DRAFT 09/17/97
UNDERWRITING AGREEMENT
between
NICHE PHARMACEUTICALS, INC.
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & COMPANY, INC.
Dated: , 1997
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1,400,000 Shares of Common Stock
NICHE PHARMACEUTICALS, INC.
UNDERWRITING AGREEMENT
New York, New York
, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Company, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, #▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned, NICHE PHARMACEUTICALS, INC., a Delaware corporation (the
"Company"), hereby confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & COMPANY, INC.
(being referred to herein as "you," the "Representative" or the "Underwriter"),
as follows:
1. Purchase and Sale of Securities.
1.1 Employment of the Underwriter.
1.1.1Terms and Conditions of Employment. On the basis of the
representations and warranties and subject to the terms and conditions
contained herein, the Company hereby employs the Underwriter as its
exclusive agent, and the Underwriter agrees to use its best efforts,
to offer and sell 1,400,000 (the "Shares") of the Company's Common
Stock, $.01 par value per share (the "Common Stock") to the public at
$5.00 per share, on a "best efforts, all or none" basis within
forty-five (45) days from the effective date (the "Effective Date") of
the Registration Statement (as hereinafter defined), or within ninety
(90) days from the Effective Date if extended by mutual agreement
between the Company and the Underwriter. There will be an underwriting
discount of ten percent. The total gross discount and non-accountable
expense allowance shall be subject to approval by the National
Association of Securities Dealers, Inc. ("NASD").
1.1.2 Agreement to Use Best Efforts. Subject to the terms and
conditions contained herein, the Underwriter agrees to make a public
offering of the Shares and to use its best efforts as agent, promptly
following receipt by it of written notice from the
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Securities and Exchange Commission (the "Commission") that the
Registration Statement is effective, to sell the Shares. Such public
offering may be made through dealers in securities selected by the
Underwriter. The Underwriter may allow such concessions to dealers as
may be determined by the Underwriter. The offering will be made upon
terms and conditions set forth in the Registration Statement and the
Prospectus in conformity with all applicable state and federal laws,
rules and regulations and in accordance withe Rules of Practice and
the Code of Uniform Practice of the NASD. The employment hereunder
shall terminate forty-five (45) days after the Effective Date of the
Registration Statement, unless extended for an additional forty-five
(45) day period by mutual agreement between the Company and the
Underwriter, or upon the sale of all the Shares, whichever date sooner
occurs.
1.1.3 Consequences of Unsuccessful Offering. In the event the
Underwriter does not find purchasers for 1,400,000 Shares within the
periods herein provided, this Agreement shall terminate and the
Underwriter shall refund to any persons who have subscribed to the
Shares the full amount which may have been received from them, without
interest or deductions, and none of the parties to this Agreement
shall have any obligation to any other party except as may be
otherwise expressly stipulated hereunder. Appropriate arrangements
shall be made prior to the commencement of the offering pursuant to an
escrow agreement between the Company, Underwriter and First Union
National Bank of Florida, N.A. (the "Escrow Agreement") for placing
the funds received from subscribers in an escrow account, entitled
First Union National Bank of Florida, N.A., Escrow Agent(the "Escrow
Account").
1.1.4 Underwriter's Commission. Subject to the sale of 1,400,000
Shares, the Underwriter shall be entitled to receive as its
compensation, a commission of $.50 per Share, and the Underwriter may
re-allow to selected dealers who are members of the NASD a concession
as may be determined by the Underwriter, but such concession shall not
exceed $____ per Share.
1.2 Representative's Warrants.
1.2.1 Purchase and Sale. Subject to the sale of 1,400,000 Shares,
the Company shall issue and sell to you and/or to such persons as you
may designate, on the Closing Date, warrants for the purchase of an
aggregate of 140,000 shares of Common Stock (the "Representative's
Warrants") for an aggregate purchase price of $140.00. The
Representative's Warrants and the shares of Common
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Stock issuable upon exercise of the Representative's Warrants are
hereinafter referred to collectively as the "Representative's
Securities." The Shares and the Representative's Securities are
hereinafter referred to collectively as the "Securities."
1.2.2 Terms and Conditions of Warrants. The Representative's
Warrants shall be exercisable for a period of three years commencing
one year after the Effective Date at an initial exercise price of
$7.50 per share and shall be substantially in the form of the
Representative's common stock purchase warrant attached hereto as
Exhibit A.
2. Representations and Warranties of the Company. The Company represents
and warrants to the Underwriter that:
2.1 Filings under Securities Laws.
2.1.1 Pursuant to the Act. The Company has filed with the
Commission a registration statement and an amendment or amendments
thereto, on Form SB-2 (Registration No. 333-17767), including any
related prospectus subject to completion (a "Preliminary Prospectus"),
for the registration of the Securities under the Securities Act of
1933, as amended (the "Act"), which registration statement and
amendment or amendments have been prepared by the Company in
conformity with the requirements of the Act, and the rules and
regulations of the Commission under the Act (the "Regulations").
Except as the context may otherwise require, such registration
statement, as amended, on file with the Commission at the time the
registration statement becomes effective (including the prospectus,
financial statements, schedules, exhibits and all other documents
filed as a part thereof or incorporated therein and all information
deemed to be a part thereof as of such time pursuant to paragraph (b)
of Rule 430A of the Regulations), is hereinafter called the
"Registration Statement," and the form of the final prospectus dated
the Effective Date (or, if applicable, the form of final prospectus
filed with the Commission pursuant to Rule 424 of the Regulations), is
hereinafter called the "Prospectus." The Registration Statement has
been declared effective on or prior to the effective date of this
Agreement.
2.1.2 Pursuant to the Exchange Act. The Company has filed with
the Commission a Form 8-A Registration Statement (File No. 0-_____)
providing for the registration under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), of the
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Common Stock. Such registration of the Common Stock has been declared
effective by the Commission on the date hereof.
2.2 No Stop or Other Orders. Neither the Commission, nor any state
regulatory authority, has issued any order preventing or suspending the use
of any Preliminary Prospectus or has instituted or threatened to institute
any proceedings with respect to such an order.
2.3 Disclosures in Registration Statement.
2.3.1 Representation as to Contents. At the time the Registration
Statement became effective and at all times subsequent thereto up to
the Closing Date, the Registration Statement and the Prospectus shall
contain all material statements that are required to be stated therein
in accordance with the Act and the Regulations, and shall in all
material respects conform to the requirements of the Act and the
Regulations; neither the Registration Statement nor the Prospectus,
nor any amendment or supplement thereto, on such dates, shall contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement for
the registration of the Securities or any amendment thereof or
pursuant to Rule 424(a) of the Regulations) and when any amendment
thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements
thereto complied or will comply in all material respects with the
applicable provisions of the Act and the Regulations, and did not and
will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The representation and
warranty made in this Section 2.3.1 does not apply to statements made
or statements omitted in reliance upon and in conformity with written
information furnished to the Company with respect to the Underwriter
expressly for use in the Registration Statement, Preliminary
Prospectus, or Prospectus or any amendment thereof or supplement
thereto. The Company acknowledges that the information referred to in
the immediately preceding sentence consists solely of the information
under the heading "Underwriting" in the Prospectus.
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2.3.2 Disclosure Regarding Contracts. The description in the
Registration Statement and the Prospectus of contracts, instruments
and other documents is accurate in all material respects and presents
fairly the information required to be disclosed therein. There are no
contracts, instruments or other documents of a character required to
be described in the Registration Statement or the Prospectus or to be
filed with the Commission as exhibits to the Registration Statement,
which have not been so described or filed. Each contract, instrument
and other document (however characterized or described) to which the
Company is a party or by which its property or business is or may be
bound or affected and which is referred to in the Prospectus, or is
material to its business, has been duly and validly executed, is in
full force and effect and is enforceable against the parties thereto
in accordance with its terms and none of such contracts, instruments
or documents has been assigned by the Company. Neither the Company
nor, to the best knowledge of the Company, any other party thereto is
in default thereunder and no event has occurred which, with the lapse
of time or the giving of notice, or both, would constitute a default
by the Company thereunder.
2.3.3 Prior Securities Transactions. No securities of the Company
have been sold by the Company or by or on behalf of, or for the
benefit of, any person or persons controlling, controlled by, or under
common control with the Company (or any predecessor), within three
years prior to the date hereof, except as disclosed in the
Registration Statement.
2.4 Changes After Dates in Registration Statement.
2.4.1 No Material Adverse Change. Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise specifically stated therein, (i) there
has been no material adverse change in the condition, financial or
otherwise, or in the results of operations, assets, properties,
business or business prospects of the Company, including, but not
limited to, any material loss of, or interference with, its business
from fire, storm, explosion, flood or other casualty, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, whether or not arising in the
ordinary course of business, and (ii) there have been no transactions
entered into by the Company, other than those in the ordinary course
of business, which are material with respect to the condition,
financial or otherwise,
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or to the results of operations, business or business prospects of the
Company.
2.4.2 Recent Securities Transactions, Etc. Subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, and except as may otherwise be indicated
or contemplated herein or therein, the Company has not (i) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money; or (ii) declared or paid any dividend
or made any other distribution on or in respect to its capital stock.
2.5 Independent Accountants. To the best knowledge of the Company,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.C., whose report is filed with the Commission as part of
the Registration Statement, are independent accountants as required by the
Act and the Regulations. The statements included in the Registration
Statement with respect to such accountants are true and correct in all
material respects.
2.6 Financial Statements. The financial statements, including the
notes thereto and supporting schedules, if any, included in the
Registration Statement and Prospectus fairly present the financial
position, the results of operations and cash flows of the Company at the
dates and for the periods to which they apply; and such financial
statements have been prepared in conformity with United States generally
accepted accounting principles, consistently applied throughout the periods
involved; and the supporting schedules, if any, included in the
Registration Statement present fairly the information required to be stated
therein. No other financial statements or schedules are required to be
included in the Registration Statement. The selected financial data set
forth in the Prospectus under the captions "Summary Financial Information"
and "Capitalization" fairly present the information set forth therein on
the basis stated in the Registration Statement.
2.7 Capitalization. As used herein, the term "Preferred Stock" shall
mean the Preferred Stock, $.01 par value per share, of the Company. The
Company had at the date or dates indicated in the Registration Statement
and Prospectus duly authorized, issued and outstanding capitalization as
set forth in the Registration Statement and the Prospectus. Based on the
assumptions stated in the Registration Statement and the Prospectus, the
Company will have on the Closing Date the adjusted stock capitalization set
forth therein. Except as set forth in the Registration Statement
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and the Prospectus, on the Effective Date and on the Closing Date, there
will be no options, warrants, or other rights to purchase or otherwise
acquire any authorized but unissued Common Stock or Preferred Stock or any
security convertible into shares of Common Stock or Preferred Stock, or any
contracts or commitments to issue or sell shares of Common Stock or
Preferred Stock or any such options, warrants, rights or convertible
securities.
