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Exhibit 1.1
2,500,000 SHARES*
CALYPTE BIOMEDICAL CORPORATION
COMMON STOCK
FORM UNDERWRITING AGREEMENT
June ___, 1996
Pacific Growth Equities, Inc.
353 Sacramento Street, 16th Floor
San Francisco, California 94111
As Representative of the several Underwriters
Ladies and Gentlemen:
1. INTRODUCTORY. Calypte Biomedical Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters identified on
Exhibit A hereto (the "Underwriters") for whom you are acting as Representative
an aggregate of 2,500,000 shares (the "Firm Common Shares") of the Company's
authorized but unissued Common Stock ("Common Stock"). In addition, the Company
proposes to grant to the Underwriters an option to purchase up to 375,000
additional shares of Common Stock (the "Optional Common Shares"), as provided in
Section 4 hereof. The Firm Common Shares and, to the extent such option is
exercised, the Optional Common Shares are hereinafter collectively referred to
as the "Common Shares."
You have advised the Company that the Underwriters propose to make a public
offering of the Common Shares on the effective date of the registration
statement hereinafter referred to, or as soon thereafter as in your judgment is
advisable.
The Company hereby confirms its agreement with respect to the purchase of the
Common Shares by the Underwriters as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to you that:
(a) The Company has prepared a registration statement on Form S-1 (File
No. __________) with respect to the Common Shares in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules
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*Plus an option to purchase up to 375,000 additional shares of Common Stock to
cover overallotments, if any.
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and Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has filed such registration statement with the Commission. The
Company has prepared and has filed or proposes to file prior to the effective
date of such registration statement an amendment or amendments thereto, which
have been or will be similarly prepared. The Company has delivered to you two
signed copies of such registration statement and amendments, together with two
copies of each exhibit filed therewith. Conformed copies of such registration
statement and amendments (but without exhibits) and of the related preliminary
prospectus have been delivered to you in such reasonable quantities as you have
requested. The Company will next file with the Commission one of the following:
(i) prior to effectiveness of such registration statement, a further amendment
thereto, including the form of final prospectus, (ii) a final prospectus in
accordance with Rules 430A and 424(b) of the Rules and Regulations or (iii) a
term sheet (the "Term Sheet") as described in and in accordance with Rules 434
and 424(b) of the Rules and Regulations. As filed, such amendment and form of
final prospectus, such final prospectus or such Term Sheet shall include all
Rule 430A Information (as defined below) and, except to the extent you shall
agree in writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the date and time that this Agreement was
executed and delivered by the parties hereto, or, to the extent not completed at
such date and time, shall contain only such specific additional information and
other changes (beyond those contained in the latest Preliminary Prospectus) as
the Company shall have previously advised you in writing would be included or
made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended; provided, however, that such
term shall also include all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes effective
as provided by Rule 430A of the Rules and Regulations and any registration
statement filed pursuant to Rule 462(b) of the Rules and Regulations. The term
"Preliminary Prospectus" shall mean each preliminary prospectus referred to in
the preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule 430A
Information. The term "Prospectus" shall mean either (i) the prospectus relating
to the Common Shares in the form in which it is first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or, (ii) if a Term Sheet is
not used and no filing pursuant to Rule 424(b) of the Rules and Regulations is
required, the form of final prospectus included in the Registration Statement at
the time such registration statement becomes effective, or (iii) if a Term Sheet
is used, the Term Sheet in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, together with
the Preliminary Prospectus included in the Registration Statement at the time it
becomes effective. The term "Rule 430A Information" means information with
respect to the Common Shares and the offering thereof permitted to be omitted
from the Registration Statement when it becomes effective pursuant to Rule 430A
of the Rules and Regulations.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects
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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, in the light of
the circumstances under which they were made, not misleading; and at the time
the Registration Statement becomes effective, and at all times subsequent
thereto up to and including each Closing Date hereinafter mentioned, the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, will contain all material statements and 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 neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, no
representation or warranty contained in this subsection 2(b) shall be applicable
to information contained in or omitted from any Preliminary Prospectus, the
Registration Statement, the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter directly or through you, as
Representative, specifically for use in the preparation thereof.
(c) The Company does not own or control, directly or indirectly, any
corporation, association, partnership or entity other than Pepgen Corporation
(the "Subsidiary"). The Company and the Subsidiary have been duly incorporated
or otherwise formed and each is validly existing as a corporation in good
standing under the laws of the jurisdiction of its formation with full power and
authority (corporate and other) to own and lease its property and conduct its
business as described in the Prospectus. Each of the Company and the Subsidiary:
(i) is in possession of and operating in compliance with all authorizations,
licenses, permits, consents, certificates and orders material to the conduct of
its respective business, all of which are valid and in full force and effect;
and (ii) is duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction in which the ownership or leasing of properties
or the conduct of its business requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a material
adverse effect upon the Company. No proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, any such power and authority or qualification.
(d) The Company has an authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus; the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, were 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, and
conform to the description thereof contained in the Prospectus. Except as
disclosed in or contemplated by the Prospectus and the financial statements of
the Company, and the related notes thereto, included in the Prospectus, the
Company does not have outstanding any 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,
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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
Prospectus accurately describes the Company's direct and indirect beneficial
ownership of the equity securities of the Subsidiary, and there are no
outstanding options to purchase 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 equity securities of the Subsidiary or any such
options, rights, convertible securities or obligations.
(e) The Common Shares have been duly authorized and, when issued,
delivered and paid for in the manner set forth in this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus. No preemptive rights or other
rights to subscribe for or purchase exist with respect to the issuance and sale
of the Common Shares by the Company pursuant to this Agreement. No person has
any right that has not lapsed or been waived to require the Company to register
the sale of any securities owned by such person under the Act in the public
offering contemplated by this Agreement. No further approval or authority of the
stockholders or the Board of Directors of the Company will be required for the
issuance and sale of the Common Shares as contemplated herein.
(f) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding obligation of the Company in accordance with its terms. The
making and performance of this Agreement by the Company and the consummation of
the transactions herein contemplated will not violate any provisions of the
certificate of incorporation or bylaws, or other organizational documents, of
the Company, and will not conflict with, result in the breach or violation of,
or constitute, either by itself or upon notice or the passage of time or both, a
default under any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company is a party or by
which the Company or any of its properties may be bound or affected, any statute
or any authorization, judgment, decree, order, rule or regulation of any court
or any regulatory body, administrative agency or other governmental body
applicable to the Company or any of its properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery of
this Agreement or the consummation of the transactions contemplated by this
Agreement, except for compliance with the Act, the Blue Sky laws applicable to
the public offering of the Common Shares by the Underwriters and the clearance
of such offering with the National Association of Securities Dealers, Inc. (the
"NASD").
(g) KPMG Peat Marwick LLP, who have expressed their opinion as to the
financial statements and schedules filed with the Commission as a part of the
Registration Statement and included in the Prospectus and in the Registration
Statement, are independent accountants for the Company as required by the Act
and the Rules and Regulations.
