subject to the limitations of Section
6.2(b), the Company will include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within 15 Business Days after the date on which such notice is given.
Each such request shall also specify the aggregate number of Registrable
Securities to be registered and the intended method of disposition thereof.
6.3 Buy-Outs of Registration Demand.
In lieu of carrying out its obligations to effect a Piggyback
Registration or Demand Registration of any Registrable Securities pursuant to
this Article 6, the Company may carry out such obligation by offering to
purchase and purchasing such Registrable Securities requested to be registered
in an amount in cash equal to the difference between (a) 95% of the last sale
price of the Common Stock on the day the request for registration is made and
(b) the Exercise Price in effect
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on such day; provided, however, that the Holder or Holders may withdraw such
request for registration rather than accept such offer by the Company.
6.4 Registration Procedures.
If and whenever the Company is required to use its best efforts to
take action pursuant to any Federal or state law or regulation to permit the
sale or other disposition of any Registrable Securities that are then held or
that may be acquired upon exercise of the Warrants in order to effect or cause
the registration of any Registrable Securities under the Securities Act as
provided in this Article 6, the Company shall, as expeditiously as practicable:
(a) prepare and file with the SEC, as soon as practicable within 90
days after the end of the period within which requests for registration may be
given to the Company (but subject to the provisions for deferral contained in
Section 6.2(a) hereof) a Registration Statement or Registration Statements
relating to the registration on any appropriate form under the Securities Act,
which form shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof, subject
to Section 6.1(d) hereof, and use its best efforts to cause such Registration
Statements to become effective; provided that before filing a Registration
Statement or Prospectus or any amendment or supplements thereto, including
documents incorporated by reference after the initial filing of any Registration
Statement, the Company will furnish to the Holders of the Registrable Securities
covered by such Registration Statements and the underwriters, if any, copies of
all such documents proposed to be filed, which documents will be subject to the
review of such Holders and underwriters;
(b) prepare and file with the SEC such amendments and post-effective
amendments to a Registration Statement as may be necessary to keep such
Registration Statement effective for a reasonable period not to exceed 180 days;
cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement or
supplement to such Prospectus;
(c) notify the selling Holders of Registrable Securities and the
managing underwriters, if any, promptly and (if requested by any such Person)
confirm such advice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related Prospectus or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose; (iv) if at any time any of the representations and warranties of the
Company contemplated by paragraph (m) below ceases to be true and correct in all
material respects; (v) of the receipt by the Company of any notification with
respect to the suspension of the
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qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purposes; and (vi)
of the happening of any event that makes any statement of a material fact made
in the Registration Statement, the Prospectus or any document incorporated
therein by reference untrue or which requires the making of any changes in the
Registration Statement or Prospectus so that they will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(e) if reasonably requested by the managing underwriters,
immediately incorporate in a Prospectus supplement or post-effective amendment
such information as the managing underwriters believe (on advice of counsel)
should be included therein as required by applicable law relating to such sale
of Registrable Securities, including, without limitation, information with
respect to the purchase price being paid for the Registrable Securities by such
underwriters and with respect to any other terms of the underwritten (or "best
efforts" underwritten) offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(f) furnish to each selling Holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment therein, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(g) deliver to each selling Holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each preliminary Prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; the Company consents
to the use of such Prospectus or any amendment or supplement thereto by each of
the selling Holders of Registrable Securities and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities,
cooperate with the selling Holders of Registrable Securities, the underwriters,
if any, and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder or underwriter reasonably requests in writing, keep each such
registration or qualification effective during the period such Registration
Statement is required to be kept effective and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the applicable Registration Statement,
provided that the Company will not be required to qualify to do business in any
jurisdiction where it is not then so
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qualified or to take any action which would subject the Company to general
service of process in any jurisdiction where it is not at the time so subject;
(i) cooperate with the selling Holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not bearing
any restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two Business Days prior to any sale of Registrable Securities
to the underwriters;
(j) use its best efforts to cause the Registrable Securities covered by
the applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities within the United States as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Registrable Securities;
(k) upon the occurrence of any event contemplated by Section 6.4(c)(vi)
above, prepare a post-effective amendment or supplement to the applicable
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
such Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading;
(l) with respect to each issue or class of Registrable Securities, use its
best efforts to cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange or automated quotation
system, if any, on which similar securities issued by the Company are then
listed if requested by the Holders of a majority of such issue or class of
Registrable Securities;
(m) enter into such agreements (including any underwriting agreement) and
take all such other action reasonably required in connection therewith in order
to expedite or facilitate the disposition of such Registrable Securities and in
such connection, if the registration is in connection with an underwritten
offering (i) make such representations and warranties to the underwriters in
such form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions shall be in form, scope and substance reasonably
satisfactory to the underwriters) addressed to the underwriters covering the
matters customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such underwriters; (iii)
obtain "cold comfort" letters and updates thereof from the Company's accountants
addressed to the underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters by
underwriters in connection with underwritten offerings; (iv) set forth in full
in any underwriting agreement entered into the indemnification provisions and
procedures of Section 6.5 hereof with respect to all parties to be indemnified
pursuant to said Section; and (v) deliver such documents and certificates as may
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be reasonably requested by the underwriters to evidence compliance with clause
(i) above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company; the above shall be
done at each closing under such underwriting or similar agreement as and to the
extent required hereunder;
(n) make available for inspection by one or more representatives of the
Holders of Registrable Securities being sold, any underwriter participating in
any disposition pursuant to such registration, and any attorney or accountant
retained by such Holders or underwriter, all financial and other record,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such representatives, in connection with such; and
(o) otherwise use its best efforts to comply with all applicable Federal
and state regulations; and take such other action as may be reasonably necessary
or advisable to enable each such Holder and each such underwriter to consummate
the sale or disposition in such jurisdiction or jurisdictions in which any such
Holder or underwriter shall have requested that the Registrable Securities be
sold.
