EXHIBIT 1.1
3,125,000 UNITS
RETRAC MEDICAL, INC.
UNDERWRITING AGREEMENT
Centex Securities, Incorporated
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Dear Sirs:
Retrac Medical, Inc., a Delaware corporation ("Company"), proposes to
offer and sell to selected persons or entities acceptable to the Company, upon
the terms and subject to the conditions set forth in the enclosed Prospectus,
(as defined below) up to 3,125,000 Units of the Company's securities at the sale
price of $8.00 per Unit. The Units and certain of the terms on which they are
being offered are more fully described in the enclosed Prospectus.
The Company hereby invites you, Centex Securities Incorporated, a
California corporation ("Underwriter"), to become the Underwriter on a
best-efforts basis in connection with the offer and sale of the Units. By your
acceptance hereof, you agree to act in such capacity and to use commercially
reasonable efforts to find purchasers for the Units in accordance with the terms
and conditions of the Prospectus and this Agreement, but with no obligation or
understanding, express or implied, that you are making a commitment to purchase
or sell the Units. You agree to use commercially reasonable efforts to find
purchasers of Units both directly and indirectly through a selling group
consisting of participating brokers ("Participating Brokers") with whom you
shall contract pursuant to a Participating Broker Agreement.
Accompanying this Agreement is a copy of the Prospectus and the
Supplemental Material (as defined below) prepared by the Company for use in
conjunction with the offer and sale of the Units.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (SEC File No.33-46316) and a
related preliminary prospectus for the registration of: (i) the Units, including
the shares of the Company's $.01 par value common stock ("Common Stock") and
common stock purchase warrants ("Unit Warrant") making up the Unites; (ii) the
shares of Common Stock issuable upon the exercise of the Unit Warrants; (iii) a
common purchase warrant described in Section 4 hereof (the "Underwriter's Unit
Warrant"), (iv) the Units, including the shares of Common Stock and Unit
Warrants; and (v) the shares of Common Stock issuable upon exercise of the Unit
Warrants made part of the Underwriter's Unit Warrant under the Securities Act of
1933 (the "1933 Act") and has filed such amendments thereto, if any, and such
amended preliminary prospectuses as may have been required to the date hereof, a
copy of each of which heretofore has been delivered to you. The registration
statement, as amended, (including exhibits previously filed or filed therewith)
and the amended prospectus on file with the Commission at the time the
registration statement becomes effective are hereinafter called the
"Registration Statement" and the "Prospectus," respectively, except that if the
prospectus filed by the Company pursuant to the Rule 424(b) under the 1933 Act
differs from the prospectus on file at the time the Registration Statement
becomes effective, the term "Prospectus" shall refer to the Rule 424(b)
prospectus from and after the time it is mailed to the Commission for filing.
The Company understands that you propose to make a public offering of
the Units as soon as you deem advisable after the Registration Statement becomes
effective.
SECTION 1
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
(a) The Company represents and warrants to you as follows:
(i) From the Effective Date and at all times
subsequent thereto up to and including the Termination Date
(as defined in Section 3 below), the Registration Statement
and the Prospectus will comply in all material respects with
the requirements of the 1933 Act and the rules and regulations
thereunder (the "1933 Act Regulations") and will not contain
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the
Company herein or otherwise furnished in writing by you for
use in the Registration Statement or Prospectus.
(ii) All additional written, audio or audio-visual
material, including an investment xxxxxxx, xxxxx tape, video
tape and internet site prepared by the Company for use in
conjunction with the offer or sale of the Units, if any
("Supplemental Material"), will be distributed by the Company
only in full compliance with the requirements of the 1933 Act
(including, without limitation, the requirement that such
Supplemental Material not be delivered to any prospective
purchaser unless accompanied or preceded by a Prospectus), and
at the time the Registration Statement is declared effective
and at all times subsequent thereto up to and including the
Termination Date, such Supplemental Material has not contained
and will not contain any untrue statement of material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
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(iii) The accountants who certified the financial
statements included in the Registration Statement are
independent public accountants as required by the 1933 Act and
the 1933 Act Regulations.
(iv) The financial statements and supporting
schedules included in the Registration Statement present
fairly the financial position of the Company as at the dates
indicated and the results of its operations for the periods
specified; said financial statements have been prepared in
conformity with generally accepted accounting principles
applied on a consistent basis; and the supporting schedules
included in the Registration Statement present fairly the
information required to be stated therein.
(v) Since the respective dates as of which
information is given in the Registration Statement, except as
otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, of
the Company, or in the earnings, properties or business of the
Company, whether or not arising in the ordinary course of
business, (B) there have been no material transactions entered
into by the Company other than those in the ordinary course of
business, and (C) there has been no dividend or distribution
of any kind declared, paid, or made by the Company on its
capital stock.