2.8 Representations Regarding Securities.
2.8.1 Outstanding Securities. All issued and outstanding
securities of the Company have been duly authorized and validly issued
and are fully paid and non-assessable; the holders thereof have no
rights of rescission with respect thereto, and are not subject to
personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any
holder of any security of the Company or similar contractual rights
granted by the Company. The outstanding options and warrants to
purchase Common Stock constitute the valid and binding obligations of
the Company, enforceable in accordance with their terms, except (i)
such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, marshaling and/or similar laws,
now or hereafter in effect affecting creditors rights and remedies and
(including such as may deny giving effect to waivers of debtors'
rights), (ii) as enforceability of any indemnification provision may
be limited under Federal and State laws, (iii) that the remedy of
specific performance and injunction and other forms of equitable
relief may be subject to the equitable defenses and to the discretion
of the courts before which any proceeding therefor may be brought
(regardless of whether such enforceability is considered a proceeding
in equity or in law). The authorized Common Stock, the Preferred Stock
and the outstanding options and warrants to purchase Common Stock
conform to all statements relating thereto contained in the
Registration Statement and the Prospectus. The offers and sales of the
outstanding Common Stock, and the options and warrants to purchase
Common Stock, were at all relevant times either registered under the
Act and applicable state securities or Blue Sky Laws or were exempt
from such registration requirements.
2.8.2 Securities Sold Hereunder. The Securities have been duly
authorized and, when issued and paid for, will be validly issued,
fully paid and non-assessable and the holders thereof are not and will
not be subject to personal liability by reason of
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being such holders; the Securities are not and will not be subject to
the preemptive rights of any holders of any security of the Company or
similar contractual rights granted by the Company; and all corporate
action required to be taken for the authorization, issuance and sale
of the Securities has been duly and validly taken. When issued, the
Representative's Warrants will constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof
and payment therefor, the number and type of securities of the Company
called for thereby and the Representative's Warrants are enforceable
against the Company in accordance with their respective terms, except
(i) such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, marshaling and/or similar laws,
now or hereafter in effect affecting creditors rights and remedies and
(including such as made deny giving effect to waivers of debtors'
rights, (ii) as enforceability of any indemnification provision may be
limited under Federal and State laws, (iii) that the remedy of
specific performance and injunction and other forms of equitable
relief may be subject to the equitable defenses and to the discretion
of the courts before which any proceeding therefor may be brought
(regardless of whether such enforceability is considered a proceeding
in equity or in law).
2.9 No Registration Rights. No holder of any securities of the Company
or of any options or warrants of the Company exercisable for or convertible
or exchangeable into securities of the Company has the right to require the
Company to register any such securities of the Company under the Act or to
include any such securities in a registration statement to be filed by the
Company, including the Registration Statement, except as disclosed in the
Prospectus.
2.10 Representations Regarding This Agreement. The Company has full
power and authority, corporate and otherwise, to enter into this Agreement.
This Agreement has been duly and validly authorized by the Company and
constitutes the valid and binding agreement of the Company, enforceable
against it in accordance with its terms, except (i) such enforceability may
be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, marshaling and/or similar laws, now or hereafter in effect
affecting creditors rights and remedies and (including such as made deny
giving effect to waivers of debtors' rights, (ii) as enforceability of any
indemnification provision may be limited under Federal and State laws,
(iii) that the remedy of specific performance and injunction and other
forms of equitable relief may
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be subject to the equitable defenses and to the discretion of the courts
before which any proceeding therefor may be brought (regardless of whether
such enforceability is considered a proceeding in equity or in law). The
execution, delivery and performance by the Company of this Agreement, the
consummation by the Company of the transactions herein contemplated and the
compliance by the Company with the terms and conditions hereof have been
duly authorized by all necessary corporate action and do not and will not,
with or without the giving of notice or the lapse of time or both, (i)
result in a breach of, or conflict with any of the terms and provisions of,
or constitute a default under, or result in the creation, modification,
termination or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to the terms of, any indenture,
mortgage, deed of trust, note, loan or credit agreement or any other
agreement or instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company is a party or by which
the Company may be bound or to which any of the property or assets of the
Company is subject, which breach, conflict or default would have a material
adverse effect on the condition (financial or other), business, prospects
or properties of the Company; (ii) result in any violation of the
provisions of the Certificate of Incorporation or the By-Laws of the
Company; (iii) violate any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
business; or (iv) have a material adverse effect on any permit, license,
certificate, registration, approval, consent or franchise concerning the
Company; except in the case of (i) or (iii), where such default, breach,
violation or effect, either singly or in the aggregate, would not have
material adverse effect on the financial condition or results of
operations.
2.11 No Improper Payments. Neither the Company nor, to its knowledge,
any director, officer, employee or agent of the Company has made any
payment of funds of the Company or received or retained any funds in
violation of any law, rule or regulation or of a character required to be
disclosed in the Prospectus.
2.12 No Defaults; Violations. Except as set forth in the Prospectus,
no default exists in the due performance and observance of any material
term, covenant or condition of any license, contract, indenture, mortgage,
deed of trust, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other
material agreement or
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instrument to which the Company is a party or by which the Company may be
bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its
Certificate of Incorporation or By-Laws. The Company is not in violation of
any franchise, license, permit, applicable law, rule, regulation, judgment
or decree of any governmental agency or court, domestic or foreign, having
jurisdiction over such company or any of its properties or business, which
violation would result in a material adverse change in the condition
(financial or other), business, prospects or properties.
2.13 Corporate Power; Licenses; Consents.
2.13.1 Conduct of Business. The Company has all requisite
corporate power and authority, and has all necessary authorizations,
approvals, orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies to own or lease its
properties and conduct its business as described in the Prospectus,
and such company is and has been doing business in compliance with all
such authorizations, approvals, orders, licenses, certificates and
permits and all federal, state and local laws, rules and regulations,
except where the failure to so comply would not have a material
adverse effect on the condition (financial or other), business,
prospects or properties of the Company.
2.13.2 Required Consents. The Company has obtained all consents,
authorizations, approvals and orders required in connection with the
execution and delivery of this Agreement and the performance of its
obligations hereunder. No consent, authorization or order of, and no
filing with, any court, government agency or other body is required
for the valid issuance, sale and delivery of the Securities pursuant
to this Agreement and as contemplated by the Prospectus, except those
required under applicable federal and state securities laws.
2.14 Title to Property; Insurance. The Company has good and marketable
title to, or valid and enforceable leasehold estates in, all items of real
and personal property (tangible and intangible) owned or leased by it, free
and clear of all liens, encumbrances, claims, security interests, defects
and restrictions (collectively, "Restrictions") of any material nature
whatsoever, other than those referred to in the Prospectus. The Company has
adequately insured its properties against loss or damage by fire or other
casualty and
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maintains such other insurance, in adequate amounts, as is usually
maintained by companies engaged in the same business or in similar
businesses.
2.15 Litigation. Except as set forth in the Prospectus, there is no
action, suit, proceeding, inquiry, arbitration, investigation, litigation
or governmental proceeding pending or threatened against, or involving the
properties or business of, the Company which might materially and adversely
affect the financial position, prospects, value or the operation or the
properties or the business of the Company, or which question the validity
of the capital stock of the Company or this Agreement or of any action
taken or to be taken by the Company pursuant to, or in connection with,
this Agreement. There are no outstanding orders, judgments or decrees of
any court, governmental agency or other tribunal naming the Company and
enjoining the Company from taking, or requiring the Company to take, any
action, or to which the Company, or any of its properties or business, is
bound or subject.
2.16 Organization; Good Standing. The Company has been duly organized
and is validly existing as a corporation and is in good standing under the
laws of its state of incorporation. The Company is duly qualified and
licensed and in good standing as a foreign corporation in each jurisdiction
in which ownership or leasing of any properties or the character of its
operations requires such qualification or licensing, except where the
failure to qualify would not have a material adverse effect on the
condition (financial or otherwise) business prospects or properties of the
Company.
2.17 Taxes. The Company has filed all returns (as hereinafter defined)
required to be filed with taxing authorities prior to the date hereof or
has duly obtained extensions of time for the filing thereof. The Company
has paid all taxes (as hereinafter defined) shown as due on such returns
that were filed and has paid all taxes imposed on or assessed against it,
other than any which the Company is contesting in good faith. The
provisions for taxes payable, if any, shown on the financial statements
filed with or as part of the Registration Statement are sufficient for all
accrued and unpaid taxes, whether or not disputed, and for all periods to
and including the dates of such financial statements. No issues have been
raised (and are currently pending) by any taxing authority in connection
with any of the returns or taxes asserted as due from the Company, and no
waivers of statutes of limitation with respect to the returns or collection
of taxes have been given by or
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requested from the Company or any subsidiary thereof. The term "taxes"
means all federal, state, local, foreign, and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
windfall profits, customs, duties or other taxes, fees, assessments, or
charges of any kind whatever, together with any interest and any penalties,
additions to tax, or additional amounts with respect thereto. The term
"returns" means all returns, declarations, reports, statements, and other
documents required to be filed in respect to taxes.
2.18 Transactions Affecting Disclosure to NASD.
2.18.1 Finders' Fees. To the best knowledge of the Company, there
are no claims, payments, issuances, arrangements or understandings for
services in the nature of finders' or origination fees with respect to
the sale of the Securities hereunder or any other arrangements,
agreements, understandings, payments or issuances with respect to the
Company that may affect the Underwriter's compensation, as determined
by NASD, other than payments to the Representative of a placement
agent fee with respect to the Companies private placement of a
$100,000 promissory note and 100,000 Shares which closed on December
9, 1996.
2.18.2 Payments Within Twelve Months. The Company has not made
any direct or indirect payments (in cash, securities or otherwise) (i)
to any person, as a finder's fee, investing fee or otherwise, in
consideration of such person raising capital for the Company or
introducing to the Company persons who provided capital to the
Company, (ii) to any NASD member, or (iii) to any person or entity
that has any direct or indirect affiliation with an NASD member within
the twelve month period prior to December 12, 1996, the date on which
the Registration Statement was filed with the Commission (the "Filing
Date") or thereafter, other than payments to the Representatives.
2.18.3 Use of Proceeds. None of the net proceeds of the offering
will be paid by the Company to any participating NASD member or any of
its affiliates or associated persons. The Underwriter shall approve
the Company's proposed "Use of Proceeds" of the offering.
2.18.4 Insiders' NASD Affiliation. No officer, director or holder
of five percent (5%) or more of any class of
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securities of the Company has any direct or indirect affiliation or
association with any NASD member. No beneficial owner of the
unregistered securities of the Company has any direct or indirect
affiliation or association with any NASD member. The Company will
advise the Representative and the NASD if the Company becomes aware
that any 5% or greater shareholder, or any officer or director, of the
Company becomes an affiliate or associated person of an NASD member.
2.19 Internal Accounting Controls. The Company maintains, and the
Company will continue to maintain, a system of internal accounting control
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
2.20 Nasdaq Listing. As of the Effective Date, the Shares have been
approved for listing on the National Association of Securities Dealers
Automated Quotation ("Nasdaq") SmallCap Market System.