Except as otherwise provided in this Agreement, the Company shall have
sole control in connection with the preparation, filing, withdrawal, amendment
or supplementing of each Registration Statement, the selection of underwriters,
and the distribution of any preliminary prospectus included in the Registration
Statement, and may include within the coverage thereof additional shares of
Common Stock or other securities for its own account or for the account of one
or more of its other security holders.
The Company may require each Seller of Registrable Securities as to which
any registration is being effected to furnish to the Company such information
regarding the distribution of such securities and such other information as may
otherwise be required by the Securities Act to be included in such Registration
Statement.
6.5 Indemnification.
(a) Indemnification by Company. In connection with each Registration
Statement relating to the disposition of Registrable Securities, the Company
shall indemnify and hold harmless each Holder and each underwriter of
Registrable Securities and each Person, if any, who controls such Holder or
underwriter (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation, legal and
other expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they, or any
of them, may become subject under the Securities Act, the Exchange Act or other
federal or state law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus or
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45
any amendment thereof or supplement thereto, or arise out of or are based upon
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;
provided, however, that such indemnity shall not inure to the benefit of any
Holder or underwriter (or any person controlling such Holder or underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) on account of any losses, claims, damages or liabilities arising
from the sale of the Registrable Securities if such untrue statement or omission
or alleged untrue statement or omission was made in such Registration Statement,
Prospectus or preliminary prospectus or such amendment or supplement, in
reliance upon and in conformity with information furnished in writing to the
Company by such Holder or underwriter specifically for use therein. The Company
shall also indemnify selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, their officers and
directors and each Person who controls such Persons (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of the Holders of
Registrable Securities, if requested. This indemnity agreement shall be in
addition to any liability which the Company may otherwise have.
(b) Indemnification by Holder. In connection with each Registration
Statement, each Holder shall indemnify, to the same extent as the
indemnification provided by the Company in Section 6.5(a), the Company, its
directors and each officer who signs the Registration Statement and each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act) but only insofar as such losses, claims,
damages and liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in the
Registration Statement, the Prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
information furnished in writing by such Holder to the Company specifically for
use therein. In no event shall the liability of any selling Holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. The Company shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above, with respect to information
so furnished in writing by such Persons specifically for inclusion in any
Registration Statement, Prospectus or preliminary prospectus or any amendment
thereof or supplement thereto.
(c) Conduct of Indemnification Procedure. Any party that proposes to
assert the right to be indemnified hereunder will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or parties
under this Section, notify each such indemnifying party of the commencement of
such action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 6.5(a) or 6.5(b) shall be available to
any party who shall fail to give notice as provided in this Section 6.5(c) if
the party to whom notice was not given was unaware of the proceeding in which
such notice would have related and was prejudiced by the failure to give such
notice, but the omission so to notify such indemnifying party of any such
action, suit
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46
or proceeding shall not relieve it from any liability that it may have to any
indemnified party for contribution otherwise than under this Section. In case
any such action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying parties,
(ii) the indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
parties shall not have the right to direct the defense of such action on behalf
of the indemnified party) or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a reasonable time
after notice of the commencement thereof, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying parties. An
indemnified party shall not be liable for any settlement of any action, suit,
proceeding or claim effected without its written consent.
(d) Contribution. In connection with each Registration Statement
relating to the disposition of Registrable Securities, if the indemnification
provided for in subsection (a) hereof is unavailable to an indemnified party
thereunder in respect to any losses, claims, damages or liabilities referred to
therein, then the indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 6.5 in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. Relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission.
(e) Underwriting Agreement to Control. Notwithstanding the foregoing
provisions of the Section 6.5, to the extent that the provisions on
indemnification and contribution contained in any underwriting agreement entered
into in connection with the underwritten public offering of the Registrable
Securities are in conflict with the foregoing provisions, the provisions in such
underwriting agreement shall control.
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47
(f) Specific Performance. The Company and the Holder acknowledge
that remedies at law for the enforcement of this Section 6.5 may be inadequate
and intend that this Section 6.5 shall be specifically enforceable.
(g) Survival of Obligations. The obligations of the Company and the
Holder under this Section 6.5 shall survive the completion of any offering of
Registrable Securities pursuant to a Registration Statement under this Article
6, and otherwise.