(vi) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware with corporate power and
authority to own, lease and operate its properties and conduct
its business as described in the Registration Statement; and
the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction
in which it owns or leases substantial properties or in which
the conduct of its business requires such qualification except
for such jurisdictions in which the failure to qualify in the
aggregate would not have a material and adverse effect on the
earnings, properties or business of the Company.
(vii) Except as described in the Registration
Statement, the Company does not have any subsidiaries and does
not own any equity investment in any other corporation,
partnership, joint venture, or other entity.
(viii) The authorized, issued, and outstanding
capital stock of the Company is as set forth in the
Registration Statement under "Capitalization"; the shares of
issued and outstanding capital stock set forth thereunder have
been duly authorized and validly issued and are fully paid and
nonassessable; the Units, including the securities included
therein, have been duly authorized for issuance and sale
pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement against payment of the
consideration set forth in Section 2 hereof, will be validly
issued and fully paid and nonassessable; the securities
conform to all the statements relating thereto contained in
the Registration Statement; and the issuance of the securities
are not subject to preemptive rights.
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(ix) The Underwriter's Unit Warrant has been duly
authorized for issuance and sale to the Underwriter pursuant
to this Agreement and the Warrant Agreement and, when issued
and delivered by the Company pursuant to this Agreement and
the Warrant Agreement against payment of the consideration set
forth in Section 4 hereof, will be validly issued and fully
paid and nonassessable; until the Underwriter's Warrant has
been exercised or has expired, the Underwriter's Unit Warrant
Units will have been duly reserved from the Company's
authorized but unissued units of Common Stock; and the
issuance of the Underwriter's Unit Warrant and Underwriter's
Unit Warrant Units are not subject to preemptive rights.
(x) This Agreement and the Warrant Agreement have
been duly and validly authorized and this Agreement has been
duly executed and delivered by the Company and this Agreement
constitutes, and the Warrant Agreement, when duly executed and
delivered by the Company, will constitute, valid and binding
agreements, enforceable in accordance with their respective
terms, except as enforceability of any indemnification
provision may be limited under federal securities laws and
except as enforceability of such agreements may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium,
or other laws relating to or affecting generally the
enforcement of the creditor's rights.
(xi) The Company has good and marketable title to all
properties, licenses, and assets described in the Prospectus
as owned by it, free and clear of all liens, charges,
encumbrances, or restrictions, except such as are described or
referred to in the Prospectus or are not materially
significant or important in relation to the business of the
Company; all of the leases or 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 the Company is not in default in any material
respect in respect of any of the terms or provisions of any of
such leases or subleases, and to the best of the Company's
knowledge, no claim has been asserted by anyone adverse to the
Company's rights as lessor, sublessor, lessee, or sublessee
under any of the leases or subleases mentioned above or
affecting or questioning the Company's rights to the continued
possession of the leased or subleased premises or assets under
any such lease or sublease.
(xii) To the best of the Company's knowledge, no
labor disturbance by the employees of the Company exists or is
imminent which might be expected to materially and adversely
affect the conduct of the business, operations, financial
condition, or income of the Company.
(xiii) Except as disclosed in the Registration
Statement, the Company is not in violation of its charter
documents or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant, or
condition contained in any material bond, debenture, note, or
other evidence of indebtedness or in any material contract,
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indenture, mortgage, loan agreement, lease, joint venture, or
other material agreement or instrument to which the Company is
a party or by which it or any of its properties are bound; and
the execution and delivery of this Agreement and the Warrant
Agreement, the incurrence of the obligations herein and
therein set forth and the consummation of the transactions
herein and therein contemplated will not conflict with, or
result in a breach of any of the material terms, conditions,
or provisions of, or constitute a default under, the charter
documents or by-laws of the Company or any material bond,
debenture, contract, indenture, mortgage, loan agreement,
lease, joint venture, or other material agreement or
instrument to which the Company is a party or by which it or
any of its properties are bound, or result in any material
violation by the Company of any law, administrative
regulation, or court decree.
(xiv) Except as set forth in the Registration
Statement, there is no action, suit, or proceeding before or
by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company,
threatened against or affecting the Company, which might
result in any material and adverse change in the condition
(financial or otherwise), business or earnings of the Company.
(xv) There are no contracts or documents of the
Company which would be required to be filed as exhibits to the
Registration Statement by the 1933 Act or by the 1933 Act
Regulations which have not been previously filed or filed as
exhibits to the Registration Statement; each contract to which
the Company is a party and which has been previously filed or
filed as an exhibit to the Registration Statement is in full
force and effect or has terminated in accordance with its
terms or as set forth in the Registration Statement; and no
party to any such contract has given notice of the
cancellation of, or its intention to cancel, any such contract
and to the best of the Company's knowledge no party to any
such contract intends to cancel any such contract.
