Exhibit 1.1
11,000 Units
(each Unit consisting of 190 shares of Class A Common Stock,
no par value, and 95 redeemable Class B Warrants)
PREMIER LASER SYSTEMS, INC.
UNDERWRITING AGREEMENT
X.X. Xxxxx Investment Banking Corp. September ___, 1996
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Premier Laser Systems, Inc., a California corporation (the
"Company"), proposes to issue and sell to X.X. Xxxxx Investment Banking Corp.
(the "Underwriter"), as underwriter pursuant to this Underwriting Agreement
(the "Agreement"), an aggregate of 11,000 Units, each unit being hereinafter
referred to as a "Unit" and consisting of 190 shares of Class A Common Stock,
no par value ("Shares"), and 95 redeemable Class B Warrants (the "Warrants").
Each Warrant is exercisable to purchase one share of Class A Common Stock at
a price of $8.00 from the date of issusance, 1996 to November 30, 1999. The
Warrants are subject to redemption, in certain instances commencing November
30, 1997. In addition, the Company proposes to grant to the Underwriter the
option referred to in Section 2(b) to purchase all or any part of an
aggregate of 1,650 additional Units. Unless the context otherwise indicates,
the term "Units" shall include the 1,650 additional Units referred to above.
The Class A Common Stock of the Company to be outstanding
after giving effect to the sale of the Shares is herein called the "Common
Stock." The Shares and Warrants included in the Units (including the Units
which the Underwriter has the option to purchase) are herein collectively called
the "Securities."
You have advised the Company that you desire to purchase the Units.
The Company confirms the agreements made by it with respect to the purchase of
the Units by you as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Underwriter that:
(a) A registration statement (File No. 333-04219) on Form
SB-2 relating to the public offering of the Units, including a form of
prospectus subject to completion, copies of which have heretofore been
delivered to you, has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with
the Commission under the Act and one or more amendments to such registration
statement may have been so filed. After the execution of this Agreement, the
Company will file with the Commission either (i) if such registration
statement, as it may have been amended, has been declared by the Commission
to be effective under the Act, a prospectus in the form most recently
included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the Act or permitted
by Rule 424(b) under the Act, as have been provided to and approved by you
prior to the execution of this Agreement, or (ii) if such registration
statement, as it may have been amended, has not been declared by the
Commission to be effective under the Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment has been
furnished to and approved by you prior to the execution of this Agreement.
As used in this Agreement, the term "Registration Statement"
means such registration statement, as amended at the time when it was or is
declared effective, including all financial schedules and exhibits thereto
and including any information omitted therefrom pursuant to Rule 430A under
the Act and included in the Prospectus (as hereinafter defined); the term
"Preliminary Prospectus" means each prospectus subject to completion filed
with such registration statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Registration
Statement or any amendment thereto at the time it was or is declared
effective); the term "Prospectus" means (A) the prospectus first filed with
the Commission pursuant to Rule 424(b) under the Act or (B) if no prospectus
is required to be filed pursuant to said Rule 424(b), such term means the
prospectus included in the Registration Statement; except that if such
registration statement or prospectus is amended or such prospectus is
supplemented, after the effective date of such registration statement and
prior to the Option Closing Date (as hereinafter defined), the terms
"Registration Statement" and "Prospectus" shall include such registration
statement and prospectus as so amended, and the term "Prospectus" shall
include the prospectus as so supplemented, or both, as the case may be.
-2-
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. At the time the
Registration Statement becomes effective and at all times subsequent thereto
up to and on the Closing Date (as hereinafter defined) or the Option Closing
Date, as the case may be, (i) the Registration Statement and Prospectus will
in all respects conform to the requirements of the Act and the Rules and
Regulations; and (ii) neither the Registration Statement nor the Prospectus
will include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make 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 in reliance upon, and in conformity
with, written information furnished to the Company by or on behalf of the
Underwriter specifically for use in the preparation thereof. It is
understood that the statements set forth in the Prospectus on page 2 with
respect to stabilization, under the heading "Risk Factors - Possible Adverse
Effects of Liquidity of the Company's Securities Due to the Investigation of
X.X. Xxxxx Corp. and X.X. Xxxxx & Co., Inc. by the Securities and Exchange
Commission," under the heading "Underwriting" and the identity of counsel to
the Underwriter under the heading "Legal Matters" constitute the only
information furnished in writing by or on behalf of the Underwriter for
inclusion in the Registration Statement and Prospectus, as the case may be.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
California, with full power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus and is
duly qualified to do business as a foreign corporation and is in good
standing in all other jurisdictions in which the nature of its business or
the character or location of its properties requires such qualification,
except where failure to so qualify will not materially and adversely affect
the Company's business, properties or financial condition.
(d) The authorized, issued and outstanding capital stock of the
Company as of June 30, 1996 is as set forth in the Prospectus under
"Capitalization"; the shares of issued and outstanding capital stock of the
Company set forth thereunder have been duly authorized, validly issued and are
fully paid and non-assessable; except as set forth in the Prospectus, no
options, warrants, or other rights to purchase, agreements or other obligations
to issue, or agreements or other rights to convert any obligation into, any
shares of capital stock of the Company have been granted or entered into by the
Company; and the capital stock conforms to all statements relating thereto
contained in the Registration Statement and Prospectus.
(e) The Units and the Shares are duly authorized, and when
issued and delivered pursuant to this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights of
any security holder of the Company. Neither the
-3-
filing of the Registration Statement nor the offering or sale of the Units as
contemplated in this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration of any shares
of Common Stock, except as described in the Registration Statement.
The Warrants have been duly authorized and, when issued,
delivered and paid for pursuant to this Agreement, will have been duly
executed, issued and delivered and will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms and
entitled to the benefits provided by the Warrant Agreement dated November 30,
1994, as amended, pursuant to which such Warrants are to be issued (the
"Warrant Agreement"), the amendment to which will be substantially in the
form filed as an exhibit to the Registration Statement. The shares of Common
Stock issuable upon exercise of the Warrants have been reserved for issuance
upon the exercise of the Warrants and when issued in accordance with the
terms of the Warrants and Warrant Agreement, will be duly and validly
authorized, validly issued, fully paid and non-assessable and free of
preemptive rights and no personal liability will attach to the ownership
thereof. The Warrant Agreement has been duly authorized and, when executed
and delivered pursuant to this Agreement, will have been duly executed and
delivered and will constitute the valid and legally binding obligation of the
Company enforceable in accordance with its terms. The Warrants and the
Warrant Agreement conform to the respective descriptions thereof in the
Registration Statement and Prospectus.
The Shares and the Warrants contained in the Unit Purchase
Option have been duly authorized and, when duly issued, delivered and paid
for, such Warrants will constitute valid and legally binding obligations of
the Company enforceable in accordance with their terms and entitled to the
benefits provided by the Unit Purchase Option. The Shares included in the
Unit Purchase Option (and the shares of Common Stock issuable upon exercise
of such Warrants) when issued and sold, will be duly authorized, validly
issued, fully paid and non-assessable and free of preemptive rights and no
personal liability will attach to the ownership thereof.
(f) This Agreement, the Unit Purchase Option and the M/A
Extension Agreement (as defined below) have been duly and validly authorized,
executed and delivered by the Company. The Company has full power and lawful
authority to authorize, issue and sell the Units to be sold by it hereunder
on the terms and conditions set forth herein, and no consent, approval,
authorization or other order of any governmental authority is required in
connection with such authorization, execution and delivery or with the
authorization, issue and sale of the Units or the Unit Purchase Option,
except such as may be required under the Act or state securities laws.
(g) Except as described in the Prospectus and for such
matters as would not have a material adverse effect on the Company's
business, financial condition or results of operations, the Company is not in
violation, breach or default of or under, and consummation of the
transactions herein contemplated and the fulfillment of the terms of this
Agreement will not conflict with, or result in a breach or violation of, any
of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of the Company pursuant to the terms of any indenture,
mortgage, deed of trust, loan
-4-
agreement or other agreement or instrument to which the Company is a party or by
which the Company may be bound or to which any of the property or assets of the
Company is subject, nor will such action result in any violation of the
provisions of the articles of incorporation or the by-laws of the Company, as
amended, or any statute or any order, rule or regulation applicable to the
Company of any court or of any regulatory authority or other governmental body
having jurisdiction over the Company.
