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EXHIBIT 1.1
2,300,000 SHARES
ZYMETX, INC.
(A DELAWARE CORPORATION)
(PAR VALUE $.001 PER SHARE)
UNDERWRITING AGREEMENT
, 1997
Capital West Securities, Inc.
Millennium Financial Group, Inc.
ComVest Partners, Inc.
As Representatives of the Several
Underwriters Identified in Schedule A hereto,
c/o Capital West Securities, Inc.
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Ladies/Gentlemen:
ZymeTx, Inc., a Delaware corporation (the "Company"), hereby confirms
its agreement with you as Representatives of the several underwriters named in
Schedule A hereto (herein collectively called the "Underwriters") as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell
2,300,000 shares (the "Firm Shares") of its authorized and unissued common
stock , par value $.001 per share (the "Common Stock") to the Underwriters upon
the terms and subject to the conditions set forth herein. The Company also
proposes to grant to the Underwriters an option to purchase, for the sole
purpose of covering over-allotments in connection with the sale of Firm Shares,
an aggregate of up to 345,000 additional shares ("Option Shares") of Common
Stock upon the terms and subject to the conditions set forth herein and as
provided in Section 7 hereof. As used in this Agreement, the term "Shares"
shall include the Firm Shares and the Option Shares. All shares of Common
Stock of the Company, including the Shares, are hereinafter referred to as
"Common Stock."
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
Unless otherwise indicated or the context otherwise requires, references to the
"Company" in this Section 2 are references to ZymeTx, Inc., a Delaware
corporation. The Company represents and warrants to and agrees with the
Underwriters, as follows:
(a) A registration statement on Form SB-2 (File No.
333-33563) with respect to the Shares, including a prospectus subject to
completion, has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
applicable rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Act and has
been filed with the Commission; such amendments to such registration statement
and such amended prospectuses subject to completion, as may have been required
prior to the date hereof have been similarly prepared and filed with the
Commission; and the Company will file such additional amendments
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to such registration statement and such amended prospectuses subject to
completion, as may hereafter be required. The Company meets the requirements
for use of a registration statement on Form SB-2. Copies of such registration
statement and any amendments and of each related prospectus subject to
completion have been delivered to you.
If the registration statement has been declared effective
under the Act by the Commission, the Company will prepare and promptly file
with the Commission the information omitted from the registration statement
pursuant to Rule 430A(a) of the Rules and Regulations or as part of a
post-effective amendment to the registration statement (including a final form
of prospectus). If the registration statement has not been declared effective
under the Act by the Commission, the Company will prepare and promptly file a
further amendment to the registration statement, including a final form of
prospectus. The term "Registration Statement" as used in this Agreement shall
mean such registration statement, including financial statements, schedules and
exhibits, in the form in which it became or becomes, as the case may be,
effective (including, if the Company omitted information from the registration
statement pursuant to Rule 430A(a) of the Rules and Regulations, the
information deemed to be a part of the registration statement at the time it
became effective pursuant to Rule 430A(b) of the Rules and Regulations) and, in
the event of any amendment thereto after the effective date of such
registration statement, shall also mean (from and after the effectiveness of
such amendment) such registration statement as so amended. The term
"Prospectus" as used in this Agreement shall mean the prospectus relating to
the Shares as included in such Registration Statement at the time it becomes
effective (including, if the Company omitted information from the Registration
Statement pursuant to Rule 430A(a) of the Rules and Regulations, the
information deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 430A(b) of the Rules and Regulations), except
that if any revised prospectus shall be provided to the Underwriters by the
Company for use in connection with the offering of the Shares that differs from
the Prospectus on file with the Commission at the time the Registration
Statement became or becomes, as the case may be, effective (whether or not such
revised prospectus is required to be filed with the Commission pursuant to Rule
424(b)(3) of the Rules and Regulations), the term "Prospectus" shall refer to
such revised prospectus from and after the time it is first provided to the
Underwriters for such use.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted proceedings for
that purpose, and each such Preliminary Prospectus has conformed in all
material respects to the requirements of the Act and the Rules and Regulations
and, as of its date, has not included any untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein,
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and at the time the Registration
Statement became or becomes, as the case may be, effective and at all times
subsequent thereto, up to and on the Closing Date (hereinafter defined) and on
any later date on which Option Shares are to be purchased, (i) the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
contained and will contain all material information required to be included
therein by the Act and the Rules and Regulations and will in all material
respects conform to the requirements of the Act and the Rules and Regulations,
and (ii) neither the Registration Statement nor the Prospectus, nor any
amendments or supplements thereto, will include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that none of the
representations and warranties contained in this subparagraph shall apply to
information contained in or omitted from the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company by any
Underwriter specifically for inclusion therein.
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(c) Each contract, agreement, instrument, lease, license
or other item required to be described in the Registration Statement or the
Prospectuses or filed as an exhibit to the Registration Statement has been so
described or filed, as the case may be.
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction
of its organization, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement; the Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
ownership or leasing of its properties or the conduct of its business requires
such qualification except where the failure to be so qualified or to be in good
standing would not have a material adverse effect on the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company considered as a whole; the Company is in possession of and operating in
compliance with all authorizations, licenses, certificates, consents, orders
and permits from state, federal and other regulatory authorities which are
material to the conduct of its business, all of which are valid and in full
force and effect; the Company is not in violation of its charter or bylaws or
in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any material indenture, mortgage,
deed of trust, loan agreement, bond, debenture, note agreement or other
evidence of indebtedness, or any material lease, contract, joint venture, or
other agreement or instrument to which it is a party or by which its property
is bound or in violation of any law, order, rule, regulation, writ, injunction,
judgment or decree of any government, governmental agency or body or court,
domestic or foreign, of which it has knowledge except such failures to comply
as would not, individually or in the aggregate, have a material adverse effect
on the Company considered as a whole.
(e) The Company has full legal right, power and authority
to enter into this Agreement and to perform the transactions contemplated
hereby. This Agreement and the Warrant Agreement (the "Warrant Agreement") by
and between the Company and the Underwriters have been duly authorized,
executed and delivered by the Company and are valid and binding agreements on
the part of the Company, enforceable in accordance with their respective terms,
except as rights to indemnification and contribution hereunder may be limited
by applicable law and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally, or by general
equitable principles; the performance of this Agreement and the Warrant
Agreement and the consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any material indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness, or any material lease, contract, joint venture
or other agreement or instrument to which the Company is a party or by which
the property of the Company is bound including any licenses from third parties,
or (ii) the Certificate of Incorporation and Bylaws of the Company, or (iii)
any law, order, rule, regulation, writ, injunction, judgment or decree of any
government or governmental agency or body or court, domestic or foreign, having
jurisdiction over the Company or over the properties of the Company, except for
breaches, violations or defaults that individually or in the aggregate, would
not have a material adverse effect on the Company; and no consent, approval,
authorization or order of any court or governmental agency or body is required
for the consummation of the transactions herein contemplated, except such as
may be required under the Act, the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), or under state or other securities or Blue Sky
laws, all of which requirements have been satisfied in all material respects.
(f) Except as disclosed in the Registration Statement or
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, to the
knowledge of the Company, threatened, against or affecting the Company which
(i) is required to
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be disclosed in the Registration Statement or the Prospectus or which might
result in any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company, or
which might materially and adversely affect the properties or assets thereof;
or (ii) which might be expected to materially and adversely affect the
consummation of the transactions contemplated by this Agreement; all pending
legal or governmental proceedings to which the Company is a party or of which
any of its properties or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to the
Company's business, could not reasonably be expected to result in a material
adverse change in the condition, financial or otherwise, or the earnings,
business affairs or business properties of the Company considered as one
enterprise; and there are no contracts or documents of the Company which are
required to be described in the Registration Statement or the Prospectus, or to
be filed as exhibits thereto, by the Act or by the Rules and Regulations which
have not been accurately described in all material respects and filed as
exhibits to the Registration Statement. To the best of the Company's
knowledge, the contracts so described in the Prospectus are in full force and
effect on the date hereof, and the Company is not in breach of or default
under, and to the Company's knowledge, no other party is in material breach of
or material default under, any of such contracts.