(xvi) The Company has not received any notice of
infringement of or conflict with asserted rights of others
with respect to any patent, patent rights, inventions,
trademarks, service marks, trade names or copyrights owned by
or licensed to the Company, which singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding,
would materially and adversely affect the conduct of the
business, operations, financial condition, or income of the
Company.
(xvii) The Company has not received any notice of
proceedings relating to the revocation or modification of any
franchises held by the Company which, singly or in the
aggregate, if the subject of any unfavorable decision, ruling
or finding, would materially adversely affect the conduct of
the business, operations, financial condition, or income of
the Company.
(xviii) There are no outstanding claims for services
either in the nature of a finder's fee, brokerage fee, or
otherwise with respect to this financing for which the Company
or the Underwriter may be responsible.
(xix) The Company has not taken, and will not take,
directly or indirectly, any action designed to constitute or
which has constituted or which might be reasonably expected to
cause or result in the stabilization of the price of the
Common Stock in a violation of the Securities Exchange Act of
1934 (the "1934 Act") or in a manipulation of the price of any
security issued by the Company.
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(xx) The SEC has not issued any order preventing or
suspending the use of the Prospectus, and no proceedings for
that purpose have been instituted or are pending before or
threatened by the SEC.
(xxi) At all times subsequent to the date of this
Agreement and up to and including the Termination Date, the
representations and warranties made in this Section l will be
true and correct with the same effect as if they had been made
on and as of such time, except as may subsequently be
disclosed in writing to the Underwriter.
(xxii) No closing will take place unless and until
Companys in respect of subscriptions for an aggregate of at
least 2,500,000 Units, acceptable to the Company, have been
received by the Company and payment for such Units has been
deposited in the Escrow Account and classified as "cleared
funds" by the Escrow Agent.
(b) Any certificate required by this Agreement to be signed by
any officer of the Company and delivered to you or to your counsel
shall be deemed a representation and warranty by the Company to you as
to the matters covered thereby.
SECTION 2
SALE OF THE UNITS
A subscription agreement ("Subscription Agreement") must be
completed by each person desiring to purchase Units, or, at your or the
Participating Broker's option, by you or the Participating Broker on behalf of
each such person, and returned by you or the Participating Broker together with
any other documents that may be required under state securities laws or by the
Company, to the Company at Retrac Medical, Inc., 00 Xxxxx Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 Attention: Xxxxxx Xxxxxxx. You or the Participating Broker shall
ascertain that the Subscription Agreement has been properly completed in full
and signed by the prospective purchaser prior to its return.
All subscription checks shall be made payable to the order
_________________________________ until the Minimum Subscription Date (as
hereinafter defined) and thereafter all subscription checks shall be made
payable to Retrac Medical, Inc. If you or the Participating Broker receives a
check not conforming to the foregoing instructions, you or the Participating
Broker must return such check directly to the subscriber not later than the end
of the next business day following its receipt. On or before the Minimum
Subscription Date, checks conforming to the foregoing instructions shall be
transmitted by you or the Participating Broker for deposit directly
______________________________ ("Escrow Agent"), at ___________________ by the
end of the next business day following receipt by you or the Participating
Broker. Following the Minimum Subscription Date, checks conforming to the
foregoing instructions shall be transmitted by you or the Participating Broker
for deposit directly to the Company, at the aforementioned Company address, by
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the end of the next business day following receipt by you or the Participating
Broker. In the event you or the Participating Broker's final internal
supervisory review is conducted at a different location, then checks must be
transmitted to you or the Participating Broker's final review office by the end
of the next business day following receipt by you or the Participating Broker
and your or the Participating Broker's final review office must in turn by the
end of the next business day following receipt by it, transmit the check for
deposit directly to the Escrow Agent on or before the Minimum Subscription Date
or to the Company after the Minimum Subscription Date.
Upon receipt of the Subscription Agreement, the Company will
determine promptly (and in any event within ten (10) days after such receipt)
whether it wishes to accept the proposed purchaser as a shareholder in the
Company, it being understood that the Company reserves the right to reject the
tender of any Subscription Agreement and to reject all tenders after the
Termination Date. Should the Company determine to accept the tender of the
Subscription Agreement, the Company will promptly advise you or the
Participating Broker of such action. Should the Company determine to reject the
tender it will promptly notify in writing the prospective purchaser, you and the
Participating Broker, if any, of such determination and will promptly return the
tendered Subscription Agreement and instruct the Escrow Agent to return the
purchase price of the Units directly to the prospective purchaser if the
determination is made on or before the Minimum Subscription Date or the Company
will return the purchase price of the Units directly to the prospective
purchaser is the determination is made after the Minimum Subscription Date.
