As filed with the Securities and Exchange Commission on March 6, 1996
Registration No.___________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THERMOGENESIS CORP.
(Exact name of the Company as specified in its charter)
DELAWARE 94-3018487
(State or other jurisdiction of (I.R.S. Employer Identification
incorportion or organization) Number)
11431 Sunrise Gold Circle, Suite A
Rancho Cordova, California 95742
(916) 858-5100
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Philip H. Coelho
President & C.E.O.
THERMOGENESIS CORP.
11431 Sunrise Gold Circle, Suite A
Rancho Cordova, CA 95742
(916) 858-5100
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
David C. Adams, Esq. Daniel B. Eng, Esq.
Weintraub Genshlea & Sproul Bartel Eng Linn & Schroder
400 Capitol Mall, Suite 1100 300 Capitol Mall, Suite 1100
Sacramento, California 95814 Sacramento, California 95814
(916) 558-6000 (916) 442-0400
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC:
Approximately 180 days, or as soon as practicable, after the Registration
Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
9999\DCA\DCA\112381.1
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF OFFERING PRICE PER AGGREGATE OFFERING
SECURITIES TO BE AMOUNT TO BE SHARE PRICE AMOUNT OF
REGISTERED REGISTERED REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock Offered
by Selling
Stockholders 4,400,000 $1.1875{(1)} $5,225,000 $1,801.73
Common Stock
Underlying Placement
Agent Warrant 440,000{(2)} $ .60{(4)} $ 264,000 $ 91.04
Common Stock
Underlying Warrants 1,210,000{(3)} $1.50{(4)} $1,815,000 $ 625.86
$2,518.63
</TABLE>
(1)Calculated in accordance with Rule 457(c) of the Securities Act of 1933, as
amended ("Securities Act"). Estimated for the sole purpose of calculating the
registration fee and based upon the average of the high and low price per share
of the common stock of the Company on March 1, 1996, as reported on the
National Association of Securities Dealers Automated Quotations System.
(2)Represents a warrant to purchase 8.8 units at an exercise price of $30,000
per Unit. Each Unit consists of 50,000 shares of Common Stock and a warrant
representing the right to acquire an additional 12,500 shares of Common Stock
at $1.50 per share. The Warrants issuable as part of the Units and exercisable
at $1.50 per share have been included in 1,210,000 shares to be issued upon
exercise of the Warrants listed below.
(3)Represents Warrants to purchase 1,210,000 shares at an exercise price of
$1.50 per share. Warrants were issued as part of the Units.
(4)Calculated in accordance with Rule 457(g) of the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
ii
<PAGE>
Subject to Completion March 6, 1996
PROSPECTUS
6,050,000 Shares
THERMOGENESIS CORP.
Common Stock
($.001 Par Value)
Of the 6,050,000 shares of Common Stock ("Common Stock") of THERMOGENESIS
CORP. ("THERMOGENESIS" or the "Company") being offered hereby (the
"Offering"), 4,400,000 shares are being offered by certain stockholders of the
Company (the "Selling Stockholders"), and 1,210,000 shares are being offered by
the Company upon the exercise of outstanding Warrants. The 4,400,000 shares
being offered by the Selling Stockholders were issued in connection with the
Company's private placement completed in December 1995. In addition, an
additional 440,000 shares may be issued upon the exercise of a warrant granted
to the placement agent in that offering to acquire an additional 8.8 Units. The
1,210,000 shares being offered by the Company upon the exercise of Warrants
were also issued in connection with that private placement. See "The Company -
Recent Financing".
The shares of Common Stock owned by the Selling Stockholders may be
offered for sale from time to time at market prices prevailing at such time or
at negotiated prices by the Selling Stockholders, and without payments of any
underwriting discounts or commission, except for usual and customary selling
commissions paid to brokers or dealers. THERMOGENESIS Common Stock is traded
and listed on the Nasdaq Stock Market, SmallCap Market, under the symbol
"KOOL". See "Description of Securities". On March 1, 1996, the average of the
high and low price for the Company's Common Stock was $1.1875, as reported on
the Nasdaq SmallCap Market. The Company will not receive any proceeds from the
sale of any Common Stock by the Selling Stockholders. See "SELLING
STOCKHOLDERS". Expenses of the Offering, estimated to be $38,018, will be paid
in full by the Company.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" AT PAGE 4
THESE ARE SPECULATIVE SECURITIES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS
PRICE TO WARRANT AND COMMISSIONS PROCEEDS TO THE COMPANY{(2)}
HOLDERS{(1)}
<S> <C> <C> <C>
Per share. . . . . . . . . $ 1.50 $ 0.00 $ 1.50
Total. . . . . . . . . . . $ 2,079,000 $ 0.00 $ 2,079,000
</TABLE>
(1)Represents exercise price to Warrant holders at $1.50 per share and exercise
price for placement agent Warrant at $30,000 per Unit for 8.8 Units.
(2)Represents proceeds to the Company assuming the exercise of Warrants to
purchase up to 1,210,000 shares of Common Stock at a price of $1.50 per share,
the exercise of Warrants to purchase up to 8.8 Units at $30,000 per Unit, and
before other expenses of issuance and distribution estimated to be $38,018.
All expenses will be paid by the Company.
The date of this Prospectus is March __, 1996.
- 1 -
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-3 under the Securities Act of
1933 (the "Securities Act"), with respect to the Common Stock offered hereby.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
periodic reports, proxy statements and other information with the Commission.
Such reports, proxy statements and other information concerning the Company may
be inspected and copies may be obtained (at prescribed rates) at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's Regional offices at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade
Center, New York, New York 10048. This Prospectus does not contain all
information set forth in the Registration Statement and Exhibits thereto which
the Company has filed with the Commission under the Securities Act and to which
reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein modifies or replaces such
statement. Any such statement shall not be deemed to constitute a part of this
Prospectus, except as so modified or replaced. There is incorporated herein by
reference the following documents previously filed with the Commission:
(1)The Company's Annual Report on Form 10-KSB for the year ended June 30, 1995,
and amendment to Annual Report on Form 10-KSBA/1 filed October 26, 1995;
(2)The Company's Quarterly Reports on Form 10-QSB for the quarters ended
September 30, 1995, and December 31, 1995;
(3) The Company's Current Reports on Form 8-K for the event date September 27,
1995; and
(4)The Company's Form 8-A for the registration of the Company's Common Stock
pursuant to Section 12(g) of the Exchange Act.
In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering of the Common Stock offered hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on written or oral
request of any such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than exhibits to such documents).
Requests should be directed to: THERMOGENESIS CORP., 11431 Sunrise Gold
Circle, Suite A, Rancho Cordova, California 95742, Attention: Charles de B.
Griffiths, Secretary; (916) 858-5100.
- 2 -
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements appearing elsewhere or incorporated by
reference in this Prospectus.
THE COMPANY
THERMOGENESIS CORP. (the "Company"), formerly known as Insta Cool Inc. of
North America, was incorporated in Delaware on September 26, 1986 and
subsequently merged with Refrigeration Systems International, Inc., a
California corporation. In January of 1995, the Company changed its name to
THERMOGENESIS CORP. to better reflect the thermodynamic segment of the
biotechnology industry that it hopes to service through development of new
products. The Company designs and sells products and devices which utilize its
proprietary thermodynamic technology for the processing of biological
substances including the cryopreservation, thawing, and harvesting of blood
components, and to a lesser extent for the preservation of perishable foods
(THERMOGENESIS Proprietary Technology). Historically, the Company's primary
revenues have been from sales of blood plasma freezers to hospitals, blood
banks and blood transfusion centers for rapid freezing of blood plasma.
Currently, the Company is manufacturing several categories of thermodynamic
devices which are being sold to the blood plasma industry under permission from
the Food and Drug Administration ("FDA"). Other potential applications and
markets for the Company's THERMOGENESIS Proprietary Technology includes medical
and pharmaceutical applications, and industrial applications. During the
fiscal years 1988 through 1995, the Company has focused its efforts on research
and development and on refining product design and application. The Company
has also continuously sought new applications for its products and technology,
including the design of a device used for the intraoperative harvesting of
autologous fibrinogen rich cryoprecipitate for use as a hemostatic agent or
tissue sealant in certain surgical and medical procedures. See "The Company
and Recent Events - Current Products and Development Efforts".
Pursuant to the terms of the private placement, the Company is registering
the Common Stock offered by the Selling Stockholders. The Company is also
registering Common Stock to be issued upon the exercise of outstanding Warrants
issued as part of the Units in the private placement pursuant to contract
terms. To the extent required under the federal securities laws, this
Prospectus may be used for resale of Common Stock upon the exercise of the
Warrants by the holders of such Warrants.
THE OFFERING
Common Stock Outstanding Before the Offering 24,765,434
Common Stock Offered to Warrant Holders 1,650,000
Common Stock Offered by Selling Stockholders 4,400,000
Common Stock Outstanding After the Offering
Assuming Exercise of the Outstanding Warrants 26,415,434
Nasdaq Symbol KOOL
RISK FACTORS
An investment in the Common Stock described herein entails a number of
very significant risks. Because of these risks, funds should only be invested
by persons able to bear the risk of and withstand the loss of their entire
investment. Prospective investors should also consider the following before
making an investment decision.
LACK OF PROFITABILITY. Except for net income of $11,246 for the year
ended June 30, 1994 on net sales of $2,678,192, the Company has not been
profitable since inception. For the year ended June 30, 1995, the Company had
a net loss of $88,296 on net sales of $3,311,880 and an accumulated deficit at
June 30, 1995, of $5,814,394. See "Annual Report on Form 10-KSB". For the
six months ended December 31, 1995, the Company had a net loss of $102,339 on
sales of $1,980,119.
DEPENDENCE UPON NEW PRODUCTS. Historically, substantially all of the
Company's revenue has been from the sales of product related to the freezing,
thawing and storing of blood plasma. Because the Company expects the blood
plasma market to have limited growth, the future success of the Company will be
dependent upon new applications of its technology, including application of
products in the biotechnology market. The Company intends to concentrate on
developing (1) an autologous fibrinogen processing device with disposable
containers; (2) a long-term sample storage and retrieval system with disposable
containers; and (3) a stem cell control rate freezer ("CRF"), storage and
retrieval system with disposable containers. See "The Company and Recent
Events - Current Products and Development Efforts." Although these three
products use technology related to the freezing, thawing and storage of blood
plasma, development of these products represents a departure from the Company's
current core business. Further, although the Company has had encouraging
discussions with experts in areas of application for these products,
development of each product is in its pre-application or initial development
phase and the Company has no contracts for sales of these three products. No
assurance can be given that each of these products can be successfully
developed, and if developed, that a market will develop for them.
POSSIBLE ADDITIONAL FINANCING. Based on current sales and projected
development costs for products currently in development, the Company believes
that it will have sufficient working capital for its operations for the 1997
fiscal year. In the event actual sales of the Company's products do not meet
the Company's expectations in any given period, or development and production
costs increase significantly, the Company may need to secure additional
financing to complete and fully implement its business objectives. There can
be no assurance that the Company will not need additional financing, and if
available, that it will be obtained on terms favorable to the Company.
Furthermore, delays in receipt of any required governmental approvals prior to
marketing products in development, or requirements for additional clinical
testing prior to approval, may result in decreased revenues and increased
development costs. See "Risk Factors -- Government Regulation Associated with
Products".