(g) All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all Federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities (other than such
preemptive rights or other rights to subscribe for or purchase securities as
were fully complied with or expressly waived or with respect to the violation
of which the right to make claim is barred by the applicable statute of
limitations), and the authorized and outstanding capital stock of the Company
conforms in all material respects to the statements relating thereto contained
in the Registration Statement and the Prospectus (and such statements correctly
state the substance of the instruments defining the capitalization of the
Company); the Firm Shares and the Option Shares to be purchased from the
Company hereunder have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered by the
Company against payment therefor in accordance with the terms of this
Agreement, will be duly and validly issued and fully paid and nonassessable;
the shares of Common Stock issuable under the warrant (the "Underwriters'
Warrant") to be granted to the Underwriters under the Warrant Agreement have
been duly authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company against payment
therefor in accordance with the terms of the Warrant Agreement, will be duly
and validly issued and fully paid and nonassessable; and no preemptive right,
co-sale right, registration right, right of first refusal or other similar
right of stockholders exists with respect to any of the Firm Shares, Option
Shares or shares of Common Stock issuable under the Underwriters' Warrant or
the issuance and sale thereof other than those that have been expressly waived
prior to the date hereof and those that will automatically expire upon the
consummation of the transactions contemplated on the Closing Date. No further
approval or authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale or transfer of the Shares except as may
be required under the Act, the Exchange Act or under state or other securities
or Blue Sky laws. Except as disclosed in or contemplated by the Prospectus and
the financial statements of the Company (including the notes thereto) included
in the Prospectus, the Company has no outstanding options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. The description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents the information required to be shown with
respect to such plans, arrangements, options and rights. The shares of Common
Stock reserved for issuance upon exercise of the Company's outstanding options
and warrants have been duly and validly authorized and are sufficient in number
to meet the exercise requirements of such options.
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(h) Ernst & Young LLP, which has audited the historical
financial statements of the Company filed with the Commission as a part of the
Registration Statement and which are included in the Prospectus, are
independent accountants within the meaning of the Act and the Rules and
Regulations; the audited and pro forma financial statements of the Company,
together with the notes, and the unaudited financial information, forming part
of the Registration Statement and Prospectus, fairly present the financial
position and the results of operations of the Company at the respective dates
and for the respective periods to which they apply; and all audited and pro
forma financial statements, together with the notes, and the unaudited and pro
forma financial information, filed with the Commission as part of the
Registration Statement, have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved except as may be otherwise stated therein. The selected and summary
financial and statistical data included in the Registration Statement present
fairly the information shown therein and have been compiled on a basis
consistent with the audited financial statements presented therein.
(i) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (i) there has been no material adverse change in the business,
properties, operations, condition (financial or otherwise) or in the earnings,
business affairs or business prospects of the Company, whether or not arising
in the ordinary course of business, (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 Company, (iii) there has been
no obligation that is material to the Company, direct or contingent, incurred
by the Company, except obligations incurred in the ordinary course of business,
(iv) there has been no change in the capital stock of the Company, (v) there
has been no change in the outstanding indebtedness of the Company which is
material to the Company, (vi) there has been no dividend or distribution of any
kind declared, paid or made by the Company on behalf of any class of its
respective capital stock, (vii) there has been no redemption, purchase or
acquisition or agreement to redeem, purchase or acquire shares of Common Stock
of the Company, or (viii) to the knowledge of the Company, there has been no
change in any Federal, state, or other laws, rules, or regulations (or
interpretations thereof) applicable to the business of the Company that would
have a material adverse effect on the Company, and, to the knowledge of the
Company, no such change is pending other than as described in the Prospectus.
(j) Except as described in the Prospectus, (i) the
Company has good and marketable title to all properties and assets described in
the Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions of any kind, except those described in the
Prospectus, or those not material, singly or in the aggregate, to the business
of the Company considered as a whole, (ii) the agreements to which the Company
is a party described in the Prospectus are valid agreements, enforceable by the
Company, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or by general equitable principles, and
(iii) the Company has valid and enforceable leases for the properties described
in the Prospectus as leased by it except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles.
(k) All federal, state, local and foreign tax returns
required to be filed by the Company in any jurisdiction have been filed, and
all material taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due or claimed to be due from such entities
have been paid other than those being contested in good faith and for which
adequate reserves have been provided or those currently payable without penalty
or interest; and adequate charges, accruals and reserves have been provided for
in the financial statements referred to in Section 2(h) above in respect of all
Federal, state, local and foreign taxes for all periods as to which the tax
liability of the Company has not been finally determined or remains open to
examination by applicable taxing authorities.
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(l) No labor dispute with the employees of the Company
exists or, to the knowledge of the Company, is imminent; and the Company is not
aware of any existing or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers, contractors or customers which might be
expected to result in any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company. No collective bargaining agreement exists with any of the Company's
employees and, to the Company's knowledge, no such agreement is imminent.
(m) The Company owns or possesses the patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
("Intellectual Property") presently employed by them in connection with the
business now operated by them or necessary for the conduct of its business as
described in the Registration Statement and Prospectus and the Company has not
received any notice or is otherwise aware of any infringement of or conflict
with rights of others with respect to any Intellectual Property or of any facts
or circumstances which would render any Intellectual Property rights invalid or
inadequate to protect the interest of the Company therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy singly or in the aggregate, would result
in any adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company.
(n) Except as set forth in the Prospectus, the Company is
in compliance in all material respects with all applicable laws, statutes,
ordinances, rules or regulations, the enforcement of which, individually or in
the aggregate, would be reasonably expected to have a material adverse effect
on the condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company.
(o) The Common Stock has been approved for listing on the
Nasdaq National Market subject to official notice of issuance.
(p) The Company has been advised concerning the
Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its affairs in such a manner as to ensure that it will not
become an "investment company" within the meaning of the 1940 Act and such
rules and regulations.
(q) The Company has not distributed and will not
distribute prior to the Closing Date or on any date on which Option Shares are
to be purchased, as the case may be, any offering material in connection with
the offering and sale of the Shares other than the Prospectus, the Registration
Statement and other materials permitted by the Act.
(r) The Company has not at any time during the last five
years (i) made any unlawful contribution to any candidate for foreign office,
or failed to disclose fully any contribution in violation of law, or (ii) made
any payment to any Federal or state governmental officer or official, or other
person charged with similar public or quasi- public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
(s) The Company has not taken and will not take, directly
or indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares. The Company has not
effected any sales of securities required to be disclosed in Item 26 of Form
SB-2 under the Act, other than as disclosed in the Registration Statement.
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(t) Each officer and director of the Company and certain
beneficial owners of at least 4% of the outstanding shares of Common Stock and
options and warrants to purchase Common Stock outstanding after completion of
this offering have agreed in writing that such persons will not, for a period
expiring 24 months after the termination of the offering pursuant to this
Underwriting Agreement, offer to sell, contract to sell, sell short, or
otherwise sell or dispose of any shares of Common Stock of the Company, any
options or warrants to purchase any shares of Common Stock of the Company, or
any securities convertible into or exchangeable for shares of the Common Stock
owned directly by such person or with respect to which such person has the
power of disposition otherwise than (i) as a gift or gifts, provided the donee
or donees thereof agree to be bound by this restriction or (ii) with the prior
written consent of Capital West Securities, Inc. ("Capital West"). In addition
holders of in excess of 90% of the Company's Series A Preferred Stock and all
the holders of the Company's Series C Preferred Stock have agreed not to offer,
sell or otherwise dispose of the shares of Common Stock into which such
preferred stock is convertible for 13 months after the termination of the
offering pursuant to this Underwriting Agreement without the prior written
consent of Capital West.