All payments received on or prior to the Minimum Subscription
Date, except as hereinafter provided, from purchasers of Units shall be
transmitted directly to the Escrow Agent and deposited in an escrow account (the
"Escrow Account") with Escrow Agent. Such funds may be temporarily invested in
bank savings accounts, bank or money market accounts, bank short-term
certificates of deposit of U.S. banks having a net worth of $100 million, or
short-term U.S. government issued or guaranteed obligations. Prior to the
Minimum Subscription Date, the Company will have no right to obtain any funds
from the Escrow Agent. Funds for Units purchased on or before the Minimum
Subscription Date shall be made available to the Company, or its order, by the
Escrow Agent, on the Minimum Subscription Date.
Nothing contained in this Section 2 shall be construed to relieve
you and the Participating Brokers of the responsibility of complying with the
Conduct Rules of the National Association of Securities Dealers, Inc. ("NASD").
SECTION 3
TERMINATION DATE AND MINIMUM SUBSCRIPTION CLOSING DATE
As used herein, the term "Termination Date" shall mean the
earliest to occur of (i) the date upon which subscriptions for the maximum
number of Units offered have been accepted by the Company which date the Company
shall designate by notice to you in writing; or (ii) _____________, 200_. The
Company may terminate the offering of Units at any time for any reason by
written notice to the Underwriter at least two (2) business days prior to the
date of termination.
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As used herein, the term "Minimum Subscription Date" shall mean
the earlier of the termination date on the date on which the Company shall mail
or otherwise furnish to you notification that subscriptions and payments for an
aggregate of at least 2,500,000 Units have been received and accepted by the
Company and deposited with the Escrow Agent. In the event that subscriptions and
payments for an aggregate of at least 2,500,000 Units shall not have been
received and accepted by the Company on or prior to ____________, 200_, this
Agreement will terminate and the Company shall have no further obligation or
liability hereunder to you or any Participating Brokers. In the event of such
termination, all purchase payments deposited with the Escrow Agent shall be
returned to the subscribers and no selling commissions (as described below) will
be payable.
SECTION 4
COMPENSATION AND PAYMENT OF EXPENSES
For your services as Underwriter in soliciting and obtaining
purchasers of the Units, the Company agrees to pay a selling commission of ten
percent (10%) of the gross offering proceeds realized from the sale of Units.
All or a portion of these selling commissions may be reallowed by you to
Participating Broker as compensation for their services in soliciting and
obtaining subscribers for the purchase of Units. An additional three percent
(3%) of the gross offering proceeds, less the $___________ advance previously
paid to you by the Company, all or a portion of which may be reallowed to
Participating Brokers, will be paid to you as a non-accountable fee for
marketing services, wholesaling fees, expense reimbursements, bonuses and
incentive compensation.
The selling commissions and expense allowance will be paid as
follows: (i) on or promptly following the Minimum Subscription Date, the Company
will pay the selling commissions and expense allowance payable with respect to
the Units purchased on or before the Minimum Subscription Date, and (ii) after
the Minimum Subscription Date, the Company will pay the selling commissions,
marketing support fees, and due diligence expense allowance payable with respect
to Units purchased during the period commencing with the first business day
following the Minimum Subscription Date and ending on the Termination Date
unless otherwise agreed, no later than the seventh (7TH) day following the date
of the sale of the Units. Subject to the provisions of Section 3 below, in the
event the offer and sale of Units is terminated prior to the Minimum
Subscription Date, you shall not be entitled to any reimbursement for your due
diligence expenses incurred in connection with the offering of Units.
In the event the Company gives you any advances of any portion of
the expense allowance, the amount of the advance shall be deducted by the
Company from amounts owed to Underwriter for selling commissions or expense
allowance and such amount shall be promptly reimbursed to the Company by the
Company.
No person will be entitled to a selling commission or expense
allowance in any case in which it is determined that the solicitation or
obtaining of purchasers by such person was made in violation of the securities
laws of the United States or any state or other jurisdiction.
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At the Termination date, and subject to the sale of 2,500,000 Units by
the Minimum Subscription Date, the Company will sell to you a common stock
purchase warrant ("Underwriter's Unit Warrant"), for a purchase price of
$100.00, entitling you to purchase up to one Unit for every ten Units sold prior
to the Termination Date. The terms and provisions of the Underwriter's Unit
Warrant and the respective rights and obligations of the Company and the
holder(s) are described in the Warrant Agreement set forth in Exhibit A hereto
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the printing and filing of the
Registration Statement and the printing of this Agreement, the Participating
Brokers Agreement, and the Warrant Agreement, (ii) the issuance and delivery of
the Units to the Subscribers including stock transfer taxes, if any, payable
upon sale and transfer of the Units to the Subscribers thereof, (iii) the fees
and disbursements of the Company's counsel and accountants, (iv) the expenses in
connection with the qualification of the Units under all applicable securities
laws, including filing fees and the reasonable fees and disbursements of Blue
Sky counsel in connection therewith and in connection with the preparation of
the Blue Sky Survey, (v) the printing and delivery to you of copies of the
Registration Statement and all amendments thereto, of the preliminary
prospectuses and any amendments thereto, and of the Prospectus and any
amendments or supplements thereto, (vi) the printing and delivery to you of
copies of the Blue Sky Survey, (vii) the fee of the National Association of
Securities Dealers, Inc., and (viii) the listing fees of the American Stock
Exchange ("AMEX").