2.21 Intangibles. The Company owns or possesses the requisite licenses
or rights to use all trademarks, service marks, service names, trade names,
patents and patent applications, copyrights and other rights (collectively,
the "Intangibles") owned or used by it. The Intangibles owned or used by
the Company has been registered in the United States Patent and Trademark
Office and/or the United States Copyright Office and have been fully
maintained and are in full force and effect. There is no claim or action by
any person, or proceeding pending or, to the knowledge of the Company,
threatened, and the Company has not received any notice of conflict with
the asserted rights of others, which challenges the exclusive right of the
Company with respect to any Intangibles used in the conduct of the business
of the Company. To the knowledge of the Company, neither its Intangibles,
nor its current products, services and processes infringe on any
intangibles held by any third party. To the best knowledge of the Company,
no others have infringed or are infringing upon the Intangibles of the
Company.
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2.22 Employee Matters.
2.22.1 Relations With Employees. The Company has generally
enjoyed a satisfactory relationship with its employees and is in
compliance with all federal, state and local laws and regulations
respecting the employment of its employees and employment practices,
terms and conditions of employment and wages and hours relating
thereto. There are no pending investigations involving the Company by
the U.S. Department of Labor or any other governmental agency
responsible for the enforcement of such federal, state or local laws
and regulations. There is no unfair labor practice charge or complaint
against the Company pending before the National Labor Relations Board
or any strike, picketing, boycott, dispute, slowdown or stoppage
pending or threatened against or involving the Company or any
predecessor entity, and none has ever occurred. No issue concerning
representation exists respecting the employees of the Company and no
collective bargaining agreement or modification thereof is currently
being negotiated by the Company. No grievance or arbitration
proceeding is pending or threatened under any expired or existing
collective bargaining agreement of the Company, if any.
2.22.2 Employee Benefit Plans. Other than as set forth in the
Registration Statement, the Company does not maintain, sponsor or
contribute to, nor is it required to maintain, sponsor or contribute
to, any program or arrangement that is an "employee pension benefit
plan," an "employee welfare benefit plan," or a, "multi-employer plan"
(each, an "ERISA Plan") as such terms are defined in Sections 3(2),
3(1) and 3(37), respectively, of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Company has at any
time maintained or contributed to a defined benefit plan, as defined
in Section 3(35) of ERISA. If the Company does maintain or contribute
to a defined benefit plan, any termination of the plan on the date
hereof would not give rise to liability under Title IV of ERISA. No
ERISA Plan (or any trust created thereunder) has engaged in a
"prohibited transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code"), which could subject the Company to any tax penalty for
prohibited transactions and which has not adequately been corrected.
Each ERISA Plan is in compliance with all material reporting,
disclosure and other requirements of the Code and ERISA as they relate
to any such ERISA Plan. Determination letters have been received from
the Internal Revenue Service with respect to each ERISA Plan that is
intended to comply with Code Section 401(a), stating that such ERISA
Plan and
120243.3
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the attendant trust are qualified thereunder. The Company has not ever
completely or partially withdrawn from a "multi-employer plan."
2.23 Investment Company Representations. The Company is not an
"investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
2.24 Officer's Certificate. Any certificate signed by any duly
authorized officer of the Company and delivered to you or to your counsel
shall be deemed a representation and warranty by such Company to the
Representative as to the matters covered thereby.
2.25 Lock-Up Agreements With Insiders. The Company has caused to be
duly executed legally binding agreements enforceable in accordance with
their respective terms, except (a) such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, marshaling
and/or similar laws, now or hereafter in effect affecting creditors rights
and remedies and (including such as made deny giving effect to waivers of
debtors' rights, (b) as enforceability of any indemnification provision may
be limited under Federal and State laws, (c) that the remedy of specific
performance and injunction and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the courts
before which any proceeding therefor may be brought (regardless of whether
such enforceability is considered a proceeding in equity or in law)
pursuant to which (i) the persons listed on Appendix I hereto and their
family members and affiliates (as defined in the securities laws)
(collectively, the "Insiders") agree not to sell any shares of Common Stock
or warrants or options to purchase Common Stock or securities convertible
into Common Stock owned by them (either pursuant to Rule 144 of the
Regulations or otherwise) for a period of two years following the Effective
Date and (ii) the persons listed on Appendix II hereto and their family
members and affiliates (as defined in the securities laws) (collectively,
the "Non-Insider Shareholders") agree not to sell any shares of Common
Stock or warrants or options to purchase Common Stock or securities
convertible into Common Stock owned by them (either pursuant to Rule 144 of
the Regulations or otherwise) for a period of six (6) months following the
Effective Closing Date, except in any such case with the prior written
consent of the Representative (other than by the laws of descent and
distribution). In order to enforce
120243.3
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such agreements, the Company shall impose stop transfer instructions with
respect to all such shares of Common Stock or warrants or options to
purchase Common Stock or securities convertible into Common Stock until the
end of the applicable period.
2.26 No Stabilization or Manipulation. Neither the Company, nor any of
its officers, directors or controlling persons, has taken, or will take,
directly or indirectly, any action designed, or which reasonably might be
expected, to cause or result, under the Act, the Exchange Act or otherwise,
in, or that has constituted, stabilization or manipulation of the price of
any security of the Company or to facilitate the sale or resale of the
Shares.
2.27 Subsidiaries. The representations and warranties made by the
Company in this Agreement shall, in the event that it has one or more
subsidiaries (the "subsidiary(ies)") also apply and be true with respect to
each subsidiary, individually (except as the context otherwise requires)
and taken as a whole with the respective company of which it is a
subsidiary and all other subsidiaries thereof, as if each representation
and warranty contained herein made specific reference to each subsidiary
each time the term "Company" was used. Except as described in the
Prospectus, the Company does not own any interest in any corporation,
partnership, joint venture, trust or other business entity.
2.28 Other Agreements. The Company shall enter into three-year
employment contracts with each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇ and
adopt a 1996 Senior Executive Stock Option Plan, as described in the
Prospectus, with terms subject to the Underwriter's approval.
3. Representative's Representations and Warranties.
The Representative represents and warrants to the Company that:
3.1 Organization: Good Standing. The Representative has been duly
organized and is validly existing as a corporation and is in good standing
under the laws of its state of incorporation.
120243.3
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3.2 Corporate Power; Licenses; Consents. The Representative is
registered as a broker-dealer with the Commission and in each state where
such registration is required where the Representative acts as a
broker-dealer.
3.3 Binding Obligation; Enforceability. This Agreement and the
transactions contemplated hereby have been duly authorized by, an executed
on behalf of the Representative and constitute the valid and binding
obligations of the Representative, enforceable in accordance with its
terms, except (i) such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, marshaling and/or
similar laws, now or hereafter in effect affecting creditors rights and
remedies and (including such as made deny giving effect to waivers of
debtors' rights, (ii) as enforceability of any indemnification provision
may be limited under Federal and State laws, (iii) that the remedy of
specific performance and injunction and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the courts
before which any proceeding therefor may be brought (regardless of whether
such enforceability is considered a proceeding in equity or in law).
4. Covenants of the Company. The Company covenants and agrees with the
Underwriter as follows:
4.1 Amendments to Registration Statement. The Company shall deliver to
the Representative, prior to filing, any amendment or supplement to the
Registration Statement or Prospectus proposed to be filed after the
Effective Date and shall not file any such amendment or supplement to which
the Representative shall reasonably object.
4.2 Federal Securities Laws.
4.2.1 Compliance. During the time when a Prospectus is required
to be delivered under the Act, the Company shall use all reasonable
efforts to comply with all requirements imposed upon it by the Act,
the Regulations and the Exchange Act and by the regulations under the
Exchange Act, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Shares in
accordance with the provisions hereof and the Prospectus. If at any
time when a Prospectus relating to the Shares is required to be
delivered under the Act, any event shall have occurred as a result of
which, in the opinion of counsel for the Company or counsel for the
Underwriter, the Prospectus, as then
120243.3
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amended or supplemented, includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act,
the Company shall notify the Representative promptly and prepare and
file with the Commission, subject to Section 4.1 hereof, an
appropriate amendment or supplement in accordance with Section 10 of
the Act.
4.2.2 Filing of Final Prospectus. The Company shall file the
Final Prospectus (in form and substance satisfactory to the
Representative) with the Commission pursuant to the requirements of
Rule 424 of the Regulations.
4.2.3 Exchange Act Registration. For a period of five years from
the Effective Date, the Company will use its best efforts to maintain
registration of the Common Stock under the provisions of the Exchange
Act.
4.2.4 Financial Printer. The Preliminary Prospectuses shall be
printed by a financial printer selected by the Company and approved by
the Underwriter.
4.3 Blue Sky Filings. The Company shall endeavor in good faith, in
cooperation with the Representative and its counsel, at or prior to the
time the Registration Statement becomes effective, to qualify the Shares
for offering and sale under the securities laws of such jurisdictions as
the Representative may reasonably designate, provided that no such
qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or
would be required to qualify to do business as a foreign corporation. In
each jurisdiction where such qualification shall be effected, the Company
shall, unless the Representative agrees that such action is not at the time
necessary or advisable, use all reasonable efforts to file and make such
statements or reports at such times as are or may be required by the laws
of such jurisdiction. All blue sky work shall be undertaken by
________________, and the Company shall pay for all related expenses and
disbursements incurred by such counsel.
4.4 Delivery of Filings to Underwriter. The Company shall deliver to
the Underwriter, without charge, from time to time during the period when
the Prospectus is required to be delivered
120243.3
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under the Act or the Exchange Act, such number of copies of each
Preliminary Prospectus and the Prospectus as the Underwriter may reasonably
request and, immediately after the Registration Statement or any amendment
or supplement thereto is filed, deliver to the Representative two (2)
executed original Registration Statements, including exhibits, and all
post-effective amendments thereto and copies of documents filed therewith
or incorporated therein by reference and all executed original consents of
certified experts.
4.5 Effectiveness and Events Requiring Notice to the Representative.
The Company shall use its best efforts to cause the Registration Statement
to remain effective until the later of the completion by the Underwriter of
the distribution of the Shares (but in no event more than 9 months after
the date on which the Registration Statement shall have been declared
effective) or 25 days after the date on which the Registration Statement
shall have been declared effective and shall notify the Representative
immediately and shall promptly confirm the notice in writing of (i) the
effectiveness of the Registration Statement and any amendment thereto, (ii)
the issuance by the Commission of any stop order or of the initiation, or
the threatening, of any proceeding for that purpose, (iii) the issuance by
any state securities commission of any proceedings for the suspension of
the qualification of the Shares for offering or sale in any jurisdiction or
of the initiation, or the threatening, of any proceeding for that purpose,
(iv) the mailing and delivery to the Commission for filing of any amendment
or supplement to the Registration Statement or Prospectus, (v) the receipt
of any comments or request for any additional information from the
Commission, and (vi) the happening of any event during the period described
in Section 4.4 hereof that makes any statement of a material fact made in
the Registration Statement or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the Prospectus in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. If the Commission or any state
securities commission shall enter a stop order or suspend such
qualification at any time, the Company shall make every reasonable effort
to obtain promptly the lifting of such order.