GOVERNMENT REGULATION ASSOCIATED WITH PRODUCTS. The majority of the
Company's products require permission to market in the United States from the
United States Food and Drug Administration ("FDA"), which may limit or
circumscribe applications or U.S. markets for which the Company's products may
be sold. Further, if the Company cannot establish that its product is
substantially equivalent, or superior, in safety or efficacy to a previously
approved product, delays may result in final approval from the FDA for
marketing its products. No assurance can be given that FDA permission to
market in the United States will be obtained. The Company's products might
also be required to meet certain other criteria or receive certain approvals
from other foreign governments for marketing and sales. See "The Company and
Recent Events - Current Products and Development Efforts".
RELIANCE ON PATENTS AND OTHER PROPRIETARY INFORMATION. The Company
believes that patent protection is important for products and potential
segments of its current and proposed business. The Company currently holds 4
patents, and has patents pending for an additional 3 products which the Company
markets or intends to market. See "Annual Report on Form 10-KSB". There can
be no assurance, however, as to the breadth or degree of protection afforded to
the Company or the competitive advantage derived by the Company from current
patents and future patents, if any. Although the Company believes that its
patents and the Company's existing and proposed products do not infringe upon
patents of other parties, it is possible that the Company's existing patent
rights may be challenged and found invalid or found to violate proprietary
rights of others. In the event any of the Company's products are challenged as
infringing, the Company would be required to modify the design of its product,
obtain a license or litigate the issue. There is no assurance that the Company
would be able to finance costly patent litigation, or that it would be able to
obtain licenses or modify its products in a timely manner. Failure to defend a
patent infringement action or to obtain a license or implementation of
modifications would have a material adverse effect on the Company's continued
operations.
TRADE SECRETS. The Company also relies in part on trade secrets and
proprietary know-how, and it employs various methods to protect its technology,
such as use of confidentiality agreements with employees, vendors, and
customers. However, such methods may not afford complete protection and there
can be no assurance that others will not obtain the Company's know-how, or
independently develop it.
DEPENDENCE ON KEY PERSONNEL AND OBTAINING ADDITIONAL ENGINEERING
PERSONNEL. The Company is dependent upon the experience and services of Philip
H. Coelho, President and Chief Executive Officer, and Charles de B. Griffiths,
Director of International Sales. The loss of Mr. Coelho or Mr. Griffiths would
adversely affect the Company's operations. The Company has obtained key man
life insurance covering Mr. Coelho in the amount of $1,000,000 as some
protection against this risk. Furthermore, to implement its new product
development, the Company will have to recruit and retain additional experienced
engineers. There is no assurance that the Company will be able to find and
retain engineers required to meet its self-imposed deadlines for product
development. See "The Company and Recent Events - Employees".
DEPENDENCE ON FOREIGN SALES. A large percentage of the Company's sales
are made to foreign countries. For the year ended June 30, 1995, foreign sales
represented 55% of the Company's total sales for the year. The Company is not
aware of any current material risks associated with foreign sales. Sales are
made in U.S. currency and, therefore, currency fluctuations do not affect
operations. See "Annual Report on Form 10-KSB".
PRODUCT LIABILITY AND UNINSURED RISKS. The Company maintains a general
liability policy which includes domestic and foreign product liability coverage
of $1,000,000 per occurrence and $2,000,000 per year in the aggregate.
Nevertheless, a partial or completely uninsured claim against the Company could
have a material adverse effect on the Company's financial condition and
operations.
POSSIBLE LOSS OF NASDAQ SMALLCAP MARKET ELIGIBILITY. While the Company's
Common Stock is included on the Nasdaq SmallCap Market, its continued inclusion
will depend on the Company's ability to meet certain eligibility requirements
established for The Nasdaq Stock Market, including maintaining a minimum of $2
million in assets. Loss of Nasdaq eligibility could result if the Company
sustains substantial material operating losses affecting its net worth.
Although the Company could seek listing on another market, any failure to
maintain listing on the Nasdaq could have an adverse effect on trading and the
value of the Company's Common Stock.
NEGATIVE IMPACT ON TRADING VALUE OF COMMON STOCK. The Company has
currently more than 24,000,000 shares outstanding, including the shares
registered hereby, almost all of which are registered and trading. Because the
trading market for the Company's common stock is affected by numerous
circumstances and events, the Company can make no prediction on the effect the
registration of the shares of common stock hereby will have on that market.
The number of shares being registered by the Company hereby could have an
adverse effect on the trading value of its Common Stock in general. See
"Description of Securities - Registration Obligation".
LACK OF CASH DIVIDENDS. To date, the Company has not paid any cash
dividends on its Common Stock and does not expect to declare or pay any cash or
other dividends on its Common Stock in the foreseeable future.
SUMMARY FINANCIAL INFORMATION
The following information has been summarized from the Company's financial
statements included in its Annual Report on Form 10-KSB for the year ended June
30, 1995, and Quarterly Reports on Form 10-QSB for the quarters ended September
30, 1995, and December 31, 1995, incorporated herein by reference, and should
be read in conjunction with such financial statements and the related notes
thereto:
<TABLE>
<CAPTION>
For the Six Months Ended December 31, For the Year Ended June 30,
<S> <C> <C> <C> <C>
1995 1994 1995 1994
STATEMENT OF OPERATIONS DATA:
Revenues $1,980,119 $1,838,162 $3,311,880 $2,678,192
Operating expenses $2,079,813 $1,737,306 $3,704,193 $2,931,974
Net income (loss) $(102,339) $105,526 ($88,296) $11,246
Net income (loss) per common share ($0.00) $0.01 ($0.00) $0.00
Weighted average shares outstanding 21,094,000 20,715,000 20,340,000 20,247,000
</TABLE>
<TABLE>
<CAPTION>
December 31, June 30,
<S> <C> <C> <C> <C>
1995 1994 1995 1994
SELECTED BALANCE SHEET DATA:
Working Capital $3,197,732 $1,566,050 $1,413,156 $1,438,579
Total Assets $4,529,733 $2,837,544 $2,662,839 $2,500,399
Long Term Obligations $168,730 $ ---- $14,456 $ ---
Total Liabilities $725,246 $661,381 $662,256 $429,762
Stockholders' Equity $3,804,487 $2,176,163 $2,000,583 $2,070,637
</TABLE>
THE COMPANY AND RECENT EVENTS
The Company, formerly known as Insta Cool Inc. of North America, was
incorporated in Delaware on September 26, 1986 and subsequently merged with
Refrigeration Systems International, Inc., a California corporation. In
January of 1995, the Company changed its name to THERMOGENESIS CORP. to better
reflect the thermodynamic segment of the biotechnology industry that it hopes
to service through development of new products. The Company designs and sells
products and devices which utilize its proprietary thermodynamic technology for
the processing of biological substances including the cryopreservation,
thawing, and harvesting of blood components, and to a lesser extent for the
preservation of perishable foods (THERMOGENESIS Proprietary Technology).
Historically, the Company's primary revenues have been from sales of blood
plasma freezers to hospitals, blood banks and blood transfusion centers for
rapid freezing of blood plasma. Currently, the Company is manufacturing
several categories of thermodynamic devices which are being sold to the blood
plasma industry under FDA permission to market in the United States. Other
potential applications and markets for the Company's THERMOGENESIS Proprietary
Technology include medical and pharmaceutical applications, and industrial
applications. During the fiscal years 1988 through 1995, the Company has
focused its efforts on research and development and on refining product design
and application. The Company has also continuously sought new applications for
its products and technology, including the design of a device used for the
intraoperative harvesting of autologous fibrinogen rich cryoprecipitate for use
as a hemostatic agent or tissue sealant in certain surgical and medical
procedures. See "The Company and Recent Events - Current Products and
Development Efforts".
HISTORICAL
Tools used by biotechnology researchers to process biological substances
and to accomplish manipulation of such substances to obtain desired results
vary and include microscopic laser scalpels, chemical formulations, sterile and
disposable containers, as well as devices that control temperatures of the
processes.
The Company's initial strategy focused product development on small niche
blood processing markets where new products could more quickly establish
credibility for the Company's proprietary thermodynamic technology. The
Company believed that by concentrating its products to serve the blood plasma
industry, many customers, such as the Red Cross or other blood transfusion
societies of various countries, would validate the Company's technology for
rapid freezing of biological substances, more specifically blood plasma. Early
products were designed and distributed to blood processing markets in a manner
that would permit the Company to attain high market share and receive more
rapid FDA 510K permission to market. See "Annual Report on Form 10-KSB".
From 1988 to 1992 the Company's products were designed to transfer heat by
causing heat transfer liquids to indirectly contact biological substances,
primarily blood plasma, contained within plastic sealed containers. Early
product designs used liquids containing chloro-flouro-carbons ("CFC") which the
Company phased out in the fall of 1992. Thereafter, the Company developed an
alternative heat transfer method which automatically interposed a thin flexible
membrane between the heat transfer liquid and biological substances which
process allowed for use of non-CFC based heat transfer liquids.
Principal products initially developed by the Company and marketed to
hospitals, blood banks, and blood transfusion centers consisted of freezers and
thawers for blood plasma. The Company continued to design and develop various
freezer models and thawers for different applications, and these products
remain the core product component of the Company's business. To expand its
market and product use, the Company changed the focus of its research and
development to the design of new products that would be applied to different
applications within the blood industry, including surgical, pharmaceutical and
medical procedures that utilize freezing and thawing technology as part of
standard procedures. See "The Company and Recent Events - Current Products and
Development Efforts".
Over the past seven years, the Company has developed and received FDA
permission to market several of its thermodynamic processors of blood tissues
and have three new products awaiting FDA approval. The several FDA-approved
blood processing devices have a significant share of their small niche markets
and generate the majority of the Company's annual revenues which were
approximately $3,300,000 during the 1995 fiscal year. For instance, of the 51
American Red Cross Blood Centers, 48 utilize the Company's blood plasma
freezer. These products include the Company's blood plasma freezers, blood
thawers, and portable blood plasma freezers, and blood collection and transport
containers. See Annual Report on Form 10-KSB.
Having established a presence in markets where the need to freeze and thaw
blood tissues precisely and rapidly was critical, the Company began to focus
its technology and tissue and development efforts towards harvesting fibrinogen
rich cryoprecipitate from blood for use as a hemostatic agent and tissue
adhesive for medical and surgical use. Medical literature currently documents
important practical applications for fibrinogen rich cryoprecipitate in
thirteen distinct areas, including plastic surgery, thoracic surgery,
cardiovascular surgery, orthopaedic surgery, and opthamologic surgery. The
Company's fibrinogen collecting device with its disposable container sources
the fibrinogen rich cryoprecipitate from a patient's own blood ("autologous"),
and is unique in that aspect when compared to current sources of fibrinogen
which generally rely on homologous single donations or pooled plasma.
RECENT FINANCING
In December 1995, the Company completed a private placement raising a
total of $2,200,000, before direct expenses of $242,000 and other indirect
related expenses, for net proceeds of $1,901,000, which funds are being used
for general corporate purposes that include, but are not limited to, payment of
existing accounts payable and short-term debt, testing of products, continued
research and development, production costs and inventory, advertising and
promotional materials, working capital, and increased payroll due to addition
of personnel.
Assuming the exercise of all Warrants issued as part of the Units in the
private placement, and the exercise of the placement agent warrant to acquire
an additional 8.8 Units at $30,000 per Unit, the Company would receive an
additional $2,079,000, which would be used to support general operations and
research and development. The Company does not, however, anticipate that the
Warrants will be exercised prior to expiration on July 31, 1996, based on the
current trading price of $1.1875 on March 1, 1996. See "Use of Proceeds". The
Company will not receive any money from the sale of Common Stock offered by the
Selling Stockholders in this Offering. See "Summary of the Offering"; "Selling
Stockholders".