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SECTION 5
COVENANTS OF THE COMPANY
The Company covenants with you as follows:
(a) The Company will notify you or your counsel immediately,
and confirm the notice in writing, (i) of the effectiveness of the
Registration Statement and any amendment thereto, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the
Commission for any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. The
Company will make every reasonable effort to prevent the issuance of
any stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) The Company will give you notice of its intention to file
any amendment to the Registration Statement or any amendment or
supplement to the Prospectus (including a prospectus filed pursuant to
Rule 424(b) which differs from the prospectus on file at the time the
Registration Statement becomes effective), and will not file any such
amendment or supplement to which you or your counsel shall reasonably
object.
(c) The Company will deliver to you as many signed copies of
the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein) as you may reasonably request and also deliver to
you a conformed copy of the registration statement as originally filed
and of each amendment thereto (without exhibits filed therewith or
incorporated by reference therein).
(d) The Company will furnish to you, from time to time during
the period when the Prospectus is required to be delivered under the
1933 Act, such number of copies of the Prospectus (as amended or
supplemented) as you may reasonably request for the purposes
contemplated by the 1933 Act or the 1933 Act Regulations and for
purposes contemplated by the 1934 Act and the rules and regulations
thereunder.
(e) If any event shall occur as a result of which it is
necessary, in the opinion of your counsel, to amend the Registration
Statement and the Prospectus or to supplement the Prospectus in order
to make the Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, the Company will
forthwith amend the Registration Statement and the Prospectus or
supplement the Prospectus, as the case may be, by preparing and
furnishing to you a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to the Registration
Statement and the Prospectus (in form and substance satisfactory to
your counsel), so that, as so amended or supplemented, the Registration
Statement and the Prospectus, as the case may be, will not contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading.
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(f) The Company will endeavor, in cooperation with you and
your counsel, to qualify the Units for offering and sale under the
applicable securities laws of such states and other jurisdictions of
the United States as you may designate, and will maintain such
qualifications in effect for as long as may be required for the
distribution of the Units. The Company shall not, however, be obligated
to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified except as may be required by the laws of
the State of New York. The Company will file such statements and
reports as may be required by the laws of each jurisdiction in which
such securities have been qualified as above provided.
(g) The Company shall file and maintain effective with the
Commission and applicable state securities authorities, a registration
statement registering the Underwriter's Unit Warrant and the
Underwriter's Warrant Units which shall comply with all applicable
provisions of the Warrant Agreement.
(h) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Section 11(a) of the 1933 Act, which
need not be certified by independent public accountants unless required
by the 1933 Act or the 1933 Act Regulations) covering a twelve-month
period beginning not later than the first day of the Company's fiscal
quarter next following the effective date of the Registration
Statement.
(i) The Company will for a period of three years from the
effective date of the Registration Statement furnish directly to each
of you, as soon as the same shall be sent to the Company's
shareholders, copies of any annual or interim reports of the Company to
its shareholders, and it will, for the same period, also furnish each
of you with the following:
(i) concurrently with furnishing to the Company's
shareholders, one copy of the annual independent accountants'
report, including therein the accountants' certificate, the
consolidated balance sheet of the Company and its
subsidiaries, if any, and the related consolidated statements
of operations, stockholders' equity and cash flows;
(ii) copies of any report, application, or document
which the Company shall file with the Commission, the AMEX or
any securities exchange;
(iii) copies of any press releases disseminated to
the public; and
(iv) as soon as the same shall be sent to the
shareholders, each communication which shall be sent to the
shareholders as a class.
(j) The Company will apply the net proceeds from the sale of
the Units sold by it hereunder for the purposes set forth under "Use of
Proceeds" in the Prospectus in substantially the amounts indicated thereunder.
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(k) The Company will prepare and file with the Commission a
report on Form SR in accordance with the 1933 Act regulations and will supply
copies of the Form SR, and any amendments or supplements thereto, to you and
your counsel within five days of its filing with the Commission.
(l) At the Effective Time (as defined below), the Company will
register its equity securities under Section 12(b) of the 1934 Act and will
supply copies of the Form 8-A, and any amendments or supplements thereto, to you
and your counsel within five days of its filing with the Commission.
(m) The Company will obtain a CUSIP number for its Common
Stock and Unit Warrant by the first day for trading of the securities made part
of the Units. The Company will use its best efforts to have the Unit Warrants
and all outstanding units of Common Stock listed on the American Stock Exchange
(AMEX).