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(h) The financial statements and schedules of the Company (together
with the related notes thereto) included in the Registration Statement and the
Prospectus present fairly the financial position of the Company as of the
respective dates of such financial statements and schedules, and the results of
operations and cash flows of the Company for the respective periods covered
thereby. Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis as certified, except as otherwise disclosed therein, by the independent
accountants named in subsection 2(g). No other financial statements, schedules
or information are required to be included in the Registration Statement. The
selected financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Consolidated Financial Data" fairly present the
information set forth therein on the basis stated in the Registration Statement.
(i) Except as disclosed in the Prospectus, and except as to defaults
that individually or in the aggregate would not be material to the Company,
neither the Company nor the Subsidiary is in violation or default of any
provision of its certificate of incorporation or bylaws, or other organizational
documents, nor is the Company or the Subsidiary in breach of or default as to
any provision of any agreement, judgment, decree, order, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to which
the Company or the Subsidiary is a party or by which the Company or the
Subsidiary or any of their respective properties are bound; and there does not
exist any state of facts that constitutes an event of default on the part of the
Company or the Subsidiary as defined in such documents or that, with notice or
lapse of time or both, would constitute such an event of default.
(j) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the Registration
Statement by the Act or by the Rules and Regulations that have not been
described or filed as required. The descriptions of all contracts referenced in
the Prospectus are accurate and complete; all such contracts are in full force
and effect on the date hereof; and neither the Company or, to the best of the
Company's knowledge, any other party, is in breach of or default under any of
such contracts.
(k) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or the Subsidiary is or may
be a party or of which property owned or leased by the Company or the Subsidiary
is or may be the subject, or related to environmental or discrimination matters,
which actions, suits or proceedings might, individually or in the aggregate,
prevent or adversely affect the transactions contemplated by this Agreement, or
result in a material adverse change in the condition (financial or otherwise),
properties, business, results of operations or prospects of the Company. No
labor disturbance by the employees of the Company or the Subsidiary exists or is
imminent that might be expected to affect adversely such condition, properties,
business, results of operations or prospects. Neither the Company nor the
Subsidiary is a party or subject to the provisions of any material injunction,
judgment, decree or order of any court, regulatory body, administrative agency
or other governmental body.
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(l) The Company or the Subsidiary, as applicable, has good and
marketable title to all the properties and assets reflected as owned in the
Company's financial statements included in the Prospectus or the Registration
Statement and all properties and assets necessary for the conduct of its
business, in each case subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except (i) those, if any, reflected in such financial
statements (or elsewhere in the Prospectus), or (ii) those that are not material
in amount and do not adversely affect the use made and proposed to be made of
such property by the Company or the Subsidiary. Except as disclosed in the
Prospectus, the Company or the Subsidiary, as applicable, holds its leased
properties under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company. Except as
disclosed in the Prospectus, the Company or the Subsidiary, as applicable, owns
or leases all such properties as are necessary to its operations as now
conducted or as proposed to be conducted.
(m) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) neither the Company nor the
Subsidiary has incurred any material liabilities or obligations, indirect,
direct or contingent, or entered into any material verbal or written agreement
or other transaction that is not in the ordinary course of business or that
could result in a material reduction in the future earnings of the Company; (ii)
neither the Company nor the Subsidiary has sustained any material loss or
interference with its business or property from fire, flood, windstorm, accident
or other calamity, whether or not covered by insurance; (iii) the Company has
not paid or declared any dividends or other distributions with respect to its
capital stock and neither the Company nor the Subsidiary has defaulted on the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock (other than upon the sale of the
Common Shares hereunder and upon the exercise of options and warrants or
pursuant to employee benefit plans described in the Registration Statement) or
indebtedness material to the Company; and (v) there has not been any material
adverse change in the condition (financial or otherwise), business, properties,
results of operations or prospects of the Company or the Subsidiary.
(n) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and the Subsidiary each has sufficient trademarks, trade
names, patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct its respective business as described in
the Prospectus; the expiration of any trademarks, trade names, patent rights,
mask works, copyrights, licenses, approvals or governmental authorizations would
not have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company; and the Company has
no knowledge of any infringement by it or the Subsidiary of any trademark, trade
name rights, patent rights, mask works, copyrights, licenses, trade secret or
other similar rights of any others, and there is no claim being made against the
Company or the Subsidiary regarding trademark, trade name, patent, copyright,
license, trade secret or other infringement that could have a material adverse
effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company.
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(o) Neither the Company nor the Subsidiary has been advised, and
neither has any reason to believe, that the Company or the Subsidiary is not
conducting its business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business and proposes
to conduct business, including, without limitation, all applicable statutes or
regulations relating to: the development, testing, manufacture, labelling,
advertising, sale or use of diagnostic medical products; the control of exports
from the United States; and local, state and federal environmental laws and
regulations, except as disclosed in the Prospectus and except where failure to
be so in compliance would not materially adversely affect the condition
(financial or otherwise), business, results of operations or prospects of the
Company.
(p) The Company and the Subsidiary have filed all necessary federal,
state and foreign income and franchise tax returns and has paid all taxes shown
as due thereon; and the Company has no knowledge of any tax deficiency that has
been or might be asserted or threatened against the Company or the Subsidiary
that could materially and adversely affect the business, operations or
properties of the Company.
(q) Neither the Company nor the Subsidiary is or will be after
completion of the offering described in the Prospectus, an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute prior to
the later to occur of (i) competition of the distribution of the Common Shares,
or (ii) the expiration of any time period within which a dealer is required
under the Securities Act to deliver a Prospectus relating to the Common Shares
any offering material in connection with the offering and sale of the Common
Shares other than the Prospectus, the Registration Statement and the other
materials permitted by the Act.
(s) The Company and the Subsidiary maintain insurance of the types and
in the amounts generally deemed adequate for their respective businesses,
including, but not limited to, product liability insurance, insurance covering
real and personal property owned or leased by the Company or the Subsidiary
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
(t) Neither the Company nor the Subsidiary has, at any time during the
last five years, directly or indirectly (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.
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(u) Neither the Company nor the Subsidiary has taken, nor will either
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 Common Shares.
(v) The Common Stock has been duly authorized for quotation on the
Nasdaq National Market.
(w) The Company is not aware of any state of facts that might
reasonably be expected to result in any supplier to the Company or the
Subsidiary failing to deliver or delaying delivery of goods, services, or other
products to the Company or the Subsidiary, except for failures or delays that
would not materially adversely affect the financial condition or results of
operations of the Company.
(x) Neither the Company nor the Subsidiary has received any notice,
whether written or oral, from any distributor of the Company or the Subsidiary
of termination of a distribution agreement between the Company or the Subsidiary
and such distributor, and the Company is not aware of the revocation or
impending revocation of any governmental permit necessary for the sale of the
Company's or the Subsidiary's products in any state or country in which any such
distributor has authority to sell such products.
3. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. The Representative on
behalf of the several Underwriters represents and warrants to the Company that
the information set forth (i) on the cover page of the Prospectus with respect
to price, underwriting discounts and commissions and terms of offering and (ii)
under "Underwriting" in the Prospectus was furnished to the Company by and on
behalf of the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus and is correct in all material
respects. The Representative represents and warrants that it has been authorized
by each of the other Underwriters as the Representative to enter into this
Agreement on behalf of such other Underwriter and to act for such other
Underwriter in the manner herein provided.
4. PURCHASE, SALE AND DELIVERY OF COMMON SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to
the Underwriters the 2,500,000 Firm Common Shares. The Underwriters agree,
severally and not jointly, to purchase from the Company that number of Firm
Common Shares set forth opposite such Underwriter's name on Exhibit A. The
purchase price per share to be paid by the Underwriters shall be equal to the
initial price to the public per share less an amount per share equal to the per
share underwriting discount. The initial price to the public, which shall be a
fixed price, and the underwriting discount will be determined by separate
agreement among the Company and the Underwriters in substantially the form set
forth as Exhibit B hereto. It shall be a condition to this Agreement and the
obligation of the Company to sell and deliver the Firm Common Shares hereunder,
and of you to purchase the Firm Common Shares in the manner described herein,
that you shall purchase and pay for all the Firm Common Shares agreed to be
purchased hereunder upon tender to you of all such Firm Common Shares in
accordance with the terms hereof.
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Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Pacific Growth
Equities, Inc., 353 Sacramento Street, 16th Floor, San Francisco, California (or
such other place as may be agreed upon by the Company and the Underwriters) at
such time and date, not later than the third full business day following the
first date that any of the Common Shares are released by you for sale to the
public, as you shall designate by at least 48 hours prior notice to the Company
(the "First Closing Date"); provided, however, that if the Prospectus is at any
time prior to the First Closing Date recirculated to the public, the First
Closing Date shall occur upon the later of the third full business day following
the first date that any of the Common Shares are released by you for sale to the
public or the date that is 48 hours after the date that the Prospectus has been
so recirculated.
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Company to you for the respective accounts of the several
Underwriters, against payment by the Underwriters of the purchase price therefor
by certified or official bank or investment bank checks payable in next day
funds to the order of the Company. The certificates for the Firm Common Shares
shall be registered in such names and denominations as you shall have requested
at least two full business days prior to the First Closing Date, and shall be
made available for checking and packaging on the business day preceding the
First Closing Date at a location in New York, New York, as may be designated by
you. Time shall be of the essence, and delivery at the time and place specified
in this Agreement is a further condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 375,000 Optional Common Shares
at the purchase price per share to be paid for the Firm Common Shares, for use
solely in covering any over-allotments made by you for the account of the
Underwriters in the sale and distribution of the Firm Common Shares. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the first date that any of the Common Shares are released by you
for sale to the public, upon notice by you to the Company setting forth the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, the names and denominations in which the certificates for
such shares are to be registered and the time and place at which such
certificates will be delivered. Such time of delivery (which may not be earlier
than the First Closing Date), being herein referred to as the "Second Closing
Date," shall be determined by you, but if at any time other than the First
Closing Date shall not be earlier than three nor later than five full business
days after delivery of such notice of exercise. The number of Optional Common
Shares to be purchased by each Underwriter shall be determined by multiplying
the number of Optional Common Shares to be sold by the Company pursuant to such
notice of exercise by a fraction, the numerator of which is the number of Firm
Common Shares to be purchased by such Underwriter as set forth opposite its name
in Exhibit A and the denominator of which is 375,000 (subject to such
adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares will be made
available for checking and packaging on the business day preceding the Second
Closing Date at a location in New
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York, New York, as may be designated by you. The manner of payment for and
delivery of the Optional Common Shares shall be the same as for the Firm Common
Shares as specified in the two preceding paragraphs. At any time before lapse of
the option, you may cancel such option by giving written notice of such
cancellation to the Company. If the option is cancelled or expires unexercised
in whole or in part, the Company will deregister under the Act the number of
Optional Common Shares as to which the option has not been exercised.
You have advised the Company that each Underwriter has authorized you to accept
delivery of its Common Shares, to make payment and to take receipt therefor.
You, individually and not as the Representative of the Underwriters, may (but
shall not be obligated to) make payment for any Common Shares to be purchased by
any Underwriter whose funds shall not have been received by you by the First
Closing Date or the Second Closing Date, as the case may be, for the account of
such Underwriter, but any such payment shall not relieve such Underwriter from
any of its obligations under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose to make a
public offering of the Common Shares as soon after the effective date of the
Registration Statement as in your judgment is advisable and at the public
offering price set forth on the cover page of and on the terms set forth in the
Prospectus.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees that:
(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 this
Agreement is executed and delivered by the parties hereto, to become effective.
If the Registration Statement has become or becomes effective pursuant to Rule
430A of the Rules and Regulations, or the filing of the Prospectus is otherwise
required under Rule 424(b) of the Rules and Regulations, the Company will file
the Prospectus, properly completed, pursuant to the applicable paragraph of Rule
424(b) of the Rules and Regulations within the time period prescribed and will
provide evidence satisfactory to you of such timely filing. The Company will
promptly advise you in writing (i) of the receipt of any comments of the
Commission, (ii) of any request of the Commission for amendment of or supplement
to the Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus or for additional information, (iii)
when the Registration Statement shall have become effective, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for that
purpose. If the Commission shall enter any such stop order at any time, the
Company shall use its best efforts to obtain the lifting of such order at the
earliest possible moment. The Company shall not file any amendment or supplement
to the Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus of which you have not been furnished
with a copy a reasonable time prior to such filing or to which you reasonably
object or which is not in compliance with the Act and the Rules and Regulations.
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(b) The Company shall prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration Statement
or the Prospectus that in your judgment may be necessary or advisable to enable
the Underwriters to continue the distribution of the Common Shares and shall use
its best efforts to cause the same to become effective as promptly as possible.
The Company shall fully and completely comply with the provisions of Rule 430A
of the Rules and Regulations with respect to information omitted from the
Registration Statement in reliance upon such Rule.
(c) If at any time within the nine-month period referred to in Section
10(a)(3) of the Act during which a prospectus relating to the Common Shares is
required to be delivered under the Act any event occurs, as a result of which
the Prospectus, including any amendments or supplements, would include an untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or if
it is necessary at any time to amend the Prospectus, including any amendments or
supplements, to comply with the Act or the Rules and Regulations, the Company
shall promptly advise you thereof and shall promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will correct
such statement or omission or an amendment or supplement which will effect such
compliance and shall use its best efforts to cause the same to become effective
as soon as possible. In case any Underwriter is required to deliver a prospectus
after such nine-month period, the Company, upon request, but at the expense of
such Underwriter, shall promptly prepare 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.