(u) Except as described in the Registration Statement,
(i) the Company is not in violation of any Federal, state, local or foreign
laws or regulations relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Environmental
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Environmental Materials
(collectively, the "Environmental Laws"), except such violations as would not,
singly or in the aggregate, have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company, and (ii) to the best of the Company's knowledge, there are no
events or circumstances that could form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company relating to any
Environmental Materials or the violation of any Environmental Laws, which,
singly or in the aggregate, could reasonably be expected to have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company.
(v) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles as in
effect in the United States and to maintain asset accountability; (iii) access
to bank accounts 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.
(w) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus. Neither the Company nor any employee or agent of the Company has
made any payment or transfer of any funds or assets of the Company or conferred
any personal benefit by use of the Company's assets, or received any funds,
assets or personal benefit in violation of any law, rule or regulation.
(x) On the Closing Date and upon delivery of the Option
Shares, as applicable, all transfer and other taxes (other than income taxes)
that are required to be paid in connection with the sale and transfer of the
Shares to the Underwriters will have been paid.
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(y) The Company currently has a pension plan subject to
the provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred with
respect to such "pension plan" (as defined in ERISA) for which the Company
would have any liability, the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each "pension plan" for
which the Company would have any liability that is intended to be qualified
under Section 401 (a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(z) Any certificate signed by any officer of the Company
and delivered to the Underwriters or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
(aa) Except as may be set forth in the Prospectus, the
Company has not incurred any liability for a fee, commission, or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by the Underwriting Agreement.
(bb) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which the Company is engaged.
3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, respectively, at a purchase price per
share of $________________ per Share, the number of Shares set forth in
Schedule A hereto (subject to adjustment as provided in Section 10).
Delivery of definitive certificates for the Firm Shares to be
purchased by the Underwriters pursuant to this Section 3 shall be made against
payment of the purchase price therefor by the Underwriters by certified or
official bank check in next day funds, payable to the order of the Company at
the offices of Capital West Securities, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, 16th Floor, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as
shall be agreed upon by the Underwriters and the Company, at 9:30 a.m. on
_________________________________, 1997(or at such time and date to which
payments and delivery shall have been postponed pursuant to Section 10 hereof),
such time and date of payment and delivery being herein called the "Closing
Date." The certificates for the Firm Shares to be so delivered will be made
available to you at such office or at such other location as you may reasonably
request for checking at least one business day prior to the Closing Date and
will be in such names and denominations as you may request, such request to be
made at least two business days prior to the Closing Date. If the Underwriters
so elect, delivery of the Shares may be made by credit through full fast
transfer to the accounts at Depository Trust Company designated by the
Underwriters.
It is understood that Capital West, individually and not as
representative of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by Capital West prior to the
Closing Date for the Firm Shares to be purchased by such Underwriter or
Underwriters. Any such payment by Capital West shall not relieve any such
Underwriter or Underwriters of any of its or their obligations hereunder.
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After the Registration Statement becomes effective, the
several Underwriters intend to offer the Firm Shares to the public as set forth
in the Prospectus.
The information set forth in the last paragraph on the front
cover page (insofar as such information relates to the Underwriters) and under
"Underwriting" in any Preliminary Prospectus and in the final form of
Prospectus filed pursuant to Rule 424(b) constitutes the only information
furnished by the Underwriters to the Company for inclusion in any Preliminary
Prospectus, the Prospectus or the Registration Statement, and you, on behalf of
the Underwriters, represent and warrant to the Company that the statements made
therein do not include any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make such
statements, in the light of the circumstances in which they were made, not
misleading.
4. FURTHER COVENANTS OF THE COMPANY. The Company covenants with
the several Underwriters as follows:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto,
to become effective as promptly as possible; it will notify you, promptly after
it shall receive notice thereof, of the time when the Registration Statement or
any subsequent amendment to the Registration Statement has become effective or
any supplement to the Prospectus has been filed; if the Company omitted
information from the Registration Statement at the time it was originally
declared effective in reliance upon Rule 430A(a) of the Rules and Regulations,
the Company will provide evidence satisfactory to you that the Prospectus
contains such information and has been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (1) or (4) of Rule
424(b) of the Rules and Regulations or as part of a post-effective amendment to
such Registration Statement as originally declared effective which is declared
effective by the Commission; if for any reason the filing of the final form of
Prospectus is required under Rule 424(b)(3) of the Rules and Regulations, it
will provide evidence satisfactory to you that the Prospectus contains such
information and has been filed with the Commission within the time period
prescribed; it will notify you promptly of any request by the Commission for
the amending or supplementing of the Registration Statement or Prospectus or
for additional information; promptly upon your request, it will prepare and
file with the Commission any amendments or supplements to the Registration
Statement or Prospectus which, in the opinion of counsel for the several
Underwriters, may be necessary or advisable in connection with the distribution
of the Shares by the Underwriters; it will promptly prepare and file with the
Commission, and promptly notify you of the filing of, any amendments or
supplements to the Registration Statement or Prospectus which may be necessary
to correct any statements or omissions, 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 the Prospectus or any other prospectus
relating to the Shares as then in effect would include any untrue statement of
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; in case any
Underwriter is required to deliver a prospectus nine months or more after the
effective date of the Registration Statement in connection with the sale of the
Shares, it will prepare promptly upon request, but at the expense of such
Underwriter, such amendment or amendments to the Registration Statement and
such prospectus or prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Act; and it will file no amendment
or supplement to the Registration Statement or Prospectus which shall not
previously have been submitted to you a reasonable time prior to the proposed
filing thereof or to which you shall reasonably object in writing, subject,
however, to compliance with the Act, the Rules and Regulations thereunder and
the provisions of this Agreement.
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(b) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof of the issuance of any stop order by
the Commission suspending the effectiveness of the Registration Statement or of
the initiation or threat of any proceeding for that purpose; and it will
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
(c) The Company will cooperate with the Underwriters and
Underwriters' counsel in connection with their efforts to qualify the Shares
for offering and sale under the securities laws of such jurisdictions as you
may designate and to continue such qualifications in effect for so long as may
be required for purposes of the distribution of the Shares, except that the
Company shall not be required in connection therewith or as a condition thereof
to qualify as a foreign corporation or to execute a general consent to service
of process in any jurisdiction or to make any undertaking with respect to the
conduct of its business. In each jurisdiction in which the Shares shall have
been qualified as above provided, the Company will make and file such
statements and reports in each year as are or may be reasonably required by the
laws of such jurisdiction.
(d) The Company will furnish you, as soon as available,
copies of the Registration Statement (three of which will be signed and include
all exhibits), each Preliminary Prospectus, the Prospectus and any amendments
or supplements to such documents, including any prospectus prepared to permit
compliance with Section 10(a)(3) of the Act, all in such quantities as you may
from time to time reasonably request.
(e) The Company will make generally available to its
stockholders as soon as practicable, but in any event not later than the 45th
day following the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement, an earnings
statement (which will be in reasonable detail but need not be audited)
complying with the provisions of Section 11 (a) of the Act and covering a
twelve-month period beginning after the effective date of the Registration
Statement.
(f) As long as the Company is a reporting company under
the Exchange Act, the Company will furnish to its stockholders, as soon as
practicable after the end of each respective period, annual reports (including
financial statements audited by independent certified public accountants) and
unaudited quarterly reports of operations for each of the first three quarters
of the fiscal year, and for a period of five years after the effective date of
the Registration Statement, the Company will furnish to the several
Underwriters hereunder, upon request (i) concurrently with furnishing such
reports to its stockholders, statements of operations of the Company for each
of the first three quarters in the form furnished to the Company's
stockholders; (ii) concurrently with furnishing to its stockholders, a balance
sheet of the Company as of the end of such fiscal year, together with
statements of operations, of stockholders' equity, and of cash flows of the
Company for such fiscal year, accompanied by a copy of the certificate or
report thereon of independent accountants; (iii) as soon as they are available,
copies of all reports and financial statements furnished to or filed with the
Commission, any securities exchange or the National Association of Securities
Dealers, Inc. ("NASD"); (iv) every material press release and every material
news item or article in respect of the Company or its affairs which was
released or prepared by the Company (excluding, in each case customary
product-related press releases and articles); and (v) any additional
information of a public nature concerning the Company, or its business which
you may reasonably request. During such five-year period, if the Company shall
have active subsidiaries, the foregoing financial statements shall be on a
consolidated basis to the extent that the accounts of the Company and its
subsidiaries are consolidated, and shall be accompanied by similar financial
statements for any significant subsidiary which is not so consolidated. For a
period of five years from the date of the Registration Statement, the Company
will furnish to you and, upon request, to each of the other Underwriters, as
soon as available, a copy of each report of the Company mailed to holders of
the Common Stock or publicly filed with the Commission or any automated
quotation system or national securities exchange on which any class of
securities of the Company is listed.