(h) Subject to the qualifications stated in the Prospectus, the
Company has good and marketable title to all properties and assets described in
the Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as are not materially significant or
important in relation to its business; all of the material leases and subleases
under which the Company is the lessor or sublessor of properties or assets or
under which the Company holds properties or assets as lessee or sublessee as
described in the Prospectus are in full force and effect, and, except as
described in the Prospectus, the Company is not in default in any material
respect with respect to any of the terms or provisions of any of such leases or
subleases, and no claim has been asserted by anyone adverse to rights of the
Company as lessor, sublessor, lessee or sublessee under any of the leases or
subleases mentioned above, or affecting or questioning the right of the Company
to continued possession of the leased or subleased premises or assets under any
such lease or sublease except as described or referred to in the Prospectus; and
the Company owns or leases all such properties described in the Prospectus as
are necessary to its operations as now conducted and, except as otherwise stated
in the Prospectus, as proposed to be conducted as set forth in the Prospectus.
(i) Price Waterhouse LLP, who have given their reports on
certain financial statements filed and to be filed with the Commission as a part
of the Registration Statement, which are incorporated in the Prospectus, are
with respect to the Company, independent public accountants as required by the
Act and the Rules and Regulations.
(j) The financial statements, together with related notes,
set forth in the Prospectus (or if the Prospectus is not in existence, the
most recent Preliminary Prospectus) or the Registration Statement present
fairly the financial position and results of operations and changes in cash
flow position of the Company on the basis stated in the Registration
Statement, at the respective dates and for the respective periods to which
they apply. Said statements and related notes have been prepared in
accordance with generally accepted accounting principles applied on a basis
which is consistent during the periods involved. The information set forth
under the caption "Selected Financial Data" in the Prospectus fairly
present, on the basis stated in the Prospectus, the information included
therein. The pro forma financial information filed as part of the
Registration Statement or included in the Prospectus (or such preliminary
prospectus) has been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, and includes all
adjustments necessary to present fairly the pro forma financial condition and
results of
-5-
operations at the respective dates and for the respective periods indicated and
all assumptions used in preparing such pro forma financial statements are
reasonable.
(k) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), the
Company has not incurred any liabilities or obligations, direct or
contingent, not in the ordinary course of business, or entered into any
transaction not in the ordinary course of business, which is material to the
business of the Company, and there has not been any change in the capital
stock (other than immaterial changes arising from option exercises) of, or
any incurrence of short-term or long-term debt by, the Company or any
issuance of options, warrants or other rights to purchase the capital stock
of the Company or any adverse change or any development involving, so far as
the Company can now reasonably foresee a prospective adverse change in the
condition (financial or other), net worth, results of operations, business,
key personnel or properties of it which would be material to the business or
financial condition of the Company and the Company has not become a party to,
and neither the business nor the property of the Company has become the
subject of, any material litigation whether or not in the ordinary course of
business.
(l) Except as set forth in the Prospectus, there is not
now pending or, to the knowledge of the Company, threatened, any action, suit
or proceeding to which the Company is a party before or by any court or
governmental agency or body, which might result in any material adverse
change in the condition (financial or other), business prospects, net worth,
or properties of the Company, nor are there any actions, suits or proceedings
related to environmental matters or related to discrimination on the basis of
age, sex, religion or race; and no labor disputes involving the employees of
the Company exist or, to the Company's knowledge, are imminent which might be
expected to adversely affect the conduct of the business, property or
operations or the financial condition or results of operations of the Company.
(m) Except as disclosed in the Prospectus, the Company has filed
all necessary federal, state and foreign income and franchise tax returns and
has paid all taxes shown as due thereon; and there is no tax deficiency which
has been or to the knowledge of the Company might be asserted against the
Company.
(n) The Company has sufficient licenses, permits and other
governmental authorizations currently required for the conduct of its business
or the ownership of its properties as described in the Prospectus,
except where the failure to obtain such licenses, permits or authorizations
would not have a material adverse effect on the Company's business, financial
conditions or results of operations, and the Company is in all
material respects complying therewith and owns or possesses adequate rights to
use all material patents, patent applications, trademarks, service marks,
trade-names, trademark registrations, service xxxx registrations, copyrights and
licenses necessary for the conduct of such business and had not received any
notice of conflict with the asserted rights of others in respect thereof. To
the best knowledge of the Company, none of the activities or business of the
Company are in violation of, or cause the Company to violate, any law, rule,
regulation or order of the United States, any state, county or locality, or of
any agency or body of the United States or of any state, county or locality, the
violation of which
-6-
would have a material adverse impact upon the condition (financial or
otherwise), business, property, results of operations, or net worth
of the Company.
(o) The Company has not, directly or indirectly, at any time
(i) made any contributions to any candidate for political office, or failed to
disclose fully any such contribution in violation of law or (ii) made any
payment to any state, federal or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments or contributions required or allowed by applicable law. The Company's
internal accounting controls and procedures are sufficient to cause the Company
to comply in all material respects with the Foreign Corrupt Practices Act of
1977, as amended.
(p) On the Closing Dates (hereinafter defined) all transfer or
other taxes, (including franchise, capital stock or other tax, other than income
taxes, imposed by any jurisdiction) if any, which are required to be paid in
connection with the sale and transfer of the Units to the Underwriter hereunder
will have been fully paid or provided for by the Company and all laws imposing
such taxes will have been fully complied with.
(q) All contracts and other documents of the Company which are,
under the Rules and Regulations, required to be filed as exhibits to the
Registration Statement have been so filed.
(r) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Units hereby.
(s) The Company has no subsidiaries.
(t) The Company has not entered into any agreement pursuant to
which any person is entitled either directly or indirectly to compensation from
the Company for services as a finder in connection with the proposed public
offering, provided, however, the Company may make payments of up to $35,000 to
Xxxxxx & Xxxxxxx, Inc. or its counsel.
(u) Except as previously disclosed in writing by the
Company to the Underwriter, no officer or director of the Company has any
affiliation or association with any member of the National Association of
Securities Dealers Inc. ("NASD").
(v) The Company is not, and upon receipt of the proceeds from
the sale of the Units will not be, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.
-7-
(w) The Company has not distributed and will not distribute
prior to the First Closing Date (as defined below) any offering material in
connection with the offering and sale of the Units other than the Preliminary
Prospectus, Prospectus, the Registration Statement or the other materials
permitted by the Act, if any.
(x) The conditions for use of Form SB-2, as set forth in the
General Instructions thereto, have been satisfied.
(y) There are no business relationships or related-party
transactions of the nature described in Item 404 of Regulation S-K involving
the Company and any person described in such Item that are required to be
disclosed in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) and that have not been so disclosed.
(z) The Company has complied with all provisions of Section
517.075 Florida Statutes relating to doing business with the government of Cuba
or with any person or affiliate located in Cuba.
2. PURCHASE, DELIVERY AND SALE OF THE UNITS.
(a) Subject to the terms and conditions of this Agreement, and
upon the basis of the representations, warranties, and agreements herein
contained, the Company agrees to issue and sell to the Underwriter, and the
Underwriter agrees to buy from the Company at $925 per Unit, at the place
and time hereinafter specified, 11,000 Units.
Delivery of the First Units against payment therefor shall
take place at the offices of X.X. Xxxxx Investment Banking Corp., 00 Xxxx
Xxxxxx, Xxx Xxxx, X.X. (or at such other place as may be designated by
agreement between you and the Company) at 10:00 a.m., New York time, on
October 18, 1996, or at such later time and date as you may designate, such
time and date of payment and delivery for the First Units being herein called
the "First Closing Date."
