17,000 Units
(each Unit consisting of (i) 280 shares of Class A Class A Common Stock, no par
value, and (ii) 280 redeemable Class A Warrants to purchase one share of Class A
Common Stock at an exercise price of $___ from the date
of issuance through __________, 2002)
AMERIGON INCORPORATED
UNDERWRITING AGREEMENT
____________, 1997
▇.▇. ▇▇▇▇▇ Investment Banking Corp.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
AMERIGON INCORPORATED, a California corporation (the "Company"),
proposes to issue and sell to ▇.▇. ▇▇▇▇▇ Investment Banking Corp. ("you" or the
"Underwriter") pursuant to this Underwriting Agreement (the "Agreement") an
aggregate of 17,000 Units, each unit being hereinafter referred to as a "Unit"
and consisting of (i) 280 shares of Class A Common Stock, no par value per share
("Shares"), and (ii) 280 redeemable Class A Warrants ("Class A Warrants"). Each
Class A Warrant is exercisable from the date of issuance through ____________,
2002, at an exercise price of $_____ to purchase one share of Class A Common
Stock. The Class A Warrants may be referred to herein as the "Warrants." The
Warrants are subject to redemption in certain instances commencing one year from
the date of this Agreement. 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 2,550 additional Units. Unless the context otherwise
indicates, the term "Units" shall include the 2,550 additional Units referred to
above.
The aggregate of 17,000 Units to be sold by the Company, together with
all or any part of the 2,550 Units which the Underwriter has the option to
purchase, and the Shares and the Warrants comprising such Units, are herein
called the "Units." The Class A Common Stock of the Company to be outstanding
after giving effect to the sale of the Shares is herein called the "Class A
Common Stock." The Shares and Warrants included in the Units (including the
Units which the Underwriter has the option to purchase as described in Section
11 hereof) are herein collectively called the "Securities."
You have advised the Company that you desire to purchase the Units.
The Company confirms the agreement 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. 333-17401) on Form S-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,
either (A) if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Units that shall identify the Preliminary
Prospectus (as hereinafter defined) that it supplements containing such
information as is required or permitted by Rules 434, 430A and 424(b) under the
Act or (B) if the Company does not rely on Rule 434 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, and in the case of either
clause (i)(A) or (i)(B) of this sentence, 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 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) if the Company relies on
Rule 434 under the Act, the Term Sheet relating to the Units that is first filed
pursuant to Rule 424(b)(7) under the Act, together with the Preliminary
Prospectus identified therein that such Term Sheet supplements, (B) if the
Company does not rely on Rule 434 under the Act, the prospectus first filed with
the Commission pursuant to Rule 424(b) under the Act or (C) if the Company does
not rely on Rule 434 under the Act and 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
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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; and the term "Term Sheet" means any term sheet that satisfies the
requirements of Rule 434 under the Act. Any reference to the "date" of a
Prospectus that includes a Term Sheet shall mean the date of such Term Sheet.
(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 material 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 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 therein or 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 "Underwriting" (other
than the number and exercise price of warrants issued to the Underwriter in
June 1993), under the heading "Risk Factors -- Possible Adverse Effect on
Liquidity of the Company's Securities Due to the Investigation of ▇.▇. ▇▇▇▇▇
Investment Banking Corp. and ▇.▇. ▇▇▇▇▇ & Co., Inc. by the Securities and
Exchange Commission," the first sentence under the heading "Risk Factors
--Adverse Effect on Liquidity Associated with Possible Restrictions on
Market-Marking Activities in the Company's Securities" 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 jurisdiction of
its incorporation, 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 be so qualified will not materially adversely affect the Company's business,
properties or financial condition, taken as a whole.
(d) The authorized, issued and outstanding capital stock of the
Company as of September 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
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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 against payment therefor 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 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 Class
A Common Stock, except as described in the Registration Statement.
The Warrants have been duly authorized and, when issued and delivered
against payment therefor 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, except as
may be limited by bankruptcy, insolvency, moratorium or similar laws relating to
or affecting creditors' rights generally and by general principles of equity,
and entitled to the benefits provided by the warrant agreement pursuant to which
such Warrants are to be issued (the "Warrant Agreement"), which will be
substantially in the form filed as an exhibit to the Registration Statement.