SECTION 6
CONDITIONS OF UNDERWRITERS' OBLIGATIONS
Your obligations hereunder are subject to the accuracy of the
representations and warranties of the Company of its obligations hereunder, and
to the following further conditions:
(a) The Registration Statement shall have become effective
("Effective Time") not later than 5:30 p.m., Washington, D.C. time, on
the date hereof, or with your consent, at a later time and date not
later, however, than 5:30 p.m., Washington, D.C. time, on the first
business day following the date hereof, or at such later time and date
as may be approved by you.
(b) At the Effective Time you shall have received the
favorable opinion, dated as of the Effective Time, of _______________,
counsel for the Company, in form and substance satisfactory to your
counsel, 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 Delaware.
(ii) The Company has corporate power and authority to
own, lease, and operate its properties and conduct its
business as described in the Registration Statement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which it owns or leases substantial
properties or in which the conduct of its business requires
such qualification, except for such jurisdictions in which the
failure to qualify in the aggregate would not have a
materially adverse effect on the earnings, business or
properties of the Company.
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(iv) To the best of their knowledge, the Company does
not have any subsidiaries and does not own any equity
investment in any other corporation, partnership, joint
venture, or other entity.
(v) To the best of their knowledge, the authorized,
issued, and outstanding capital stock of the Company is as set
forth in the Registration Statement under "Capitalization" and
the units of issued and outstanding Common Stock set forth
thereunder have been duly authorized and validly issued and
are fully paid and nonassessable.
(vi) To the best of their knowledge, the Units have
been duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement against payment of the
consideration set forth in Section 2 hereof, will be validly
issued and fully paid and nonassessable; and to the best of
their knowledge, the issuance of the Units is not subject to
preemptive rights.
(vii) The Underwriter's Unit Warrant has been duly
authorized for issuance and sale to you pursuant to this
Agreement and the Warrant Agreement and, when issued and
delivered by the Company pursuant to this Agreement and the
Warrant Agreement against payment of the consideration set
forth in Section 4 hereof, will be validly issued and fully
paid and nonassessable; the Underwriter's Unit Warrant Shares
have been duly reserved from the Company's authorized but
unissued Shares of Common Stock; and to the best of their
knowledge, the issuance of the Underwriter's Warrant and
Underwriter's Warrant Shares are not subject to preemptive
rights.
(viii) This Agreement and the Warrant Agreement have
been duly and validly authorized and this Agreement has been
duly executed and delivered by the Company and this Agreement
constitutes, and the Warrant Agreement, when duly executed and
delivered by the Company, will constitute, valid and binding
agreements, enforceable in accordance with their respective
terms, except as enforceability of any indemnification
provision may be limited under federal securities laws and
except as enforceability of such agreements may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium,
or other laws relating to or affecting generally the
enforcement of creditor's rights.
(ix) To the best of their knowledge, the execution
and delivery of this Agreement and the Warrant Agreement and
the consummation of the transactions herein and therein
contemplated will not conflict with or constitute a breach of,
or default under, the charter or by-laws of the Company or any
contract, indenture, mortgage, loan agreement, note, lease, or
other instrument known to such counsel to which the Company is
a party or by which it may be bound, or any court decree known
to such counsel or any law or administrative regulation.
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(x) The Registration Statement is effective under the
1933 Act and, to the best of their knowledge and information,
no stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act or proceedings
there for initiated or threatened by the Commission.
(xi) To the best of their knowledge, at the time the
Registration Statement became effective, the Registration
Statement (other than the financial statements and supporting
schedules included therein, as to which no opinion need be
rendered) complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations.
(xii) Nothing has come to their attention that would
lead them to believe that the Registration Statement, at the
time it became effective, contained an untrue statement of
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading or that the Prospectus, at the time the
Registration Statement became effective (unless the term
"Prospectus" refers to the Rule 424(b) prospectus, in which
case at the time it was mailed to the Commission for filing)
or at the Effective Time, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they are made not misleading.
(xiii) There are no contracts, indentures, mortgages,
loan agreements, notes, leases, or other instruments known to
such counsel that are required to be described or referred to
in the Registration Statement or to be filed as exhibits
thereto other than those described or referred to therein or
filed or incorporated by reference as exhibits thereto; the
descriptions thereof or references thereto are accurate, and
to such counsel's knowledge no default exists in the due
performance or observance of any material obligation,
agreement, covenant, or condition contained in any contract,
indenture, loan agreement, note, lease, or other instrument so
described, referred to, filed or incorporated by reference.
(xiv) Except as set forth in the Registration
Statement and Prospectus, such counsel does not know of any
action, suit, or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending,
or threatened against or affecting, the Company, which might
result in any material and adverse change in the condition
(financial or otherwise), business or earnings of the Company,
or might materially and adversely affect the properties or
assets thereof).
(xv) The Common Stock and the Underwriter's Unit
Warrant conform to the description thereof contained in the
Registration Statement.
(xvi) No authorization, approval or consent of any
court or governmental authority or agency is required in
connection with the sale of the Shares to you, except as may
be required under the 1933 Act and state securities or Blue
Sky laws.