(d) As soon as practicable, but not later than 45 days after the end of
the first quarter ending after one year following the "effective date of the
Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company shall make generally available to its security holders
an earnings statement (which need not be audited) covering a period of 12
consecutive months beginning after the effective date of the Registration
Statement which will satisfy the provisions of the last paragraph of Section
11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or a dealer, the Company,
at its expense, but only for the nine-month period referred to in Section
10(a)(3) of the Act, shall furnish to you copies of the Registration Statement,
the Prospectus, the Preliminary Prospectus and all amendments and supplements to
any such documents in each case as soon as available and in such quantities as
you may request, for the purposes contemplated by the Act.
(f) The Company shall cooperate with you and your counsel in order to
qualify or register the Common Shares for sale under (or obtain exemptions from
the application of) the Blue Sky laws of such jurisdictions as you designate,
shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as reasonably required for the
distribution of the Common Shares. The Company shall not be required to qualify
as a foreign corporation or to file a general consent to service of process in
any such jurisdiction where it is not presently qualified or where it would be
subject to taxation as a
11.
12
foreign corporation. The Company shall advise you promptly of the suspension of
the qualification or registration of (or any such exemption relating to) the
Common Shares for offering, sale or trading in any jurisdiction or any
initiation or threat of any proceeding for any such purpose, and in the event of
the issuance of any order suspending such qualification, registration or
exemption, the Company, with your cooperation, shall use its best efforts to
obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company shall
furnish to you and, upon your request, each of the other Underwriters: (i) as
soon as practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as of the
close of such fiscal year and statements of income, stockholders' equity and
cash flows for the year then ended and the opinion thereon of the Company's
independent public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Report on Form 8-K or other report filed by the Company
with the Commission, including the Report on Form SR required by Rule 463 of the
Securities Act, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed generally
to holders of its Common Stock.
(h) During the period of 180 days after the first date any of the
Common Shares are released by you for sale to the public, without your prior
written consent (which consent may be withheld in your sole discretion), the
Company shall not, other than upon the exercise of outstanding stock options and
warrants disclosed in the Prospectus and other than the grant of options to
employees under option plans described in the Prospectus and consistent with
past practice, issue, offer, sell, grant options to purchase or otherwise
dispose of any of the Company's equity securities or any other securities
convertible into or exchangeable with its Common Stock or other equity security.
(i) The Company shall apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company shall use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain exemptions
from the application of) the Blue Sky laws of the State of California (and
thereby permit market making transactions and secondary trading in the Company's
Common Stock in California), shall comply with such Blue Sky laws and shall
continue such qualifications, registrations and exemptions in effect for a
period of five years after the date hereof.
(k) Prior to the Second Closing Date, the Company shall not repurchase
or otherwise acquire any of the Company's Common Stock or declare or pay any
dividend or make any other distribution upon its Common Stock.
(l) For a period of five years after the date hereof, the Company shall
use its best efforts to maintain the listing of the Common Stock on the Nasdaq
National Market.
12.
13
(m) If at any time during the 25-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 for the shares 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.
You may, in your sole discretion, waive in writing the performance by
the Company of any one or more of the foregoing covenants or extend the time for
their performance.
6. PAYMENT OF EXPENSES. Whether or not the transactions contemplated hereunder
are consummated or this Agreement becomes effective or is terminated, the
Company agrees to pay all costs, fees and expenses incurred by it in connection
with the performance of its obligations hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality of
the foregoing, (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel and the Company's independent accountants, (v) all costs
and expenses incurred in connection with the preparation, printing, filing,
shipping and distribution of the Registration Statement, each Preliminary
Prospectus and the Prospectus (including all exhibits and financial statements)
and all amendments and supplements provided for herein, this Agreement, the
Agreement among Underwriters, the Selected Dealers Agreement, the Underwriters'
Questionnaire, the Underwriters' Power of Attorney, and the Blue Sky Memorandum,
(vi) all filing fees, attorneys' fees and expenses incurred by the Company or
the Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under the Blue Sky laws, and (vii) the filing
fee of the NASD. Except as provided in this Section 6, Section 8 and Section 10
hereof, the Underwriters shall pay all of their expenses, including the fees and
disbursements of their counsel (excluding those relating to qualification,
registration or exemption under the Blue Sky laws and the Blue Sky Memorandum
referred to above).
7. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the
Underwriters to purchase and pay for the Firm Common Shares on the First Closing
Date and the Optional Common Shares on the Second Closing Date shall be subject
to the accuracy of the representations and warranties on the part of the Company
herein set forth as of the date hereof and as of the First Closing Date or the
Second Closing Date, as the case may be, to the accuracy of the statements of
Company officers made pursuant to the provisions hereof, to the performance by
the Company of its obligations hereunder, and to the following additional
conditions:
13.
14
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., Washington, D.C. Time, on the date of this Agreement, or at such
later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and Regulations;
and prior to such Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Company or you, shall be contemplated by the Commission; and any request of
the Commission for inclusion of additional information in the Registration
Statement, or otherwise, shall have been complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and Prospectus, (i) there
shall not have been any change in the capital stock of the Company other than
pursuant to the exercise of outstanding options and warrants disclosed in the
Prospectus or any material change in the indebtedness of the Company or the
Subsidiary, (ii) except as set forth or contemplated by the Registration
Statement or the Prospectus, no material verbal or written agreement or other
transaction shall have been entered into by the Company or the Subsidiary, that
is not in the ordinary course of business or that could result in a material
reduction in the future earnings of the Company, (iii) no loss or damage
(whether or not insured) to the property of the Company or the Subsidiary shall
have been sustained that materially and adversely affects or may affect the
condition (financial or otherwise), business, results of operations or prospects
of the Company, (iv) no legal or governmental action, suit or proceeding
affecting the Company that is material to the Company or that affects or may
affect the transactions contemplated by this Agreement shall have been
instituted or threatened, and (v) there shall not have been any material change
in the condition (financial or otherwise), business, management, results of
operations or prospects of the Company that makes it impractical or inadvisable
in the judgment of the Representative to proceed with the public offering or
purchase of the Common Shares contemplated hereby.
(c) There shall have been furnished to you as representative of the
Underwriters on each Closing Date, in form and substance satisfactory to you:
(i) An opinion of Wilson, Sonsini, Goodrich & Rosati, counsel
for the Company, addressed to the Underwriters and dated the First Closing Date,
or the Second Closing Date, as the case may be, as set forth in Exhibit C-1
hereto.
In rendering such opinions, such counsel may rely (i) as to matters of local
law, on opinions of local counsel, (ii) as to matters of patent and other
intellectual property matters on the opinion of [ ], and (iii) as to
matters of fact, on certificates of officers of the Company or
governmental officials, provided that such counsel's opinion states
that such counsel is doing so and that the Underwriters are
justified in relying on such opinions or certificates and that copies
of such opinions of local counsel or certificates are attached to such
counsel's opinion.
14.