As a condition of the private placement of Units, each investor in the
private placement was required to enter into an agreement not to sell, directly
or indirectly, the Common Stock included in the Units for a period of 180 days
from the effective date of the registration statement registering such Common
Stock without the prior written approval of the placement agent, Paradise
Valley Securities, Inc. (the "Investor Lock-Up"). In giving or withholding its
approval, the placement agent will consider the effect that any such sale prior
to expiration of the Investor Lock-Up will have on the maintenance of an
orderly market for the Company's Common Stock. See "Description of Securities
- - Registration Obligation". As part of the private placement of the Units, the
Company granted purchasers of the Units a limited price protection provision
for the warrants issued as part of the Units to mitigate the effect of any
potential market decline in the trading price of the Company's Common Stock
should the Company delay in registering the Common Stock. Under the terms of
the provision, the exercise price of the warrants would be automatically reset
at $1.00 per share in the event a registration statement was not filed within
three months following the close of the private placement. The Company
complied with the registration filing requirement and the repricing provision
is of no further effect. All warrants issued as part of the Units will expire
on July 31, 1996, unless exercised by the holders thereof prior to that date.
CURRENT PRODUCTS AND DEVELOPMENT EFFORTS
The Company's core business continues to focus on plasma freezers and
thawers which have already received FDA permission to market in the United
States. However, since the Company anticipates that the plasma freezer market
will flatten when market penetration is complete (with the exception of
replacement products), it has begun to focus on the following new products and
market opportunities. See "Annual Report on Form 10-KSB".
LONG-TERM BLOOD SAMPLE STORAGE AND RETRIEVAL SYSTEM WITH DISPOSABLE
CONTAINER. The Company has built a prototype long-term storage freezer,
computer inventory system and blood sample container (the "Blood Archive and
Retrieval System") for possible use by the Japanese Red Cross for storing blood
samples for a five year period for all blood donations that occur in Japan each
year. The five-year blood sample storage program has been mandated by the
Japanese government in an effort to comply with new product liability laws in
Japan. It is estimated that 6,600,000 blood donations occur annually. The
Company has shipped the prototype Blood Archive and Retrieval System to Daido-
Hoxan, the Company's Japanese distributor, in November 1995 for tests and
performance review. The Company believes that the Japanese government will
approve a budget that will include purchases of the Blood Archive and Retrieval
System. The Company, its distributor Daido-Hoxan, and the Japanese Red Cross
are currently evaluating the equipment and proposed program. No assurance can
be given that the Company's Blood Archive and Retrieval System will ultimately
be purchased by or through the Japanese Government. See "Risk Factors -
Dependence on New Markets; Government Regulations Associated with Products".
AUTOLOGOUS FIBRINOGEN PROCESSING SYSTEM WITH DISPOSABLE CONTAINER. The
Company has completed a prototype of a system for harvesting fibrinogen rich
cryoprecipitate from a patient's own blood plasma for use as a tissue sealant
and hemostatic agent during surgery (the "Autologous Fibrinogen Device"). The
Autologous Fibrinogen Device features a transportable thermodynamic device and
sterile disposable containers within which each unit of blood plasma is
processed to obtain the fibrinogen rich cryoprecipitate.
The FDA declined to approve the use of the Autologous Fibrinogen Device
for all the surgical uses of fibrinogen as sought by the Company and, instead,
agreed to constructively review a 510K application for a few narrow uses, such
as Factor VIII deficiency (when blood is deficient in the Factor VIII clotting
protein causing hemophilia) and fibrinogenemia (when blood is deficient in the
Fibrinogen clotting protein). Further clinical data would need to be collected
and submitted in order to have the FDA permit expanded claims for efficacy.
See "Risk Factors -- Government Regulations Associated with Products". The
restriction to these few narrow uses would significantly reduce initial sales
in the United States and force the Company to rely on foreign marketing.
The Company has identified three significant opportunities to bring the
Autologous Fibrinogen Device to market in the near future, while encompassing
all the potential surgical uses in Japan, Canada and Europe where fibrinogen is
already licensed, and one major use in the United States where the Company may
have significant assistance in presenting clinical data to support the claim
for autologous fibrinogen as a tissue adhesive.
1) The Company secured an agreement in principal with Haemonetics,
Japan, a major medical device company, which contemplates that Haemonetics will
manufacture the disposable container and the applicators and pay the Company a
10% royalty on sales of those items, in addition to purchases and distribution
of the Autologous Fibrinogen Device to be manufactured by the Company.
Haemonetics would market the Autologous Fibrinogen Device in Japan, where
fibrinogen from pooled plasma is already a licensed product. Further, a
Ministry of Health and Welfare reimbursement schedule has already been approved
for autologous fibrinogen by the Japanese government, even though no practical
supply of autologous fibrinogen exists today in Japan. The Company believes
that the Japanese are uncomfortable with the only currently available supply of
fibrinogen in Japan which is sourced from pooled plasma donated by non-Japanese
donors. Based on this perception, the Company has focused development and
introduction of this product for the Japanese market, while continuing with
efforts toward clinical data collection for additional FDA approval for the
United States Market.
2) The Company has reached an agreement in principle with
Organogenesis, a Massachusetts-based company which has developed a
biologically-alive skin replacement, Graftskin (trademark) produced from cells
derived from infant foreskin and bovine collagen. The Company was informed
that in clinical trials a 61% success rate was achieved in the complete closure
of ulcerated wounds (diabetic), a disease which afflicts over 10 million
Americans. In acknowledgment of the potential benefit this product might offer
to patients with ulcerated wounds, the FDA has chosen Graftskin for expedited
review. The Company believes that bonding the Graftskin to the wound site with
autologous fibrinogen rich cryoprecipitate may increase the success rate of the
engraftment and is collaborating with Organogenesis in the design of clinical
tests to determine whether the autologous fibrinogen rich cryoprecipitate
sealant assists the engraftment. If successful, this test data would be
submitted to the FDA by the Company in support of a claim for the autologous
fibrinogen rich cryoprecipitate as a skin graft adhesive. The Company believes
that this submission could be reviewed by the FDA at the same time as the
expedited review of the skin replacement product. FDA permission to market the
Company's Autologous tissue sealant for use with Graftskin could open markets
to over 200 specialized wound care centers, 3,000 surgi-centers and 3,500
hospitals with surgery wards in the United States. Tests using the Company's
autologous fibrinogen device are, however, in preliminary stages and
conclusions about any improved engraftment efficacy are premature.
Furthermore, there is no assurance that the FDA will review the data related to
the Company's device contemporaneously with the submissions by the
Massachusetts company. See "Risk Factors - Government Regulations Associated
with the Products".
3) The Company has obtained agreement from Gail Rock, MD, Ph.D., to
organize and supervise all necessary laboratory and clinical tests to
demonstrate the safety and efficacy of the Company's Autologous Fibrinogen
Device for the Canadian Ministry of Health. Canada has licensed the use of
fibrinogen sourced from pooled plasma.
Potential additional revenues may be generated from the Autologous
Fibrinogen Device by virtue of the Company's proprietary disposable bag set
designed for processing the patient's plasma. Each use of the Autologous
Fibrinogen Device will require use of a proprietary sterile bag set that the
Company currently proposes to sell, thereby potentially creating a continuing
stream of revenues that will rise with the cumulative number of autologous
fibrinogen devices operating, and the number of procedures executed with each
device. The Company expects to license the manufacture and sale of the sterile
bags (containers) in both Japan and Europe in return for a 10% royalty on net
sales from such licenses.
The Autologous Fibrinogen Device is still in its pre-production phase and
is subject to FDA permission to market in the United States. No assurance can
be given that the FDA will grant permission to market the Autologous Fibrinogen
Device, or that a market within the United States will develop if approved.
See "Risk Factors -- Government Regulations Associated with the Products".
Initially, the Company intends to concentrate on foreign markets where
fibrinogen, sourced from pooled plasma, is currently used to market the device
pending further applications for approval by the FDA.
STEM CELL CRF STORAGE AND RETRIEVAL SYSTEM WITH DISPOSABLE CONTAINER.
Placental stem cells have been identified by Dr. Pablo Rubinstein as a superior
alternative replacement to bone marrow for the reconstitution of the immune
system. Dr. Rubinstein is director and chief scientist of the F.H. Allen
Laboratory of Immunologenetics, Lindsey F. Kimball Research Institute of the
New York Blood Center. Dr. Rubinstein directed a National Institute of Health
funded research program which demonstrated the effectiveness of stem and
progenitor cells sourced from placental blood in accomplishing reconstitution
of the immune system in patients unrelated to the donor source. For optimum
therapeutic benefit, it is necessary to harvest and inventory thousands of
cryopreserved placental stem cell donations, all of which must be genetically
typed. In conjunction with Dr. Pablo Rubinstein's research over the past few
years, the Company developed a sterile bag set for collecting, processing, and
freezing the stem cells sourced from placental blood, and is designing a
sophisticated liquid nitrogen storage system which provides controlled rate
freezing ("CRF") of the stem cells and which robotically archives up to 2,500
donations (the "Stem Cell Storage and Retrieval System") for use in an
international blood banking network. A laboratory prototype of the Stem Cell
Storage and Retrieval System is in its initial phase of development. No
assurance can be given that the Company will be able to develop a Stem Cell
Storage and Retrieval System and if developed, that a market for such system
will develop. See "Risk Factors - Dependence on New Markets; Government
Regulations Associated with the Products". The Stem Cell Storage and Retrieval
System also features a disposable clip designed to protect the stem cell bag at
below freezing temperatures and assists the recording of temperatures that may
provide revenues to the Company in addition to revenues from sales of the
system.
For a more complete discussion of the Company and its business and other
properties, refer to the Company's Annual Report on Form 10-KSB, which is
incorporated herein by reference.
EMPLOYEES
At fiscal year ended June 30, 1995, the Company employed thirty-two (32)
regular full time employees. In order to complete research and design, to
build, market and service the new products in development, the Company hired an
additional eight (8) engineers, six (6) production personnel, a sales manager,
and six (6) additional customer support, marketing and administrative
employees. At March 1, 1996, the Company employed fifty-one (51) full time
employees. The Company considers current staffing levels adequate at this
time, but may need to add additional personnel to meet shortened production
times or to handle increases in business. Similarly, any downturn in product
markets or sales might result in decreases in the number of full time
employees.
- 3 -
<PAGE>
SUMMARY OF THE OFFERING
The Company is registering 4,400,000 shares of Common Stock on behalf of
the Selling Stockholders, and offering 1,210,000 shares of Common Stock upon
the exercise of outstanding Warrants. The Common Stock and Warrants were
issued in connection with a December 1995 private placement by the Company of
88 Units at $25,000 per Unit. Each Unit consisted of fifty thousand shares of
Common Stock and a Warrant to purchase an additional twelve thousand five
hundred (12,500) shares of Common Stock at $1.50 per share. The Company also
granted the placement agent Warrants to purchase 8.8 Units at $30,000 per Unit,
each Unit having the same terms as the Units offered in the private placement,
including the July 31, 1996 expiration of the Warrants to be issued as part of
those Units. See "The Company and Recent Events - Recent Financing".
The Company will receive no proceeds from the sale of the 4,400,000 shares
of Common Stock that may be offered and sold from time to time or by the
Selling Shareholders.
USE OF PROCEEDS
Assuming Warrants to purchase all of the 1,210,000 shares are exercised,
the Company expects to receive $1,815,000 before deducting expenses of
approximately $38,018 associated with this Offering. In addition, if the
placement agent Warrants to acquire the additional 8.8 Units are exercised, the
Company will also receive $264,000. The Company intends to use any amounts
received from the exercise of these Warrants for general corporate purposes.