14
In rendering such opinion, such counsel may rely, as to matters of
fact, to the extent they deem proper, upon responsible officers of the Company
and certificates of public officials, and, as to matters of the law of
jurisdictions other than the United States and California, upon the opinions of
other counsel satisfactory to your counsel, in which case such opinions shall
also state that the Underwriters are justified in relying upon the opinion of
such local counsel.
(c) At the Effective Time there shall not have been, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change in the
condition, financial or otherwise, of the Company, or in the earnings,
business or properties of the Company, whether or not arising in the
ordinary course of business, and you shall have received a certificate
from each of the Chief Executive Officer and Chief Financial Officer of
the Company, dated as of the Effective Time, to the effect that (i)
there has been no such material adverse change, (ii) that the other
representations and warranties of the Company contained in Section 1
are true and correct with the same force and effect as though expressly
made at and as of Closing Time, (iii) that the Company has complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) that no
stop order suspending the effectiveness of the Registration Statement
has been issued and to the best of such officer's knowledge, no
proceedings for that purpose have been initiated or threatened by the
Commission.
(d) At the time of the execution of this Agreement, you shall
have received from X. X. Xxxxxx & Co. LLP, a letter dated such date, in
form and substance satisfactory to you, to the effect that (i) they are
independent public accountants as required by the 1933 Act and the 1933
Act Regulations and the answer to Item 13 of the Registration Statement
is correct insofar as it related to them; (ii) it is their opinion that
the financial statements and supporting schedules included in the
Registration Statement and covered by their opinion therein comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations; (iii) based
upon limited procedures set forth in detail in such letter, nothing has
come to their attention which causes them to believe that (A) the
unaudited condensed financial statements and supporting schedules of
the Company as of __________________, included in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations or are not fairly presented in conformity with generally
accepted accounting principles applied on a basis consistent in all
material respects with the audited financial statements included in the
Registration Statement, or (B) during the period from
__________________, to a specified date not more than five days prior
to the date of this Agreement, there has been any change in the capital
stock or funded debt of the Company, or any decrease in consolidated
net current assets, net assets, or stockholders' equity as compared
with the amounts shown in the _________________ balance sheet or any
decrease, as compared with the corresponding period in the preceding
year, in total revenues or total or per share amounts of earnings of
the Company in each case except as set forth or contemplated in the
Registration Statement; and (iv) they have read in the Registration
Statement the information under "Prospectus Summary - the Offering,"
"Prospectus Summary - Summary Financial Information," "Use of
Proceeds," "Capitalization," "Dilution," "Managements Discussion and
Analysis," "Business," and "Management - Executive Compensation" and
the notes thereto and other information specified by you and have
performed the procedures set forth in detail in such letter and found
such amounts or information to be in agreement with the relevant
accounting and financial records of the Company.
15
(e) At the Minimum Subscription Date you shall have received
from _____________, a letter, dated as of the Minimum Subscription
Date, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (d) of this Section, except
that the specified date referred to shall be a date not more than five
days prior to Minimum Subscription Date.
(f) At Minimum Subscription Date your counsel shall have been
furnished with such documents and opinions as they may require for the
purpose of enabling them to pass upon the issuance and sale of the
Units as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of the Units as herein contemplated shall be satisfactory in form
and substance to you and your counsel.
If any condition specified in this Section shall not have been fulfilled when
and as required to be fulfilled, this Agreement may be terminated by you by
written notice to the Company at any time at or prior to Termination Date, and
such termination shall be without liability of any party to any other party
except as provided in Section 4.
SECTION 7
INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless you and
each person, if any, who controls you within the meaning of Section 15
of the 1933 Act as follows:
(i) against any and all loss, liability, claim,
damage, and expense whatsoever arising out of any untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment
thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
unless such untrue statement or omission was made in reliance
upon and in conformity with written information furnished to
the Company by any Underwriter through you expressly for use
in the Registration Statement (or the Prospectus or any
amendment or supplement);
(ii) against any and all loss, liability, claim,
damage, and expense whatsoever to the extent of the aggregate
amount paid in settlement of any litigation or investigation
or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the prior
written consent of the Company; and
16
(iii) against any and all expense whatsoever
(including the fees and disbursements of counsel chosen by
you) reasonably incurred in investigating, preparing or
defending against any litigation, or investigation or
proceeding by governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid
under (i) or (ii) above.