4.6 Unaudited Financials. The Company shall furnish to the
Representative as early as practicable prior to the date hereof and the
Closing Date, but no later than two (2) full business days prior thereto, a
copy of the latest available unaudited interim financial statements (the
"Unaudited Financials") of the Company
120243.3
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prepared in a manner consistent with that included in the Registration
Statement (which in no event shall be as of a date more than sixty (60)
days prior to the Effective Date) which have been read by the Company's
independent accountants, as stated in their letter to be furnished pursuant
to Section 5.3 hereof.
4.7 Reports to the Underwriters.
4.7.1 Periodic Reports, Etc. For a period of five (5) years
following the Effective Date, the Company shall, simultaneously with
the release or filing thereof, as the case may be, furnish to the
Representative, (i) copies of such financial statements and other
periodic and special reports as the Company from time to time
furnishes generally to holders of any class of its securities, (ii) a
copy of each periodic report the Company shall be required to file
with the Commission, (iii) a copy of every press release and every
news item and article with respect to the Company or its affairs which
was released by the Company, (iv) copies of each Form SR filed by the
Company, (v) a copy of each Form 8-K or Schedules 13D, 13G, 14D-1 or
13E-4 received or prepared by the Company, and (vi) such additional
documents and information with respect to the Company and the affairs
of any future subsidiaries of the Company as the Representative may
from time to time reasonably request.
4.7.2 Transfer Sheets. For a period of three years from the
Closing Date, the Company will furnish to the Representative at the
Company's sole expense such transfer sheets of the Company's
securities as the Representative may request, including the daily,
weekly and monthly consolidated transfer sheets of the transfer agent
of the Company.
4.8 Delivery of Representative's Warrants. On the Closing Date, the
Company shall execute and deliver to the Representative the
Representative's Warrants substantially in the form filed as Exhibit 4.2 to
the Registration Statement.
4.9 Payment of Expenses.
4.9.1 General Expenses. The Company shall pay on the Closing Date
all expenses incident to the performance of the obligations of the
Company under this Agreement, including, but not limited to, (i) the
preparation, printing, filing and mailing (including the payment of
postage with respect to such mailing) of
120243.3
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the Registration Statement, the Preliminary Prospectuses and the
Prospectus and the printing and mailing of this Agreement and related
documents, including the cost of all copies thereof and any amendments
or supplements thereto supplied to the Underwriter in quantities as
may be required by the Underwriter, (ii) the printing, engraving,
issuance and delivery of the Shares and the Representative's Warrants,
including any transfer taxes and other taxes payable thereon, (iii)
the qualification of the Shares under state or foreign securities or
Blue Sky laws, including the costs of printing and mailing the
"Preliminary Blue Sky Memorandum," and all amendments and supplements
thereto, fees and disbursements for the Underwriter's Blue Sky
counsel, which fees shall not exceed an aggregate of $35,000.00
($15,000.00 of which has already been paid),and fees and disbursements
of local counsel, if any, retained for such purpose, (iv) applications
for assignments of a rating of the Shares by qualified rating
agencies, (v) filing fees, costs and expenses incurred in registering
the offering with the NASD, (vi) costs of placing "tombstone"
advertisements in publications that shall be reasonably selected by
the Representative, (vii) fees and disbursements of the transfer
agent, (viii) the Company's expenses associated with "due diligence"
meetings arranged by the Representative; (ix) the preparation, binding
and delivery of four transaction bound volume sets for the
Representative; (x) any listing of the Shares on the Nasdaq SmallCap
Market System or on any securities exchange or any listing in Standard
& Poor's Corporation Records or ▇▇▇▇▇'▇ OTC Industrial Manual, and
(xi) all other costs and expenses incident to the performance of its
obligations hereunder that are not otherwise specifically provided for
in this Section 4.9.1. Since an important part of the public offering
process is for the Company to appropriately and accurately describe
both the background of the principals of the Company and the Company's
competitive position in its industry, the Company will engage, if
requested by the Underwriter, and will pay for, an investigative
search firm of the Representative's choice to conduct an investigation
of principals of the Company and its predecessors and affiliates
designated by the Representative. The Representative may deduct from
the net proceeds of the offering payable to the Company on the Closing
Date the expenses set forth herein to be paid by the Company. If this
Agreement shall not be carried out for any reason whatsoever, the
Company shall remain liable for all of its actual out-of-pocket
expenses pursuant to this Section 4.9.1.
4.9.2 Representatives' Expenses. In addition to the expenses
payable pursuant to Section 4.9.1, the Company shall pay
120243.3
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to the Representative a non-accountable expense allowance in an amount
not to exceed $210,000 on the Closing Date by certified or bank
cashier's check or, at the election of the Representative, by
deduction from the proceeds of the offering contemplated hereby. If
the offering contemplated by this Agreement is not consummated for any
reason, the Company shall be liable for the accountable expenses of
the Representatives, including, but not limited to, legal fees, Blue
Sky counsel fees, and "road show" and due diligence expenses, to a
maximum of $200,000, less any payments previously made therefor.
4.10 Application of Net Proceeds. The Company shall apply the net
proceeds from the offering received by it in a manner consistent with the
application described under the caption "Use of Proceeds" in the Prospectus
and shall file such reports with the Commission with respect to the sale of
the Shares and the application of the proceeds therefrom as may be required
pursuant to Rule 463 under the Act.
4.11 Delivery of Earnings Statements to Security Holders. The Company
shall make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth full
calendar month following the Effective Date, an earnings statement (which
need not be certified by independent public or independent certified public
accountants unless required by the Act or the Regulations, but which shall
satisfy the provisions of Rule 158(a) under Section 11(a) of the Act)
covering a period of at least twelve (12) consecutive months beginning on
the date immediately after the Effective Date.
4.12 Reservation of Shares. The Company shall reserve and keep
available that maximum number of its authorized but unissued shares of
Common Stock as is issuable upon the exercise of the Representative's
Warrants.
4.13 Board of Directors. For a period of three years from the
Effective Date, the Company will recommend and use its best efforts to
elect a designee of the Underwriter as a member of its Board of Directors.
If for whatever reason the Underwriter does not designate a member of the
Company's Board of Directors, the Underwriter shall nevertheless have the
right to send a representative (who need not be the same individual from
meeting to meeting) to observe each meeting of the Board of Directors. The
Company agrees to give the Underwriter written notice of each such meeting
and to provide the Underwriter with an agenda and minutes
120243.3
-22-
of the meeting no later than the time it gives such notice and provides
such items to the other directors. The Company agrees to provide such
director or representative of the Underwriter: (i) the same compensation
and expense reimbursement as would be paid to non-officer directors of the
Company; and (ii) the same indemnification and insurance protection as is
afforded generally to officers and directors of the Company.
4.14 Press Releases. The Company shall not issue a press release or
engage in any other publicity until twenty-five (25) days after the
Effective Date, without the Representative's prior written consent, which
consent shall not be unreasonably withheld.
4.15 Nasdaq Maintenance. For a period of five years from the date
hereof, the Company shall use its best efforts to maintain the listing of
the Common Stock on the Nasdaq SmallCap Market for not less than five
years, unless otherwise agreed to by the Underwriter.
4.16 Key Person Life Insurance. For a period of at least three years
following the Effective Date, the Company shall maintain key person life
insurance with an insurance company which is reasonably satisfactory to the
Representative in an amount no less than $2 million in the aggregate on the
lives of each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇, naming the Company as
the sole beneficiary thereof.
4.17 Disqualification of Form S-1 (or other appropriate form). For a
period equal to seven years from the date hereof, the Company will not take
any action or actions which may prevent or disqualify the Company's use of
Form S-1 (or other appropriate form) for the registration under the Act of
the shares underlying the Representative's Warrants.
4.18 Transfer Agent. The Company shall retain a transfer agent
acceptable to the Underwriter for the Common Stock for a period of five
years following the Effective Date.
4.19 Accountants. For a period of three years from the Effective Date,
the Company will not effect a change in its accounting firm without the
prior written consent of the Representative, which consent will not be
unreasonably withheld, except that no such consent is required if the new
firm is a member of the so-called "Big Six."
120243.3
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4.20 Professional Services. The Company shall retain attorneys and
accountants acceptable to the Underwriter to assist the Company in
preparation of the Registration Statement and the Prospectus. If requested
by the Underwriter, the Company will retain a financial public relations
firm and/or an advertising agency to assist in the preparation of the
Registration Statement and Prospectus and for up to two years after the
Effective Date.
4.21 Sale of Securities. The Company will not, without obtaining the
prior written of the Representative, (i) issue or sell in any manner,
whether by private placement, public offering or otherwise, any of its
securities, other than the Representative's Warrants, Common Stock upon the
exercise of the Representative's Warrants or any other currently
outstanding warrant or option, options (and Common Stock upon the exercise
thereof) under the Company's stock option plans as currently in effect, or
securities issued in connection with an acquisition or corporate
combination, for a period of two years following the Closing Date, or (ii)
permit or cause a private or public sale or private or public offering of
any of its securities (in any manner, including pursuant to Rule 144 under
the Act) owned nominally or beneficially by (A) any of the Insiders for a
period of two years following the Closing Date or (B) any of the
Non-Insider Shareholders for a period of six months following the Closing
Date.
4.22 Exercise Price of Options/Warrants. For a period of twelve months
after the Effective Date, the Company will not grant or issue options to
purchase more than 150,000 shares of the Company's Common Stock pursuant to
the Company's 1996 Non-Senior Executive Stock Option Plan, and the exercise
price of such options shall not be less than the fair market value of the
Common Stock on the date of the grant.
4.23 Insiders' Sales. During the three year period following the
Effective Date, the Underwriter shall have the right to purchase for the
Underwriter's account or to sell for the account of any of the Company's
officers or directors, by any persons or entities currently owning shares
or options to purchase five percent or more of the shares of Common Stock
on the Effective Date, or by the Insiders, any securities of the Company
sold by the Insiders pursuant to Rule 144 under the Act. Each of the
Insiders will agree to offer the Underwriter the exclusive opportunity to
purchase or sell such securities on terms at least as favorable to the
Insiders as they can secure elsewhere.
120243.3
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5. Conditions of the Underwriter's Obligations. The obligations of the
Underwriter to purchase and pay for the Shares, as provided herein, shall be
subject to the continuing accuracy of the representations and warranties of the
Company as of the date hereof and as of the Closing Date to the accuracy of the
statements of officers of the Company made pursuant to the provisions hereof and
to the performance by the Company of its obligations hereunder and to the
following conditions:
5.1 Regulatory Matters.
5.1.1 Effectiveness of Registration Statement. The Registration
Statement shall have become effective not later than 5:00 P.M., New
York time, on the date of this Agreement or such later date and time
as shall be consented to in writing by you, and, at the Closing Date,
no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for the purpose
shall have been instituted or shall be pending or contemplated by the
Commission and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of Caro & Graifman, P.C., counsel to the Underwriter.
5.1.2 NASD Clearance. On or before the Effective Date, the
Representative shall have received clearance from the NASD as to the
amount of compensation allowable or payable to the Underwriter as
described in the Registration Statement.