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, the Company hereby grants an option to the Underwriter to
purchase all or any part of an aggregate of an additional 1,650 Units at the
same price per Unit as the Underwriter shall pay for the First Units being sold
pursuant to the provisions of subsection (a) of this Section 2 (such additional
Units being referred to herein as the "Option Units"). This option may be
exercised within 45 days after the effective date of the Registration Statement
upon notice by you to the Company advising as to the amount of Option Units as
to which the option is being exercised, the names and denominations in which the
certificates for such Option Units are to be registered and the time and date
when such certificates are to be delivered. Such time and date shall be
determined
-8-
by you but shall not be earlier than four nor later than ten full business
days after the exercise of said option, nor in any event prior to the First
Closing Date, and such time and date is referred to herein as the "Option
Closing Date." Delivery of the Option Units against payment therefor shall
take place at the offices of X.X. Xxxxx Investment Banking Corp., 00 Xxxx
Xxxxxx, Xxx Xxxx, X.X. The Option granted hereunder may be exercised only to
cover overallotments in the sale by the Underwriter of First Units referred
to in subsection (a) above. In the event the Company declares or pays a
dividend or distribution on its Common Stock, whether in the form of cash,
shares of Common Stock or any other consideration, prior to the Option
Closing Date, such dividend or distribution shall also be paid on the Option
Units on the Option Closing Date (to the extent the option is exercised).
(c) The Company will make the certificates for the securities
comprising the Units to be purchased by the Underwriter hereunder available to
you for checking at least two full business days prior to the First Closing Date
or the Option Closing Date (which are collectively referred to herein as the
"Closing Dates"). The certificates shall be in such names and denominations as
you may request, at least two full business days prior to the Closing Dates.
Time shall be of the essence and delivery at the time and place specified in
this Agreement is a further condition to the obligations of the Underwriter.
Definitive certificates in negotiable form for the Units to be
purchased by the Underwriter hereunder will be delivered by the Company to you
against payment of the purchase price by the Underwriter, by certified or bank
cashier's checks in New York Clearing House funds, payable to the order of the
Company.
In addition, in the event the Underwriter exercises the option to
purchase from the Company all or any portion of the Option Units pursuant to the
provisions of subsection (b) above, payment for such Units shall be made to or
upon the order of the Company by certified or bank cashier's checks payable in
New York Clearing House funds at the offices of X.X. Xxxxx Investment Banking
Corp., at the time and date of delivery of such Units as required by the
provisions of subsection (b) above, against receipt of the certificates for such
Units by the Underwriter for the account of the Underwriter registered in such
names and in such denominations as the Underwriter may request.
It is understood that the Underwriter proposes to offer the Units
to be purchased hereunder to the public upon the terms and conditions set forth
in the Registration Statement, after the Registration Statement becomes
effective.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the Underwriter that:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as possible. If
required, the Company will file the Prospectus that constitutes a part
thereof and any amendment or supplement
-9-
thereto with the Commission in the manner and within the time period required
by 424(b) under the Act. Upon notification from the Commission that the
Registration Statement has become effective, the Company will so advise you
and will not at any time, whether before or after the effective date, file
the Prospectus or any amendment to the Registration Statement or supplement
to the Prospectus of which you shall not previously have been advised and
furnished with a copy or to which you or your counsel shall have objected in
writing or which is not in compliance with the Act and the Rules and
Regulations. At any time prior to the later of (A) the completion by the
Underwriter of the distribution of the Units contemplated hereby (but in no
event more than nine months after the date on which the Registration
Statement shall have become or been declared effective) and (B) 25 days after
the date on which the Registration Statement shall have become or been
declared effective, the Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the Registration
Statement or Prospectus which, in your opinion, may be necessary or advisable
in connection with the distribution of the Units.
As soon as the Company is advised thereof, the Company will
advise you, and confirm the advice in writing, of the receipt of any comments of
the Commission, of the effectiveness of any post-effective amendment to the
Registration Statement, of the filing of any supplement to the Prospectus or any
amended Prospectus, of any request made by the Commission for amendment of the
Registration Statement or for supplementing of the Prospectus or for additional
information with respect thereto, of the issuance by the Commission or any state
or regulatory body of any stop order or other order or threat thereof suspending
the effectiveness of the Registration Statement or any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Units for offering in any jurisdiction, or of the
institution of any proceedings for any of such purposes, and will use its best
efforts to prevent the issuance of any such order, and, if issued, to obtain as
soon as possible the lifting thereof.
The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. The Company
authorizes the Underwriter and dealers to use the Prospectus in connection with
the sale of the Units for such period as in the opinion of counsel to the
Underwriter the use thereof is required to comply with the applicable provisions
of the Act and the Rules and Regulations. In case of the happening, at any time
within such period as a Prospectus is required under the Act to be delivered in
connection with sales by an underwriter or dealer of any event of which the
Company has knowledge and which materially affects the Company or the securities
of the Company, or which in the opinion of counsel for the Company or counsel
for the Underwriter should be set forth in an amendment of the Registration
Statement or a supplement to the Prospectus in order to make the statements
therein not then misleading, in light of the circumstances existing at the time
the Prospectus is required to be delivered to a purchaser of the Units or in
case it shall be necessary to amend or supplement the Prospectus to comply with
law or with the Rules and Regulations, the Company
-10-
will notify you promptly and forthwith prepare and furnish to you copies of such
amended Prospectus or of such supplement to be attached to the Prospectus, in
such quantities as you may reasonably request, in order that the Prospectus, as
so amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material facts necessary in order to make the
statements in the Prospectus, in the light of the circumstances under which they
are made, not misleading. The preparation and furnishing of any such amendment
or supplement to the Registration Statement or amended Prospectus or supplement
to be attached to the Prospectus shall be without expense to the Underwriter,
except that in case any Underwriter is required, in connection with the sale of
the Units to deliver a Prospectus nine months or more after the effective date
of the Registration Statement, the Company will upon request of and at the
expense of the Underwriter, amend or supplement the Registration Statement and
Prospectus and furnish the Underwriter with reasonable quantities of
prospectuses complying with Section 10(a)(3) of the Act.
The Company will comply with the Act, the Rules and Regulations
and the Securities Exchange Act of 1934 and the rules and regulations thereunder
in connection with the offering and issuance of the Units.
(b) The Company will use its best efforts to qualify to register
the Units for sale under the securities or "blue sky" laws of such jurisdictions
as the Underwriter may designate and will make such applications and furnish
such information as may be required for that purpose and to comply with such
laws, provided the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or to execute a general consent of service
of process in any jurisdiction in any action other than one arising out of the
offering or sale of the Units. The Company will, from time to time, prepare and
file such statements and reports as are or may be required to continue such
qualification in effect for so long a period as the Underwriter may reasonably
request.
(c) If the sale of the Units provided for herein is not
consummated for any reason caused by the Company, the Company shall pay all
costs and expenses incident to the performance of the Company's obligations
hereunder, including but not limited to, all of the expenses itemized in
Section 8, including the accountable expenses of the Underwriter, up to the
maximum set forth in Section 8(b).
(d) The Company will use its best efforts if requested by the
Underwriter and to obtain and keep current a listing in the Standard & Poors
or Xxxxx'x Industrial OTC Manual.
(e) For so long as the Company is a reporting company under
either Section 12(g) or 15(d) of the Securities Exchange Act of 1934, the
Company, at its expense, will furnish to its stockholders an annual report
(including financial statements audited by independent public accountants), in
reasonable detail and at its expense, will furnish to you during the period
ending five (5) years from the date hereof, (i) as soon as practicable after the
-11-
end of each fiscal year, a balance sheet of the Company and any of its
subsidiaries as at the end of such fiscal year, together with statements of
income, surplus and cash flow of the Company and any subsidiaries for such
fiscal year, all in reasonable detail and accompanied by a copy of the
certificate or report thereon of independent accountants; (ii) as soon as
practicable after the end of each of the first three fiscal quarters of each
fiscal year, consolidated summary financial information of the Company for such
quarter in reasonable detail; (iii) as soon as they are available, a copy of all
reports (financial or other) mailed to security holders; (iv) as soon as they
are available, a copy of all non-confidential reports and financial statements
furnished to or filed with the Commission or any securities exchange or
automated quotation system on which any class of securities of the Company is
listed; and (v) such other information as you may from time to time reasonably
request.
(f) In the event the Company has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (e) above will
be on a consolidated basis to the extent the accounts of the Company and its
subsidiary or subsidiaries are consolidated in reports furnished to its
stockholders generally.