The shares of Class A 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 the Warrant Agreement upon payment
of the exercise price therefor, 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 by the Company
pursuant to this Agreement, will have been duly executed and delivered by the
Company and will constitute the valid and legally binding obligation of the
Company enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, moratorium or similar laws relating to or affecting
creditors' rights generally and by general principles of equity. 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 Units subject to the Unit
Purchase Option have been duly authorized and, when duly issued and delivered
upon payment of the exercise price therefor, such Warrants will constitute valid
and legally binding obligations of the Company enforceable in accordance with
their terms, except as may be limited by bankruptcy, insolvency, moratorium or
similar laws relating to or affecting creditors' rights generally and by general
principles of equity, and entitled to the benefits provided by the Warrant
Agreement. The Shares included in the Unit Purchase Option (and the shares of
Class A Common Stock issuable upon exercise of such Warrants) when issued and
sold in accordance with the terms of the Unit Purchase Option or the Warrants,
as the case may be, 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.
-4-
(f) This Agreement, the Unit Purchase Option and the Extension
Agreement (the "M/A Agreement") extending the term of an existing agreement
with you regarding mergers, acquisitions, joint ventures and certain other
forms of transactions have been duly and validly authorized, executed and
delivered by the Company. The Company has corporate power and 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, 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 material breach or violation of, any of the terms
or provisions of, or constitute a material 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 agreement or other material 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 material
violation of 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) Except as described 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 L.L.P., 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.
-5-
(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) present fairly in all material respects the
financial position and results of operations and changes in cash flow 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, except for the absence of year-end adjustments to interim statements.
The information set forth under the captions "Dilution," "Capitalization," and
"Selected Financial Data" in the Prospectus fairly present, on the basis stated
in the Prospectus, in all material respects the information included therein.
(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), except as
contemplated thereby or in connection with the transactions contemplated by this
Agreement, the Company has not incurred any liability or obligation, 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
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 materially adverse to the business or
financial condition of the Company, taken as a whole, 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, taken as a whole, nor are there any such 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 knowledge of the
Company, are threatened which might be expected to materially 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 or is contesting in good faith all taxes shown as due thereon; and
there is no tax deficiency which has been or to the knowledge of the Company is
reasonably likely to be asserted against the Company.
-6-
(n) Except as described in the Prospectus, 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 and 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 mark registrations, copyrights and licenses necessary for the conduct of
such business and has not received any notice of conflict with the asserted
rights of others in respect thereof. To the 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 would have a material
adverse impact upon the condition (financial or otherwise), business, property,
prospective results of operations, or net worth of the Company, taken as a
whole.
(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 Class A Common Stock to facilitate
the sale or resale of the Units hereby.
(s) Except as set forth in Schedule 1(s) hereto, the Company has
no subsidiaries and except as described or referenced in the Prospectus, the
Company does not own, directly or indirectly, any capital stock or other equity
ownership or proprietary interests in any other corporation, association, trust,
partnership, joint venture or other entity. Schedule 1(s) sets forth the
jurisdiction of incorporation of each subsidiary (the "Subsidiaries") of the
Company and the amount and percentage of capital stock of such subsidiary owned
by the Company, which
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capital stock is owned by the Company, except as described in the Prospectus,
free and clear of all liens, security interests and encumbrances.
(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.
(u) Except as previously disclosed in writing by the Company to
the Underwriter, to the Company's knowledge after due inquiry, no officer,
director, 5% shareholder or 1% shareholder 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.
(w) The Company has not distributed and will not distribute
prior to the First Closing Date 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 S-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, the Subsidiaries 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 $______ per Unit, at the place and
time hereinafter specified, 17,000 Units (the "First Units").
Delivery of the First Units against payment therefor shall take
place at the offices of ▇.▇. ▇▇▇▇▇ Investment Banking Corp., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇.▇. (or at such other place as may be designated by agreement between you
and the Company) at 10:00 a.m.,
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New York time, on ___________, 1997 or at such later time and date as you and
the Company may agree, 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 2,550 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 the Underwriter 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 designated by the Underwriter 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 ▇.▇. ▇▇▇▇▇
Investment Banking Corp., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. 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 Class A Common
Stock, whether in the form of cash, shares of Class A 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.
(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 one full business day 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 Securities
comprising the Units to be purchased by the Underwriter hereunder will be
delivered by the Company to you against payment of the purchase price, 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 ▇.▇. ▇▇▇▇▇ 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 the
Securities
-9-
comprising the Option Units by the Underwriter registered in such names and in
such denominations as the Underwriter may request.