5.1.3 No Blue Sky Stop Orders. No order suspending the sale of
the Shares in any jurisdiction designated by you pursuant to Section
4.3 hereof shall have been issued on the Closing Date, and no
proceedings for that purpose shall have been instituted or shall be
contemplated.
5.2 Counsel Matters.
5.2.1 Closing Date Opinion of Counsel. On the Closing Date, the
Representative shall have received the favorable opinion of Certilman
Balin ▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel to the Company, dated the Closing
Date, addressed to the Underwriter and in form and substance
satisfactory to Caro & Graifman, P.C., counsel to the Underwriter, to
the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation and is in good standing under the
120243.3
-25-
laws of its state of incorporation and is duly qualified and
licensed and in good standing as a foreign corporation in Texas,
which to the knowledge of such counsel is the only jurisdiction
in which its ownership or leasing of any properties or the
character of its operations requires such qualification or
licensing (except where the failure to be so qualified or
licensed would not have a material adverse effect on the
Company).
(ii) The Company has all requisite corporate power and
authority, and, to such counsel's knowledge, has all necessary
authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental or regulatory officials and
bodies, to own or lease its properties and to conduct its
business as described in the Prospectus, and, to such counsel's
knowledge, is in compliance with all such authorizations,
approvals, orders, licenses, certificates and permits and all
federal, state and local laws, rules and regulations. The Company
has all requisite corporate power and authority to enter into
this Agreement and to carry out the terms and conditions hereof.
To such counsel's knowledge, no consents, approvals,
authorizations or orders of, and no filing with any court or
governmental agency or body (other than such as may be required
under the Act and applicable Blue Sky laws), is required for the
valid authorization, issuance, sale and delivery of the
Securities, and the consummation of the transactions and
agreements contemplated by this Agreement and the
Representative's Warrants, and as contemplated by the Prospectus
or, if required, all such authorizations, approvals, consents,
orders, registrations, licenses and permits have been duly
obtained and are in full force and effect and have been disclosed
to the Representatives.
(iii) All issued and outstanding securities of the Company
have been duly authorized and validly issued and are fully paid
and non-assessable; to such counsel's knowledge, the holders
thereof have no rights of rescission with respect thereto and are
not subject to personal liability by reason of being such
holders; and, to such counsel's knowledge, none of such
securities were issued in violation of the preemptive rights of
any holders of any security of the Company or similar contractual
rights granted by the Company. The outstanding options and
warrants, if any, to purchase shares of Common Stock constitute
the valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) such
enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, marshaling and/or similar
laws, now or hereafter in effect
120243.3
-26-
affecting creditors rights and remedies and (including such as
made deny giving effect to waivers of debtors' rights, (ii) as
enforceability of any indemnification provision may be limited
under Federal and State laws, (iii) that the remedy of specific
performance and injunction and other forms of equitable relief
may be subject to the equitable defenses and to the discretion of
the courts before which any proceeding therefor may be brought
(regardless of whether such enforceability is considered a
proceeding in equity or in law). Prior to the completion of the
offering, the offers and sales of the outstanding Common Stock
and options and warrants to purchase shares of Common Stock have
been at all relevant times either registered under the Act and
the applicable state securities or Blue Sky Laws or exempt from
such registration requirements. The authorized and outstanding
capital stock of the Company is as set forth under the caption
"Capitalization" in the Prospectus.
(iv) The Securities have been duly authorized and, when
issued, paid for and delivered in accordance herewith, will be
validly issued, fully paid and non-assessable; the holders
thereof are not and will not be subject to personal liability by
reason of being such holders. The Securities are not and will not
be subject to the preemptive rights of any holders of any
security of the Company pursuant to the provisions of the
Company's Certificate of Incorporation or, to such counsel's
knowledge, similar contractual rights granted by the Company. All
corporate action required to be taken for the authorization,
issuance and sale of the Securities has been duly and validly
taken. When issued, the Representative's Warrants will constitute
valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment therefor, the number and type
of securities of the Company called for thereby and the
Representative's Warrants, when issued, will be enforceable
against the Company in accordance with their terms, except (a)
such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, marshaling and/or similar
laws, now or hereafter in effect affecting creditors rights and
remedies and (including such as made deny giving effect to
waivers of debtors' rights, (b) as enforceability of any
indemnification provision may be limited under Federal and State
laws, (c) that the remedy of specific performance and injunction
and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the courts before
which any proceeding therefor may be brought (regardless of
whether such enforceability is considered a proceeding in equity
or in law).
120243.3
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(v) To such counsel's knowledge, except as set forth in the
Prospectus, or for Common Shares included in the Prospectus, no
holders of any securities of the Company or of any options,
warrants or securities of the Company exercisable for or
convertible or exchangeable into securities of the Company has
the right to require the Company to register any such securities
under the Act or to include any such securities in a registration
statement to be filed by the Company.
(vi) The Shares have been approved for listing on Nasdaq
SmallCap Market System.
(vii) This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except (a) such
enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, marshaling and/or similar
laws, now or hereafter in effect affecting creditors rights and
remedies and (including such as made deny giving effect to
waivers of debtors' rights, (b) as enforceability of any
indemnification provision may be limited under Federal and State
laws, (c) that the remedy of specific performance and injunction
and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the courts before
which any proceeding therefor may be brought (regardless of
whether such enforceability is considered a proceeding in equity
or in law). The Representative's Warrants have been duly and
validly authorized, executed and delivered by the Company and
constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms,
except (a) such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, marshaling
and/or similar laws, now or hereafter in effect affecting
creditors rights and remedies and (including such as may deny
giving effect to waivers of debtors' rights), (b) as
enforceability of any indemnification provision may be limited
under Federal and State laws, (c) that the remedy of specific
performance and injunction and other forms of equitable relief
may be subject to the equitable defenses and to the discretion of
the courts before which any proceeding therefor may be brought
(regardless of whether such enforceability is considered a
proceeding in equity or in law).
(viii) The execution, delivery and performance of this
Agreement and the Representative's Warrants, the issuance and
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sale of the Securities, the consummation of the transactions
contemplated hereby and thereby and the compliance by the Company
with the terms and provisions hereof and thereof, do not and will
not, with or without the giving of notice or the lapse of time,
or both, (a) to such counsel's knowledge, conflict with, or
result in a breach of, any of the terms or provisions of, or
constitute a default under, or result in the creation or
modification of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company
pursuant to the terms of, any material mortgage, deed of trust,
note, indenture, loan, contract, commitment or other material
agreement or instrument known to such counsel, to which the
Company is a party or by which the Company or any of its
properties or assets may be bound, (b) result in any violation of
any of the provisions of the Certificate of Incorporation or the
By-Laws of the Company, (c) to such counsel's knowledge, violate
any statute or any judgment, order or decree, rule or regulation
applicable to the Company of any court, domestic or foreign, or
of any federal, state or other regulatory authority or other
governmental body having jurisdiction over the Company, its
properties or assets, or (d) to such counsel's knowledge have a
material adverse effect on any permit, license, certification,
registration, approval, consent, or franchise of the Company.
(ix) The Registration Statement, each Preliminary Prospectus
and the Prospectus and any post-effective amendments or
supplements thereto (other than the financial statements and
notes thereto and other financial, numerical, accounting and
statistical data included therein or omitted therefrom, as to
which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the
Regulations. The Securities and all other securities issued or
issuable by the Company conform in all material respects to the
description thereof contained in the Registration Statement and
the Prospectus. All statements in the Prospectus (other than
those set forth under the caption "Underwriting") have been
reviewed by such counsel and, insofar as they refer to statements
of law, descriptions of statutes, licenses, rules or regulations,
or legal conclusions are correct in all material respects. Each
statute or regulation or legal or governmental proceeding
required to be described in the Prospectus is not described as
required, and all contracts, instruments or other documents known
to such counsel, of a character required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement are so described or filed
as required.
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(x) Such counsel has participated in one or more personal or
telephonic conferences with officers and other representatives of
the Company, representatives of the independent public
accountants for the Company, the Representative and/or counsel to
the Underwriter at which the contents of the Registration
Statement and Prospectus and related matters were discussed and,
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus
(except as otherwise expressly set forth in its opinion), on the
basis of the foregoing (relying as to the factual matters upon
the statements of officers and other representatives of the
Company and State officials) no facts have come to the attention
of such counsel that caused it to believe that the Registration
Statement (other than the financial statements and notes thereto
and other financial, numerical, statistical and accounting data
included therein, or omitted therefrom, as to which no opinion is
requested or need be rendered) as amended or supplemented, at the
time such Registration Statement became effective, contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading (other than information
omitted therefrom in reliance on Rule 430A under the Act), or the
Prospectus (other than the financial statements and notes thereto
and other financial, numerical, statistical and accounting data
included therein, or omitted therefrom, as to which no opinion is
requested or need be rendered) as amended or supplemented, as of
its date, contained an untrue statement of material fact or
omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(xi) The Registration Statement is effective under the Act
and to such counsel's knowledge no stop order suspending the
effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted, are pending
or are threatened under the Act or applicable state securities
laws.
(xii) To such counsel's knowledge, there is no claim or
action by any person pertaining to, or proceeding, pending or
threatened, which challenges the exclusive rights of the Company
with respect to any Intangibles used in the conduct of its
business (including, but not limited to, any such licenses or
rights
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described in the Prospectus as being owned or possessed by the
Company).
(xiii) To such Counsel's knowledge, except as described in
the Prospectus, no default exists in the due performance and
observance of any term, covenant or condition of any material
license, contract, indenture, mortgage, deed of trust, note, loan
or credit agreement, or any other material agreement, instrument
or other document evidencing an obligation for borrowed money, or
any other material agreement, instrument or other document to
which the Company is a party or by which the Company may be bound
or to which any of the properties or assets of the Company is
subject. To such Counsel's knowledge, the Company is not in
violation of any term or provision of its Certificate of
Incorporation or By-Laws, or, to the best of such counsel's
knowledge, any material franchise, license, permit, applicable
law, rule, regulation, judgment or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over
the Company or any of its properties or business, except as
described in the Prospectus.
(xiv) To such counsel's knowledge, except as set forth in
the prospectus, there are no claims, payments, issuances,
arrangements or understandings for services in the nature of a
finder's or origination fee with respect to the sale of the
Securities hereunder or financial consulting arrangements or any
other arrangements, agreements, understandings, payments or
issuances that may affect the Underwriter's compensation, as
determined by the NASD, in connection with the order and sale of
the Shares.
(xv) To such counsel's knowledge, except as described in the
Prospectus, the Company does not own any interest in any
corporation, partnership, joint venture, trust or other business
entity.
(xvi) To such counsel's knowledge, except as set forth in
the Prospectus, there is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or foreign,
now pending, or threatened against the Company, which would have
a material adverse effect on the Company.