15
(ii) An opinion of [ ], special patent counsel for the
Company, addressed to the Underwriters and dated the First Closing Date, or the
Second Closing Date, as the case may be, as set forth in Exhibit C-2 hereto.
(iii) An opinion of [ ], counsel for regulatory
matters for the Company, addressed to the Underwriters and dated the First
Closing Date, or the Second Closing Date, as the case may be, as set forth in
Exhibit C-3 hereto.
In rendering such opinions, such counsel may rely as to matters of local law on
opinions of local counsel, and as to matters of fact on certificates of officers
of the Company or governmental officials, provided that such counsel's opinion
states that such counsel is so doing and that the Underwriters are justified in
relying on such opinions of local counsel or certificates and that copies of
such opinions of local counsel or certificates are attached to such counsel's
opinion.
(iv) Such opinion or opinions of Cooley Godward Castro
Huddleson & Tatum, counsel for the Underwriters, dated the First Closing Date or
the Second Closing Date, as the case may be, with respect to the incorporation
of the Company, the sufficiency of all corporate proceedings and other legal
matters relating to this Agreement, the validity of the Common Shares, the
Registration Statement and the Prospectus and other related matters as you may
reasonably require, and the Company shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as they may
reasonably request for the purpose of enabling them to pass upon such matters.
In connection with such opinions, such counsel may rely on representations or
certificates of officers of the Company and governmental officials.
(v) A certificate of the Company executed by the Chief
Executive Officer or President and the chief financial or accounting officer of
the Company, dated the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) The representations and warranties of the Company
set forth in Section 2 of this Agreement are true and correct as of the date of
this Agreement and as of the First Closing Date or the Second Closing Date, as
the case may be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied on or
prior to such Closing Date;
(2) The Commission has not issued any order
preventing or suspending the use of the Prospectus or any Preliminary Prospectus
filed as a part of the Registration Statement or any amendment thereto; no stop
order suspending the effectiveness of the Registration Statement has been
issued; and to the best of the knowledge of the respective signers, no
proceedings for that purpose have been instituted or are pending or contemplated
under the Act;
(3) Each of the respective signers of the certificate
has carefully examined the Registration Statement and the Prospectus; in his
opinion and to the best of his knowledge, the Registration Statement and the
Prospectus and any amendments or supplements
15.
16
thereto contain all statements required to be stated therein regarding the
Company or the Subsidiary; and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto includes any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction or event has
occurred that should have been set forth in an amendment to the Registration
Statement or in a supplement to or amendment of any prospectus which has not
been disclosed in such a supplement or amendment;
(5) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, and
except as disclosed in or contemplated by the Prospectus, there has not been any
material adverse change or a development involving a material adverse change in
the condition (financial or otherwise), business, properties, results of
operations, management or prospects of the Company or the Subsidiary; no legal
or governmental action, suit or proceeding is pending or threatened against the
Company or the Subsidiary that is material to the Company, whether or not
arising from transactions in the ordinary course of business, or that may
adversely affect the transactions contemplated by this Agreement; since such
dates and except as so disclosed, neither the Company nor the Subsidiary has
entered into any verbal or written agreement or other transaction that is not in
the ordinary course of business or that could result in a material reduction in
the future earnings of the Company; neither the Company nor the Subsidiary has
incurred any material liability or obligation, direct, contingent or indirect,
made any change in its capital stock, made any material change in its short-term
debt or funded debt or repurchased or otherwise acquired any of its capital
stock; and the Company has not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to stockholders of
record on a date prior to such Closing Date; and
(6) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus and except
as disclosed in or contemplated by the Prospectus, neither the Company nor the
Subsidiary has sustained any material loss or damage by strike, fire, flood,
windstorm, accident or other calamity (whether or not insured).
(vi) On the date Preliminary Prospectuses are first
circulated, the date immediately preceding the date this Agreement is executed,
the First Closing Date, and the Second Closing Date (if applicable), a letter
addressed to you as representative of the Underwriters from KPMG Peat Marwick
LLP, independent accountants, dated the date of its delivery as specified above,
in form and substance satisfactory to you.
(vii) On or before the First Closing Date, each director of
the Company, each officer of the Company, and each person who owns beneficially
1% or more of the outstanding shares of Common Stock (calculated without regard
to the offering contemplated hereby) or options to purchase 1% or more of the
outstanding shares of Common Stock (calculated without regard to the offering
contemplated hereby) as of the date hereof, in form and substance satisfactory
to you, confirming that for a period of 180 days after the first date any of the
16.
17
Common Shares are released by you for sale to the public, such person will not
directly or indirectly sell or offer to sell or otherwise dispose of or transfer
any shares of Common Stock or any right to acquire such shares without your
prior written consent, which consent may be withheld in your sole discretion.
All such opinions, certificates, letters and documents shall be deemed in
compliance with the provisions hereof only if they are satisfactory to you and
to Cooley Godward Castro Huddleson & Tatum, counsel for the Underwriters. The
Company shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request. Any certificate
signed by any officer of the Company and delivered to you as representative of
the Underwriters or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the
statements made therein.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification by you to the Company without
liability on the part of the Underwriters or the Company except for the expenses
to be paid or reimbursed by the Company pursuant to Sections 6 and 8 hereof and
except to the extent provided in Section 10 hereof.
8. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. Notwithstanding any other provisions
hereof, if this Agreement shall be terminated by you pursuant to Section 7, or
if the sale to the Underwriters of the Common Shares at the First Closing is not
consummated because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or to comply with any provision hereof,
the Company agrees to reimburse you upon demand for all out-of-pocket expenses
that shall have been reasonably incurred by you in connection with the proposed
purchase and the sale of the Common Shares, including but not limited to fees
and disbursements of counsel, printing expenses, travel expenses, postage,
telegraph charges and telephone charges relating directly to the offering
contemplated hereby. Any such termination shall be without liability of any
party to any other party except that the provisions of this Section, Section 6
and Section 10 shall at all times be effective and shall apply.
9. EFFECTIVENESS OF REGISTRATION STATEMENT. You and the Company shall use your
and its best efforts to cause the Registration Statement to become effective, to
prevent the issuance of any stop order suspending the effectiveness of the
Registration Statement and, if such stop order be issued, to obtain as soon as
possible the lifting thereof.
10. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of the
Act against any losses, claims, damages, liabilities or expenses, joint or
several, to which any Underwriter or any such controlling person may become
subject, under the Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected
17.
18
with the written consent of the Company), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state in
any of them a material fact required to be stated therein or necessary to make
the statements in any of them not misleading, or arise out of or are based in
whole or in part on any inaccuracy in the representations and warranties of the
Company contained herein or any failure of the Company to perform its
obligations hereunder or under law; and will reimburse each Underwriter and each
such controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 3 hereof. In addition
to its other obligations under this Section 10(a), the Company agrees that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, or any inaccuracy in the
representations and warranties of the Company herein or failure to perform its
obligations hereunder, all as described in this Section 10(a), it will reimburse
each Underwriter on a quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
obligation to reimburse each Underwriter for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, each Underwriter that received such
improper payment shall promptly return it to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing) announced from time
to time by Bank of America NT&SA, San Francisco, California (the "Prime Rate").