It is understood that you propose 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 or any Term Sheet that
constitutes a part thereof and any amendment or supplement thereto with the
Commission in the manner and within the time period required by Rules 434 and
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, Term Sheet 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 reasonable 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
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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 to 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 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 the 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, as set forth in Section 8.
-11-
(d) The Company will use its best efforts, if requested by the
Underwriter, to obtain and keep current a listing in the Standard & Poors or
▇▇▇▇▇'▇ 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 shareholders 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
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
shareholders generally.
(g) The Company will deliver to you at or before the First
Closing Date at least one signed copy of the Registration Statement including
all financial statements and exhibits filed therewith, and of all amendments
thereto, and will deliver to you 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 (i) 5:00 p.m., New York City time, on the date of determination of the
public offering price, if such determination occurred at or prior to 12:00 noon,
New York City time, on such date or (ii) 6:00 p.m., New York City time, on the
business day following the date of determination of the public offering price,
if such determination occurred after 12:00 noon, New York City time, 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
-12-
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 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. The
Company shall not use any of the proceeds from the Offering to repay any
indebtedness of the Company, including but not limited to indebtedness to any
current executive officers, directors or principal shareholders of the Company;
provided, that a portion of the proceeds will be used to repay the Bridge Notes,
a portion of the proceeds may be used to repay bank debt and trade payables and,
upon the repayment in full and termination of the Company's Imperial Bank loan,
a portion of the proceeds may be used to repay loans from ▇▇▇ ▇. ▇▇▇▇ Ph.D. (not
to exceed $500,000) and to pay deferred wages to executive officers and founders
of the Company (up to a maximum of $75,000).
(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 ▇▇▇▇▇▇▇, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ 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, prior to the Effective Date of the
Registration Statement, and at all times thereafter, have authorized and
reserved sufficient shares of Class A Common Stock issuable upon exercise of the
Warrants included in the Units, upon exercise of the Unit Purchase Option to be
issued to the Underwriter (including the Warrants included therein) and upon
exercise of the Warrants included in the Underwriter's Option Units.
(l) The Underwriter shall receive agreements from each officer
and director of the Company, each stockholder holding in excess of 5% of the
outstanding Common Stock (except for HBI Financial, The Copernicus Fund, L.P.
and The Galileo Fund, L.P.) and each other stockholder known by the Company to
hold in excess of 1% of the outstanding Common Stock to the effect that (i) such
stockholder shall not publicly sell, assign or transfer any of their securities
of the Company for a period of 13 months from the First Closing Date (other than
(A) bona fide gifts and transfers to trusts for estate planning purposes where
the transferee agrees to be bound by this provision and (B) the sale of shares
owned by ▇▇▇ ▇. ▇▇▇▇, Ph.D. pursuant to the exercise, by the holders thereof, of
options on such shares previously granted by ▇▇. ▇▇▇▇); (ii) such stockholder
shall not exercise any preemptive rights which it
-13-
might hold with respect to the Offering; and (iii) such stockholder waives any
registration rights it may have with respect to the Offering and for a period of
13 months thereafter. In order to enforce this covenant, the Company shall
impose stop-transfer instructions with respect to the shares owned by such
shareholders until the end of such period.
(m) Prior to completion of this offering, the Company will make
all filings required to obtain the listing of the Warrants on the Nasdaq
SmallCap Market or a listing on such other market or exchange as the Underwriter
consents to, and will effect and use its best efforts to maintain such listing
for at least five years from the date of this Agreement.
(n) The Company and ▇▇▇ ▇. ▇▇▇▇, Ph.D. represent that it or he
has not taken and agree 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.
(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 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 18 month period commencing on the date of this
Agreement, the Company will not, without the prior written consent of the
Underwriter, grant any options to employees to purchase shares of Class A Common
Stock at an exercise price less than the fair market value of the Class A Common
Stock on the date of grant. 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) ▇▇▇ ▇. ▇▇▇▇, Ph.D. shall be the Chief Executive Officer,
President and Chairman of the Board and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be the Vice
President - Corporate Development and Planning of the Company on the Closing
Dates. Prior to completion of this offering, the Company will have obtained key
person life insurance on the lives of each of ▇▇. ▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ in an
amount of not less than $2 million and will use its best efforts to maintain
such insurance for a minimum period of either three years from the Effective
Date of the Registration Statement or the respective terms of the employment
agreements between the Company and such officers, whichever period is longer.
For a period of thirteen months from the First Closing Date, the cash
compensation of the executive officers of the Company shall not be increased
from the cash compensation levels disclosed in the Prospectus.