5.2.2 Reliance. In rendering such opinions, such counsel may rely
(i) as to matters involving the application of laws other than the
laws of the United States, the General
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Corporation Law of the States of Delaware and New York and
jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all,
upon an opinion or opinions (in form and substance satisfactory to
Underwriter's counsel) of other counsel reasonably acceptable to
Underwriter's counsel, familiar with the applicable laws, (ii) as to
matters of fact, to the extent they deem proper, (A) on certificates
or other written statements of responsible officers of the Company and
(B) on certificates or other written statements of officers or
departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company,
provided that copies of any such statements or certificates shall be
delivered to Underwriter's counsel, (iii) as to matters described in
the Prospectus under "Risk Factors - Uncertainty of Protection of
Patents and Proprietary Rights" and "Business-Patents and Proprietary
Rights", on advice of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP (which has been
re-confirmed as of the opinion date) and (iv) as to matter described
in the Prospectus under "Risk Factors - Uncertainty of Third Party
Reimbursement and Product Pricing", "Risk Factors - Consumer Loans and
Governmental Regulation", "Business-Governmental Regulations" and
"Business-Third Party Reimbursement", on advice of Arent & Fox (which
has been re-confirmed as of the opinion date). Such opinions of
counsel shall include a statement to the effect that they may be
relied upon by the Underwriter and counsel for the Underwriter. Such
opinion may assume the due authorization, execution and delivery of
all documentation referred to therein by the parties thereto other
than the Company.
5.2.3 Subsidiaries. In the event that the Company has one or more
subsidiaries (the "subsidiaries"), the opinions referred to in this
Section 5.2 shall also be given with respect to each subsidiary
(except as the context otherwise requires), as if the provisions
calling for such opinions made specific reference to each subsidiary
each time the term "Company" was used.
5.3 Cold Comfort Letter. At the time this Agreement is executed, and
at the Closing Date you shall have received a letter, addressed to the
Underwriter and in form and substance satisfactory in all respects
(including the non-material nature of the changes or decreases, if any,
referred to in clause (iii) below) to you and to Caro & Graifman, P.C.,
counsel to the Underwriter, from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.C., dated, respectively,
as of the date of this Agreement, as of the Closing Date:
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(i) Confirming that they are independent accountants with
respect to the Company and its subsidiaries (collectively, the
"Entities") within the meaning of the Act and the applicable
Regulations;
(ii) Stating that in their opinion the financial statements
of the Entities (including the unaudited financial information
for the Company) included in the Registration Statement and
Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act and the
Regulations;
(iii) Stating that, based on performance of the procedures
specified by the American Institute of Certified Public
Accountants for a review of the latest available unaudited
interim financial statements of the Entities (as defined in SAS
No. 71 Interim Financial Interpretation) with an indication of
the date of such unaudited financial statements, a reading of the
latest available minutes of the stockholders and Boards of
Directors of the Entities and the various committees of the
Boards of Directors of the Entities, consultations with officers
and other employees of the Entities responsible for financial and
accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to
believe that (a) the unaudited financial statements of the
Entities, included in the Registration Statement do not comply as
to form in all material respects with the applicable accounting
requirements of the Act and the Regulations or are not fairly
presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that
of the audited financial statements of the Company included in
the Registration Statement, (b) at a date not later than five (5)
days prior to the Effective Date or Closing Date, as the case may
be, there was any change in the capital stock or long-term debt
of the Company, or any decrease in the stockholders' equity of
the Company as compared with amounts shown in the most recent
balance sheet included in the Registration Statement, other than
as set forth in or contemplated by the Registration Statement,
or, if there was any decrease, setting forth the amount of such
decrease, and (c) during the period from January 1, 1996 to a
specified date not later than five (5) days prior to the
Effective Date or Closing Date, as the case may be, there was any
decrease in revenues or net earnings (or increase in net loss per
share) of the Company or net earnings (or increase in net loss
per share) of the Company per share of its Common Stock, in each
case as compared with the corresponding period in the preceding
year and as compared with the corresponding period in the
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preceding quarter, other than as set forth in or contemplated by
the Registration Statement, or, if there was any such decrease
(or increase, as the case may be), setting forth the amount of
such decrease;
(iv) Stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings,
statements and other financial information pertaining to the
Entities set forth in the Prospectus in each case to the extent
that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records,
including work sheets, of the Entities, with the results obtained
from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an
examination in accordance with generally accepted auditing
standards) set forth in the letter and found them to be in
agreement;
(v) Stating that they have not (and are not aware) during
the immediately preceding five year period brought to the
attention of the management of any of the Entities any reportable
condition with respect to the Company's internal controls related
to internal structure, design or operation, as defined in the
Statement on auditing Standards No. 60 -- "Communication of
Internal Control Structure Related Matters Noted in an Audit;"
and
(vi) Statements as to such other matters incident to the
transactions contemplated hereby as you may reasonably request.
5.4 Certificates.
5.4.1 Officers' Certificates. At the Closing Date the
Representative shall have received a certificate of the Company signed
by its respective Chief Executive Officer and Principal Accounting
Officer, dated the Closing Date, to the effect that the Company has
performed all covenants and complied with all conditions required by
this Agreement to be performed or complied with by the Company prior
to and as of the Closing Date, and that the conditions set forth in
Section 5.5 hereof have been satisfied as of such date and that, as of
the Closing Date, the representations and warranties of the Company
set forth in Section 2 hereof are true and correct. In addition, the
Representative shall have received such other and further certificates
of officers of the Company, and such other evidence including
certified copies
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of applicable documentation, as the Representative may reasonably
request.
5.4.2 Secretary's Certificate. At the Closing Date, the
Representative shall have received a certificate of the Company signed
by the Secretary of the Company, dated the Closing Date, certifying
(i) that the Certificate of Incorporation and By-Laws, as amended, of
the Company are true and complete, have not been modified and are in
full force and effect, (ii) that the resolutions relating to the
offering contemplated by this Agreement are in full force and effect
and have not been modified, (iii) all correspondence between the
Company or its counsel and the Commission, (iv) all correspondence
between the Company or its counsel and Nasdaq and (v) as to the
incumbency of the officers of the Company. The documents referred to
in such certificate shall be attached to such certificate.
5.5 No Material Changes. Prior to and on the Closing Date, (i) there
shall have been no material adverse change or development involving a
prospective material change in the condition or prospects or the business
activities, financial or otherwise, of the Company from the latest dates as
of which such condition is set forth in the Registration Statement and
Prospectus, (ii) there shall have been no transaction, not in the ordinary
course of business, entered into by the Company from the latest date as of
which the financial condition of the Company is set forth in the
Registration Statement and the Prospectus which is materially adverse to
the Company, (iii) the Company shall not be in default under any provision
of any instrument relating to any outstanding indebtedness which default
would have a material adverse effect on the Company, (iv) no material
amount of the assets of the Company shall have been pledged or mortgaged,
except as set forth in the Registration Statement and Prospectus, (v) no
action, suit or proceeding, at law or in equity, shall be pending or
threatened against the Company or affecting any of its property or business
before or by any court or federal or state commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding
may materially adversely affect the business, operations, prospects or
financial condition or income of the Company, except as set forth in the
Registration Statement and Prospectus, (vi) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated
or threatened by the Commission, and (vii) the Registration Statement and
the Prospectus and any amendments or supplements thereto shall contain all
material statements that are required to be stated therein in
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accordance with the Act and the Regulations and shall conform in all
material respects to the requirements of the Act and the Regulations, and
neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto shall contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
5.6 Delivery of Representative's Warrants. The Company shall have
delivered to the Representative executed copies of the Representative's
Warrants, registered in such authorized names and in such authorized
denominations as the Representative shall have requested.
5.7 Opinion of Counsel for the Underwriter. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as
herein contemplated shall be reasonably satisfactory in form and substance
to you and to Caro & Graifman, P.C., counsel to the Underwriter, and you
shall have received from such counsel a favorable opinion, dated the
Closing Date, with respect to such of these proceedings as you may
reasonably require. On or prior to the Effective Date, the Closing Date,
counsel for the Underwriter shall have been furnished with such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in this
Section 5.7, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions herein
contained.
5.8 Copies of the Prospectus. The Company shall furnish to the
Underwriter and to other broker-dealers as directed by the Underwriter, as
soon as possible after the Effective Date, and thereafter from time to time
during the term of the public offering, as many copies of the Prospectus
(and of any amended or supplemental Prospectus) as the Underwriter and such
other broker-dealers may reasonably request. If, during such period, any
event occurs as a result of which the Prospectus, as then amended or
supplemented, would include a statement of a material fact or omit to state
a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading, or
it shall be necessary to amend or supplement the Prospectus to comply with
the Act or with the Regulations, the Company will forthwith notify the
Underwriter thereof and will prepare and furnish to the Underwriter and
such broker-dealers in
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such quantity as may be reasonably requested, an amendment or supplement
which will correct such statement or omission or cause the Prospectus to
comply with the Act and with the Regulations thereunder.
5.9 Delivery of Certificates. Subject to the sale of 1,400,000 Shares,
the Company agrees to (i) issue, or have issued, such certificates
evidencing the Shares as have been sold in such names and denominations as
the Underwriter may specify on at least three (3) days notice prior to the
Closing Date; and (ii) deliver such Share certificates as the Underwriter
may request, to the offices of the Underwriter, or the transfer agent of
the Company, on the Closing Date, against payment by certified check or
bank cashier's check to the order of the Company in Miami Clearing House
funds, at $5.00 per Share, less underwriting commissions and any
accountable and non-accountable expense allowance.
5.10 Conditions to Obligation of the Company. The obligation of the
Company to deliver the Shares to the Underwriter hereunder shall be subject
to the conditions that (i) the Registration Statement shall have become
effective; (ii) no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for that
purpose shall have been instituted or shall be pending or contemplated by
the Commission at the Closing Date; and (iii) the Underwriter shall have
sold all 1,400,000 Shares in the public offering.
In case of any of the conditions specified in this Section 5.10 shall
not be fulfilled, this Agreement may be terminated by the Company by giving
notice to you. Any such termination shall be without liability of the
Underwriter to the Company; provided, however, that in event of any such
termination the Company agrees to indemnify and hold harmless the
Underwriters from all costs or expenses incident to the performance of the
obligations of the Company under this Agreement and shall be responsible
for such costs and expenses in accordance with Section 4.9.2.
6. Escrow Provision.
6.1 Escrow Account. Notwithstanding anything contained herein to the
contrary, unless the Underwriter shall sell 1,400,000 Shares, none of the
Shares will be sold to the public. The Underwriter agrees to open a special
non-interest bearing Escrow Account maintained at First Union National Bank
of Florida, N.A.,
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Escrow Agent, in which there shall be deposited payment received by the
Underwriter and selected dealers group for the Shares in full, without
deductions for commissions and/or expenses.
6.2 Receipt of Funds. Appropriate arrangements will be made by the
Underwriter and members of the selected dealers group to provide for the
receipt of funds from the subscribers of the Shares and to deposit same in
the Escrow Account, in accordance with the provisions of this paragraph.
6.3 No Commissions if Offering Unsuccessful. Unless the Underwriter
shall have sold 1,400,000 Shares it shall not be entitled to receive any
commissions, nor will the Underwriter be entitled to purchase any
Underwriter's Warrants from the Company except as provided herein.