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(g) The Company will apply the net proceeds from the sale
of the Shares being sold by it in the manner set forth under the caption "Use
of Proceeds" in the Prospectus.
(h) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for its Common Stock.
(i) The Company will file Form SR in conformity with the
requirements of the Act and the Rules and Regulations.
(j) The Company shall comply with all provisions of all
undertakings contained in the Registration Statement.
(k) If the transactions contemplated hereby are not
consummated by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed hereunder or to
fulfill any condition of the Underwriters' obligations hereunder, or if the
Company shall terminate this Agreement under Section 11(a), the Company will
pay the several Underwriters $75,000, which amount has already been paid.
(1) If at any time during the 90-day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect set forth
above, forthwith prepare, consult with you concerning the substance of, and
disseminate a press release or other public statement, reasonably satisfactory
to you, responding to or commenting on such rumor, publication or event.
(m) For a period of two years after the effective date
of the Registration Statement, without the prior written consent of Capital
West, which consent shall not be unreasonably withheld, the Company shall not,
directly or indirectly, offer, sell, contract to sell, pledge, grant any option
to purchase or otherwise dispose (or announce any offer, sale, contract of sale
or other disposition of), any shares of Common Stock or any other shares of
capital stock of the Company, or any securities convertible into or exercisable
or exchangeable for, or warrants, options or rights to purchase or acquire,
shares of Common Stock or any other shares of capital stock of the Company, or
any interest in the Common Stock (including derivative interests) other than
the Company's issuance and sale of Shares in accordance with the Underwriting
Agreement, the issuance of stock options under, the issuance of Common Stock
upon the exercise of stock options granted under, any stock option plan
described in the Prospectuses, and the issuance and sale of additional shares
of Common Stock in an offering registered under the Act on any date after the
termination of the offering pursuant to this Underwriting Agreement.
(n) During a period of 90 days from the effective date of
the Registration Statement, the Company will not file a registration statement
registering shares under any employee benefit plan.
(o) On the Closing Date the Company will sell to you, for
$.001 per share of Common Stock covered by each warrant, the Underwriters'
Warrants to purchase one share of Common Stock of the
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Company for each ten shares of the Company's Common Stock which have been sold
(or purchased by the Underwriters), excluding any over-allotment shares, as set
forth in the Prospectus. The Underwriters' Warrants shall have the terms and
be in the form filed as an exhibit to the Registration Statement. At any time
during the period commencing 12 months and ending five years after the
effective date of the offering and at the written request of the then holders
of 51% of the Underwriters' Warrants and the Common Stock of the Company issued
upon the exercise of the Underwriters' Warrants, and on one occasion, the
Company will file with the Commission and process to effectiveness a
registration statement covering not less than 51% of the shares of the Common
Stock of the Company issuable and/or issued upon the exercise of the
Underwriters' Warrants. The Company must file a registration statement only if
the shares of Common Stock issuable under the Underwriters' Warrants cannot be
sold without registration under Rule 144 promulgated under the Act. The
Company agrees to use its commercially reasonable best efforts to cause the
filing to become effective. The costs of the filing of such registration
statement including but not limited to, legal (including legal fees relating to
clearance in the various states, limited however to such states as may be
reasonably requested), accounting and printing fees, shall be borne by the
Company but the Company shall not be responsible for the cost of any separate
counsel to review the registration statement on behalf of or to advise the
selling stockholders and shall not be responsible for the payment of any
underwriting discount or commissions with respect to such sale. Such
registration statement shall comply with any undertaking applicable to such
shares. If the Company otherwise than upon the request of the owners of the
Underwriters' Warrants or the shares of Common Stock issuable upon the exercise
thereof files a registration statement under the Act with respect to any of its
securities at any time (other than on Form ▇-▇, ▇-▇, or any other form that
does not provide for resales by selling security holders), the Company will
give such persons 30 days' notice of its intention to do so, and at their
written request given within 10 days of the receipt of such notice, will
include in such registration statement such number of such Shares as they may
specify, all at no cost to them (except for underwriting discounts and the fees
and expenses of counsel to such holders). In connection with any such
registration statement covering all or a part of such shares, the Company
agrees that it will covenant with the owners of such shares with respect to
such shares and the offering thereof, in customary form substantially to the
effect contained in this Section 4. If the offering pursuant to any
registration statement provided for herein is made through Underwriters, the
Company agrees to enter into an underwriting agreement in customary form with
such underwriters in which the Company and the underwriters and each person who
controls such underwriters within the meaning of the Act grant to each other
customary reciprocal indemnities against liabilities under the Act.
(p) As long as the Company is a reporting company under
the Exchange Act, the Company will comply with the Act, the Exchange Act, the
rules and regulations of the NASD and applicable state securities or Blue Sky
laws so as to permit the continuance of sales and dealings in the Common Stock
under the Act, the Exchange Act, the rules and regulations of the NASD, and
applicable state securities or Blue Sky laws, including the filing with the
NASD and the Commission of all reports required to be filed pursuant to the
applicable provisions of the rules and regulations of the NASD, the Act, and
the Exchange Act, and will deliver to the holders of the Common Stock all
reports required to be provided to such holders pursuant to the applicable
provisions of the rules and regulations of the NASD, the Act, the Exchange Act,
and applicable state securities or Blue Sky laws.
5. EXPENSES.
(a) The Company agrees with each Underwriter that the
Company will pay and bear all costs and expenses of the Company incurred in
connection with (i) the preparation, printing, filing and mailing of the
Registration Statement (including financial statements, schedules and
exhibits), Preliminary
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Prospectuses and the Prospectus and any amendments or supplements thereto; (ii)
the approval of the Common Stock for listing on the Nasdaq National Market;
(iii) the printing and mailing of this Agreement, the Preliminary Blue Sky
Survey and any Supplemental Blue Sky Survey, the Underwriters' Questionnaire
and Power of Attorney and any instruments related to any of the foregoing; (iv)
the issuance, transfer and delivery of the Shares hereunder to the Underwriters
or to Depository Trust Company, including transfer taxes, if any, and the cost
of all certificates representing the Shares and transfer agents' and
registrars' fees; (v) the fees and disbursements of counsel for the Company;
(vi) all fees and other charges of the Company's independent public
accountants; (vii) the cost of furnishing to the Underwriters copies of the
Registration Statement (including appropriate exhibits), Preliminary Prospectus
and the Prospectus, and any amendments or supplements to any of the foregoing;
and (viii) all costs incurred in connection with the qualification of the
Shares under the securities laws of such states as the Company and you may
designate including the fees and disbursements of counsel to the Underwriters
retained to qualify the Shares in the various states; and (ix) all other
expenses directly incurred by the Company in connection with the performance of
its obligations hereunder.