As of March 1, 1996, the average high and low price of one share of Common
Stock was $1.1875. In light of the current market price for one share of
Common Stock, and the exercise price of the Warrants, it is unlikely at this
time that a holder of a Warrant would exercise the Warrant.
The Company will not receive any proceeds upon the sale of Common Stock by
the Selling Stockholders.
SELLING STOCKHOLDERS
The following table identifies the Selling Stockholders, as of March 5,
1996, and indicates (i) the nature of any material relationship that such
Selling Stockholders have had with the Company for the past three years, (ii)
the number of shares of Common Stock held by the Selling Stockholders, (iii)
the amount to be offered for the Selling Stockholders' account, and (iv) the
number of shares and percentage of outstanding shares of Common Stock to be
owned by the Selling Stockholders after the sale of the Common Stock offered by
the Selling Stockholders pursuant to this Offering. The Selling Stockholders
are not obligated to sell their Common Stock offered in this Prospectus and may
choose not to sell any of their shares or only a part of their shares.
The shares of Common Stock offered by the Selling Stockholders may be
offered for sale from time to time at market prices prevailing at the time of
sale or at negotiated prices, and without payment of any underwriting discounts
or commissions except for usual and customary selling commissions paid to
brokers or dealers. The Company will not receive any proceeds from the sale of
the Common Stock by the Selling Stockholders.
Under the Exchange Act, any person engaged in a distribution of the shares
of Common Stock of the Company offered by this Prospectus may not
simultaneously engage in market making activities with respect to the Common
Stock of the Company during the applicable "cooling off" periods prior to the
commencement of such distribution. In addition, and without limiting the
foregoing, each Selling Stockholder will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder including, without
limitation, Rules 10b-6 and 10b-7, which provisions may limit the timing of
purchases and sales of Common Stock by the Selling Stockholders.
With regard to the shares offered by the Selling Stockholders such shares
may be sold on the Nasdaq Stock Market or in private transactions at prices to
be determined at the time of sale. Such shares may be offered through broker-
dealers, acting on the Selling Stockholders' behalf, who may offer the shares
at then current market prices. Any sales may be by block trade. The Selling
Stockholders and any brokers, dealers or others who participate with the
Selling Stockholders in the distribution of such shares of Common Stock may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
commissions or fees received by such persons and any profit on the resale of
such shares purchased by such persons may be deemed to be underwriting
commissions or discounts under the Securities Act. Sales may be made by all
Selling Stockholders pursuant to the Registration Statement of which this
Prospectus is a part.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES TO BE SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING SOLD AFTER OFFERING
<S> <C> <C> <C> <C> <C>
NAME OF BENEFICIAL OWNER NUMBER{(1)} PERCENTAGE NUMBER{(1)} NUMBER PERCENTAGE
Jack and Albena Acampora 125,000 * 125,000 0 *
MAN & CO FBO
Kenneth J. Acampora, IRA 62,500 * 62,500 0 *
Codron Family Revocable
Trust, Ray and Rebecca
Codron, Trustees 62,500 * 62,500 0 *
Gary Boster 62,500 * 62,500 0 *
Viola F. Coelho 62,500 * 62,500 0 *
MAN & CO. IRA
Registration FBO
Robert R. Dorfler 62,500 * 62,500 0 *
L. Michael Howell 62,500 * 62,500 0 *
MAN & CO. IRA
Registration FBO
Robert Howard 62,500 * 62,500 0 *
John Hundley 62,500 * 62,500 0 *
Karnell Family Trust 125,000 * 125,000 0 *
Henry J. Roth 62,500 * 62,500 0 *
Neal Shindel 62,500 * 62,500 0 *
MAN & CO. IRA
Registration FBO
Gregory Smith 31,250 * 31,250 0 *
MAN & CO. IRA
Registration FBO
Marc Summers 62,500 * 62,500 0 *
Star Bank FBO
IRA Rollover #06-8580
Richard Wagner 62,500 * 62,500 0 *
MAN & CO. FBO
Ross L. Wilcox IRA 62.500 * 62,500 0 *
Fred Kaeffer 62,500 * 62,500 0 *
Warren Linney 62,500 * 62,500 0 *
Doug Linney 62,500 * 62,500 0 *
MAN & CO. IRA
Registration FBO
Gary D. Levine IRA 62,500 * 62,500 0 *
Mercedes Group Limited
Partnership 250,000 * 250,000 0 *
Thomas F. Miller 125,000 * 125,000 0 *
Lucille E. Post Revocable
Living Trust 62,500 * 62,500 0 *
Bert Rettner IRA 62,500 * 62,500 0 *
Jack and Katherine Richey 125,000 * 125,000 0 *
MAN & CO. IRA
Registration FBO
Mark Rosenberg 93,750 * 93,750 0 *
David Acampora 125,000 * 125,000 0 *
MAN & CO. IRA
Registration FBO
Jerry Alcone 62,500 * 62,500 0 *
MAN & CO. IRA
Registration FBO
J. Lynton Allred IRA
Rollover 62,500 * 62,500 0 *
MAN & CO. IRA
Registration FBO
Ann Lyn Batcheller 62,500 * 62,500 0 *
J. Tashoff Bernton 125,000 * 125,000 0 *
Daniel and Robert Bock,
tenants in common 62,500 * 62,500 0 *
The Bridge Fund N.V.
De Ruyterkade 58A/ 137,500 * 137,500 0 *
Samuel Bronstein 62,500 * 62,500 0 *
Spencer Brown 62,500 * 62,500 0 *
MAN & CO. IRA
Registration FBO
Fred Burstein 93,750 * 93,750 0 *
MAN & CO. IRA
Registration FBO
Daniel Cetina 62,500 * 62,500 0 *
DMS Partnership 62,500 * 62,500 0 *
Smith Barney as IRA
Rollover Custodian for
Leonard H. Dreyer 62,500 * 62,500 0 *
Michael J. Ernemann 62,500 * 62,500 0 *
Robert A. Ferkula 62,500 * 62,500 0 *
Harry Franz 62,500 * 62,500 0 *
Michael D. Friedman 62,500 * 62,500 0 *
John G. Gorman, M.D.
Pension Plan U-A 1-1-92 62,500 * 62,500 0 *
Daniel Harkins 31,250 * 31,250 0 *
Eugene and Shirley
Hudson, JTWROS 62,500 * 62,500 0 *
Jeffrey Huls 62,500 * 62,500 0 *
Rebecca A. Huls 62,500 * 62,500 0 *
Vickie S. Huls 62,500 * 62,500 0 *
Jasminville Corp. N.V. 125,000 * 125,000 0 *
James & Betty
Kleinegger, JTWROS 62,500 * 62,500 0 *
Heartland Trust Co. TTEE for
Fargo Water 401K 62,500 * 62,500 0 *
Larry and Ann Larson
JTWROS 62,500 * 62,500 0 *
John Levine 62,500 * 62,500 0 *
Mercedes Group Limited
Partnership 62,500 * 62,500 0 *
Albert J. Naftel 62,500 * 62,500 0 *
Tom W. Parker 62,500 * 62,500 0 *
Marvin J. Pollak Trust
U/A 5-22-90 62,500 * 62,500 0 *
Dean Rosow 62,500 * 62,500 0 *
Bonnie Rost 62,500 * 62,500 0 *
William L. Schlueter 62,500 * 62,500 0 *
Jeffrey J. Scott 62,500 * 62,500 0 *
Arnold Appelbaum 62,500 * 62,500 0 *
Leroy Canterbury Trust
DTD 5-14-95 Leroy and
Shirley Canterbury TTEES 62,500 * 62,500 0 *
K. George Collings 62,500 * 62,500 0 *
Dean Harry Franz 125,000 * 125,000 0 *
Katharine Beaty Gaston 50,000 * 50,000 0 *
Intergalactic Growth
Fund, Inc. 125,000 * 125,000 0 *
John K. Koll 62,500 * 62,500 0 *
The Overholt Family
Partnership 31,250 * 31,250 0 *
MAN & CO. FBO
Emmett Mitchell IRA 31,250 * 31,250 0 *
William J. Scott 62,500 * 62,500 0 *
MAN & CO. FBO
Wayne Stern IRA 125,000 * 125,000 0 *
Richard K. Wertz, TTEE
Wertz Family Trust
DTD 1-4-90 62,500 * 62,500 0 *
Lee S. and Janet E.
Yosowitz, IRA 62,500 * 62,500 0 *
Paradise Valley Securities, 550,000 2.17% 550,000 0 *
Inc. (2)
</TABLE>
FOOTNOTES TO TABLE
* Less than one percent.
(1)Includes shares underlying Warrants, which are immediately exercisable, to
purchase one fifth of the listed shares.
(2)Includes right to acquire 8.8 Units at $30,000 per Unit. Each Unit consists
of 50,000 shares of common stock and a warrant to acquire an additional 12,500
shares of common stock.
DESCRIPTION OF SECURITIES
Pursuant to its Amended and Restated Certificate of Incorporation, the
Company is authorized to issue two classes of capital stock, designated as
Common Stock and Preferred Stock. The authorized Common Stock consists of
50,000,000 shares, $.001 par value, and the authorized Preferred Stock consists
of 2,000,000 shares, $.001 par value.
As of March 5, 1996, the number of shares of Common Stock outstanding
was 24,765,434. There are no shares preferred stock outstanding.
COMMON STOCK
Holders of shares of the Common Stock have full voting rights, one vote
for each share held of record. Subject to preferential rights of holders of
any series of Preferred Stock, holders of shares of Common Stock are entitled
to receive such dividends as may be declared by the Board of Directors out of
funds legally available therefor, and share pro rata in any distributions to
stockholders upon liquidation. The holders of shares of Common Stock have no
conversion, preemptive or other subscription rights. All of the outstanding
shares of Common Stock are, and the shares offered hereby will be, validly
issued, fully paid and nonassessable.
PREFERRED STOCK
The Company's Board of Directors is authorized to establish, upon
authorization of a series or designation of Preferred Stock, the rights,
preferences, privileges, and restrictions on such stock. The Company currently
has no Preferred Stock outstanding, and the Board of Directors has not
established any rights, preferences, privileges or restrictions on such stock.
OPTIONS
As of March 5, 1996, the Company has outstanding options to acquire
2,222,000 shares of Common Stock at exercise prices ranging from $.82 to $1.50
per share. Some of these options are subject to vesting, and in general, have
a five year exercise period.
WARRANTS
The Company issued warrants to purchase an aggregate of 85,000 shares of
Common Stock in connection with the private placement that concluded in
February 1993. Those warrants may be exercised in whole or in part any time
before February 5, 1998, at an exercise price of $.60 per share. The exercise
price may adjusted from time to time in the event the Company subdivides or
combines its outstanding Common Stock. The Company was obligated to register,
and did register the underlying Common Stock of the Warrants under the
Securities Act, upon the one-time request of holders of fifty percent (50%) of
those warrants.
The Company issued Warrants to purchase an aggregate of 1,210,000 shares
of Common Stock in connection with the private placement of Units that was
concluded in December 1996. The Warrants may be exercised in whole or in part
anytime before July 31, 1996. The 1,210,000 shares are issuable at an exercise
price of $1.50 per share. The exercise price may be adjusted from time to time
in the event the Company subdivides or combines its outstanding Common Stock.
The Company is contractually obligated to register the shares of Common Stock
underlying the Warrants with the Commission pursuant to the provisions of the
Securities Act. As part of the placement agent's compensation in the 1995
private placement of Units, additional Warrants to purchase 8.8 Units at an
exercise price of $30,000 per Unit were also issued, each Unit consisting of
fifty thousand (50,000) shares of Common Stock and a purchase Warrant to
purchase an additional twelve thousand five hundred (12,500) shares of Common
Stock, exercisable at $1.50 per share. The Warrants to be issued as part of
the Units, and exercisable at $1.50 per share, have been included in the
1,210,000 Warrants. The Warrants will expire on July 31, 1996, unless
exercised by the holders thereof prior to that date. See "The Company and
Recent Events - Recent Financing".