Any such interim reimbursement payments that are not made to an Underwriter
within 30 days of a request for reimbursement, shall bear interest at the Prime
Rate from the date of such request. This indemnity agreement will be in addition
to any liability that the Company may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Act, against any losses, claims, damages, liabilities or expenses to
which the Company, or any such director, officer or controlling person may
become subject, under the Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as
18.
19
contemplated below) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, in reliance
upon and in conformity with the information furnished to the Company pursuant to
Section 3 hereof; and will reimburse the Company, or any such director, officer
or controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. In addition to its other obligations under
this Section 10(b), each Underwriter severally agrees that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 10(b) which relates to
information furnished to the Company pursuant to Section 3 hereof, it will
reimburse the Company on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company shall
promptly return it to the Underwriters together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such interim reimbursement
payments that are not made to the Company within 30 days of a request for
reimbursement, shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability that such
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability it may have to any indemnified party for contribution or otherwise
under the indemnity agreement contained in this Section to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties
19.
20
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. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed counsel in connection with the assumption
of legal defenses in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel, approved by the
Representative in the case of paragraph (a), representing the indemnified
parties who are parties to such action) or (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) in respect of any losses, claims, damages, liabilities or expenses referred
to herein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Underwriters from the offering of the Common Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Underwriters in connection with the statements or omissions or inaccuracies
in the representations and warranties herein which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company and the Underwriters shall be deemed to be in the same proportion, in
the case of the Company as the total price paid to the Company for the Common
Shares sold by it to the Underwriters (net of underwriting commissions but
before deducting expenses) bears to the total price to the public set forth on
the cover of the Prospectus, and in the case of the Underwriters as the
underwriting discounts and commissions received by them bears to the total price
to the public set forth on the cover of the Prospectus. The relative fault of
the Company and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact or the inaccurate
or the alleged inaccurate representation and/or warranty relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in subparagraph (c) of
this Section, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
20.
21
provisions set forth in subparagraph (c) of this Section with respect to notice
of commencement of any action shall apply if a claim for contribution is to be
made under this subparagraph (d); provided, however, that no additional notice
shall be required with respect to any action for which notice has been given
under subparagraph (c) for purposes of indemnification. The Company and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section were determined solely by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. Notwithstanding the
provisions of this Section, the Underwriters shall not be required to contribute
any amount in excess of the amount of the total underwriting commissions
received by the Underwriters in connection with the Common Shares underwritten
by them and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section are several in proportion to their respective underwriting commitments
and not joint.
(e) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 10(a) and 10(b)
hereof, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
under the provisions of the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration or
written notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Such an arbitration
would be limited to the operation of the interim reimbursement provisions
contained in Sections 10(a) and 10(b) hereof and would not resolve the ultimate
propriety or enforceability of the obligation to reimburse expenses which is
created by the provisions of such Sections 10(a) and 10(b) hereof.
11. DEFAULT OF UNDERWRITERS. It shall be a condition to this Agreement and the
obligation of the Company to sell and deliver the Common Shares hereunder, and
of the Underwriters to purchase the Common Shares in the manner as described
herein, that, except as hereinafter in this paragraph provided, the Underwriters
shall purchase and pay for all the Common Shares agreed to be purchased
hereunder upon tender to the Underwriters of all such shares in accordance with
the terms hereof. If any Underwriter defaults in its obligations to purchase
Common Shares hereunder on either the First or Second Closing Date and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase on such Closing Date does not exceed
10% of the total number of Common Shares which the Underwriters are obligated to
purchase on such Closing Date, the nondefaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Common Shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase on such Closing Date. If any Underwriter or Underwriters so
default and the aggregate number of Common Shares with respect to which such
default occurs is more than the above percentage and arrangements satisfactory
to you and the Company for the purchase of such Common Shares by other persons
are not made within 48 hours after such
21.
22
default, this Agreement will terminate without liability on the part of the
Company except for the expenses to be paid by the Company pursuant to Sections 6
and 8 hereof and except to the extent provided in Section 10 hereof.
In the event Common Shares to which a default relates are to be purchased by
another party or parties, the Underwriters or the Company shall have the right
to postpone the First or Second Closing Date, as the case may be, for not more
than five business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, the term
"Underwriters" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
12. EFFECTIVE DATE. This Agreement shall become effective immediately as to
Sections 6, 8, 10, 13 and 14 and, as to all other provisions, (i) if at the time
of execution of this Agreement the Registration Statement has not become
effective, at 2:00 P.M., California time, on the first full business day
following the effectiveness of the Registration Statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 2:00 P.M., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Common Shares for sale to the public. For the
purposes of this Section, the Common Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams (i)
advising the Underwriters that the Common Shares are released for public
offering, or (ii) offering the Common Shares for sale to securities dealers,
whichever may occur first.
13. TERMINATION. Without limiting the right to terminate this Agreement pursuant
to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you or
by you by notice to the Company at any time prior to the time this Agreement
shall become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company to any Underwriter (except for
the expenses to be paid or reimbursed by the Company pursuant to Sections 6 and
8 hereof and except to the extent provided in Section 10 hereof) or of any
Underwriter to the Company (except to the extent provided in Section 10 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have been suspended on either such
Exchange or in the over the counter market by the NASD, or a general banking
moratorium shall have been established by federal, New York or California
authorities, (ii) if an outbreak of major hostilities
22.
23
or other national or international calamity or any substantial change in
political, financial or economic conditions shall have occurred or shall have
accelerated or escalated to such an extent, as, in your judgment, to affect
adversely the marketability of the Common Shares or securities in general, (iii)
if any adverse event shall have occurred or shall exist which makes untrue or
incorrect in any material respect any statement or information contained in the
Registration Statement or Prospectus or which is not reflected in the
Registration Statement or Prospectus but should be reflected therein in order to
make the statements or information contained therein not misleading in any
material respect, or (iv) if there shall be any action, suit or proceeding
pending or threatened, or there shall have been any development or prospective
development involving particularly the business or properties or securities of
the Company or the transactions contemplated by this Agreement, which, in the
reasonable judgment of the Representative, may materially and adversely affect
the Company's business or earnings and makes it impracticable or inadvisable to
offer or sell the Common Shares. Any termination pursuant to this subsection (b)
shall without liability on the part of any Underwriter to the Company or on the
part of the Company to any Underwriter (except for expenses to be paid or
reimbursed by the Company pursuant to Sections 6 and 8 hereof and except to the
extent provided in Section 10 hereof).
(c) This Agreement shall also terminate at 5:00 P.M., California time,
on the tenth full business day after the Registration Statement shall have
become effective if the initial public offering price of the Common Shares shall
not then as yet have been determined as provided in Section 4 hereof. Any
termination pursuant to this subsection (c) shall be without liability on the
part of any Underwriter to the Company or on the part of the Company to any
Underwriter (except for expenses to be paid or reimbursed by the Company
pursuant to Sections 6 and 8 hereof and except to the extent provided in Section
10 hereof.)