(b) Capital West shall be entitled to receive from the
Company, for itself and not as representative of the Underwriters, a
nonaccountable expense allowance equal to three percent of the aggregate public
offering price of Shares sold to the Underwriters in connection with the
Offering reduced by any amounts advanced by the Company to Capital West
pursuant to the terms of the Letter of Intent. Capital West shall be entitled
to withhold this allowance on the Closing Date.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters to purchase and pay for Shares as provided herein shall be
subject to the accuracy, as of the date hereof and the Closing Date and any
later date on which Option Shares are to be purchased (the "Option Closing
Date"), as the case may be, of the representations and warranties of the
Company herein to the performance by the Company of its obligations hereunder,
and to the following additional conditions:
(a) The Registration Statement shall have become
effective not later than 5:30 p.m. on the date hereof, or with the consent of
the Underwriters, at a later time and date, not later, however, than 5:30 p.m.
on the first business day following the date hereof, or at such later time and
date as may be approved by a majority in interest of the Underwriters; and no
stop order suspending the effectiveness of the Registration Statement shall
have been issued under the Act or proceedings therefor initiated or threatened
by the Commission and any request on the part of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. If the Company has elected to rely upon Rule 430A
of the Rules and Regulations, the price of the Shares and any price-related
information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) of the Rules and Regulations within the
prescribed time period, and prior to the Closing Date the Company shall have
provided evidence satisfactory to the Underwriters of such timely filing, or a
post-effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule 430A
of the Rules and Regulations. Qualification under the securities laws of such
states as you may deem necessary to the success of the underwriting of the
issue and sale of the Shares upon the terms and conditions set forth in this
Agreement or contemplated by this Agreement and containing no provisions
unacceptable to you will have been secured, and no stop order (or the
equivalent thereof) will be in effect denying or suspending effectiveness of
such qualification, nor will any stop order proceedings (or the equivalent
thereof) with respect thereto be instituted or pending or threatened under such
laws.
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(b) At the Closing Date and the Option Closing Date, if
any, counsel for the Underwriters shall have been furnished with such documents
and opinions as they may require for the purpose of enabling them to pass upon
the issuance and sale of the Shares as contemplated herein and related
proceedings or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Shares as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
(c) There shall not have been, since the date hereof or
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any change in the condition (financial or
otherwise), earnings, operations, business affairs or business prospects of the
Company whether or not arising in the ordinary course of business which, in
your sole judgment, is material and adverse and that makes it, in your sole
judgment, impracticable or inadvisable to proceed with the public offering of
the Shares as contemplated by the Prospectus, and the Underwriters shall have
received a certificate of the President or Vice President of the Company and of
the chief financial or chief accounting officer of the Company, dated as of the
Closing Date, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 2 hereof are true
and correct with the same force and effect as though expressly made at and as
of the Closing Date, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior
to the Closing Date, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been initiated or threatened by the Commission or any Blue Sky jurisdiction.
(d) At the Closing Date the Underwriters shall have
received:
(1) The opinions, dated as of the Closing Date of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇, P.C., special counsel for the
Company, in form and substance satisfactory to counsel for the Underwriters, to
the effect that:
(i) The Company has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the State of Delaware.
(ii) The Company has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus and to enter into
and perform its obligations under this Agreement and to issue, sell and deliver
to the Underwriters the Firm Shares or the Option Shares, as the case may be,
to be issued and sold by it hereunder.
(iii) The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which it owns or leases property or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction.
(iv) At the Closing Date, after giving
effect to the sale of the Firm Shares, the authorized capital stock of the
Company is as set forth in the Prospectus under the caption "Capitalization" as
of the dates stated therein; the issued and outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable and have not been issued in violation of any preemptive right
contained in the Certificate of Incorporation or Bylaws of the Company or, to
such counsel's knowledge, any co-sale right, registration right, right of first
refusal or other similar right (other than such preemptive rights or other
rights to subscribe for or purchase securities as were fully complied with or
expressly waived or with respect to the violation of which the right to make a
claim is barred by the applicable statute of limitation).
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(v) The Firm Shares and the Option
Shares, as the case may be, to be purchased from the Company hereunder have
been duly authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment therefor in accordance with the terms hereof, will be
validly issued and fully paid and nonassessable, and will not be issued in
violation of any preemptive right under the Certificate of Incorporation or
Bylaws of the Company or, to such counsel's knowledge, any co-sale right, right
of first refusal or other similar right and the stockholders of the Company
have no preemptive right under the Certificate of Incorporation or Bylaws of
the Company or, to such counsel's knowledge, other rights to purchase any of
the Shares; the shares of Common Stock reserved for issuance upon the exercise
of the Underwriters' Warrants have been duly and validly authorized and are
sufficient in number to meet the exercise requirements thereof, and such shares
of Common Stock, when issued upon exercise, will be duly and validly issued,
fully paid (assuming exercise in accordance with the governing instruments
therefor and receipt by the Company of the exercise price thereof) and
nonassessable; the stockholders of the Company have no preemptive right under
the Certificate of Incorporation or Bylaws of the Company or, to such counsel's
knowledge, other rights to purchase any of the Shares; and the shares of Common
Stock reserved for issuance upon the exercise of the Company's outstanding
options have been duly and validly authorized and are sufficient in number to
meet the exercise requirements of such options, and such shares of Common
Stock, when issued upon exercise, will be duly and validly issued, fully paid
(assuming exercise in accordance with the governing instruments therefor and
receipt by the Company of the exercise price thereof) and nonassessable.
(vi) The issuance of the Shares to be
purchased hereunder is not subject to preemptive or other similar rights
arising by operation of law or, to the best of their knowledge and information,
otherwise.
(vii) This Agreement and the Warrant
Agreement have been duly authorized by all necessary corporate action on the
part of the Company and have been duly executed and delivered by the Company
and assuming due authorization, execution and delivery by the Underwriters, are
valid and binding agreements of the Company, except insofar as indemnification
and contribution provisions may be limited by applicable law or equitable
principles, and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or any general equitable principles.
(viii) The Registration Statement has been
declared effective under the Act; any required filing of the Prospectus
pursuant to Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b) and, to the best of their knowledge and information, no
stop order suspending the effectiveness of the Registration Statement has been
issued under the Act or proceedings therefor have been initiated or are pending
or threatened by the Commission.
(ix) The Registration Statement,
Prospectus and each amendment or supplement to the Registration Statement and
Prospectus, as of their respective effective or issue dates (other than the
financial statements and supporting schedules included therein, as to which no
opinion need be rendered) complied as to form in all material respects with the
requirements of the Act and the applicable Rules and Regulations.
(x) The terms and provisions of the
capital stock of the Company conform in all material respects to the
description thereof contained in the Prospectus under the caption "Description
of Securities", and the Shares have been duly approved for listing on the
Nasdaq National Market.
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(xi) The information in the Prospectus
under the caption "Description of Securities" to the extent that they
constitute matters of law or legal conclusions, has been reviewed by such
counsel and accurately and fairly summarizes in such counsel's opinion the
matters described therein and to the knowledge of such counsel, there are no
outstanding options, warrants, convertible securities, or other rights to
acquire from the Company any capital stock, except as described in the
Registration Statement; in addition, the forms of certificates evidencing the
Company stock comply with Delaware law.
(xii) To the best of their knowledge and
information, except as set forth in the Prospectus, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which the
Company is a party, or to which the property of the Company is subject, before
or brought by any court or government agency or body, which might reasonably be
expected to result in any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company, or which might reasonably be expected to materially and adversely
affect the properties or assets thereof or the consummation of this Agreement
or the performance by the Company of its obligations hereunder; and all pending
legal or governmental proceedings to which the Company is a party or that
affect any of its respective properties that are not described in the
Prospectus, including ordinary routine litigation incidental to the business,
could not reasonably be expected to result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company.
(xiii) The information in the Prospectus
under the captions "Business", "Shares Eligible for Future Sale", "Certain
Relationships and Related Transactions" and "Description of Securities" in the
Prospectus and Items 24 and 26 of Part II of the Registration Statement to the
extent that such items constitute matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been reviewed by them and
is correct in all material respects, and there are no legal or governmental
actions, suits or proceedings pending or threatened against the Company that
are required to be described in the Prospectus as required by the Act or the
applicable Rules and Regulations.
(xiv) All descriptions in the Prospectus
of contracts and other documents are accurate in all material respects; to the
best of their knowledge and information, there are no agreements, no contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments
required to be described or referred to in the Registration Statement or to be
filed as exhibits thereto other than those described or referred to therein or
filed as exhibits thereto, the descriptions thereof or references thereto are
correct in all material respects, and to the best of counsel's knowledge and
information, the Company is not in default in the due performance or observance
of any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
so described, referred to or filed as exhibits thereto.