INVESTOR LOCK-UP
Investors in the private placement of Units were required to enter into an
agreement not to sell, directly or indirectly, the Common Stock included in the
Units purchased for a period of 180 days following the effective date of a
registration statement registering such shares for resale. The placement agent
of the private placement o f Units may waive that condition and allow for
resale earlier under certain conditions. The placement agent has advised the
Company that in giving or withholding its approval, it will consider the effect
that any such sale will have on the maintenance of an orderly market for the
Company's securities. See "The Company and Recent Events - Recent Financing".
REGISTRATION OBLIGATION
As part of the private placement of the Units, the Company agreed to
register the shares of Common Stock and shares of Common Stock underlying the
Warrants issued in the Units for resale under the Securities Act by filing with
the Commission a registration statement on Form S-3 (the "Registration
Obligation"). The Company has agreed to prepare and file such registration
statement no later than ninety (90) days following the final closing of the
private placement. In the event the registration statement on Form S-3 was not
filed within the ninety (90) day period, the exercise price of the Warrants
issued as part of the Units would have automatically been reduced, pursuant to
the terms of the Warrant, to $1.00 per share. The Company complied with its
obligation to file the registration statement, and the repricing provision is
of no further effect. The Company paid all expenses necessary to prepare and
file the registration statement. See "The Company and Recent Events - Recent
Financing".
VOTING RIGHTS; DIVIDENDS
The holders of Common Stock will be entitled to one vote for each share
held of record on each matter submitted to a vote of shareholders. Further,
the holders of Common Stock will be entitled to receive ratable dividends when
and as declared by the Board of Directors from funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
Company, the holders of Common Stock will be entitled to share ratably in all
assets remaining after payment to holders of any series of preferred stock or
of any other senior securities outstanding at such time. It is anticipated
that the Company will not be declaring dividends in the near future.
CERTIFICATE OF INCORPORATION AND BYLAWS
The Company's Amended and Restated Certificate of Incorporation provides
for the indemnification of directors and officers for certain acts to the
fullest extent permitted by Delaware Law. Further, the Company's bylaws
provide authority for the Company to maintain a liability insurance policy
which insures directors or officers against any liability incurred by them in
their capacity as such.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
TRANSFER AGENT
The Trust Company of New Jersey, Thirty-Five Journal Square, Jersey City,
New Jersey 07306 is the transfer agent for the Company's Common Stock.
EXPERTS
The financial statements of THERMOGENESIS CORP. appearing in THERMOGENESIS
CORP.'s Annual Report (Form 10-KSB) for the year ended June 30, 1995, have been
audited by Ernst & Young, LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
The legality of the shares of Common Stock offered by the Company and the
selling stockholders by this Prospectus will be passed upon for the Company by
Weintraub Genshlea & Sproul of Sacramento, California.
- 4 -
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by the
Company in connection with the issuance and distribution of the securities
being registered hereunder. No expenses shall be borne by the Selling
Stockholders. All of the amounts shown are estimates, except for the SEC
Registration fee.
SEC registration fee $ 2,518.63
Printing and engraving expenses *$ 500.00
Accounting fees and expenses *$ 15,000.00
Legal fees and expenses *$ 20,000.00
Transfer agent and registrar fees *$ -0-
Fees and expenses for qualification
under state securities laws $ -0-
Miscellaneous *$ -0-
TOTAL $ 38,018.63
* estimated
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law permits
indemnification of directors, officers and employees of corporations under
certain conditions and subject to certain limitations. Article Eighth of the
Company's Amended and Restated Certificate of Incorporation contain provisions
for the indemnification of its directors and officers to the fullest extent
permitted by law.
Under such law, the Company is empowered to indemnify any person who was
or is a party or is threatened to be made a party to any proceeding (other than
an action by or in the right of the Company to procure a judgment in its favor)
by reason of the fact that such person is or was an officer, director, employee
or other agent of the Company or its subsidiaries, against expenses, judgments,
fines, settlements, and other amounts actually and reasonably incurred in
connection with such proceeding, if such person acted in good faith and in a
manner such person reasonably believed to be in the best interests of the
Company and, in the case of a criminal proceeding, has no reasonable cause to
believe the conduct of such person was unlawful. In addition, the Company may
indemnify, subject to certain exceptions, any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action by or in the right of the Company to procure a judgment in its favor by
reason of the fact that such person is or was an officer, director, employee or
other agent of the Company or its subsidiaries, against expenses actually and
reasonably incurred by such person in connection with the defense or settlement
of such action if such person acted in good faith and in a manner such person
believed to be in the best interest of the Company and its shareholders. The
Company may advance expenses incurred in defending any proceeding prior to
final disposition upon receipt of an undertaking by the agent to repay that
amount it shall be determined that the agent is not entitled to indemnification
as authorized.
In addition, although the Company does not have director's and officer's
insurance, the Company's bylaws provide the Company authority to maintain a
liability insurance policy which insures directors or officers against any
liability incurred by them in their capacity as such, or arising out of their
status as such. The Company intends to seek such insurance in the future.
Item 16. Exhibits and Financial Statement Schedules
EXHIBIT DESCRIPTION
1.01 Unit Placement Agreement
3.1 (a) Amended and Restated Certificate of Incorporation (5)
(b) Revised Bylaws (5)
5.1 Opinion of Weintraub Genshlea & Sproul counsel to the *
registrant
10.1 (a) Letter of Agreement between Liquid Carbonic, Inc.
Canada and THERMOGENESIS, CORP. (2)
(b) Letter of Agreement between Fujitetsumo USA and
THERMOGENESIS, CORP. (2)
(c) Letter of Agreement between Fujitetsumo Japan
and THERMOGENESIS, CORP. (2)
(d) Letter of Agreement between THERMOGENESIS, CORP.
and Liquid Carbonic, Inc. Sale of Convertible Debenture (3)
(e) License Agreement between Stryker Corp. and
THERMOGENESIS, CORP. (7)
(f) Lease of Office and Mfg. Space (5)
(g) Executive Development and Distribution Agreement
between THERMOGENESIS and Daido Hoxan Inc. (4)
(h) Administrative Office Lease (8)
(i) Employment Agreement for Philip H. Coelho (5)
(j) Employment Agreement for Charles de B. Griffiths (5)
11.1 Statement of Computation of Net Income (Loss) Per Share (6)
23.1 Consent of Weintraub Genshlea & Sproul is contained in
Exhibit 5.1 *
23.2 Consent of Ernst & Young, LLP is contained in Part II,
page II-4 of the registration statement
24.1 Power of Attorney contained on Signature Page, Part II,
page II-5 of the registration statement.
27.1 Financial Data Schedule
FOOTNOTES TO INDEX
(1) Incorporated by reference to Registration Stmt No. 33-12210-A of
THERMOGENESIS, CORP. filed on June 4, 1987.
(2) Incorporated by reference to Registration Statement No. 33-37242 of
THERMOGENESIS, CORP. filed on Feb. 7, 1991.
(3) Incorporated by reference to Form 8-K for July 19, 1993
(4) Incorporated by reference to Form 8-K for June 9, 1995.
(5) Incorporated by reference to Form 10-KSB for the year ended
June 30, 1994
(6) Incorporated by reference to Form 10-KSB for the year ended
June 30, 1995
(7) Incorporated by reference to Form 8-K for September 27, 1995
(8) Incorporated by reference to Form 10-QSB for the quarter
ended December 31, 1995
* To be filed by pre-effective amendment number 1 to Form S-3
Item 17. Undertakings
The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of THERMOGENESIS CORP.
for the registration of 6,050,000 shares of its common stock and to the
incorporation by reference therein of our report dated August 23, 1995, with
respect to the financial statements of THERMOGENESIS CORP. included in its
Annual Report (Form 10-KSB) for the year ended June 30, 1995, filed with the
Securities and Exchange Commission.
Sacramento, California
March 4, 1996 ERNST & YOUNG, LLP
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Rancho Cordova, County of Sacramento, State of California,
on the 6th day of March, 1996.
THERMOGENESIS CORP.
S/ PHILIP H. COELHO
Philip H. Coelho, C.E.O. and
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Walter J. Ludt as his true and lawful attorney-
in-fact and agent, with full power of substitution and resubstitution, for him
and in his name, place, and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorney-
in-fact and agents or any of them, or of his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated:
S/PHILIP H. COELHO Dated: March 6, 1996
Philip H. Coelho, C.E.O. , President,
and Chairman of the Board
(Principal Executive Officer)
S/CHARLES DE B. GRIFFITHS Dated: March 6, 1996
Charles de B. Griffiths, V.P.,
Secretary, and Director
S/MERRILL K. PARKER Dated: March 6, 1996
Merrill K. Parker, Controller
(Principal Accounting Officer
and Principal Financial Officer)
S/SID V. ENGLER Dated: March 1, 1996
Sid V. Engler , Director
S/NOEL K. ATKINSON Dated: March 1, 1996
Noel K. Atkinson, Director
THERMOGENESIS CORP.
UNIT PLACEMENT AGREEMENT
November 6, 1995
PARADISE VALLEY SECURITIES, INC.
11811 N. Tatum Blvd., Suite 4040
Phoenix, Arizona 85028
Gentlemen:
The undersigned, THERMOGENESIS CORP., a Delaware corporation (the
"Company"), confirms its agreement with you as follows:
1. DESCRIPTION OF SECURITIES AND OFFERING.
(a) The Company proposes to issue and sell to investors
("Purchasers") up to 88 units ("Units"), each consisting of 50,000 shares
of the Company's common stock, $.001 par value ("Common Stock") and a
Common Stock Purchase Warrant ("Warrant") for the purchase of 12,500 shares
of Common Stock. The Warrants are exercisable at any time prior to July
31, 1996 at an exercise price of $1.50 per share, subject to reduction in
the exercise price under certain circumstances and to certain anti-dilution
provisions. The price for each Unit is $25,000.
The Units will be offered by delivery to prospective investors of the
Company's Private Placement Memorandum ("Memorandum") dated October 30,
1995, together with Exhibits A through F annexed thereto, (such Memorandum
and exhibits annexed thereto are called collectively herein the "Disclosure
Documents," which term shall include any additions or supplements thereto).
(b) You have advised us that you will act as agent for the Company
for this offering. You will offer the Units on a "best efforts-all or
none" basis as to the first 30 Units, having an aggregate value of $750,000
("Minimum Offering"), and on a "best efforts" basis as to the remaining 58
Units having an aggregate value of $1,450,000. The offering of the 88
Units having an aggregate value of $2,200,000 shall be referred to as the
"Maximum Offering." If subscriptions for at least 30 Units have been
received and accepted by the Company before the expiration date of this
offering, the Company may have an initial closing ("Initial Closing") with
respect to such subscribed Units and shall continue to offer the remaining
Units and may hold additional closings with respect to such Units sold
before the expiration date of this offering. The date of any closing under
this offering shall be referred to as a "Closing Date" and the date of the
final closing under this offering shall be referred to as the "Final
Closing Date." You are authorized to sell the Units until and including
November 30, 1995, which date may be extended to a date not later than
December 31, 1995 by our mutual agreement. The term "Offering Period," as
used herein shall include the entire period, as it may be extended, during
which the Units may be offered.