14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective
indemnities, agreements, representations, warranties and other statements of the
Company, of its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or the Company or any
of its or their partners, officers or directors or any controlling person, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
15. NOTICES. All communications hereunder shall be in writing and, if sent to
the Underwriters shall be mailed, delivered or telegraphed and confirmed to you
at 353 Sacramento Street, 16th Floor, San Francisco, California 94111,
Attention: Mitchell Stevko, with a copy to Cooley Godward Castro Huddleson &
Tatum, Five Palo Alto Square, 3000 El Camino Real, Palo Alto, California
94306-2155, Attention: Alan C. Mendelson; and if sent to the Company shall be
mailed, delivered or telegraphed and confirmed to the Company at 1440 Fourth
Street,
23.
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Berkeley, California 94710, Attention: John P. Davis, with a copy to Wilson,
Sonsini, Goodrich & Rosati, PC, 650 Page Mill Road, Palo Alto, California
94304-1050, Attention: Aron J. Alter. The Company or you may change the address
for receipt of communications hereunder by giving notice to the others.
16. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon
the parties hereto, including any substitute Underwriters pursuant to Section 11
hereof, and to the benefit of the officers and directors and controlling persons
referred to in Section 10, and in each case their respective successors,
personal representatives and assigns, and no other person will have any right or
obligation hereunder. No such assignment shall relieve any party of its
obligations hereunder. The term "successors" shall not include any purchaser of
the Common Shares as such from any Underwriter merely by reason of such
purchase.
17. REPRESENTATION OF UNDERWRITERS. You will act as Representative for the
several Underwriters in connection with all dealings hereunder, and any action
under or in respect of this Agreement taken by you, as Representative, will be
binding upon all the Underwriters.
18. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or
enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
19. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the laws pertaining to conflicts of
laws) of the State of California.
20. GENERAL. This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. This Agreement may be executed in several counterparts, each one
of which shall be an original, and all of which shall constitute one and the
same document.
In this Agreement, the masculine, feminine and neuter genders and the singular
and the plural include one another. The section headings in this Agreement are
for the convenience of the parties only and will not affect the construction or
interpretation of this Agreement. This Agreement may be amended or modified, and
the observance of any term of this Agreement may be waived, only by a writing
signed by the Company and you.
24.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement among the Company and the Underwriters, all in
accordance with its terms.
Very truly yours,
CALYPTE BIOMEDICAL CORPORATION
By:
---------------------------
The foregoing Underwriting Agreement is
hereby confirmed and accepted by us in
San Francisco, California as of the date
first above written.
PACIFIC GROWTH EQUITIES, INC.
By:
-------------------------------------
Acting on Behalf of
the several Underwriters
25.
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EXHIBIT A
NUMBER OF FIRM COMMON
NAME OF UNDERWRITER SHARES TO BE PURCHASED
TOTAL: 2,500,000
27
EXHIBIT B
PRICE DETERMINATION AGREEMENT
Referring to Section 4 of the Underwriting Agreement dated __________
___, 1996, among the Company and Pacific Growth Equities, Inc., acting as the
representative for the Underwriters as therein defined, with respect to the
purchase and sale of the Common Shares, we hereby confirm our agreement that the
initial public offering price of the Common Shares shall be $____ per share;
that the underwriting discount shall be $______ per share; and that the purchase
price to be paid by the Underwriters for the Common Shares to be purchased from
the Company shall be $______ per share.
This Agreement may be executed in various counterparts which together
shall constitute one and the same Agreement.
PACIFIC GROWTH EQUITIES, INC.
By
-------------------------------
Acting on Behalf of
the several Underwriters
CALYPTE BIOMEDICAL CORPORATION
By
-------------------------------
28
EXHIBIT C-1
OPINION OF WILSON, SONSINI, GOODRICH& ROSATI, PC
(1) Each of the Company and the entities listed on Appendix A hereto
(each, a "Subsidiary") has been duly incorporated (or otherwise formed) and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, and the Company and each Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in all
other jurisdictions where the ownership or leasing of properties or the conduct
of its business requires such qualification, except for jurisdictions in which
the failure so to qualify would not have a material adverse effect on the
Company, and each has full corporate power and authority to own its properties
and conduct its business as described in the Registration Statement;
(2) All of the outstanding shares of common stock of each entity listed
on Appendix A hereto are owned by the Company or one or more other corporations
whose outstanding common stock is owned directly or indirectly by the Company.
(3) The authorized, issued and outstanding capital stock of the Company
is as set forth under the caption "Capitalization" in the Prospectus; all
necessary and proper corporate proceedings have been taken in order to authorize
validly such authorized Common Stock; all outstanding shares of Common Stock
(including the Firm Common Shares and any Optional Common Shares) have been duly
and validly issued, are fully paid and nonassessable, have been issued in
compliance with 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 any securities and conform to the description thereof contained in the
Prospectus;
(4) The certificates evidencing the Common Shares to be delivered
hereunder are in due and proper form under Delaware law, and when duly
countersigned by the Company's transfer agent and registrar, and delivered to
you or upon your order against payment of the agreed consideration therefor in
accordance with the provisions of the Underwriting Agreement, the Common Shares
represented thereby will be duly authorized and validly issued, fully paid and
nonassessable, will not have been issued in violation of or subject to any
preemptive rights or, to such counsel's knowledge, other rights to subscribe for
or purchase securities and will conform in all respects to the description
thereof contained in the Prospectus;
(5) Except as disclosed in or specifically contemplated by the
Prospectus, to our knowledge, there are no outstanding options, warrants or
other rights calling for the issuance of, and no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable for capital stock of the Company;
1.