(xv) No authorization, approval, consent
or order of any court or governmental authority or agency (other than under the
Act or the Rules and Regulations, which have been obtained, or as may be
required under the securities or Blue Sky laws of the various states) is
required in connection with the due authorization, execution and delivery of
this Agreement or for the offering, issuance or sale of the Shares to the
Underwriters; and the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein and compliance by the
Company with its obligations hereunder (other than performance of the Company's
indemnification and contribution obligations hereunder, concerning which no
opinion need be expressed) will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach or
violation of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company pursuant
to any material contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company
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is a party or by which either of them may be bound, or to which any of the
property or assets of the Company is subject, nor will such action result in
any violation of the provisions of the Certificate of Incorporation or Bylaws
of the Company, or any applicable law, administrative regulation or court
decree, provided, however, no opinion need be rendered concerning state
securities or Blue Sky laws.
(xvi) To the best of such counsel's
knowledge and information, except as set forth in the Registration Statement
and Prospectus, no holder of any security of the Company has any right to
require registration of any shares of Common Stock or any other security of the
Company and, except as set forth in the Registration Statement and Prospectus,
all holders of securities of the Company having rights to registration of such
shares of Common Stock, or other securities, because of the filing of the
Registration Statement by the Company have, with respect to the offering
contemplated thereby, waived such rights or such rights have expired by reason
of lapse of time following notification of the Company's intent to file the
Registration Statement, or have included securities in the Registration
Statement pursuant to the exercise of such rights.
(xvii) The Company is not an "investment
company" or an entity "controlled" by an "investment company" as such terms are
defined in the ▇▇▇▇ ▇▇▇.
(xviii) To the best of such counsel's
knowledge and information, the Company is not in violation of its charter or
by-laws.
(xix) To the best of such counsel's
knowledge, the conduct of the business of the Company is not in violation of
any federal, state or local statute, administrative regulation or other law
which violation could have a material adverse effect on the Company. The
Company possesses all licenses, permits, approvals and other governmental
authorizations required for the conduct of its business, as described in the
Prospectus except where the absence of any such license, permit, approval or
authorization would not be likely, in the opinion of such counsel, to have a
material adverse effect on the Company. Such licenses, permits and other
governmental authorizations possessed by the Company are in full force and
effect and, to such counsel's knowledge after due inquiry, the Company is in
all material respects complying therewith. To such counsel's knowledge, after
due inquiry, there is no reason why the Company would not receive, or would be
unlikely to receive such licenses, permits, approvals and other governmental
authorization as would be required for the conduct of the Company's business as
contemplated by the Prospectus.
(xx) To the best of such counsel's
knowledge, upon due inquiry, the Company is not in material violation of any
applicable federal, state or local environmental law.
(xxi) The Company owns or possesses all
rights to the Intellectual Property presently employed by them in connection
with the business now operated by it or necessary for the conduct of its
business as described in the Registration Statement and Prospectus.
In rendering such opinion, such counsel may rely as
to matters of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials.
In giving their opinion required by subsection (d)(1)
of this Section, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇, P.C. shall
additionally state that nothing has come to their attention that would lead
them to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
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the statements therein not misleading or that the Prospectus, at the effective
date of the Registration Statement (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriters by the Company for use
in connection with the offering of the Shares which differs from the Prospectus
declared effective by the Commission, in which case at the time it is first
provided to the Underwriters for such use) or at the Closing Date, included an
untrue statement of a 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. Such opinion may
state that such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus except as otherwise expressly provided in such
opinion, and such counsel need express no opinion or belief as to the financial
statements, schedules, and other financial or statistical data included in the
Registration Statement or Prospectus.
(2) The opinion, dated as of Closing Date, of
Bright & ▇▇▇▇▇▇, a Professional Corporation, counsel for the Underwriters, in
form and substance satisfactory to you, with respect to the sufficiency of all
such corporate proceedings and other legal matters relating to this Agreement
and the transactions contemplated hereby as you may reasonably require, and the
Company shall have furnished to such counsel such papers, opinions and
information as they request to enable them to pass upon such matters.
(e) At the time of the execution of this Agreement, the
Underwriters shall have received from Ernst & Young LLP a letter dated such
date, in form and substance satisfactory to the Underwriters, to the effect
that:
(1) they are independent public accountants with
respect to the Company within the meaning of the Act and the Rules and
Regulations;
(2) it is their opinion that the consolidated
balance sheet and the related statements of income, shareholders' equity and
cash flows of the Company included in the Registration Statement and covered by
their opinion therein comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and Regulations;
(3) based upon limited procedures set forth in
detail in such letter, nothing has come to their attention which causes them to
believe that, at a specified date not more than three days prior to the date of
this Agreement, (A) the unaudited consolidated balance sheet and the related
statements of income, shareholders' equity and cash flows of the Company
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 Rules
and Regulations or is not presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the audited financial statements included in the Registration Statement, or (B)
at a specified date not more than three days prior to the date of this
Agreement, there has been any change in the capital stock of the Company or any
increase in the combined long term debt of the Company or any decrease in
combined net current assets or net assets as compared with the amounts shown in
the June 30, 1997 balance sheet included in the Registration Statement or,
during the period from June 30, 1997 to a specified date not more than three
days prior to the date of this Agreement, there were any decreases, as compared
with the corresponding period in the preceding year, in combined revenues, net
income or net income per share of the Company, except in all instances for
changes, increases or decreases which the Registration Statement and the
Prospectus disclose have occurred or may occur;
(4) in addition to the examination referred to in
their opinion and the limited procedures referred to in clause (3) above, they
have carried out certain specified procedures, not constituting
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an audit, with respect to certain amounts, percentages and financial
information which are included in the Registration Statement and Prospectus and
which are specified by the Underwriters, and have found such amounts,
percentages and financial information to be in agreement with the relevant
accounting, financial and other records of the Company identified in such
letter; and
(5) they have compared the information in the
Prospectus under selected captions with the disclosure requirements of
Regulation S-B and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all material
respects with the disclosure requirements of Item 402 of Regulation S-B.
(f) At the Closing Date, the Underwriters shall have
received from Ernst & Young LLP a letter, dated as of the Closing Date, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (e) of this Section 6, except that the specified date referred to
shall be a date not more than three days prior to the Closing Date and, if the
Company has elected to rely on Rule 430A of the 1933 Act Regulations, to the
further effect that they have carried out procedures as specified in clause (4)
of subsection (e) of this Section 6 with respect to certain amounts,
percentages and financial information specified by the Underwriters and deemed
to be a part of the Registration Statement pursuant to Rule 430(A)(b) and have
found such amounts, percentages and financial information to be in agreement
with the records specified in such clause (4).
(g) At the Closing Date, the Common Stock shall have been
approved for listing on the Nasdaq National Market.
(h) In the event that the Underwriters exercise their
option provided in Section 7 hereof to purchase all or any portion of the
Option Shares, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Company
hereunder shall be true and correct as of the Option Closing Date and, at the
Option Closing Date, the Underwriters shall have received:
(1) A certificate, dated the Option Closing Date,
of the President or a Vice President of the Company and of the Chief Financial
or Chief Accounting Officer of the Company confirming that the certificate
delivered at the Closing Date pursuant to Section 6(c) hereof remains true and
correct as of the Option Closing Date (except that all references in such
Section to "Closing Date" shall be deemed to refer to the "Option Closing
Date").
(2) The opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇, P.C., in form and substance satisfactory to counsel for the
Underwriters, dated the Option Closing Date, relating to the Option Shares and
otherwise to the same effect as the opinion required by Section 6(d)(1) hereof
(except that all references in such Section to "Closing Date" shall be deemed
to refer to the "Option Closing Date").
(3) The opinion of Bright & ▇▇▇▇▇▇, a
Professional Corporation, counsel for the Underwriters, dated the Option
Closing Date, relating to the Option Shares to be purchased on the Option
Closing Date and otherwise to the same effect as the opinion required by
Section 6(d)(2) hereof (except that all references in such Section to "Closing
Date" shall be deemed to refer to the "Option Closing Date").