In addition, the Company agrees to sell to you, for an aggregate price
of $100, warrants ("Placement Agent's Warrants") for the purchase of up to
8.8 Units at $30,000 per Unit ("Placement Agent's Warrant Units"), on the
basis of one Placement Agent's Warrant Unit for each ten Units issued, sold
and delivered to Purchasers. The Units to be purchased pursuant to the
Placement Agent's Warrant shall have the same terms and conditions as the
Units offered hereby.
The Common Stock, the Warrants, the shares of Common Stock underlying
the Warrants (the "Warrant Shares"), the Placement Agent's Warrants and the
Placement Agent's Warrant Units (collectively, the "Securities") are more
fully described in the Disclosure Documents.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company represents, warrants to and agrees with you that except as
specifically described in the Memorandum:
(a) The Company has carefully prepared the Disclosure Documents or
has caused them to be so prepared. When read as one document, the
Disclosure Documents furnish all information required to be furnished to
non-accredited investors under Regulation D ("Regulation D") of the
Securities and Exchange Commission ("SEC") promulgated under Securities Act
of 1933, as amended (the "1933 Act").
(b) Applications or other filings necessary to qualify the Securities
for sale or to obtain a valid exemption from qualification in the states
set forth in Schedule 2(b) or as you may reasonably designate from time to
time (the "Designated States") including an exemption from Federal
Securities Laws under Regulation D, have been or will be timely filed to
permit the lawful offer and sale of the Units in such states. These
applications or other filings, as they may be amended from time to time,
are referred to herein as the "Blue Sky Applications." The Blue Sky
Applications shall be prepared and filed by your counsel together with the
Company's assistance.
(c) The Disclosure Documents and Blue Sky Applications and any
amendments or supplements thereto, to the best knowledge of the Company and
its directors: (i) do and will, as the case may be, contain all material
statements and information which are required to be included in accordance
with the 1933 Act, Regulation D and applicable state law, (ii) do and will
in all material respects conform to the requirements of the 1933 Act,
Regulation D and applicable state law and (iii) do not and will not, as the
case may be, include any untrue statement of material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the foregoing
representations and warranties shall not apply to information contained in
or omitted from the Disclosure Documents and Blue Sky Applications or any
such amendment or supplement in reliance upon, and in conformity with,
written information furnished to the Company by you or on your behalf
specifically for use in the preparation thereof.
(d) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions herein contemplated will
not result in a breach or violation of any of the terms and provisions of
the Articles of Incorporation or Bylaws of the Company as in effect on the
date hereof (the "Organizational Documents"), and will not constitute a
material default under any indenture, mortgage, deed of trust or other
material agreement or instrument to which the Company is a party or by
which the Company is bound, and will not violate or contravene (i) any
governmental statute, rule or regulation applicable to the Company or (ii)
any order, writ, judgment, injunction, decree, determination or award which
has been entered against the Company, the violation or contravention of
which would materially and adversely affect the Company, its assets,
financial condition or operations.
(e) Subsequent to the dates as of which information is given in the
Disclosure Documents, except as contemplated therein and prior to the final
Closing, the Company has not and will not have incurred any material
liabilities or material obligations, direct or contingent, or entered into
any material transactions not in the ordinary course of business, and there
has not been or will not have been any change in its capitalization, or any
material adverse change in its condition (financial or other), net worth,
results of operations or prospects except as disclosed in the Disclosure
Documents.
(f) Except as set forth in the Disclosure Documents, there is neither
pending nor, to the knowledge of the Company, threatened any action, suit
or proceeding to which the Company is a party before or by any court or
governmental agency or body.
(g) The Company has been duly organized in accordance with the laws
of Delaware and exists in good standing under such laws with full power and
authority to conduct its business as described in the Disclosure Documents
and is duly qualified and in good standing in the State of California and
in each other jurisdiction in which such qualification is required except
where the failure to so qualify, both individually and in the aggregate,
does not have a material adverse effect on the condition (financial or
otherwise), business or prospects of the Company or on its properties or
assets.
(h) The Company has conducted, is conducting and will conduct its
business so as to comply in all material respects with all applicable
statutes and regulations, and the Company is not charged with and, to the
knowledge of the Company, is not under investigation with respect to any
violation of any statutes or regulations nor is it the subject of any
pending or threatened adverse proceedings by any regulatory authority
having jurisdiction over its business or operations except as disclosed in
the Disclosure Documents.
(i) The financial statements, together with the related notes, as set
forth in the Disclosure Documents, present fairly the assets, liabilities
and capital structure of the Company as of the dates presented. Such
financial statements, together with the related notes, have been prepared
in accordance with generally accepted accounting principles consistently
applied. Ernst & Young LLP, who have audited the financial statements at
June 30, 1995 and for the period then ended, are independent public
accountants within the meaning of the 1933 Act and the rules promulgated
thereunder.
(j) Except as set forth in the Disclosure Documents, the Company has
good and marketable title to all properties and assets described therein as
owned by it, free and clear of all liens, charges, encumbrances or
restrictions.
(k) The Company has filed all necessary federal and state 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 might be asserted
against it that might materially and adversely affect its business or
properties.
(l) The Company maintains insurance of the types and in amounts
generally deemed adequate for its business and consistent with insurance
coverage maintained by similar companies and businesses, including, but not
limited to, insurance covering all real and personal property owned or
leased by the Company against theft, damage, destruction, acts of
vandalism, products liability, and all other risks customarily insured
against, all of which insurance is in full force and effect.
(m) To the best of the knowledge of the Company's management, no
labor disturbance by the employees of the Company exists or is imminent
that could reasonably be expected to have a material adverse effect on the
conduct of the business, operations, financial condition, or income of the
Company.
(n) To the best of the knowledge of the Company's management, neither
the Company nor any employee or agent of the Company has made any payment
of funds of the Company or received or retained any funds in violation of
law.
(o) The Company knows of no outstanding claims for services either in
the nature of a finder's fee or origination fee with respect to the sale of
the Units hereunder resulting from its acts for which you or the Company
may be responsible other than as disclosed in the Disclosure Documents.
(p) The Securities, when issued and delivered, will conform to the
description thereof under the captions "Description of Securities" and
"Terms of the Offering" in the Memorandum.
(q) This Agreement has been duly authorized by all necessary
corporate action of the Company and, when executed and delivered, will be a
legal, valid and binding obligation of the Company, enforceable in
accordance with its terms except to the extent that the enforceability
hereof may be limited by bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally or by general principles of equity,
and except that the indemnification provisions of the Agreement may be held
to be violative of public policy under either federal or state laws in the
context of the offer or sale of securities.
(r) The Warrants and the Placement Agent's Warrants, when issued and
paid for, will be duly authorized, validly existing obligations of the
Company, enforceable in accordance with their respective terms.
(s) The shares of Common Stock included in the Units, the Warrant
Shares, the Common Stock included in the Placement Agent's Warrant Units
and the Warrant Shares underlying the Warrants included in the Placement
Agent's Warrant Units, when issued and paid for, will constitute duly
authorized, legally and validly issued shares of Common Stock, fully paid
and non-assessable.
(t) Except as set forth in the Disclosure Documents, no defaults
exist in the due performance or observance of any material obligation,
term, covenant or condition of any agreement or instrument to which the
Company is a party or by which it or its properties may be bound.
(u) Neither the Company nor any affiliate has offered to sell,
offered for sale or sold any securities, the offer to sell, offer for sale
or sale of which would be integrated (as that term is used in Rule 502(a)
of Regulation D) with the offers to sell, offers for sale and sales of the
Shares so as to render the exemption provided by Section 3(b) and 4(2) of
the 1933 Act and similar exemptions under the laws of the Designated States
unavailable with respect to the offering of the Shares hereunder.
(v) Subject in part to the truth and accuracy of each Purchaser's
representations set forth in the Unit Purchase Agreement and Purchaser
Questionnaire and the representations and covenants of the Placement Agent
made in this Agreement being true, the offer, sale and issuance of the
Units, the Common Stock, the Warrants and the Contingent Warrants are
exempt from the registration requirements of the 1933 Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
(w) Neither the holders of the outstanding shares of Common Stock nor
the holders of any other securities or rights of the Company are entitled
to pre-emptive or other rights or agreements for the purchase or
acquisition from the Company of any shares of its Common Stock or to
subscribe for the Units. Except as specifically and in detail set forth in
the Disclosure Documents, the offering of the Units as contemplated by this
Agreement and the Memorandum does not give rise to any rights relating to
the registration of any securities of the Company, and the Company has not
granted or agreed to grant any registration rights, including piggyback
rights, to any person or entity. Except as set forth in the Disclosure
Documents, the Company is not a party or subject to any agreement or
understanding, and, to the best of the Company's knowledge, there is no
agreement or understanding between any persons and/or entities, which
affects or relates to the voting or giving of written consents with respect
to any security or by a director of the Company.
(x) Except as set forth in the Disclosure Documents, the Company does
not presently own or control, directly or indirectly, any interest in any
other corporation, association, or other business entity; nor is it not a
participant in any joint venture, partnership, or similar arrangement.
(y) The Company has sufficient title and ownership of all trademarks,
service marks, trade names, copyrights, patents, trade secrets and other
proprietary rights necessary for its business as now conducted and as
proposed to be conducted as described in the Disclosure Documents without
any conflict with or infringement of the rights of others. Except as set
forth in the Disclosure Documents, there are no material outstanding
options, licenses, or agreements of any kind relating to the foregoing, nor
is the Company bound by or a party to any material options, licenses or
agreements of any kind with respect to the trademarks, service marks, trade
names, copyrights, patents, trade secrets, licenses, and other proprietary
rights of any other person or entity. The Company is not aware that any of
its executive officers is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to
any judgment, decree or order of any court or administrative agency, that
would interfere with the use of his or her best efforts to promote the
interests of the Company or that would conflict with the Company's business
as proposed to be conducted.
(z) Except for agreements explicitly contemplated hereby or set forth
in the Disclosure Documents, there are no agreements, understandings or
proposed transactions between the Company and any of its officers,
directors, affiliates, or any affiliate thereof.
(aa) Except as set forth in the Disclosure Documents, the Company has
not engaged in the past three (3) months in any discussion (i) with any
representative of any corporation or corporations regarding the
consolidation or merger of the Company with or into any such corporation or
corporations, (ii) with any corporation, partnership, association or other
business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company or a
transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Company is disposed of, or (iii)
regarding any other form of acquisition, liquidation, dissolution or
winding up of the Company.
(ab) Except as set forth in the Disclosure Documents or herein, no
executive officer or director of the Company or member of his or her
immediate family is indebted to the Company, nor is the Company indebted
(or committed to make loans or extend or guarantee credit) to any of them.
To the best of the Company's knowledge, except as set forth in the
Disclosure Documents, none of such persons has any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any
firm or corporation that competes with the Company, except that executive
officers or directors of the Company and members of their immediate
families may own stock in publicly traded companies that may compete with
the Company. Except as set forth in the Disclosure Documents, no member of
the immediate family of any executive officer or director of the Company is
directly or indirectly interested in any material contract with the
Company.
3. APPOINTMENT OF PLACEMENT AGENT AND REPRESENTATIONS, WARRANTIES AND
AGREEMENTS THEREOF.
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth,
the Company appoints you as its exclusive agent during the Offering Period
to effect sales of the Units for the account of the Company upon the other
terms and conditions set forth herein, in the Subscription Agreements and
in the Memorandum, and you agree to use your best efforts as such agent to
produce Purchasers for the Units during the Offering Period upon the terms
and conditions set forth herein.