(g) The Company will deliver to you at or before the First
Closing Date two signed copies of the Registration Statement including all
financial statements and exhibits filed therewith, and of all amendments
thereto, and will deliver to the Underwriter such number of conformed copies
of the Registration Statement, including such financial statements but
without exhibits, and of all amendments thereto, as the Underwriter may
reasonably request. The Company will deliver to or upon the order of the
Underwriter, from time to time until the effective date of the Registration
Statement, as many copies of any Preliminary Prospectus filed with the
Commission prior to the effective date of the Registration Statement as the
Underwriter may reasonably request. The Company will deliver to the
Underwriter on the effective date of the Registration Statement and
thereafter for so long as a Prospectus is required to be delivered under the
Act, from time to time, as many copies of the Prospectus, in final form, or
as thereafter amended or supplemented, as the Underwriter may from time to
time reasonably request. The Company, not later than 10:00 a.m., New York
City time, on the business day after the date of determination of the public
offering price, on such date, will deliver to the Underwriter, without charge,
as many copies of the Prospectus and any amendment or supplement thereto as
the Underwriter may reasonably request for purposes of confirming orders that
are expected to settle on the First Closing Date.
(h) The Company will make generally available to its security
holders and to the registered holders of its Warrants and deliver to you as soon
as it is practicable to do so but in no event later than 90 days after the end
of twelve months after its current fiscal quarter, an earnings statement (which
need not be audited) covering a period of at least 12 consecutive
-12-
months beginning after the effective date of the Registration Statement, which
shall satisfy the requirements of Section 11(a) of the Act.
(i) The Company will apply the net proceeds from the sale of the
Units for the purposes set forth under "Use of Proceeds" in the Prospectus.
(j) The Company will, promptly upon your request, prepare and
file with the Commission any amendments or supplements to the Registration
Statement, Preliminary Prospectus or Prospectus and take any other action, which
in the reasonable opinion of Bachner, Tally, Xxxxxxx & Xxxxxx LLP, counsel to
the Underwriter, may be reasonably necessary or advisable in connection with the
distribution of the Units, and will use its best efforts to cause the same to
become effective as promptly as possible.
(k) The Company will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable upon
exercise of the Unit Purchase Option outstanding from time to time.
(l) The Company has obtained agreements from each officer,
director and beneficial holder of more than 1% of the Company's outstanding
capital stock known to the Company after due inquiry (the "Principal
Stockholders") providing that they will not directly or indirectly, offer,
sell (including any short sale), grant any option for the sale of, acquire
any option to dispose of, or otherwise dispose of any shares of Common Stock
for a period of 13 months from the First Closing Date without the prior
written consent of the Underwriter. In order to enforce this covenant, the
Company shall impose stop-transfer instructions with respect to the shares
owned by the Principal Stockholders until the end of such period.
(m) Prior to completion of this offering, the Company will make
all filings required, including registration under the Securities Exchange Act
of 1934, to obtain the additional listing of the Common Stock and Warrants on
the Nasdaq National Market (or a listing on such other market or exchange as the
Underwriter consents to), and will effect and maintain such listing for at least
five years from the date of this Agreement.
(n) The Company represents that it has not taken and agrees
that it or he will not take, directly or indirectly, any action designed to
or which has constituted or which might reasonably be expected to cause or
result in the stabilization or manipulation of the price of the Units, Shares
or the Warrants or to facilitate the sale or resale of the Securities. The
Principal Stockholders will confirm the foregoing on their own behalf in
letters delivered to the Company.
(o) On the Closing Date and simultaneously with the delivery of
the Units, the Company shall execute and deliver to you the Unit Purchase
Option. The Unit
-13-
Purchase Option will be substantially in the form of the Underwriter's Unit
Purchase Option filed as an Exhibit to the Registration Statement.
(p) During the three year period from the First Closing Date,
the Company will not, without the prior written consent of the Underwriter,
offer or sell any of its securities pursuant to Regulation S under the Act.
(q) The Company will not, without the prior written consent of
the Underwriter, grant registration rights to any person which are exercisable
sooner than 13 months from the First Closing Date.
(r) Xxxxxxx Xxxxxx, Ph.D. shall be President and Director of
Research and T. Xxxxxx Xxxxxx, Jr. shall be Senior Vice President, Sales and
Marketing of the Company on the Closing Dates. The Company has obtained key
person life insurance on the life of Xx. Xxxxxx in an amount of not less than $3
million and will use its best efforts to maintain such insurance for either
three years from the First Closing Date or the term of her employment agreement,
whichever is longer unless her employment with the Company is earlier
terminated. In such event, the Company will obtain a comparable policy on the
life of her successor for the balance of the said period. For a period of 13
months from the First Closing Date, the compensation of the executive officers
of the Company shall not be increased from the compensation levels disclosed in
the Prospectus provided that the Company may pay accrued bonuses to executive
officers in the aggregate amount of $22,000 previously approved by the Company's
board of directors.
(s) On the Closing Date and simultaneously with the delivery of
the Units the Company shall execute and deliver to you, an extension to the
agreement with you, dated as of December 7, 1994, regarding mergers,
acquisitions, joint ventures and certain other forms of transactions, in the
form previously delivered to the Company by you (the "M/A Extension Agreement").
(t) So long as any Warrants are outstanding, the Company shall
use its best efforts to cause post-effective amendments to the Registration
Statement to become effective in compliance with the Act and without any lapse
of time between the effectiveness of any such post-effective amendments and
cause a copy of each Prospectus, as then amended, to be delivered to each holder
of record of a Warrant and to furnish to each Underwriter and dealer as
-14-
many copies of each such Prospectus as such Underwriter or dealer may reasonably
request. The Company shall not call for redemption any of the Warrants unless a
registration statement covering the securities underlying the Warrants has been
declared effective by the Commission and remains current at least until the date
fixed for redemption. In addition, for so long as any Warrant is outstanding,
the Company will promptly notify the Underwriter of any material change in the
business, financial condition or prospects of the Company.
(u) Upon the exercise of any Warrant or Warrants after
October 15, 1997, the Company will pay X.X. Xxxxx Investment Banking Corp., a
fee of 5% of the aggregate exercise price of the Warrants, of which a portion
may be reallowed to the dealer who solicited the exercise (which may also be
X.X. Xxxxx Investment Banking Corp. if (i) the market price of the Company's
Common Stock is greater than the exercise price of the Warrants on the date
of exercise; (ii) the exercise of the Warrant was solicited by a member of
the National Association of Securities Dealers, Inc., (iii) the Warrant is
not held in a discretionary account; (iv) the disclosure of compensation
arrangements has been made in documents provided to customers, both as part
of the original offering and at the time of exercise, and (v) the
solicitation of the Warrant was not in violation of Rule 10b-6 promulgated
under the Securities Exchange Act of 1934, as amended. The Company agrees
not to solicit the exercise of any Warrants other than through X.X. Xxxxx
Investment Banking Corp. and will not authorize any other dealer to engage in
such solicitation without the prior written consent of X.X. Xxxxx Investment
Banking Corp.
(v) For a period of five (5) years from the Effective Date the
Company (i) at its expense, shall cause its regularly engaged independent
certified public accountants to read and comment upon the Company's financial
statements for each of the first three (3) fiscal quarters prior to the
announcement of quarterly financial information, the filing of the Company's
10-Q quarterly report and the mailing of quarterly financial information to
stockholders and (ii) shall not change its accounting firm without the prior
written consent of the Chairman or the President of the Underwriter, which
shall not be unreasonably withheld.
(w) As promptly as practicable after the Closing Date, the
Company will prepare, at its own expense, hard cover "bound volumes" relating to
the offering, and will distribute at least four of such volumes to the
individuals designated by the Underwriter or counsel to the Underwriter.
(x) For a period of five years from the First Closing Date
(i) the Underwriter shall have the right, but not the obligation, to
designate two directors of the Board of Directors of the Company which
designee shall be reasonably acceptable to the Company, and (ii) the Company
shall engage a public relations firm acceptable to the Underwriter. The
Underwriter acknowledges that Xxxxxx Xxxxxxx has been designated pursuant to
this provision.