6.6 Reports Under Securities Exchange Act of 1934.
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Company to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after 90 days after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144 (at any time
after 90 days after the effective date of the first registration statement filed
by the Company), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and (iii) such other reports and information as may be
required pursuant to the provisions of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
ARTICLE 7
OTHER MATTERS
7.1 Binding Effects; Benefits.
This Warrant shall inure to the benefit of and shall be binding upon
the Company and the Warrantholder and their respective heirs, legal
representatives, successors and assigns. Nothing in this Warrant, expressed or
implied, is intended to or shall confer on any person other than the Company and
the Warrantholder or their respective heirs, legal representatives, successors
or assigns, any rights, remedies, obligations or liabilities under or by reason
of this Warrant.
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48
7.2 No Inconsistent Agreements.
The Company will not on or after the date of this Warrant enter into
any agreement with respect to its securities which is inconsistent with the
rights granted to the Holders in this Warrant or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to holders of the
Company's securities under any other agreements.
7.3 Adjustments Affecting Registrable Securities.
The Company will not take any action outside the ordinary course of
business, or permit any change within its control to occur outside the ordinary
course of business, with respect to the Registrable Securities which is without
a bona fide business purpose, and which is intended to interfere with the
ability of the Holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to this Agreement.
7.4 Integration/Entire Agreement.
This Warrant is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Warrants.
This Warrant supersedes all prior agreements and understandings between the
parties with respect to such subject matter (other than warrants previously
issued by the Company to the Warrantholder).
7.5 Amendments and Waivers.
The provisions of this Warrant, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless the Company has
obtained the written consent of holders of at least a majority of the
outstanding Registrable Securities. Holders shall be bound by any consent
authorized by this Section whether or not certificates representing such
Registrable Securities have been marked to indicate such consent.
7.6 Counterparts.
This Warrant may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
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49
7.7 Governing Law.
This Warrant shall be governed by and construed in accordance with
the laws of the State of New York.
7.8 Severability.
In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
7.9 Attorneys' Fees.
In any action or proceeding brought to enforce any provisions of
this Warrant, or where any provision hereof is validly asserted as a defense,
the successful party shall be entitled to recover reasonable attorneys' fees and
disbursements in addition to its costs and expenses and any other available
remedy.
7.10 Computations of Consent.
Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or its affiliates (other than the Warrantholder
or subsequent Holders if they are deemed to be such affiliates solely by reason
of their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
7.11 Notice.
Any notices or certificates by the Company to the Holder and by the
Holder to the Company shall be deemed delivered if in writing and delivered in
person or by registered mail (return receipt requested) to the Holder addressed
to it in care of Wedbush Xxxxxx Securities Inc., 0000 Xxxxxxxx Xxxxxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, or, if the Holder has designated by notice in writing
to the Company, any other address, to each other address and if to the Company,
addressed to it at: 0000 XXXXX Xxxx Xxxx, Xxxx Xxxx Xxxx, Xxxx 00000, Attention:
President, with a copy to Jones, Waldo, Xxxxxxxx & XxXxxxxxx, 1500 Xxxxx Fargo
Plaza, 000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000-0000, Attention: Xxxxxx
X. Xxxxxxx, Esq., or if the Company has designated, by notice in writing to the
Holder, any other address, to such other address.
The Company may change its address by written notice to the Holder and the
Holder may change its address by written notice to the Company.
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50
In Witness Whereof, this Warrant has been duly executed by the Company
under its corporate seal as of the __ day of December, 1997.
ZEVEX INTERNATIONAL, INC.
By:_______________
Title:____________
Attest:___________________
Assistant Secretary
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51
EXERCISE FORM
(To be executed upon exercise of Warrant)
ZEVEX International, Inc.
0000 XXXXX Xxxx Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase Warrant Shares and (check one):
herewith tenders payment for _____ of the Warrant Shares to the order of
_______________ in the amount of $___________ in accordance with the terms
of this Warrant; or
herewith tenders this Warrant for ________ Warrant Shares pursuant to the
net issuance exercise provisions of Section 2.3(b) of this Warrant.
Please issue a certificate or certificates for such Warrant Shares in the
name of, and pay any cash for any fractional share to:
Name_________________
_________________
_________________
_________________
(Please print Name, Address and Social
Security Number)
Signature_______________________________
Note: The above signature should correspond
exactly with the name on the first page of this
Warrant Certificate or with the name of the
assignee appearing in the assignment form below
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder.
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52
ASSIGNMENT
(To be executed only upon assignment of Warrant)
For value received, _______________ hereby sells, assigns and transfers unto
______________ the within Warrant, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_____________________ its attorney, to transfer said Warrant on the books of the
within-named Company with respect to the number of Warrant Shares set forth
below, with full power of substitution in the premises.
Name(s) of No. of
Assignees Address Warrant Shares
--------- ------- --------------
And if said number of Warrant Shares shall not be all the Warrant Shares
represented by the Warrant, a new Warrant is to be issued in the name of said
undersigned for the balance remaining of the Warrant Shares registered by said
Warrant.
Dated: ______________, ___ Signature _______________________________
Note: The above signature should correspond exactly
with the name on the face of this Warrant.
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