6.4 Maintenance of Payments. The Underwriter shall comply in all
respects with the requirements of Rule 15c2-4 of the Regulations with
respect to the maintenance of payments received from the sale of the Shares
in a special bank account. Said payments shall remain in such bank account
until the Closing Date, or shall be returned to the subscribers as provided
in Section 6.1 above. In the event that 1,400,000 Shares are sold and paid
for within the time limitations herein provided, the funds in the Escrow
Account (less the commissions and expense allowance due to the Underwriter)
shall be transmitted to the Company, on the Closing Date, which shall then
provide such documents, certificates, receipts and any and all other papers
or instruments as counsel may reasonably deem necessary or appropriate
under the circumstances.
7. Indemnification.
7.1 Indemnification of the Underwriter.
7.1.1 By the Company. Subject to the conditions set forth below,
the Company agrees to indemnify and hold harmless the Underwriter, its
directors, officers and employees and each person, if any, who
controls the Underwriter (a "controlling person") within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all loss, liability, claim, damage and expense whatsoever
(including but not limited to any and all legal or other expenses
reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever) to
which they or any of them
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may become subject under the Act, the Exchange Act or any other
statute or at common law or otherwise or under the laws of foreign
countries, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in (i) the
Registration Statement, any Preliminary Prospectus or the Prospectus
(as from time to time each may be amended or supplemented); (ii) in
any post-effective amendment or amendments or any new registration
statement and prospectus in which is included securities of the
Company issued or issuable upon exercise of the Representatives'
Warrants; or (iii) any application or other document or written
communication (in this Section 7 collectively called "application")
executed by the Company or based upon written information furnished by
the Company in any jurisdiction in order to qualify the Securities
under the securities laws thereof or filed with the Commission, any
state securities commission or agency, or Nasdaq or any securities
exchange; or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, unless such statement or omission was made in reliance
upon and in conformity with written information furnished to the
Company with respect to any of the Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, or in any application, as the case may be;
provided, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of the
Representative, or any person controlling the Representative, if a
copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) was not
set or given by or on behalf of the Representative to the person
asserting such losses, claims, damages or liabilities, if required by
law so to have been delivered, at or prior to the written confirmation
of the sale of the Shares to such person, and if the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to
such loss, claim, damage or liability. The Company agrees promptly to
notify the Representative of the commencement of any litigation or
proceedings against the Company or any of their respective officers,
directors or controlling persons in connection with the issue and sale
of the Securities or in connection with the Registration Statement or
the Prospectus.
7.1.2 Procedure. If any action is brought against the Underwriter
or any controlling person in respect of which
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indemnity may be sought against the Company pursuant to Section 7.1.1,
the Underwriter shall promptly notify the Company in writing of the
institution of such action, but the failure to so notify the Company
shall not relieve them from any liability they may have hereunder,
unless such failure results in the forfeiture by the Company of
material substantive rights and defenses, and the Company shall assume
the defense of such action, including the employment and fees of
counsel (subject to the reasonable approval of such Underwriter) and
payment of actual expenses incurred in connection therewith. Such
Underwriter or controlling person shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the employment of such counsel shall
have been authorized in writing by the Company in connection with the
defense of such action, (ii) the Company shall not have employed
counsel to have charge of the defense of such action, or (iii) such
indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from
or additional to those available to the Company (in which case the
Company shall not have the right to direct the defense of such action
on behalf of the indemnified party or parties), in any of which events
the fees and expenses of not more than one additional firm of
attorneys selected by such Underwriter and/or controlling person shall
be borne by the Company. Notwithstanding anything to the contrary
contained herein, if an Underwriter or controlling person shall assume
the defense of such action as provided above, the Company shall have
the right to approve the terms of any settlement of such action which
approval shall not be unreasonably withheld.
7.2 Indemnification of the Company. The Underwriter agrees to
indemnify and hold harmless the Company, its directors, officers,
agents, employees and controlling persons, against any and all loss,
liability, claim, damage and expense described in the foregoing
indemnity from the Company to the Underwriter set forth in Section
7.1.1, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions directly relating
to the transactions effected by the Underwriter in connection with
this offering, made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any amendment or supplement thereto, or
in any application in reliance upon, and in strict conformity with,
written information furnished to the Company with respect to an
Underwriter by such Underwriter expressly for use in such Preliminary
Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement thereto
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or in any such application. In case any action shall be brought
against the Company based on any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment or supplement
thereto or any application, and in respect of which indemnity may be
sought against the Underwriter, such Underwriter shall have the rights
and duties given to the Company, and the Company shall have the rights
and duties given to the Underwriter, by the provisions of Section
7.1.2.
7.3 Contribution.
7.3.1 Contribution Rights. In order to provide for just and
equitable contribution under the Act in any case in which (i) any
person entitled to indemnification under this Section 7 makes
claim for indemnification pursuant hereto 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
this Section 7 provides for indemnification in such case, or (ii)
contribution under the Act, the Exchange Act or otherwise may be
required on the part of any such person in circumstances for
which indemnification is provided under this Section 7, then, and
in each such case, each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of
such losses, liabilities, claims, damages and expenses of the
nature contemplated by said indemnity agreement (i) in such
proportion as is appropriate to reflect the relative benefits
received, or sought to be received, by the Company on the one
hand and the Underwriter on the other hand from the offering of
the Shares or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Company on
the one hand and the Underwriter on the other hand; provided,
however, that, 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 was not guilty of
such fraudulent misrepresentation. Notwithstanding the provisions
of this Section 7.3, the Underwriter shall be required to
contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the sum of (a) the
amount paid by such Underwriter to the Company as its purchase
price for such
120243.3
-41-
Shares plus (b) the amount of any damages which such Underwriter
has otherwise been required to pay in respect of such losses,
liabilities, claims, damages and expenses. For purposes of this
Section 7, each respective director, officer and employee of any
Underwriter, and each respective person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act shall
have the same rights to contribution as such Underwriter.
7.3.2 Contribution Procedure. Within fifteen (15) days after
receipt by any party to this Agreement (or its representative) of
notice of the commencement of any action, suit or proceeding,
such party will, if a claim for contribution in respect thereof
is to be made against another party (the "contributing party"),
notify the contributing party of the commencement thereof, but
the omission to so notify the contributing party will not relieve
it from any liability which it may have to any other party other
than for contribution hereunder. In case any such action, suit or
proceeding is brought against any party, and such party notifies
a contributing party or its representative of the commencement
thereof within the aforesaid (15) fifteen days, the contributing
party will be entitled to participate therein with the notifying
party and any other contributing party similarly notified. Any
such contributing party shall not be liable to any party seeking
contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without
the written consent of such contributing party. The contribution
provisions contained in this Section 7 are intended to supersede,
to the extent permitted by law, any right to contribution under
the Act, the Exchange Act or otherwise available.
8. Covenants of the Representative. The Representative, covenants and
agrees with the Company as follows:
8.1 Compliance with NASD Rules of Fair Practice. The representative
hereby agrees to comply with the National Association of Securities Dealers
Regulation, Inc.'s Rules of Fair Practice.
8.2 Waiver of "Lock-Up". The Representative shall not consummate any
transactions with the Company's bridge lender described in the Prospectus,
or waive the "lock-up" applicable to such bridge lender's securities until
the Company has complied with its undertaking to the Registration Statement
to file "sticker" supplements to the Prospectus pursuant to Rule 424(c) of
the Act,
120243.3
-42-
or to file a post-effective amendment to the to Registration Statement.
9. Representations and Agreements to Survive Delivery. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Date, and such representations, warranties and
agreements of the Underwriter and the Company, including the indemnity
agreements contained in Section 7 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any of
the Underwriter, the Company or any controlling person of any thereof, and shall
survive termination of this Agreement or the issuance and delivery of the Shares
to the Underwriter.
10. Effective Date of This Agreement and Termination Thereof.
10.1 Effective Date. The effective date of this Agreement is the date
upon which the Commission declares the Registration Statement effective.
You may prevent this Agreement from becoming effective without liability to
any other party, except as noted below, by giving the notice indicated
below in this Section 10 before the time this Agreement becomes effective.
You agree to give the undersigned notice of the commencement of the
offering described herein.
10.2 Termination. You shall have the right to terminate this Agreement
at any time prior to the Closing Date, (i) if any domestic or international
event or act or occurrence has materially disrupted, or in your opinion
will in the immediate future materially disrupt, general securities markets
in the United States; (ii) if trading on the New York Stock Exchange or the
American Stock Exchange, or in the over-the-counter market shall have been
suspended, or minimum or maximum prices for trading shall have been fixed,
or maximum ranges for prices for securities shall have been required in the
over-the-counter market by the NASD or by order of the Commission or any
other government authority having jurisdiction, (iii) if the United States
shall have become involved in a war or material hostilities, (iv) if a
banking moratorium has been declared by a Florida State or federal
authority, (v) if a moratorium on foreign exchange trading has been
declared which materially adversely affects the United States securities
market, (vi) if the Company shall have sustained a material loss by fire,
flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which, whether or not such loss shall
120243.3
-43-
have been insured, will, in your opinion, make it inadvisable to proceed
with the delivery of the Shares, (vii) if ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇.
▇▇▇▇ shall no longer serve or be available to serve the Company in their
respective capacities, (viii) if the Company has breached any of its
representations, warranties or obligations hereunder, or failed to
expeditiously proceed with the offering or to cooperate with you in
requesting effectiveness of the Registration Statement at such time as you
may deem appropriate, or (ix) if the Underwriter shall have become aware
after the date hereof of such a material adverse change in the condition
(financial or otherwise), business or prospects of the Company, or such
material adverse change in general market conditions as in your judgment
would make it impracticable to proceed with the offering, sale and/or
delivery of the Shares or to enforce contracts made by the Underwriter for
the sale of the Shares.
10.3 Notice. If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 10,
the Company shall be notified on the same day as such election is made by
you by telephone or telecopy, confirmed by letter.
10.4 Expenses. In the event that this Agreement shall not be carried
out for any reason whatsoever within the time specified herein or any
extensions thereof pursuant to the terms herein, the obligations of the
Company to pay the expenses related to the transactions contemplated herein
shall be governed by Section 4.9 hereof.
10.5 Indemnification. Notwithstanding any contrary provision contained
in this Agreement, any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Section 7 shall not be in any way affected by such election
or termination or failure to carry out the terms of this Agreement or any
part hereof.
11. Miscellaneous.
11.1 Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered
or telecopied and confirmed:
120243.3
-44-
If to the Underwriter or the Representative:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Company, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, #▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇
Copy to:
Caro & Graifman, P.C.
The Lincoln Building
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chase ▇. ▇▇▇▇, Esq.
If to the Company:
Niche Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Copy to:
Certilman Balin ▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
11.2 Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this
Agreement.
11.3 Amendment. This Agreement may only be amended by a written
instrument executed by each of the parties hereto.
120243.3
-45-
11.4 Entire Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in connection with
this Agreement) constitute the entire agreement of the parties hereto with
respect to the subject matter hereof, and supersede all prior agreements
and understandings of the parties, oral and written, with respect to the
subject matter hereof.
11.5 Binding Effect. This Agreement shall inure solely to the benefit
of and shall be binding upon the Underwriter, the Company and the
controlling persons, directors and officers referred to in Section 7
hereof, and their respective successors, legal representatives and assigns,
and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of
this Agreement or any provisions herein contained.