(y) The Company shall, for a period of six years after date of
this Agreement, submit such reports to the Secretary of the Treasury and to
stockholders, as the Secretary may require, pursuant to Section 1202 of the
Internal Revenue Code, as amended, or
-15-
regulations promulgated thereunder, in order for the Company to qualify as a
"small business" so that stockholders may realize special tax treatment with
respect to their investment in the Company.
4. CONDITIONS OF THE UNDERWRITER'S OBLIGATION. The obligations of
the Underwriter to purchase and pay for the Units which they have respectively
agreed to purchase hereunder, are subject to the accuracy (as of the date
hereof, and as of the Closing Dates) of and compliance with the representations
and warranties of the Company herein, to the performance by the Company of its
obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective and
you shall have received notice thereof not later than 10:00 A.M., New
York time, on the date on which the amendment to the registration
statement originally filed with respect to the Units or to the
Registration Statement, as the case may be, containing information
regarding the initial public offering price of the Units has been
filed with the Commission, or such later time and date as shall have
been agreed to by the Underwriter; if required, the Prospectus or any
Term Sheet that constitutes a part thereof and any amendment or
supplement thereto shall have been filed with the Commission in the
manner and within the time period required by Rule 434 and 424(b)
under the Act; on or prior to the Closing Dates no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that or a similar purpose shall
have been instituted or shall be pending or, to your knowledge or to
the knowledge of the Company, shall be contemplated by the Commission;
any request on the part of the Commission for additional information
shall have been complied with to the reasonable satisfaction of
Bachner, Tally, Xxxxxxx & Xxxxxx LLP, counsel to the Underwriter;
(b) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of Xxxxx & Xxxxxx, LLP,
counsel for the Company, in form and substance satisfactory to counsel
for the Underwriter, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of California, with full corporate power and authority to
own its properties and conduct its business as described in the
Registration Statement and Prospectus and is duly qualified or
licensed to do business as a foreign corporation and is in good
standing in each other jurisdiction in which the ownership or
leasing of its properties or where the conduct of its business
requires such qualification, except where the failure to so
qualify or be licensed would not have a material adverse
effect on the business and condition (financial or otherwise)
of the Company;
-16-
(ii) to the best knowledge of such counsel, (a) the
Company has obtained or is in the process of obtaining, all
material governmental licenses, permits and governmental
authorizations (collectively "Licenses") necessary to the
conduct of its business other than Licenses required under
federal or state laws relating to the manufacture or sale of
medical devices or relating to the issuance, scope, terms or
enforceability of patents, patent applications or copyrights,
concerning which such counsel need express no opinion; and (b)
all of such Licenses (other than those excluded under the
foregoing clause) are in full force and effect;
(iii) the authorized capitalization of the Company as of
June 30, 1996 is as set forth under "Capitalization" in the
Prospectus; all shares of the Company's outstanding stock
requiring authorization for issuance by the Company's board of
directors have been duly authorized, validly issued, are fully
paid and non-assessable and conform to the description thereof
contained in the Prospectus under the heading "Description of
Securities. Except for shares covered by options to purchase
13,243 shares of Class A Common Stock issued in January 1993
and February 1993, concerning which such counsel need express
no opinion, none of the issued shares of capital stock of the
Company have been issued in violation of the preemptive rights
of any shareholder of the Company. The shareholders of the
Company do not have any preemptive rights under the Company's
Articles of Incorporation, any Material Contract or California
law to subscribe for or purchase, any of the Securities offered
under the Prospectus. The Class A Common Stock, the Warrants, the
Unit Purchase Option and the Warrant Agreement conform to the
respective descriptions thereof contained in the Prospectus
under the heading "Description of Securities." The Shares and
the shares of Class A Common Stock to be issued upon exercise
of the Warrants and the Unit Purchase Option in accordance
with the terms of the Warrants, the Warrant Agreement and Unit
Purchase Option, have been duly authorized and reserved for
issuance and, when issued and delivered, will be validly
issued, fully paid and non-assessable and not subject to,
preemptive rights, and no personal liability will attach to
the ownership thereof. All offers and sales of Securities by
the Company since December 7, 1994 were either registered
under the Act and applicable state securities laws or exempt
from registration requirements; a sufficient number of shares
of Common Stock has been reserved for issuance upon exercise
of the Warrants and Unit Purchase Option and to the best of
such counsel's knowledge, neither the filing of the
Registration Statement nor the offering or sale of the Units
as contemplated by this Agreement gives rise to any rights,
other than those which have been waived or satisfied for or
relating to the registration of any shares of Common Stock;
(iv) this Agreement, the Unit Purchase Option, the Warrant
Agreement and the M/A Extension Agreement have been duly and
validly authorized, executed and delivered by the Company and,
assuming due execution by each other party hereto or thereto,
each constitutes a legal,
-17-
valid and binding obligation of the Company enforceable against
the Company in accordance with its respective terms (except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors'
rights and the application of equitable principles in any action,
legal or equitable, and subject to limitations on the
enforceability of any indemnification and contribution
provisions under applicable law or public policy (such laws,
principles and limitations being referred to herein as the
"Enforceability Limitations");
(v) the certificates evidencing the shares of Common Stock
comply with the California General Corporation Law; subject to
the Enforceability Limitations, the Warrants will be
exercisable for shares of Common Stock of the Company in
accordance with the terms of the Warrants and at the prices
therein provided for;
(vi) other than as set forth in the Prospectus, such
counsel knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which
might materially and adversely affect the business, property,
financial condition or operations of the Company; or which
question the validity of the Securities, this Agreement, the
Warrant Agreement, the Unit Purchase Option or the M/A
Extension Agreement except with respect to federal or state
governmental proceedings or relations relating to the
manufacture or sale of medical devices or relating to the
issuance, scope, terms or enforceability of patents, patent
applications on copyrights, concerning which such counsel
need express no opinion, or of any action taken or to be taken
by the Company pursuant to this Agreement, the Warrant
Agreement, the Unit Purchase Option or the M/A Extension
Agreement; and no such proceedings are known to such counsel
to be contemplated against the Company; there are no
governmental proceedings or regulations required to be
described or referred to in the Registration Statement which
are not so described or referred to;
(vii) to the best of such counsel's knowledge, neither
the execution and delivery of this Agreement, the Unit
Purchase Option, the Warrant Agreement or the M/A Extension
Agreement, nor compliance with the terms hereof or thereof,
nor the consummation of the transactions contemplated hereby
or thereby, will result in a breach of, or constitute a
default under the Articles of Incorporation or Bylaws of the
Company, or any Material Contract, or violate any applicable
California or federal law, rule, regulation or, to the best of
such counsel's knowledge, any order, writ, injunction or
decree of any governmental agency or court having jurisdiction
over the Company or any of its properties or business;
-18-
(viii) the Registration Statement has become effective
under the Act, and to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
statement is in effect, and no proceedings for that purpose have
been instituted or are pending before, or threatened by, the
Commission; the Registration Statement and the Prospectus (except
for the financial statements and other financial data contained
therein, or omitted therefrom, as to which such counsel need
express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the Rules and
Regulations;
(ix) such counsel has participated in the preparation of the
Registration Statement and the Prospectus and nothing has come to
the attention of such counsel to cause such counsel to have
reason to believe that the Registration Statement or any
amendment thereto at the time it became effective or as of the
Closing Dates contained any untrue statement of a material fact
required to be stated therein or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or any
supplement thereto contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
statements therein, in light of the circumstances under which
they were made, not misleading (except, in the case of both the
Registration Statement and any amendment thereto and the
Prospectus and any supplement thereto, for the financial
statements, notes thereto and other financial information and
schedules contained therein, as to which such counsel need
express no opinion);
(x) all descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts
and other documents are accurate and fairly present the
information required to be shown, and such counsel is familiar
with all contracts and other documents referred to in the
Registration Statement and the Prospectus and any such amendment
or supplement or filed as exhibits to the Registration Statement,
and such counsel does not know of any contracts or documents of a
character required to be summarized or described therein or to be
filed as exhibits thereto which are not so summarized, described
or filed;
-19-
(xi) no authorization, approval, consent, or license of any
governmental or regulatory authority or agency is necessary in
connection with the authorization, issuance, transfer, sale or
delivery of the Units by the Company, in connection with the
execution, delivery and performance of this Agreement by the
Company or in connection with the taking of any action
contemplated herein, or the issuance of the Unit Purchase Option
or the Securities underlying the Unit Purchase Option, other than
registrations or qualifications of the Units under applicable
state or foreign securities or Blue Sky laws and registration
under the Act;
(xii) the statements set forth under the headings
"Business," "Use of Proceeds," "Management," and "Description
of Securities" in the Prospectus, insofar as such statements
purport to summarize agreements, statutes, licenses, rules or
regulations statements of law or legal conclusions, are a fair
summary of such agreements, statutes, licenses, rules or
regulations, statements of law or legal conclusions, except
with respect to matters relating to federal or state
regulation of the manufacture or sale of medical devices, or
to the issuance, scope, terms or enforceability of patents,
patent applications or copyrights;
(xiii) the Common Stock and the Warrants are covered by an
additional listing application filed with the Nasdaq National
Market; and
(xiv) to such counsel's knowledge, there are no business
relationships or related-party transactions of the nature
described in Item 404 of Regulation S-K involving the Company and
any person described in such Item that are required to be
disclosed in the Prospectus and which have not been so disclosed.