29
(6) The Company has full right, power and authority to enter into the
Underwriting Agreement and to sell and deliver the Common Shares to the several
Underwriters; the Underwriting Agreement has been duly and validly authorized by
all necessary corporate action by the Company, has been duly and validly
executed and delivered by and on behalf of the Company, and is a valid and
binding agreement of the Company in accordance with its terms, except as
enforceability may be limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and except as to those provisions relating to indemnity or
contribution for liabilities arising under the Act as to which no opinion need
be expressed; and no approval, authorization, order, consent, registration,
filing, qualification, license or permit of or with any court, regulatory,
administrative or other governmental body is required for the execution and
delivery of the Underwriting Agreement by the Company or the consummation of the
transactions contemplated by the Underwriting Agreement, except such as have
been obtained and are in full force and effect under the Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and such as may be
required under applicable Blue Sky laws in connection with the purchase and
distribution of the Common Shares by the Underwriters and the clearance of such
offering with the NASD;
(7) The execution and performance of the Underwriting Agreement and the
consummation of the transactions herein contemplated will not conflict with,
result in the breach of, or constitute, either by itself or upon notice or the
passage of time or both, a default under, any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to which
to our knowledge the Company or any Subsidiary is a party or by which the
Company, any Subsidiary or any property of the Company or any Subsidiary may be
bound or affected that is material to the Company, or violate any of the
provisions of the certificate of incorporation or bylaws of the Company or any
Subsidiary or, so far as is known to us, violate any statute, judgment, decree,
order, rule or regulation of any court or governmental body having jurisdiction
over the Company, any Subsidiary or any property of the Company or any
Subsidiary;
(8) Neither the Company nor the Subsidiary is in violation of its
certificate of incorporation or bylaws, or to the best of our knowledge, in
breach of or default with respect to any provision of any agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
known to us to which the Company or any Subsidiary is a party or by which it or
any of its properties may be bound or affected, except where such default would
not materially adversely affect the Company; and, to our knowledge, the Company
and each Subsidiary are in compliance with all laws, rules, regulations,
judgments, decrees, orders and statutes of any court or jurisdiction to which it
is subject, except where noncompliance would not materially adversely affect the
Company;
(9) To the best of our knowledge, no holders of securities of the
Company have rights that have not lapsed or been waived to the registration of
shares of Common Stock or other securities, because of the filing of the
Registration Statement by the Company or the offering contemplated hereby;
2.
30
(10) (a) The Registration Statement has become effective under the Act,
and, to the best of our knowledge, no stop order suspending the effectiveness of
the Registration Statement or preventing the use of the Prospectus has been
issued and no proceedings for that purpose have been instituted or are pending
or contemplated by the Commission; any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) of the Rules and Regulations has been
made in the manner and within the time period required by such Rule 424(b);
(b) The Registration Statement, the Prospectus and each amendment
or supplement thereto (except for the financial statements and schedules
included therein as to which we express no opinion) comply as to form in all
material respects with the requirements of the Act and the Rules and
Regulations;
(c) To the best of our knowledge, there are no franchises, leases,
contracts, agreements or documents of a character required to be disclosed in
the Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement that are not disclosed or filed, as required;
(d) To the best of our knowledge, 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 that are not
described as required; and
(e) To the extent statements in the Prospectus or the Registration
Statement constitute summaries of statutes, governmental rules or regulations,
documents, legal matters, or proceedings, those statements are accurate in all
material respects and fairly present the information required to be shown in
Form S-1 with respect to such statutes, governmental rules or regulations,
documents, legal matters, or proceedings or conclusions of law and the
information purported to be included in such descriptions; provided, however,
that our opinion as to the foregoing matters in this subparagraph (e) are
limited to the Federal laws of the United States and the laws of the State of
Delaware;
(11) No transfer taxes are required to be paid in connection with the
sale and delivery of the Common Shares to the Underwriters hereunder;
(12) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended; and
(13) The Common Shares have been duly authorized for listing on the
Nasdaq National Market.
In addition to the matters set forth above, counsel rendering the
foregoing opinion shall also include a statement to the effect that nothing has
come to the attention of such counsel that leads them to believe that the
Registration Statement (except as to the financial statements and schedules and
other financial and statistical data contained therein, as to which such counsel
need
3.
31
not express any opinion or belief) at the Effective Date contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, that
the Prospectus (except as to the financial statements and schedules and other
financial and statistical data contained therein, as to which such counsel need
not express any opinion or belief) as of its date or at the Closing Date (or any
later date on which Optional Common Shares are purchased), contained or contains
any untrue statement of a material fact or omitted or omits 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.
4.
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EXHIBIT C-2
PATENT COUNSEL OPINION
Such counsel are familiar with the technology used by the Company in
its business and the manner of its use thereof and have read the Registration
Statement and the Prospectus, including particularly the portions of the
Registration Statement and the Prospectus referring to patents, trade secrets,
trademarks, service marks or other proprietary information or materials and:
(i) such counsel have no reason to believe that the Registration
Statement or the Prospectus (A) contains any untrue statement of a
material fact with respect to patents, trade secrets, trademarks,
service marks or other proprietary information or materials owned or
used by the Company, or the manner of its use thereof, or any
allegation on the part of any person that the Company is infringing any
patent rights, trade secrets, trademarks, service marks or other
proprietary information or materials of any such person or (B) omits to
state any material fact relating to patents, trade secrets, trademarks,
service marks or other proprietary information or materials owned or
used by the Company, or the manner of its use thereof, or any
allegation of which such counsel have knowledge, that is required to be
stated in the Registration Statement or the Prospectus or is necessary
to make the statements therein not misleading;
(ii) to the best of such counsel's knowledge and except as set forth in
the Prospectus there are no legal or governmental proceedings pending
relating to patent rights, trade secrets, trademarks, service marks or
other proprietary information or materials of the Company, and to the
best of such counsel's knowledge no such proceedings are threatened or
contemplated by governmental authorities or others;
(iii) such counsel do not know of any contracts or other documents,
relating to governmental regulation affecting the Company or the
Company's patents, trade secrets, trademarks, service marks or other
proprietary information or materials, of a character required to be
filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus that are not
filed or described as required;
(iv) to the best of such counsel's knowledge, the Company is not
infringing or otherwise violating any patents, trade secrets,
trademarks, service marks or other proprietary information or
materials, of others, and to the best of such counsel's knowledge there
are no infringements by others of any of the Company's patents, trade
secrets, trademarks, service marks or other proprietary information or
materials which in the judgment of such counsel could affect materially
the use thereof by the Company; and
(v) to the best of such counsel's knowledge, the Company owns or
possesses sufficient licenses or other rights to use all patents, trade
secrets, trademarks, service marks or other proprietary information or
materials necessary to conduct the business now being or proposed to be
conducted by the Company as described in the Prospectus.
33
EXHIBIT C-3
REGULATORY COUNSEL OPINION
Such counsel is familiar with the business of the Company and has read
the Registration Statement and the Prospectus, including particularly the
portions of the Registration Statement and the Prospectus referring to the
Federal Drug Administration ("FDA") rules and regulations and the Company's
compliance therewith and;
(i) such counsel has no knowledge that the Registration Statement or
the Prospectus (A) contains any untrue statement of a material fact
with respect to FDA rules and regulations or the Company's compliance
therewith, or (B) omits to state any material fact relating to FDA
rules and regulations or the Company's compliance therewith that is
required to be stated in the Registration Statement or the Prospectus
or is necessary to make the statements therein not misleading;
(ii) to the best of such counsel's knowledge there are no legal or
governmental proceedings proceedings pending related to the Company and
its business, and to the best of such counsel's knowledge no such
proceedings are threatened or contemplated by governmental authorities
or others;
(iii) except as described in the Prospectus, the Company has received
all governmental permits, consents, certificates, approvals and
authorizations necessary in order to conduct its business as described
in the Registration Statement;
(iv) such counsel does not know of any contracts or other documents of
a character required to be described in the Registration Statement or
the Prospectus that are not so described.