(4) A letter from Ernst & Young LLP in form and
substance satisfactory to the Underwriters and dated the Option Closing Date,
substantially the same in form and substance as the letter furnished to the
Underwriters pursuant to Section 6(e) hereof, except that the "specified date"
in the letter furnished pursuant to this Section 6(h)(4) shall be a date not
more than three days prior to the Option Closing Date.
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(i) The Company and the Underwriters shall have entered
into the Warrant Agreement and the Company shall have sold to the Underwriters
the Underwriters' Warrants, which shall be in the form attached as an exhibit
to the Warrant Agreement.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by Capital West by notice to the Company at any time at or prior to
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section 4 and except that Sections 4(k)
and 8 shall survive any such termination and remain in full force and effect.
7. OPTION SHARES.
(a) On the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants to the several Underwriters, for the purpose of covering
over-allotments in connection with the distribution and sale of the Firm Shares
only, a non-transferable option to purchase up to an aggregate 345,000 Option
Shares at the purchase price per share for the Firm Shares set forth in Section
3 hereof. Such option may be exercised by Capital West on behalf of the
several Underwriters on one occasion in whole or in part during the period of
45 business days from and after the date on which the Firm Shares are initially
offered to the public, by giving notice to the Company. The number of Option
Shares to be purchased by each Underwriter upon the exercise of such option
shall be the same proportion of the total number of Option Shares to be
purchased by the several Underwriters pursuant to the exercise of such option
as the number of Firm Shares purchased by such Underwriter (set forth in
Schedule A hereto) bears to the total number of Firm Shares purchased by the
several Underwriters (set forth in Schedule A hereto), adjusted by the
Underwriters in such manner as to avoid fractional shares.
Delivery of definitive certificates for the Option Shares to
be purchased by the several Underwriters pursuant to the exercise of the option
granted by this Section 7 shall be made against payment of the purchase price
therefor by the several Underwriters by certified or official bank check or
checks drawn in same day funds, payable to the order of the Company. Such
delivery and payment shall take place at the offices of Capital West
Securities, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or
at such other place as may be agreed upon between the Underwriters and the
Company on the Option Closing Date, if written notice of the exercise of such
option is received by the Company not later than three full business days prior
to the Option Closing Date.
The certificates for the Option Shares so to be delivered will
be made available to you at such office or other location including, without
limitation, in Oklahoma City, as you may reasonably request for checking at
least two full business days prior to the date of payment and delivery and will
be in such names and denominations as you may request, such request to be made
at least three full days prior to such date of payment and delivery. If the
Underwriters so elect, delivery of the Shares may be made by credit through
full fast transfer to the accounts at Depository Trust Company by the
Underwriters.
It is understood that Capital West, individually, and not as
the representative of the Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by you prior to the date of
payment and delivery for the Option Shares to be purchased by such Underwriter
or Underwriters. Any such payment by Capital West shall not relieve any
Underwriter of any of its or their obligations hereunder.
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(b) Upon exercise of any option provided for in Section
7(a) hereof the obligations of the Underwriters to purchase such Option Shares
will be subject (as of the date hereof and as of the date of payment for such
Option Shares) to the accuracy of and compliance with the representations and
warranties of the Company herein, to the accuracy of the statements of the
Company and officers of the Company made pursuant to the provisions hereof, to
the performance by the Company of their respective obligations hereunder, and
to the condition that all proceedings taken at or prior to the payment date in
connection with the sale and transfer of such Option Shares shall be
satisfactory in form and substance to you and to Underwriters' counsel, and you
shall have been furnished with all such documents, certificates and opinions as
you may reasonably request in order to evidence the accuracy and completeness
of any of the representations, warranties or statements, the performance of any
of the covenants of the Company or the compliance with any of the conditions
herein contained.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities, joint or
several, as incurred, to which such Underwriter may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any breach of
any representation, warranty, agreement or covenant of the Company herein
contained, or (ii) any untrue statement or alleged untrue statement made by the
Company in Section 2 hereof, or (iii) any untrue statement or alleged untrue
statement of a material fact contained (A) in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or (B) in any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by
the Company filed in any state or other jurisdiction in order to qualify any or
all of the Shares under the securities laws thereof (any such application,
documents or information being hereinafter called a "Blue Sky Application"), or
(iv) the omission or alleged omission to state in the Registration Statement or
any amendment thereto 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, or the omission or alleged omission to
state in any Preliminary Prospectus, the Prospectus or any supplement thereto
or in any Blue Sky Application 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; and shall reimburse each Underwriter on a
regular basis for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending against or appearing
as a third-party witness in connection with any such loss, claim, damage,
liability or action; except that the Company shall not be liable in any such
case to the extent, but only to the extent, that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, such Preliminary Prospectus or the Prospectus, or any amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter specifically for
use in the preparation thereof and, provided further, that the indemnity
agreement provided in this Section 8(a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any losses, claims, charges, liabilities or litigation based
upon any untrue statement or alleged untrue statement of material fact or
omission or alleged omission to state therein a material fact purchased Shares,
if a copy of the Prospectus in which such untrue statement or alleged untrue
statement or omission or alleged omission was connected has not been sent or
given to such person within the time required by the Act and the Rules and
Regulations thereunder, unless such failure is the result of noncompliance by
the Company with Section 4(c) hereof.
(b) Each Underwriter severally, but not jointly, shall
indemnify and hold harmless the Company against any losses, claims, damages or
liabilities, joint or several, as incurred, to which the Company
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may become subject, under the Act or otherwise, insofar as such losses, claims
damages or liabilities (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in the Registration Statement, Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or (B) in any Blue Sky
Application, or (ii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
the omission or alleged omission to state in any Preliminary Prospectus, the
Prospectus or any supplement thereto or in any Blue Sky Application a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
except that such indemnification shall be available in each such case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through the
Underwriters by or on behalf of such Underwriter specifically for use in the
preparation thereof, and shall reimburse the Company on a regular basis for any
legal or other expenses reasonably incurred by the Company in connection with
investigating, defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action,
notwithstanding the possibility that payments for such expenses might later be
held to be improper, in which case the person receiving them shall promptly
refund them.
(c) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections 8(a)
and (b) hereof, including the amounts of any requested reimbursement payments,
the method of determining such amounts and the basis on which such amounts
shall be apportioned among the reimbursing parties, shall be settled by
arbitration conducted pursuant to the Code of Arbitration Procedure of the
National Association of Securities Dealers, Inc. In the event the party giving
written notice of its demand for arbitration does not designate in such written
notice its preferences as to the arbitration tribunal, then the party
responding to said demand or notice is authorized to do so. Any such
arbitration will be limited to the operation of the interim reimbursement
provisions contained in Sections 8(a) and (b) hereof and will not resolve the
ultimate propriety or enforceability of the obligation to indemnify for
expenses which is created by the provisions of Sections 8(a), 8(b) and 8(c).
(d) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the claim or the commencement of that action;
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under such
subsection. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party,
to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party; provided, however, if the defendants in any such action
include both the indemnified parties and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under such subsection for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel
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(together with appropriate local counsel) approved by the indemnifying party,
representing all the indemnified parties under Section 8(a) and 8(b) hereof who
are parties to such action), (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party. In
no event shall any indemnifying party be liable in respect of any amounts paid
in settlement of any action unless the indemnifying party shall have approved
the terms of such settlement; provided, however, that such consent shall not be
unreasonably withheld.
(e) In order to provide for just and equitable
contribution in any action in which a claim for indemnification is made
pursuant to this Section 8 for which 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 8 provides for indemnification in such case, all the parties
hereto shall contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such
proportion so that the Underwriters are responsible pro rata for the portion
represented by the percentage that the underwriting discount bears to the
initial public offering price, and the Company is responsible for the remaining
portion; provided, however, that (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to the
Shares purchased by such Underwriter, and (ii) no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to a contribution from any person who is not guilty of such fraudulent
misrepresentation. This subsection (d) shall not be operative as to any
Underwriter to the extent that the Company has received indemnity under this
Section 8.