(r) On the Closing Date, and simultaneously with the delivery of
the Units, the Company shall execute and deliver to you the M/A Agreement.
(s) 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
-14-
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 you and each dealer as many copies of each such
Prospectus as you or such 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; provided, that the Company shall not be
required to disclose confidential information regarding any contemplated
transactions.
(t) Upon the exercise of any Warrant or Warrants (except for
Warrants included in the Unit Purchase Option) after _________, 1998, the
Company will pay ▇.▇. ▇▇▇▇▇ 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 ▇.▇. ▇▇▇▇▇ 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., as designated in writing on the warrant certificate
subscription form; (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 ▇.▇. ▇▇▇▇▇ Investment Banking Corp. and will not authorize any other
dealer to engage in such solicitation without the prior written consent of ▇.▇.
▇▇▇▇▇ Investment Banking Corp.
(u) For a period of five (5) years from the Effective Date of
the Registration Statement, the Company (i) at its expense, shall cause its
regularly engaged independent certified public accountants to review (but not
audit) 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 shareholders and (ii) shall not change its accounting
firm to other than a "Big Six" firm without the prior written consent of the
Chairman or the President of the Underwriter, which consent shall not be
unreasonably withheld or delayed.
(v) 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.
(w) Prior to the First Closing Date, (i) the Company will have
at least two (2) non-affiliated members on its Board of Directors; and (ii) the
Company shall engage a public relations firm reasonably acceptable to the
Underwriter.
-15-
(x) For a period of five years from the First Closing Date, ▇.▇.
▇▇▇▇▇ Investment Banking Corp. shall have the right, but not the obligation, to
designate one director of the Board of Directors of the Company.
(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
shareholders as such Secretary may require pursuant to Section 1202 of the
Internal Revenue Code, as amended, or regulations promulgated thereunder, in
order for the Company to qualify as a "small business" so that shareholders may
realize special tax treatment with respect to their investment in the Company.
(z) With five (5) business days after the Effective Date, the
Company will file with the Commission, and use its best efforts to cause to
become effective, a registration statement on Form S-3 relating to the Selling
Securityholder Securities (as defined in the Prospectus).
4. CONDITIONS TO UNDERWRITER'S OBLIGATIONS. The obligations of the
Underwriter to purchase and pay for the Units which it has 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 and 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 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 you; 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 ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ 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 O'Melveny & ▇▇▇▇▇ LLP, counsel
for the Company, in form and substance satisfactory to counsel for the
Underwriter.
In rendering such opinion, such counsel may rely upon the
Company's representations and warranties in this Agreement and 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
-16-
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.
(c) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇, LLP,
patent counsel for the Company, in form and substance satisfactory to counsel
for the Underwriter.
(d) All corporate proceedings and other legal matters relating
to this Agreement, the Registration Statement, the Prospectus and other related
matters shall be reasonably satisfactory to or reasonably approved by ▇▇▇▇▇▇▇,
Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ 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 documents as they may reasonably
request for the purpose of enabling them to render such opinion.
(e) 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.
(f) At the Closing Dates, (i) the representations and warranties
of the Company contained in this Agreement shall be true and correct 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 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 material agreement not in the ordinary course of business other
than as referred to in the
-17-
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 knowledge of the Company, 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 (f).
(g) 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 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 ▇▇▇▇▇▇▇, Tally, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, counsel to the Underwriter.
(ii) At the Option Closing Date there shall have been
delivered to you the signed opinions of O'Melveny & ▇▇▇▇▇ LLP,
counsel for the Company, and Christie, Parker & ▇▇▇▇, LLP, patent
counsel for the Company, each dated as of the Option Closing
Date, in form and substance satisfactory to Bachner, Tally,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the Underwriter, which opinions
shall be substantially the same in scope and substance as the
opinions furnished to you at the First Closing Date pursuant to
Sections 4(b) and 4(c) hereof, except that such opinions, 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, substantially the
same in scope and substance as the certificate furnished to you
at the First Closing Date pursuant to Section 4(f) hereof.
-18-
(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(e) 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 reasonably satisfactory in form and substance to you,
and you and Bachner, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the
Underwriter, shall have been furnished with all such documents,
certificates, and opinions as you may reasonably 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.
(h) 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, Class A 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, directors, shareholders or their affiliates.
(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 you. Any such cancellation shall be
without liability of the Underwriter to the Company.
5. CONDITION TO THE OBLIGATIONS OF THE COMPANY. The obligations of
the Company to sell and deliver the Units is subject to the condition that 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.