11.6 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of
Texas, without giving effect to conflict of laws rules of such State. Any
action, proceeding or claim against any of the parties hereto arising out
of or relating in any way to this Agreement shall be brought and enforced
in the courts of the State of Texas or the federal court for the Eastern
District of Texas, and the parties hereto irrevocably submit to such
jurisdiction, which jurisdiction shall be exclusive. The parties hereto
hereby waive any objection to such exclusive jurisdiction and that such
courts represent an inconvenient forum. Except as otherwise provided in
this Agreement, the prevailing party(ies) in any such action shall be
entitled to recover from the other party(ies) all of its or their
reasonable attorneys' fees and expenses relating to such action or
proceeding and/or incurred in connection with the preparation therefor.
11.7 Execution in Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same agreement, and shall
become effective when one or more counterparts has been signed by each of
the parties hereto and delivered to each of the other parties hereto.
11.8 Waiver, Etc. The failure of any of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect
the validity of this Agreement or any
120243.3
-46-
provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such
waiver is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.
120243.3
-47-
If the foregoing correctly sets forth the understanding between the
Underwriter and Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
NICHE PHARMACEUTICALS, INC.
By:
--------------------------
Name:
Title:
Accepted as of the date first above written.
Coconut Grove, Florida
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & COMPANY, INC.
By:
--------------------------
Name:
Title:
120243.3
-48-
APPENDIX I
[Insiders]
120243.3
-49-
APPENDIX II
[Non-Insider Shareholders]
120243.3
-50-
TABLE OF CONTENTS
Page
1. Purchase and Sale of Securities..........................................................................1
1.1 Employment of the Underwriter . ................................................................1
1.1.1 Terms and Conditions of Employment.....................................................1
1.1.2 Agreement to Use Best Efforts..........................................................1
1.1.3 Consequences of Unsuccessful Offering..................................................2
1.1.4 Underwriter's Commission...............................................................2
1.2 Representative's Warrants.......................................................................2
1.2.1 Purchase and Sale......................................................................2
1.2.2 Terms and Conditions of Warrants.......................................................3
2. Representations and Warranties of the Company............................................................3
2.1 Filings under Securities Laws...................................................................3
2.1.1 Pursuant to the Act....................................................................3
2.1.2 Pursuant to the Exchange Act...........................................................3
2.2 No Stop or Other Orders.........................................................................4
2.3 Disclosures in Registration Statement...........................................................4
2.3.1 Representation as to Contents..........................................................4
2.3.2 Disclosure Regarding Contracts.........................................................5
2.3.3 Prior Securities Transactions..........................................................5
2.4 Changes After Dates in Registration Statement...................................................5
2.4.1 No Material Adverse Change.............................................................5
2.4.2 Recent Securities Transactions, Etc....................................................6
2.5 Independent Accountants.........................................................................6
2.6 Financial Statements............................................................................6
2.7 Capitalization..................................................................................6
2.8 Representations Regarding Securities............................................................7
2.8.1 Outstanding Securities.................................................................7
2.8.2 Securities Sold Hereunder..............................................................7
2.9 No Registration Rights..........................................................................8
2.10 Representations Regarding This Agreement........................................................8
2.11 No Improper Payments............................................................................9
2.12 No Defaults; Violations.........................................................................9
2.13 Corporate Power; Licenses; Consents............................................................10
2.13.1 Conduct of Business..........................................................10
2.13.2 Required Consents............................................................10
2.14 Title to Property; Insurance...................................................................10
2.15 Litigation.....................................................................................11
2.16 Organization; Good Standing....................................................................11
2.17 Taxes..........................................................................................11
2.18 Transactions Affecting Disclosure to NASD......................................................12
2.18.1 Finders' Fees................................................................12
120243.3
(i)
Page
2.18.2 Payments Within Twelve Months................................................12
2.18.3 Use of Proceeds..............................................................12
2.18.4 Insiders' NASD Affiliation...................................................12
2.19 Internal Accounting Controls...................................................................13
2.20 Nasdaq Listing.....................................................................................13
2.21 Intangibles....................................................................................13
2.22 Employee Matters...............................................................................14
2.22.1 Relations With Employees.....................................................14
2.22.2 Employee Benefit Plans.......................................................14
2.23 Investment Company Representations.............................................................15
2.24 Officer's Certificate..........................................................................15
2.25 Lock-Up Agreements With Insiders...............................................................15
2.26 No Stabilization or Manipulation...............................................................16
2.27 Subsidiaries...................................................................................16
2.28 Other Agreements...............................................................................16
3. Representative's Representations and Warranties. . . . . . 16
3.1 Organization: Good Standing. . . . . . . . . . . . . 16
3.2 Corporate Power; Licenses; Consents. . . . . . . . . 17
3.3 Binding Obligation; Enforceability. . . . . . . . . . 17
4. Covenants of the Company................................................................................17
4.1 Amendments to Registration Statement...........................................................17
4.2 Federal Securities Laws........................................................................17
4.2.1 Compliance............................................................................17
4.2.2 Filing of Final Prospectus............................................................18
4.2.3 Exchange Act Registration.............................................................18
4.2.4 Financial Printer.....................................................................18
4.3 Blue Sky Filings...............................................................................18
4.4 Delivery of Filings to Underwriter.............................................................18
4.5 Effectiveness and Events Requiring Notice
to the Representative..........................................................................19
4.6 Unaudited Financials...........................................................................19
4.7 Reports to the Underwriters....................................................................20
4.7.1 Periodic Reports, Etc.................................................................20
4.7.2 Transfer Sheets.......................................................................20
4.8 Delivery of Representative's Warrants..........................................................20
4.9 Payment of Expenses............................................................................20
4.9.1 General Expenses......................................................................20
4.9.2 Representatives' Expenses.............................................................21
4.10 Application of Net Proceeds....................................................................22
4.11 Delivery of Earnings Statements to
Security Holders ..............................................................................22
4.12 Reservation of Shares..........................................................................22
120243.3
(ii)
Page
4.13 Board of Directors.............................................................................22
4.14 Press Releases.................................................................................23
4.15 Nasdaq Maintenance.............................................................................23
4.16 Key Person Life Insurance......................................................................23
4.17 Disqualification of Form S-1 (or other
appropriate form)..............................................................................23
4.18 Transfer Agent.................................................................................23
4.19 Accountants....................................................................................23
4.20 Professional Services..........................................................................24
4.21 Sale of Securities.............................................................................24
4.22 Exercise Price of Options/Warrants.............................................................24
4.23 Insiders Sales.................................................................................24
5. Conditions of the Underwriter's Obligations.............................................................25
5.1 Regulatory Matters.............................................................................25
5.1.1 Effectiveness of Registration Statement...............................................25
5.1.2 NASD Clearance........................................................................25
5.1.3 No Blue Sky Stop Orders...............................................................25
5.2 Counsel Matters................................................................................25
5.2.1 Closing Date Opinion of Counsel.......................................................25
5.2.2 Reliance..............................................................................31
5.2.3 Subsidiaries..........................................................................32
5.3 Cold Comfort Letter............................................................................32
5.4 Certificates...................................................................................34
5.4.1 Officers' Certificates................................................................34
5.4.2 Secretary's Certificate...............................................................35
5.5 No Material Changes............................................................................35
5.6 Delivery of Representative's Warrants..........................................................36
5.7 Opinion of Counsel for the Underwriter.........................................................36
5.8 Copies of the Prospectus.......................................................................36
5.9 Delivery of Certificates.......................................................................37
5.10 Conditions to Obligation of the Company........................................................37
6. Escrow Provision........................................................................................37
6.1 Escrow Account.................................................................................37
6.2 Receipt of Funds...............................................................................38
6.3 No Commissions if Offering Unsuccessful........................................................38
6.4 Maintenance of Payments........................................................................38
7. Indemnification.........................................................................................38
7.1 Indemnification of the Underwriter.............................................................38
7.1.1 By the Company........................................................................38
7.1.2 Procedure.............................................................................39
7.2 Indemnification of the Company.................................................................40
120243.3
(iii)
Page
7.3 Contribution...................................................................................41
7.3.1 Contribution Rights...................................................................41
7.3.2 Contribution Procedure................................................................42
8. Covenants of the Representative.........................................................................42
8.1 Compliance with NASD Rules of Fair Practice....................................................42
8.2 Waiver of "Lock-Up" . . . . . . . . . .........................................................42
9. Representations and Agreements to Survive Delivery......................................................43
10. Effective Date of This Agreement and
Termination Thereof.....................................................................................43
10.1 Effective Date.................................................................................43
10.2 Termination....................................................................................43
10.3 Notice.........................................................................................44
10.4 Expenses.......................................................................................44
10.5 Indemnification................................................................................44
11. Miscellaneous...........................................................................................44
11.1 Notices........................................................................................44
11.2 Headings.......................................................................................45
11.3 Amendment......................................................................................45
11.4 Entire Agreement...............................................................................46
11.5 Binding Effect.................................................................................46
11.6 Governing Law; Jurisdiction....................................................................46
11.7 Execution in Counterparts......................................................................46
11.8 Waiver, Etc....................................................................................46
120243.3
(iv)
INDEX OF DEFINITIONS
Term Section
Act...........................................................................................................2.1.1
Application...................................................................................................7.1.1
Asset Purchase Agreement.......................................................................................2.28
Closing Date..................................................................................................1.1.2
Code.........................................................................................................2.22.2
Commission....................................................................................................1.1.2
Common Stock....................................................................................................1.1
Company......................................................................................Introductory Paragraph
Contributing Party............................................................................................7.3.2
Controlling Person............................................................................................7.1.1
Control Persons................................................................................................2.25
Effective Date................................................................................................1.1.1
ERISA........................................................................................................2.22.2
ERISA Plan...................................................................................................2.22.2
Escrow Agreement..............................................................................................1.1.3
Escrow Account................................................................................................1.1.3
Exchange Act..................................................................................................2.1.2
Filing Date..................................................................................................2.18.2
Insiders.......................................................................................................2.25
Intangibles....................................................................................................2.21
Merger.........................................................................................................2.27
NASD..........................................................................................................1.1.1
Non-Insider Shareholders.......................................................................................2.25
Nasdaq.........................................................................................................2.20
Preferred Stock.................................................................................................2.7
Preliminary Prospectus........................................................................................2.1.1
Prospectus....................................................................................................2.1.1
Registration Statement........................................................................................2.1.1
Regulations...................................................................................................2.1.1
Representative...............................................................................Introductory Paragraph
Representative's Securities...................................................................................1.2.1
Representative's Warrants.....................................................................................1.2.1
Restrictions...................................................................................................2.14
Returns........................................................................................................2.17
Securities....................................................................................................1.2.1
Shares........................................................................................................1.1.1
Subsidiaries...................................................................................................2.27
Taxes..........................................................................................................2.17
Unaudited Financials............................................................................................4.6
Underwriter..................................................................................Introductory Paragraph
You..........................................................................................Introductory Paragraph
120243.3
(v)