(c) At the First Closing Date, you shall have received the
opinion, addressed to the Underwriter, dated as of the First Closing
Date, of Knobbe, Martens, Xxxxx & Bear, LLP, patent counsel to the
Company, substantially in the form set forth in the opinion dated
September 4, 1996 to Xxxxxx & Xxxxxxx, Inc. with the following
addition:
-20-
such counsel has conducted a search for existing United States
and foreign patents with claims that might cover the Company's
technology particularly as it relates to medical lasers and
fiberoptic delivery systems used in dental, ophthalmic and
surgical applications and, in such counsel's opinion, neither the
Company's technology or products infringe any United States or
foreign patents.
(d) At the First Closing Date, you shall have received an
opinion of Xxxxx & Xxxxxxx L.L.P., regulatory counsel for the Company, addressed
to the Underwriter and dated the First Closing Date, in form and substance
satisfactory to counsel to the Underwriter to the effect that:
(i) The statements in the Prospectus under the captions "Risk
Factors -- Need for FDA and Foreign Government Approvals; Government
Regulation"
-21-
and "Business -- Government Regulation," insofar as such statements
purport to summarize applicable provisions of the FDC Act and the
regulations promulgated thereunder, have been reviewed by us and are
accurate summaries in all material respects of the provisions of such
statute and regulations purported to be summarized under such captions
in the Prospectus.
(ii) During the course of preparation of the Registration
Statement, we participated in certain discussions with officers and
other representatives of the Company as to the FDA matters dealt with
under the above-referenced captions in the Prospectus. While we have
not undertaken to determine independently, and, except as specifically
provided in the immediately preceding paragraph, we do not assume any
responsibility for the accuracy, completeness, or fairness of the
statements in such captioned sections, we may state on the basis of
these discussions and our review of the documents referenced above
that no facts have come to our attention which cause us to believe
that the information contained under the captions "Risk Factors --
Need for FDA and Foreign Governmental Approvals; Government
Regulation" and "Business -- Government Regulation" in the Prospectus,
insofar as such information related to FDA matters, at the time the
Registration Statement became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or as of the date hereof, contains an untrue statement of
a material fact or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
Such opinions shall also cover such matters incident to the
transactions contemplated hereby as the Underwriter or counsel for the
Underwriter shall reasonably request. In rendering such opinion, such counsel
may rely upon certificates of any officer of the Company or public officials as
to matters of fact; and may rely as to all matters of law other than the law of
the United States or of the State of California upon opinions of counsel
satisfactory to you, in which case the opinion shall state that they have no
reason to believe that you and they are not entitled to so rely.
(e) All corporate proceedings and other legal matters relating
to this Agreement, the Registration Statement, the Prospectus and other related
matters shall be satisfactory to or approved by Bachner, Tally, Xxxxxxx &
Xxxxxx LLP, counsel to the Underwriter, and you shall have received from such
counsel a signed opinion, dated as of the First Closing Date, with respect to
the validity of the issuance of the Units, the form of the Registration
Statement and Prospectus (other than the financial statements and other
financial data contained therein), the execution of this Agreement and other
related matters as you may reasonably require. The Company shall have furnished
to counsel for the Underwriter such
-22-
documents as they may reasonably request for the purpose of enabling them to
render such opinion.
(f) You shall have received a letter prior to the effective date
of the Registration Statement and again on and as of the First Closing Date from
Price Waterhouse LLP, independent public accountants for the Company,
substantially in the form approved by you, and including estimates of the
Company's revenues and results of operations for the period ending at the end of
the month immediately preceding the effective date and results of the comparable
period during the prior fiscal year.
(g) At the Closing Dates, (i) the representations and
warranties of the Company contained in this Agreement shall be true and
correct in all material respects with the same effect as if made on and as of
the Closing Dates and the Company shall have performed all of its obligations
hereunder and satisfied all the conditions on its part to be satisfied at or
prior to such Closing Date; (ii) the Registration Statement and the
Prospectus and any amendments or supplements thereto shall contain all
statements which are 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, in light of
the circumstances under which they were made, not misleading; (iii) there
shall have been, since the respective dates as of which information is given,
no material adverse change, or any development involving a prospective
material adverse change, in the business, properties, condition (financial or
otherwise), results of operations, capital stock, long-term or short-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 and Prospectus indicate might occur after the
effective date of the Registration Statement, and the Company shall not have
incurred any material liabilities or entered into any agreement not in the
ordinary course of business other than as referred to in the Registration
Statement and Prospectus; and (iv) except as set forth in the Prospectus, no
action, suit or proceeding at law or in equity shall be pending, or to the
Company's knowledge, threatened against the Company which would be
required to be set forth in the Registration Statement, and no proceedings
shall be pending or threatened against the Company before or by any
commission, board or administrative agency in the United States or elsewhere,
wherein an unfavorable decision, ruling or finding would materially and
adversely affect the business, property, condition (financial or otherwise),
results of operations or general affairs of the Company, and (v) you shall
have received, at the First Closing Date, a certificate signed by each of the
Chairman of the Board or the President and the principal financial or
accounting officer of the Company, dated as of the First Closing Date,
evidencing compliance with the provisions of this subsection (g).
(h) Upon exercise of the option provided for in Section 2(b)
hereof, the obligations of the Underwriter to purchase and pay for the Option
Units referred to therein will
-23-
be subject (as of the date hereof and as of the Option Closing Date) to the
following additional conditions:
(i) The Registration Statement shall remain effective at
the Option Closing Date, and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings
for that purpose shall have been instituted or shall be pending,
or, to your knowledge or the knowledge of the Company, shall be
contemplated by the Commission, and any reasonable request on the
part of the Commission for additional information shall have been
complied with to the satisfaction of Bachner, Tally, Xxxxxxx &
Xxxxxx LLP, counsel to the Underwriter.
(ii) At the Option Closing Date there shall have been
delivered to you the signed opinions of Xxxxx & Xxxxxx LLP,
Knobbe, Martens, Xxxxx & Bear, LLP, and Xxxxx & Xxxxxxx L.L.P.,
counsel for the Company, dated as of the Option Closing Date, in
form and substance satisfactory to Bachner, Tally, Xxxxxxx &
Xxxxxx LLP, counsel to the Underwriter, which opinion shall be
substantially the same in scope and substance as the opinion
furnished to you at the First Closing Date pursuant to
Sections 4(b), 4(c) and 4(d) hereof, respectively, except that
such opinion, where appropriate, shall cover the Option Units.
(iii) At the Option Closing Date there shall have been
delivered to you a certificate of the Chairman of the Board or
the President and the principal financial or accounting officer
of the Company, dated the Option Closing Date, in form and
substance satisfactory to Bachner, Tally, Xxxxxxx & Xxxxxx LLP,
counsel to the Underwriter, substantially the same in scope and
substance as the certificate furnished to you at the First
Closing Date pursuant to Section 4(g) hereof.