If the condition to the obligations of the Company provided for in
this Section has been fulfilled on the First Closing Date but is 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.
-19-
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 reasonable
attorneys' fees), to which the Underwriter or such controlling person may become
subject, under the Act or otherwise, and will reimburse, as incurred, the
Underwriter and such controlling persons for any reasonable 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; and provided,
further, that the Company will not be liable in any such case to the extent that
any such loss, claim, liability, expense or damage is asserted by any person if
such person did not receive a ▇▇▇ of the Prospectus (or the Prospectus as
amended or supplemented) at or prior to the confirmation of the sale of such
shares to such person in any case where such delivery is required by the Act and
the untrue statement or omission of a material fact contained in the Preliminary
Prospectus (or the Prospectus) was corrected in the Prospectus (or the
Prospectus as amended or supplemented). This indemnity will be in addition to
any liability which the Company may otherwise have.
(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 reasonable costs
of defense and investigation and all reasonable attorneys' fees) to which the
Company or any such director, nominee, officer or controlling person may become
subject under the Act or otherwise,
-20-
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 in reliance
upon and in conformity with written information furnished to the Company by the
Underwriter specifically for use therein or in the preparation thereof. 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 the Underwriter
or a person who controls the 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 the indemnified party and the
indemnifying party and in the reasonable judgment of the indemnified party, it
is advisable for the indemnified party to be represented by separate counsel (in
which case the indemnifying party shall not have the right to assume the defense
of such action on behalf of the indemnified party, 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
indemnified party). No settlement of any action against an indemnified party
shall be made without the
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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 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 if such
allocation is not permitted by applicable law then the relative fault of the
Company and the Underwriter 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 Section 11(f) of
the Act) shall be entitled to contribution from any person who is not guilty of
such fraudulent misrepresentation. 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 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.
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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, the
Selling Agreement and the Blue Sky Memorandum, any fees relating to the listing
of the Units, Class A Common Stock and Warrants on the Nasdaq SmallCap 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 and the cost of publication of at least two "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 ▇.▇. ▇▇▇▇▇ Investment Banking Corp. in its
individual rather than representative capacity, a non-accountable expense
allowance of $_______ of which $40,000 has been paid. In the event the
overallotment option is exercised, the Company shall pay to ▇.▇. ▇▇▇▇▇
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 such non-accountable expense
allowance, except that the Company shall be liable for the actual,
accountable, out-of-pocket expenses of the Underwriter, including legal fees,
up to a maximum of $40,000. 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 actual, accountable,
out-of-pocket expenses of the Underwriter, including legal fees, up to a
maximum of $450,000 (in addition to the Company Expenses for which the
Company shall in all events remain liable), provided, however, that if the
proposed financing is not completed because
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the Company prevents it based solely on reasons relating to pricing, the
Company's liability for such expense allowance (excluding the Company's
expenses) shall be limited to (i) $300,000 if the number of shares included in
each Unit is more than 250, (ii) $225,000 if the number of shares included in
each Unit is more than 275 and (iii) $150,000 if the number of shares included
in each Unit is more than 310.
(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 include, but not
be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees), to which the Underwriter 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 public offering by
the Underwriter of any of the Units. The time of the 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, 13, 14 and 15 shall remain in effect
notwithstanding such termination.
10. TERMINATION.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 13, 14
and 15 hereof, may be terminated at any time prior to the First Closing Date,
and the option referred to 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
-24-
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, taken as
a whole 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 ▇.▇.
▇▇▇▇▇ Investment Banking Corp. or its designees for a consideration of $1.50,
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 to
purchase an aggregate of 1,500 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.
12. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties
and other statements of the Company or ▇▇. ▇▇▇▇, 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.
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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
▇.▇. ▇▇▇▇▇ Investment Banking Corp., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
with a copy sent to Bachner, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, Esq., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or if sent to the
Company, will be mailed, delivered and confirmed to it at Amerigon Incorporated,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇. ▇▇▇▇, Ph.D.,
with a copy sent to O'Melveny & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, Attention: ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
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, any person controlling
the Company or 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 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.
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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,
AMERIGON INCORPORATED
By: ____________________________________
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
▇.▇. ▇▇▇▇▇ INVESTMENT BANKING CORP.
By: ____________________________________
Authorized Officer
I hereby agree to be bound by the provisions of Sections 3(n) and 12
hereof.
______________________________
▇▇▇ ▇. ▇▇▇▇, Ph.D.
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