(b) You agree to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act against any and all loss, liability, claim,
damage, and expense whatsoever (i) arising out your selling activities
or disclosures not authorized by the Company in writing or set forth in
the Prospectus or the Supplemental Materials, and (ii) described in the
indemnity contained in subsection (a) of this Section, but only with
respect to untrue statements or omissions, or alleged untrue statements
or omissions, made in the Registration Statement (of any amendment
thereto) or any preliminary prospectus or the Prospectus or any
amendment or supplement thereto) in reliance upon and in conformity
with written information furnished to the Company by you expressly for
use in the Registration Statement (or any amendment thereto) or such
preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(c) In no case shall the Company be liable under the indemnity
provisions of this Section 7 with respect to any preliminary prospectus
to the extent any such loss, liability, claim, damage or expense
results from the fact that you sold Shares to a person to whom there
was not sent or given, at or prior to the time such person was sent or
given a written confirmation of sale, a copy of the Prospectus if the
Company had previously furnished copies thereof to you and the untrue
statement or omission of material fact contained in such preliminary
prospectus was corrected in the Prospectus;
(d) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of
which indemnity may be sought hereunder, but failure to so notify any
indemnifying party shall not relieve it from any liability which it may
have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of
such action. In no event shall the indemnifying parties be liable for
the fees and expenses of more than one counsel for all indemnified
parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same
general allegations or circumstances. An indemnifying party shall not
be obligated to pay any settlement entered into without the
indemnifying party's consent.
17
SECTION 8
CONTRIBUTION
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 7 is for
any reason held to be unenforceable by you or the Company although applicable in
accordance with its terms, the Company and you shall contribute to the aggregate
losses, liabilities, claims, damages, and expenses of the nature contemplated by
said indemnity agreement incurred by the Company and you in such proportion as
is appropriate to reflect the relative benefits received by the Company and you
from the offering of the Shares and the relative fault of the Company and you in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative benefits received by the Company and you shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bears to the total
underwriting discounts and commissions received by you. Notwithstanding the
foregoing, no person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section, each person, if any, who controls you within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as you,
and each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company.
SECTION 9
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS
TO SURVIVE DELIVERY
All representations, warranties, and agreements contained in this
Agreement or contained in certificates of officers of the Company submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of you or controlling person, or by or
on behalf of the Company, and shall survive delivery of the Shares to the
subscribers.
SECTION 10
TERMINATION OF AGREEMENT
Provided that at least one counterpart of this Agreement shall
then have been executed and delivered, this Agreement shall become effective at
12:00 noon, California time, of the first full business day following the
effective date of the Registration Statement.
Until the Minimum Subscription Closing Date, this Agreement may
be terminated by you at your option by giving written notice to the Company if:
(a) the Company shall have become a defendant in any litigation which, in your
opinion, may reasonably be expected to result in a judgment having materially
adverse consequences for the Company or there shall have been, since the
respective dates as of which information is given in the Registration Statement
or the Prospectus, any material adverse change in the condition, financial or
otherwise, of the Company, which change in your judgment shall render it
18
inadvisable to proceed with the delivery of the Units, or (b) there shall have
been any important change in market levels, major catastrophe, substantial
change in national, international or world affairs, national calamity, postal
strike, act of God, or other event or occurrence which, in your judgment will
materially disrupt the financial markets of the United States, or (c) trading in
securities generally on the New York Stock Exchange shall have been suspended or
minimum prices shall have been established on such Exchange by the Commission or
by such Exchange, or (d) a general banking moratorium shall have been declared
by federal or state authorities, or (e) the Company has terminated the offering
of Shares as provided in Section 2 hereof, or (f) the Company is in breach of
this Agreement and has failed to cure such breach within 30 days notice from you
to the Company of such breach.
Following the Minimum Subscription Date, this Agreement may be
terminated by Underwriter at Underwriter's option by giving notice to the
Company and the Company. In any case, this Agreement will terminate at the close
of business on the Termination Date; provided, however, that all fees payable to
Underwriter under the terms and conditions hereof shall be paid when due
although this Agreement shall have theretofore been terminated.
Except as otherwise provided in Section 4, any termination of
this Agreement pursuant to this Section 10 shall be without liability of the
Company to you and without liability on your part to the Company.
SECTION 11
NOTICE
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered or sent by registered mail
or transmitted by any standard form of telecommunication. Notices to you shall
be directed to each of you at the address first written above; notices to the
Company shall be directed to Retrac Medical, Inc., 00 Xxxxx Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000; Attention of Xxxxxx Xxxxxxx.
SECTION 12
PARTIES
This Agreement shall inure to the benefit of and be binding upon you
and the Company and our respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm, or
corporation, other than the parties hereto and their respective successors and
the controlling persons and officers and directors referred to in Section 7 and
Section 8 and their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the parties hereto and
their legal respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm, or corporation.
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SECTION 13
GOVERNING LAW
This Agreement shall be governed by the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
us in accordance with its terms.
Very truly yours,
RETRAC MEDICAL, INC.
By:
-------------------------------------
Xxxxxx Xxxxxxx, Chairman of the Board
Confirmed and Accepted, as of the date first above written:
CENTEX SECURITIES, INCORPORATED
By:
--------------------------
Xxxxx Xxxxxxx, President