(f) The obligations of the Company under this Section 8
shall be in addition to any liability which the Company may otherwise have, and
shall extend, upon the same terms and conditions, to each officer and director
of each Underwriter and to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability that the respective
Underwriters may otherwise have, and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who, with his
consent, is named in the Registration Statement as about to become a director
of the Company), to each officer of the Company who has signed the Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Act, in either case, whether or not such person is a party to
any action or proceeding.
(g) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel during
the negotiations regarding the provisions hereof including without limitation
the provisions of this Section 8, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 8
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is
made in the Registration Statement and Prospectus as required by the Act and
the Exchange Act. The parties are advised that Federal or state public policy,
as interpreted by the courts in certain jurisdictions, may be contrary to
certain of the provisions of this Section 8, and the parties hereto hereby
expressly waive and relinquish any right or ability to assert such public
policy as a defense to a claim under this Section 8 and further agree not to
attempt to assert any such defense.
9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties, covenants and agreements of the
Company contained in this Agreement (including, without limitation, the
agreements of the Company set forth in Section 4), or contained in certificates
of officers of the
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Company submitted pursuant hereto, and the indemnity and contribution agreements
contained in Section 8 hereof, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or controlling person, or by or on behalf of the Company, or any of its
officers, controlling persons or directors and shall survive delivery of the
Shares to the several Underwriters hereunder or termination of this Agreement.
10. SUBSTITUTION OF UNDERWRITER. If any Underwriter or
Underwriters shall fail to take up and pay for the number of Firm Shares agreed
by such Underwriter or Underwriters to be purchased hereunder upon tender of
such Firm Shares in accordance with the terms hereof, and if the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters so
agreed but failed to purchase does not exceed 10% of the Firm Shares, the
remaining Underwriters shall be obligated, severally in proportion to their
respective commitments hereunder, to take up and pay for the Firm Shares of
such defaulting Underwriter or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters agreed
but failed to take up and pay for exceeds 10% of the Firm Shares, the remaining
Underwriters shall have the right, but shall not be obligated, to take up and
pay for (in such proportions as may be agreed upon among them) the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase, the Closing Date shall be postponed for twenty-
four hours to allow the several Underwriters the privilege of substituting
within twenty-four hours (including non- business hours) another underwriter or
underwriters (which may include any non-defaulting Underwriter) satisfactory to
the Company. If no such underwriter or underwriters shall have been
substituted as aforesaid by such postponed Closing Date, the Closing Date may,
at the option of the Company, be postponed for a further twenty-four hours, if
necessary to allow the Company the privilege of finding another underwriter or
underwriters, satisfactory to you, to purchase the Firm Shares which the
defaulting Underwriter or Underwriters so agreed but failed to purchase. If it
shall be arranged for the remaining Underwriters or substituted underwriters to
take up the Firm Shares of the defaulting Underwriter or Underwriters as
provided in this Section, (i) the Company shall have the right to postpone the
time of delivery for a period of not more than seven full business days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees promptly to file any amendments to the
Registration Statement or supplements to the Prospectus which may thereby be
made necessary, and (ii) the respective number of Firm Shares to be purchased
by the remaining Underwriters and substitute underwriters shall be taken as the
basis of their underwriting obligation. If the remaining Underwriters shall
not take up and pay for all such Firm Shares so agreed to be purchased by the
defaulting Underwriter or Underwriters or substitute another underwriter or
underwriters as aforesaid and the Company shall not find or shall not elect to
seek another underwriter or underwriters for such Firm Shares as aforesaid,
then this Agreement shall terminate.
In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section neither the Company shall be liable to any
Underwriter (except as provided in Sections 5 and 8 hereof) nor shall any
Underwriter (other than an Underwriter who shall have failed, otherwise than
for some reason permitted under this Agreement, to purchase the number of Firm
Shares agreed by such Underwriter to be purchased hereunder, which Underwriter
shall remain liable to the Company and the other Underwriters for damages, if
any, resulting from such default) be liable to the Company (except to the
extent provided in Sections 5 and 8 hereof).
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The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at the later of
(i) execution of this Agreement, or (ii) when notification of the effectiveness
of the Registration Statement has been released by the Commission.
(b) You shall have the right to terminate this Agreement
by giving notice as hereinafter specified at any time at or prior to the
Closing Date (i) if the Company shall have failed, refused or been unable, to
perform any agreement on its part to be performed, or because any other
condition of the Underwriters' obligations hereunder required to be fulfilled
by the Company is not fulfilled including, without limitation, any change in
the financial condition, earnings, operations, business, management, technical
staff, or business prospects of the Company from that set forth in the
Registration Statement or Prospectus which, in your sole judgment, is material
and adverse, or (ii) if trading on the New York Stock Exchange or the Nasdaq
Stock 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 on the New York Stock Exchange or the Nasdaq Stock
Market, by the New York Stock Exchange, the Nasdaq Stock Market or by order of
the Commission or any other governmental authority having jurisdiction, or if a
banking moratorium shall have been declared by Federal, New York or Oklahoma
authorities, or (iii) if on or prior to the Closing Date, or on or prior to any
later date on which Option Shares are to be purchased, as the case may be, the
Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as to interfere materially and
adversely with the conduct of the business and operations of the Company
regardless of whether or not such loss shall have been insured, or (iv) if
there shall have been a material adverse change in the general political or
economic conditions or financial markets in the United States as in your
reasonable judgment makes it inadvisable or impracticable to proceed with the
offering, sale and delivery of the Shares, or (v) if on or prior to the Closing
Date, or on or prior to any later date on which Option Shares are to be
purchased, as the case may be, there shall have been an outbreak or escalation
of hostilities or other international or domestic calamity, crises or material
adverse change in political, financial or economic conditions, the effect of
which on the financial markets of the United States is such as to make it in
your reasonable judgment, inadvisable to proceed with the marketing of the
Shares. In the event of termination pursuant to this Section 11(b), the
Company shall remain obligated to pay costs and expenses pursuant to Section
4(k), 5 and 8 hereof.
If you elect to prevent this Agreement from becoming effective
or to terminate this Agreement as provided in this Section 11, you shall
promptly notify the Company by telephone or telecopy, in each case confirmed by
letter. If the Company shall elect to prevent this Agreement from becoming
effective, the Company shall promptly notify you by telephone or telecopy, in
each case, confirmed by letter.
12. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given if mailed or transmitted
by any standard form of telecommunication. Notices to the Underwriters shall
be directed to the Underwriters in care of Capital West Securities, Inc., ▇▇▇
▇. ▇▇▇▇▇▇▇▇, 16th Floor, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; notices to the Company shall be directed to it
at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
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13. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters and the Company and their respective
executors, administrators, successors, and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person or corporation, other than the parties hereto and their respective
executors, administrators, successors, and assigns and the controlling persons
and officers and directors referred to in Section 8 hereof any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provisions herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and their respective executors, administrators, successors, and assigns
and said controlling persons and said officers and directors, and for the
benefit of no other person or corporation. No purchaser of the Shares from any
Underwriter shall be construed to be a successor by reason merely of such
purchase.
14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma applicable to
agreements made and to be performed in said State. Specified times of day
refer to Central time.
15. COUNTERPARTS. This Agreement may be signed in several
counterparts, each of which will constitute an original.
* * * * * * *
If the foregoing correctly sets forth your understanding of our
agreement, please sign in the space provided below for that purpose, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriter and the Company in accordance with its terms.
ZYMETX, INC.
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
CONFIRMED AND ACCEPTED, as of the date first above written:
CAPITAL WEST SECURITIES, INC.
By:
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
MILLENNIUM FINANCIAL GROUP, INC.
By:
-------------------------------------
Its:
------------------------------------
COMVEST PARTNERS, INC.
By:
-------------------------------------
Its:
------------------------------------
Its:
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SCHEDULE A
UNDERWRITER SHARES PURCHASED
Capital West Securities, Inc.
Millennium Financial Group, Inc.
ComVest Partners, Inc.
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