(b) You may in your discretion use the services of other brokers or
dealers ("Participating Dealers") in connection with the offering and sale
of the Units, and you may allow and pay to such Participating Dealers (but
only as consideration for services rendered in placement of the Units), out
of the placement fee payable to you by the Company on account of the sale
of the Units, an amount as determined by you in your discretion; provided
that all such Participating Dealers are members in good standing of the
National Association of Securities Dealers, Inc. ("NASD") who are actually
engaged in the investment banking or securities business and who have
executed and delivered to you the written agreement prescribed by Section
24(c) of Article III of the NASD's Rules of Fair Practice.
(c) As compensation for your services hereunder the Company will pay
you a placement fee equal to 8% of the funds resulting from the sale of
Units pursuant to the Maximum Offering contemplated herein, provided that
the amount of the Minimum Offering has been sold. In addition, the Company
agrees to pay you an amount equal to 3% of the funds resulting from the
sale of the Units pursuant to the Maximum Offering as a non-accountable
expense allowance.
(d) Your appointment by the Company as exclusive Placement Agent
shall commence upon the date of the execution of this Agreement, and shall
continue until and through the last day of the Offering Period, unless (i)
the Units shall be completely sold prior to that date, (ii) the offering
has been terminated by agreement between you and us, (iii) the terms of the
Bank Escrow Agreement (hereinbelow defined), to which you are a party, are
not met and the offering is terminated as a result thereof, or (iv) this
Agreement shall be terminated at a prior date as provided herein.
(e) You hereby acknowledge that you are a party to the Bank Escrow
Agreement (herein "Bank Escrow Agreement") of even date herewith between
yourselves, First Arizona Savings & Loan Association (the "Escrow Agent"),
and the Company, the terms of which are incorporated herein by reference.
(f) At your option, the Company will sell to you the Placement
Agent's Warrants to purchase the number of shares specified above in
consideration of $100 aggregate purchase price for all of the Placement
Agent's Warrants. The Placement Agent's Warrants are exercisable at a
price of $30,000 per Unit for a four (4) year period commencing one year
after the Final Closing Date. The holders of the Placement Agent's
Warrants will have the right to one demand registration and an unlimited
number of piggyback registrations. On the Final Closing Date, the Company
will deliver to you that number of Placement Agent's Warrants as shall be
due to you.
(g) It is expressly understood and agreed that you are an independent
contractor and that neither you nor your agents or employees are in any
manner employees of the Company and that the Company shall have no
responsibility for unemployment insurance, social security, or income tax
withholding in connection with your employees.
(h) You represent that you are a member of the NASD and a broker-
dealer registered as such under the Securities Exchange Act of 1934 (the
"1934 Act") and under the securities laws of the states in which the Units
will be offered or sold by you and in which states registration as a
broker-dealer is required and/or necessary.
(i) You will offer the Units in accordance with the applicable
provisions of the 1933 Act in a manner so as to preserve the exemption from
registration as provided in Section 3(b) and/or 4(2) of the Act and
Regulation D thereunder and will not knowingly take, or omit to take, any
action in connection with offers and of sales of Units which would cause
the offering not to be made in compliance with Regulation D; you will not
offer the Units for sale in any jurisdiction unless and until the Company
or your counsel shall have advised you that the Units are exempt from
registration under the state securities laws applicable thereto; and you
have not and will not knowingly take any action which would require
registration of the Units under any federal or state securities laws, or
any other laws, orders, rules or regulations without the consent of the
Company.
(j) The offering of the Units will be limited to persons who have
completed Purchaser Questionnaires (as defined in the Disclosure
Documents).
(k) You shall make no representations concerning the offering, except
as set forth in the Disclosure Documents, and except for such supplemental
information relating to the Company as shall be made available by the
Company to offerees and their representatives as contemplated by Regulation
D.
(l) You will not use any offering or selling materials other than
materials furnished or approved by the Company.
(m) You will not offer the Units by means of any form of general
solicitation or general advertising.
(n) In placing, offering, offering to sell, offering for sale,
negotiating for sale or selling Units, you will, subject to the Company's
and its agents' compliance with the same, utilize your best efforts to
comply with the applicable provisions of the 1933 Act.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with you
that:
(a) The Company will use its best efforts to cause the Blue Sky
Applications in the Designated States and any subsequent amendments thereto
to become effective (which term as used in this Agreement shall include
taking all steps necessary to obtain an exemption from registration of the
Units in a jurisdiction) as promptly as possible; provided, however, that
in no event shall (i) the Company be obligated to qualify to do business in
any state or to take any action which would subject it to general or
unlimited service of process in any state where it is not now so subject,
(ii) any stockholder be required to escrow their shares of capital stock of
the Company (except for the lock-up agreement referred to in paragraph 5(c)
of this Agreement), or (iii) the Company or any stockholder be required to
comply with any other requirements which they reasonably deem to be duly
burdensome, except for the lock-up agreement as provided for in paragraph
5(d) of this Agreement; it will notify you promptly of any request by the
SEC or the corporate or securities departments, divisions or agencies
("Securities Departments") of any of the Designated States for the
amendment or supplementing of the Disclosure Documents or the Blue Sky
Applications; it will, at its own expense, during the term of this
Agreement and thereafter promptly notify you of the filing of such
amendments or supplements to the Disclosure Documents or the Blue Sky
Applications, as may be necessary to correct any statements or omissions if
any event shall have occurred as a result of which the Disclosure Documents
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading; and
it will file or distribute no amendment to the Disclosure Documents or the
Blue Sky Applications to which you shall reasonably object after having
been furnished a copy a reasonable time prior to the filing.
(b) Promptly upon becoming aware thereof, the Company will advise you
and, if requested, confirm such advice in writing (i) of the effectiveness
of the Blue Sky Applications; (ii) of the issuance of any orders affecting
the effectiveness of the Blue Sky Applications or the use of the Disclosure
Documents, or of the initiation or threatening of any proceeding for that
purpose; and (iii) of any orders or other communications of any public
authority addressed to the Company suspending or threatening to suspend
qualification of the Units for sale or any exemption therefrom and the
Company will use all reasonable efforts to prevent the issuance of any such
order or to obtain lifting of such an order if such an order should be
issued.
(c) The Company will file and continue to file and supply such
financial statements, reports and other information at such times as are or
may be reasonably required by the SEC and the Securities Departments of the
Designated States for so long as required for the placement of the Units or
for the compliance with any conditions or requirements relating to the
effectiveness of the Blue Sky Applications.
(d) The Company will furnish to you, as soon as available, copies of
(i) the Disclosure Documents, and (ii) for such period as delivery of the
Disclosure Documents may be required by the 1933 Act or the applicable law
of the Designated States, any amended Disclosure Documents or supplements
thereto required to be prepared pursuant to this Agreement, all in such
reasonable quantities as you may from time to time request.
(e) The Company agrees to pay all expenses in connection with (i) the
preparation, printing, duplicating and filing of the Disclosure Documents
and Blue Sky Applications, including the costs of all copies thereof and of
any amendments or supplements thereto supplied to you in quantities as
hereinabove stated, (ii) the preparation and delivery of the instruments
evidencing the Securities, (iii) the qualification or exemption therefrom
of the Securities under the 1933 Act and applicable state laws, (iv) the
legal and other expenses of the Company, and (v) all fees and expenses
regarding the Bank Escrow Agreement and the fees of the escrow agent.
(f) The Company agrees that during the one year period commencing on
the Final Closing Date of this offering it will not, without your prior
written consent, sell, contract to sell, issue for other purposes or
otherwise dispose of any securities of the Company other than (i) shares of
Common Stock issuable on the exercise of any options, warrants or other
rights which are disclosed in the Disclosure Documents and (ii) shares of
Common Stock issuable upon the exercise of options granted to employees,
officers or directors after the date of this Agreement if such options are
reasonable and are granted in good faith and at prices which are not less
than 85% of the fair market value of the Common Stock on the date of grant
of such options.
(g) The Company will apply the proceeds from the sale of Units by the
Company for the purposes set forth under the caption "Use of Proceeds" in
the Memorandum.
(h) The Company will make available the transfer record of the
Company in respect of the Securities for inspection by you during the time
they remain outstanding.
(i) The Company will file Form D (as defined in Regulation D) and all
required amendments thereto in a timely manner with the SEC and the
Securities Departments of the Designated States and deliver copies thereof
to you, together with copies of all forms and other documents or materials
filed either before or after the Closing Date to comply with State
securities laws.
(j) The Company will promptly deliver to you, without charge (i) two
copies of the registration statement covering a public distribution of any
of the Securities, as originally filed, and of each amendment thereto, and
of each post-effective amendment thereto filed at any time when a
prospectus relating to the securities to be sold thereunder is required to
be delivered under the 1933 Act, and all financial statements, schedules
and exhibits filed therewith (including those incorporated by reference to
the extent not previously furnished to you), and (ii) such number of
conformed copies of the registration statement, as originally filed, and of
each amendment and post-effective amendment thereto (in each such case
excluding exhibits), as you may reasonably require. The Company will
promptly deliver, without charge, to you or such others whose names and
addresses are designated by you as soon as possible after the effective
date of the registration statement and thereafter from time to time during
the period when delivery of a prospectus relating to the securities to be
sold thereunder is required by the 1933 Act, as many printed copies as you
may reasonably request of the final prospectus and any amendment or
supplement thereto.
5. CONDITIONS TO YOUR OBLIGATIONS. Your obligations to use your best
efforts to sell the Units as provided herein shall be subject to the
accuracy, at the date hereof and at all times thereafter up to and
including the Closing Date of any closing hereunder, of the representations
and warranties of the Company contained herein, the performance by the
Company of its obligations hereunder, and to the following additional
conditions except to the extent you may specifically waive, in writing, any
condition otherwise required:
(a) The Blue Sky Applications shall have become effective in all
Designated States necessary to successfully commence sale of the Units not
later than the date required to make lawful the offer and sale of the Units
in such states; and no order suspending the effectiveness thereof or the
use of the Disclosure Documents shall have been issued and no proceeding
for that purpose shall have been initiated or, to the knowledge of the
Company or you, threatened by the Securities Departments of any Designated
State, the SEC or any other governmental agency or commission, and any
request of the Securities Departments of any Designated State or the SEC
for additional information (to be included in the Blue Sky Applications or
the Disclosure Documents or otherwise) shall have been complied with to the
satisfaction of your counsel.
(b) The Disclosure Documents, and any amendment or supplement
thereto, shall not contain any untrue statement of fact which, in the
opinion of your counsel, is material, or omits to state a fact which, in
the opinion of your counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) Each of the directors and each stockholder owning more than 5% of
the Company's outstanding Common Stock shall have duly executed and
delivered to you a lock-up agreement in the form shown by Exhibit 5(d),
attached hereto.