(iv) At the Option Closing Date there shall have been
delivered to you a letter in form and substance satisfactory to
you from Price Waterhouse LLP, dated the Option Closing Date and
addressed to the Underwriter confirming the information in their
letter referred to in Section 4(f) hereof and stating that
nothing has come to their attention during the period from the
ending date of their review referred to in said letter to a date
not more than five business days prior to the Option Closing
Date, which would require any change in said letter if it were
required to be dated the Option Closing Date.
(v) All proceedings taken at or prior to the Option Closing
Date in connection with the sale and issuance of the Option Units
shall be
-24-
satisfactory in form and substance to you, and you and Bachner,
Tally, Xxxxxxx & Xxxxxx LLP, counsel to the Underwriter, shall
have been furnished with all such documents, certificates, and
opinions as you may request in connection with this transaction
in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company or its
compliance with any of the covenants or conditions contained
herein.
(g) No action shall have been taken by the Commission or the
NASD the effect of which would make it improper, at any time prior to the
Closing Date, for members of the NASD to execute transactions (as principal or
agent) in the Units, Common Stock or the Warrants and no proceedings for the
taking of such action shall have been instituted or shall be pending, or, to the
knowledge of the Underwriter or the Company, shall be contemplated by the
Commission or the NASD. The Company represents that at the date hereof it has
no knowledge that any such action is in fact contemplated by the Commission or
the NASD. The Company shall have advised the Underwriter of any NASD
affiliation of any of its officers or directors.
(h) The estimated revenues and earnings of the Company for the
six months ending September 30, 1996 will be greater than those of the six
months ended September 30, 1995.
(i) If any of the conditions herein provided for in this Section
shall not have been fulfilled as of the date indicated, this Agreement and all
obligations of the Underwriter under this Agreement may be cancelled at, or at
any time prior to, each Closing Date by the Underwriter. Any such cancellation
shall be without liability of the Underwriter to the Company.
5. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligation of
the Company to sell and deliver the Units is subject to the following
conditions:
(a) The Registration Statement shall have become effective not
later than 10:00 A.M. New York time, on the day following the date of this
Agreement, or on such later date as the Company and the Underwriter may agree in
writing.
(b) At the Closing Dates, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued under the Act
or any proceedings therefor initiated or threatened by the Commission.
(c) No action shall have been taken by the Commission or the
NASD the effect of which would make it improper, at any time prior to the
Closing Date, for members of the NASD to execute transactions (as principal or
agent) in the Units, Common Stock or the
-25-
Warrants and no proceedings for the taking of such action shall have been
instituted or shall be pending, or, to the knowledge of the Underwriter or the
Company, shall be contemplated by the Commission or the NASD. Each of the
Company and the Underwriter represents that at the date hereof it has no
knowledge that any such action is in fact contemplated by the Commission or
NASD.
If the conditions to the obligations of the Company provided for in
this Section have been fulfilled on the First Closing Date but are not fulfilled
after the First Closing Date and prior to the Option Closing Date, then only the
obligation of the Company to sell and deliver the Units on exercise of the
option provided for in Section 2(b) hereof shall be affected.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of the Act against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all attorneys'
fees), to which the Underwriter or such controlling person may become subject,
under the Act or otherwise, and will reimburse, as incurred, such Underwriter
and such controlling persons for any legal or other expenses reasonably incurred
in connection with investigating, defending against or appearing as a third
party witness in connection with any losses, claims, damages or liabilities,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in (A) the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
(B) any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by the
Company filed in any state or other jurisdiction in order to qualify any or all
of the Units under the securities laws thereof (any such application, document
or information being hereinafter called a "Blue Sky Application"), or arise out
of or are based upon the omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus, Prospectus, or any amendment
or supplement thereto, or in any Blue Sky Application, a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent, but only to the extent, that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Underwriter
specifically for use in the preparation of the Registration Statement or any
such amendment or supplement thereof or any such Blue Sky Application or any
such preliminary Prospectus or the Prospectus or any such amendment or
supplement thereto. This indemnity will be in addition to any liability which
the Company may otherwise have.
-26-
(b) The Underwriter will indemnify and hold harmless the
Company, each of its directors, each nominee (if any) for director named in the
Prospectus, each of its officers who have signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of the Act,
against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to, all costs of defense
and investigation and all attorneys' fees) to which the Company or any such
director, nominee, officer or controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto (i) in reliance upon and in conformity with written
information furnished to the Company by you specifically for use in the
preparation thereof and (ii) relates to the transactions effected by the
Underwriter in connection with the offer and sale of the Units contemplated
hereby. This indemnity agreement will be in addition to any liability which the
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify in writing the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated, with
counsel reasonably 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, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is an Underwriter
or a person who controls such Underwriter within the meaning of the Act, the
fees and expenses of such counsel shall be at the expense of the indemnifying
party if (i) the employment of such counsel has been specifically authorized in
writing by the indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both such Underwriter or
-27-
such controlling person and the indemnifying party, and the indemnified party
shall have reasonably concluded that there may be one or more legal defenses
available to it which are different from or additional to those available to
the indemnifying party and that as a result, representation of both parties
by the same counsel would be inappropriate due to actual or potential
differing interests between them (in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for the
Underwriter and controlling persons, which firm shall be designated in writing
by you). No settlement of any action against an indemnified party shall be made
without the consent of the indemnifying party, which shall not be unreasonably
withheld in light of all factors of importance to such indemnifying party.
7. CONTRIBUTION.
In order to provide for just and equitable contribution under the Act
in any case in which (i) the Underwriter makes claim for indemnification
pursuant to Section 6 hereof 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 Section 6 provide for indemnification in such case, or
(ii) contribution under the Act may be required on the part of the Underwriter,
then the Company and each person who controls the Company, in the aggregate, and
the 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 reasonable costs of defense and
investigation and all reasonable attorneys' fees) in either such case (after
contribution from others) in such proportions that the Underwriter is
responsible in the aggregate for that portion of such losses, claims, damages or
liabilities represented by the percentage that the underwriting discount per
Unit appearing on the cover page of the Prospectus bears to the public offering
price appearing thereon, and the Company shall be responsible for the remaining
portion, provided, however, that (a) if such allocation is not permitted by
applicable law then the relative fault of the Company and the Underwriter and
controlling persons, in the aggregate, in connection with the statements or
omissions which resulted in such damages and other relevant equitable
considerations shall also be considered. The relative fault shall be determined
by reference to, among other things, whether in the case of an untrue statement
of a material fact or the omission to state a material fact, such statement or
omission relates to information supplied by the Company, or the Underwriter and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The Company and the
Underwriter agree that it would not be just and equitable if the respective
obligations of the Company and the Underwriter to contribute pursuant to this
Section 7 were to be determined by pro rata or per capita allocation of the
aggregate damages or by any other method of allocation that does not take
account of the equitable considerations referred to in the first sentence of
this Section 7. No person guilty of a fraudulent misrepresentation (within the
meaning of
-28-
Section 11(f) of the Act) shall be entitled to contribution from any person who
is not guilty of such fraudulent misrepresentation. As used in this paragraph,
the word "Company" includes any officer, director, or person who controls the
Company within the meaning of Section 15 of the Act. If the full amount of the
contribution specified in this paragraph is not permitted by law, then the
Underwriter and each person who controls the Underwriter shall be entitled to
contribution from the Company, its officers, directors and controlling persons
to the full extent permitted by law. The foregoing contribution agreement shall
in no way affect the contribution liabilities of any persons having liability
under Section 11 of the Act other than the Company and the Underwriter. No
contribution shall be requested with regard to the settlement of any matter from
any party who did not consent to the settlement; provided, however, that such
consent shall not be unreasonably withheld in light of all factors of importance
to such party.
8. COSTS AND EXPENSES.
(a) Whether or not this Agreement becomes effective or the
sale of the Units to the Underwriter is consummated, the Company will pay all
costs and expenses incident to the performance of this Agreement by the
Company including, but not limited to, the fees and expenses of counsel to
the Company and of the Company's accountants; the costs and expenses incident
to the preparation, printing, filing and distribution under the Act of the
Registration Statement (including the financial statements therein and all
amendments and exhibits thereto), Preliminary Prospectus and the Prospectus,
as amended or supplemented, or the Term Sheet, the fee of the NASD in
connection with the filing required by the NASD relating to the offering of
the Units contemplated hereby; all expenses, including reasonable fees and
disbursements of counsel to the Underwriter, in connection with the
qualification of the Units under the state securities or blue sky laws which
the Underwriter shall designate; the cost of printing and furnishing to the
Underwriter copies of the Registration Statement, each Preliminary
Prospectus, the Prospectus, this Agreement, Selling Agreement, Underwriter's
Questionnaire, and the Blue Sky Memorandum, any fees relating to the listing
of the Common Stock and Warrants on the Nasdaq National Market or any other
securities exchange, the cost of printing the certificates representing the
securities comprising the Units, the fees of the transfer agent and warrant
agent the cost of publication of at least three "tombstones" of the offering
(at least one of which shall be in national business newspaper and one of
which shall be in a major New York newspaper) and the cost of preparing at
least four hard cover "bound volumes" relating to the offering, in accordance
with the Underwriter's request. The Company shall pay any and all taxes
(including any transfer, franchise, capital stock or other tax imposed by any
jurisdiction) on sales to the Underwriter hereunder. The Company will also
pay all costs and expenses incident to the furnishing of any amended
Prospectus or of any supplement to be attached to the Prospectus as called
for in Section 3(a) of this Agreement except as otherwise set forth in said
Section.
(b) In addition to the foregoing expenses the Company shall at
the First Closing Date pay to X.X. Xxxxx Investment Banking Corp., a
non-accountable expense
-29-
allowance of $330,000 of which $30,000 has been paid. In the event the
overallotment option is exercised, the Company shall pay to X.X. Xxxxx
Investment Banking Corp. at the Option Closing Date an additional amount equal
to 3% of the gross proceeds received upon exercise of the overallotment option.
In the event the transactions contemplated hereby are not consummated by reason
of any action by the Underwriter (except if such prevention is based upon a
breach by the Company of any covenant, representation or warranty contained
herein or because any other condition to the Underwriter's obligations hereunder
required to be fulfilled by the Company is not fulfilled) the Company shall not
be liable for the accountable expenses of the Underwriter, however, the
Underwriter may in all events retain the aforementioned $30,000 advance on the
non-accountable expense allowance. In the event the transactions contemplated
hereby are not consummated by reason of any action of the Company or because of
a breach by the Company of any covenant, representation or warranty herein, the
Company shall be liable for the accountable expenses of the Underwriter,
including legal fees, up to a maximum of $330,000.
(c) No person is entitled either directly or indirectly to
compensation from the Company, from the Underwriter or from any other person for
services as a finder in connection with the proposed offering, and the Company
agrees to indemnify and hold harmless the Underwriter, against any losses,
claims, damages or liabilities, joint or several (which shall, for all purposes
of this Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees), to which the Underwriter or person may
become subject insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon the claim of any
person (other than an employee of the party claiming indemnity) or entity that
he or it is entitled to a finder's fee in connection with the proposed offering
by reason of such person's or entity's influence or prior contact with the
indemnifying party.
9. EFFECTIVE DATE.
The Agreement shall become effective upon its execution except that
you may, at your option, delay its effectiveness until 11:00 A.M., New York time
on the first full business day following the effective date of the Registration
Statement, or at such earlier time after the effective date of the Registration
Statement as you in your discretion shall first commence the initial public
offering by the Underwriter of any of the Units. The time of the initial public
offering shall mean the time of release by you of the first newspaper
advertisement with respect to the Units, or the time when the Units are first
generally offered by you to dealers by letter or telegram, whichever shall first
occur. This Agreement may be terminated by you at any time before it becomes
effective as provided above, except that Sections 3(c), 6, 7, 8, 12, 13, 14 and
15 shall remain in effect notwithstanding such termination.
10. TERMINATION.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 12, 13,
14 and 15 hereof, may be terminated at any time prior to the First Closing Date,
and the option referred to
-30-
in Section 2(b) hereof, if exercised, may be cancelled at any time prior to the
Option Closing Date, by you if in your judgment it is impracticable to offer for
sale or to enforce contracts made by the Underwriter for the resale of the Units
agreed to be purchased hereunder 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, the Nasdaq SmallCap Market or the Nasdaq
National Market having been suspended or limited; (iii) material governmental
restrictions having been imposed on trading in securities generally (not in
force and effect on the date hereof); (iv) a banking moratorium having been
declared by federal or New York state authorities; (v) an outbreak of
international hostilities or other national or international calamity or crisis
or change in economic or political conditions having occurred; (vi) a pending or
threatened legal or governmental proceeding or action relating generally to the
Company's business, or a notification having been received by the Company of the
threat of any such proceeding or action, which could materially adversely affect
the Company; (vii) except as contemplated by the Prospectus, the Company is
merged or consolidated into or acquired by another company or group or there
exists a binding legal commitment for the foregoing or any other material change
of ownership or control occurs; (viii) the passage by the Congress of the United
States or by any state legislative body or federal or state agency or other
authority of any act, rule or regulation, measure, or the adoption of any
orders, rules or regulations by any governmental body or any authoritative
accounting institute or board, or any governmental executive, which is
reasonably believed likely by the Underwriter to have a material impact on
the business, financial condition or financial statements of the Company or the
market for the securities offered pursuant to the Prospectus; (ix) any adverse
change in the financial or securities markets beyond normal market fluctuations
having occurred since the date of this Agreement, or (x) any material adverse
change having occurred, since the respective dates of which information is given
in the Registration Statement and Prospectus, in the earnings, business
prospects or general condition of the Company, financial or otherwise, whether
or not arising in the ordinary course of business.
(b) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 10 or in
Section 9, the Company shall be promptly notified by you, by telephone or
telegram, confirmed by letter.
11. UNIT PURCHASE OPTION.
At or before the First Closing Date, the Company will sell to
X.X. Xxxxx Investment Banking Corp. (for its own account) or its designees
for a consideration of $110, and upon the terms and conditions set forth in
the form of Unit Purchase Option annexed as an exhibit to the Registration
Statement, a Unit Purchase Option (the "Unit Purchase Option") to purchase an
aggregate of 1,100 Units. In the event of conflict in the terms of this
Agreement and the Unit Purchase Option, the language of the Unit Purchase
Option shall control.
-31-
12. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties
and other statements of the Company or its Principal Stockholders, where
appropriate, and the undertakings set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Underwriter, the Company or any of its officers or
directors or any controlling person and will survive delivery of and payment of
the Units and the termination of this Agreement.
13. NOTICE.
Any communications specifically required hereunder to be in writing,
if sent to the Underwriter, will be mailed, delivered and confirmed to them at
X.X. Xxxxx Investment Banking Corp., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
with a copy sent to Bachner, Tally, Xxxxxxx & Xxxxxx LLP, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or if sent to the Company, will be mailed, delivered
and confirmed to it at 3 Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, with a copy sent to
Xxxxx & Xxxxxx, LLP, 000 Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxx, Xxxxxxxxxx
00000.
14. PARTIES IN INTEREST.
The Agreement herein set forth is made solely for the benefit of the
Underwriter, the Company and, to the extent expressed, the Principal
Stockholders, any person controlling the Company or any of the Underwriter, and
directors of the Company, nominees for directors (if any) named in the
Prospectus, its officers who have signed the Registration Statement, and their
respective executors, administrators, successors, assigns and no other person
shall acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser, as such purchaser,
from any of the Underwriter of the Units.
15. APPLICABLE LAW.
This Agreement will be governed by, and construed in accordance with,
the laws of the State of New York applicable to agreements made and to be
entirely performed within New York.
-32-
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this agreement, whereupon it will become a
binding agreement between the Company and the Underwriter in accordance with its
terms.
Very truly yours,
PREMIER LASER SYSTEMS, INC.
By: ____________________________________
Xxxxxxx Xxxxxx, Ph.D.
Chairman of the Board, Chief Executive
Officer and President
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
X.X. XXXXX INVESTMENT BANKING CORP.
By: ____________________________________
Xxxxxx X. Xxxx, Vice Chairman and
General Counsel
-33-
We hereby agree to be bound by the provisions of Sections 3(l), (m),
and (o) and 13 hereof.
______________________________
______________________________
______________________________
-34-