(d) As of the Closing Date of each Closing of this offering, you
shall have received opinions, addressed to you and to the several
Purchasers, from Messrs. Bartel, Eng, Miller & Torngren, to the effect
that:
(i) The Company has been duly organized in accordance with the
Delaware Corporation Law and exists in good standing under the laws of the
State of Delaware with full corporate power and authority to conduct its
business as described in the Disclosure Documents, and is duly qualified
and in good standing in the State of California and in each additional
jurisdiction in which such qualification is required except where the
failure to so qualify, both individually and in the aggregate, does not
have a material adverse effect on the condition (financial or otherwise),
or business of the Company or on its properties or assets;
(ii) All consents, approvals, authorizations or orders of, and
filings, registrations, and qualifications with any court or governmental
body in the United States required for the consummation of the transactions
contemplated by this Agreement, other than with respect to state securities
laws have been made or obtained;
(iii) This Agreement has been duly authorized by all necessary
corporate action of the Company and, when executed and delivered, will be a
legal, valid and binding obligation of the Company, enforceable in
accordance with its terms except to the extent that the enforceability
hereof may be limited by bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally or by general principles of equity
and except that the indemnification provisions of this Agreement may be
held to be violative of public policy under either federal or state laws in
the context of the offer or sale of securities;
(iv) The execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions herein contemplated
will not result in a breach or violation of any of the terms and provisions
of the Organizational Documents of the Company, and will not constitute a
material default under any indenture, mortgage, deed of trust or other
material agreement or instrument known to such counsel to which the Company
is a party or by which it is bound, and will not violate or contravene (A)
any governmental statute, rule or regulation applicable to the Company,
other than with respect to state securities laws, or (B) any order, writ,
judgment, injunction, decree, determination or award which has been entered
against the Company and of which such counsel is aware, the violation or
contravention of which would materially and adversely affect the Company,
its assets, financial condition or operations;
(v) The Warrants and Placement Agent's Warrants, when issued and
paid for, will be duly authorized and existing obligations of the Company,
enforceable in accordance with their respective terms except to the extent
that the enforceability may be limited by bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally or by
general principles of equity;
(vi) The shares of Common Stock included in the Units, the
Warrant Shares, the Common Stock included in the Placement Agent's Warrant
Units and the Warrant Shares underlying the Warrants included in the
Placement Agent's Warrant Units will, when duly issued and paid for,
constitute duly authorized, legally and validly issued shares of the common
stock, $.001 par value, of the Company, fully paid and non-assessable;
(vii) The authorized, issued and outstanding capital stock of
the Company conforms to the descriptions thereof in the Disclosure
Documents. To the knowledge of such counsel after having conducted such
inquiry as they have deemed appropriate, there are no outstanding options,
warrants, or other rights calling for the issuance of, and no commitments,
plans or arrangements to issue or register, any shares of capital stock of
the Company or any securities convertible into or exchangeable for capital
stock of the Company other than as disclosed in the Disclosure Documents;
(viii) The certificates and instruments used to evidence the
Common Stock and Warrants are each in due and proper form as required by
the laws of the State of Delaware and the Organizational Documents of the
Company;
(ix) Neither the holders of the outstanding shares of Common
Stock nor of any other securities or rights of the Company are entitled to
pre-emptive or other rights or agreements for the purchase or acquisition
from the Company of any shares of its Common Stock or to subscribe for the
Units. Except as set forth in the Disclosure Documents the offering of the
Units as contemplated by this Agreement and the Memorandum does not give
rise to any rights relating to the registration of any securities of the
Company, and the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
Except as set forth in the Disclosure Documents, the Company is not a party
or subject to any agreement or understanding, and, to the best of such
counsel's knowledge, there is no agreement or understanding between any
persons and/or entities, which affects or relates to the voting or giving
of written consents with respect to any security or by a director of the
Company.
(x) To the knowledge of such counsel after having conducted such
inquiry as they have deemed appropriate and except as disclosed in the
Disclosure Documents, there is no pending or threatened action, suit or
proceeding before or by any court or governmental agency or body or
arbitration panel, to which the Company is a party, or to which any
property of the Company is subject, which is not referred to in the
Disclosure Documents, which in the opinion of such counsel, might result in
a material adverse change in the business, financial condition or results
of operations or materially affect the properties or assets of the Company
taken as a whole; and
(xi) Nothing has come to the attention of such counsel during
the course of any of their work in connection with this Agreement which has
caused them to believe that the Company has breached any of their
representations, warranties or agreements herein, or has made an untrue
statement of material fact in any of the Disclosure Documents or has
omitted to state a material fact necessary in order to make the statements
made in the Disclosure Documents, in light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements included in the
Disclosure Documents).
(xii) To the knowledge of such counsel, there are no material
agreements, contracts or instruments known to such counsel to which the
Company is a party or by which it is bound that are not accurately
described in the Memorandum.
In rendering the foregoing opinion, such counsel may rely as to
matters of fact upon certificates of the Company's officers and such
opinion shall be made subject to the provisions of the Legal Opinion Accord
of the ABA Section of Business Law (1991).
(e) You shall have received a certificate, dated and delivered the
Closing Date, addressed to you and the several Purchasers, from the
President and the Chief Financial Officer of the Company to the effect that
they have carefully examined the Disclosure Documents and that they have
made a careful examination as to the facts hereinafter referred to and to
the best of their knowledge and belief as to all relevant factual matters
and their understanding as to certain legal matters based upon their
discussions of such legal matters with Company counsel and other legal
counsel:
(i) The Company has complied with all the agreements and
satisfied all of the conditions on its part to be performed or satisfied
pursuant to this Agreement at or prior to the Closing Date;
(ii) No order suspending the effectiveness of the Blue Sky
Applications has been issued or threatened of which you have not been
previously notified pursuant to Section 4(b) hereof;
(iii) The Disclosure Documents and any amendments or supplements
thereto do not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and since the date of the Memorandum
there has occurred no event required to be set forth in an amended or
supplemented Disclosure Documents which has not been so set forth;
(iv) Subsequent to the dates as of which information is given in
the Disclosure Documents, the Company has not incurred any liabilities or
obligations, direct or contingent, or entered into any material
transactions, not in the ordinary course of business and there has not been
any change in the capital structure or debt of the Company or any material
adverse change in the financial condition, net worth or results of
operations of the Company, except as disclosed or contemplated in the
Disclosure Documents; and
(v) Each of the representations and warranties of the Company in
this Agreement are true and correct as of such Closing Date.
(f) The Placement Agent shall be satisfied with the current status of
the Company's patents, and the Placement Agent shall have received an
opinion, in a form satisfactory to it, from the Company's patent counsel
stating, to the best knowledge of such counsel, that the information in the
Disclosure Documents pertaining to the Company's patents is true and
correct.
(g) You shall have received from the Company or its counsel, all
information required to enable you to make such investigation of the
Company and its business prospects as you desire, including without
limitation, all of the Company's information or information, notes,
memoranda and correspondence with the Food and Drug Administration, and the
Company shall have made available to you such persons as you deem
reasonably necessary or appropriate in order to verify or substantiate any
information regarding the Company except such persons with whom the Company
has fragile business relationships or is otherwise restricted by
proprietary trade secret or confidentiality agreements.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are satisfactory to you
and your counsel.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the Company
to issue and deliver the Securities shall be subject to the accuracy, at
the date hereof and at all times thereafter up to and including the Closing
Date, of your representations and warranties contained herein, the
performance by you of your obligations hereunder, and to the receipt by the
Company on the Closing Date of a certificate from one of your officers that
your representations and warranties in this Agreement are true and correct,
and you have complied with all the agreements and satisfied all of the
conditions on your part to be performed or satisfied at or prior to each
Closing Date.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless you, each of
your officers, directors, employees, agents, registered representatives and
attorneys and each person, if any, who controls you within the meaning of
the 1933 Act, the 1934 Act or applicable state securities laws
(collectively referred to as "indemnified persons"), against losses,
claims, damages or liabilities, joint or several, to which you or such
indemnified persons may become subject under the 1933 Act, the 1934 Act,
applicable state securities law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Blue Sky Applications or the Disclosure
Documents, 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 statement
therein not misleading or out of any failure of the Company to have
obtained or maintained an exemption from registration of the Securities
under the securities laws of any Designated State; and agrees to reimburse
you and each indemnified person for any legal or other expenses reasonably
incurred by you or such indemnified person in connection with investigating
or defending any such loss, claim, damage, liability or action, provided,
however, that the indemnity agreement contained in this paragraph (a) shall
not inure to the benefit of you or any indemnified person with respect to
any loss, claim, damage or liability asserted by a purchaser of any Units
if a copy of the Disclosure Documents was not given to such purchaser at or
prior to the time required under the 1933 Act and prior to the signing of
the Subscription Agreement by such purchaser. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(b) You will indemnify and hold harmless the Company, each of its
officers, directors, employees, agents and attorneys and each person, if
any, who controls the Company within the meaning of the Act, or applicable
state securities laws (collectively referred to as "indemnified persons"),
against any losses, claims, damages or liabilities, joint or several, to
which the Company, or such indemnified persons may become subject under the
1933 Act, the 1934 Act, applicable state securities law, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon a failure to furnish a copy
of the Disclosure Documents to any offeree or purchaser of Units as
required by the Act or applicable state securities law, or the offer or
sale of the Units other than upon the terms and conditions set forth herein
or in the Disclosure Documents, or the sale of the Units to an investor who
was not suitable, provided that any oral or written statement made by an
investor may be relied upon by you in determining whether an investor is
suitable or arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Blue Sky Applications or
the Disclosure Documents or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Blue Sky Applications or the
Disclosure Documents, or such amendment or such supplement, in reliance
upon and in conformity with information furnished to the Company in writing
by you or on your behalf specifically for use in the preparation thereof;
and will reimburse any legal or other expense reasonably incurred by the
Company or any such indemnified person in connection with investigation or
defending any such loss, claim, damage, liability or action. This
indemnity agreement will be in addition to any liability which you may
otherwise have.
(c) Promptly after receipt by an indemnified party under this
paragraph 7 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 paragraph 7, notify the indemnifying party of
the commencement thereof and the failure to notify the indemnifying party
will relieve it from any liability under this paragraph 7; but omission to
notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under this paragraph 7.
Upon the receipt of such notice, the indemnifying party shall assume the
defense thereof, including the employment of counsel and payment of
expenses. The indemnifying party shall not be liable for any settlement of
any such action effected without its written consent.
(d) In the event you use the services of Participating Dealers as
provided in paragraph 3(b), each such Participating Dealer and its
officers, directors, employees, agents attorneys and controlling persons
shall be entitled to indemnification under this paragraph 7 to the same
extent as you and your indemnified persons.
(e) If recovery is not available under the foregoing indemnification
provisions of this Section for any reason other than as specified therein,
the parties entitled to indemnification by the terms thereof shall be
entitled to contribution to which the respective parties are entitled,
there shall be considered the relative benefits received by each party from
the offering of the Units (taking into account the relationship between the
net proceeds of the offering of the Units to the Company and the placement
fee received by the indemnified party), the parties' relative knowledge and
access to information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate under the
circumstances. The Company and you agree that it would not be equitable if
the amount of such contribution were determined by pro rata or per capita
allocation (even if you and the Participating Dealers were treated as one
entity for such purpose) or by any other method of allocation that does not
reflect the equitable considerations referred to in this paragraph 7(e).
Notwithstanding the equitable considerations referred to in this paragraph
7(e), neither you (or any Participating Dealer) nor any person controlling
you shall be obligated to make contribution hereunder that in the aggregate
exceeds the aggregate purchase price of the Units with respect to which you
(or any Participating Dealer) received placement fees under this Agreement,
less the aggregate amount of any damages that you (or any Participating
Dealer) and your controlling persons, if any, have otherwise been required
to pay in respect of the same claim or any substantially similar claim.
Each of the obligations of yourselves and the Participating Dealers to
contribute are several and not joint and bear the same proportion as the
amount of sales commission received by each of you bears to total sales
commissions received by all of you.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company and yourselves
herein or in certificates delivered pursuant hereto, and the indemnity
agreements of the Company and you contained in paragraph 7 hereof, shall
remain operative and in full force and effect regardless of any
investigation or statement as to the results thereof made by or on behalf
of yourselves or any controlling person, or by or on behalf of the Company
or any of its officers, directors, agents, employees, attorneys or any
controlling persons, as the case may be, and shall survive the termination
of this Agreement.
9. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective upon its execution by you.
(b) You shall have the right to terminate this Agreement at any time
prior to the termination of the offering contemplated herein if any
domestic or international event or act or occurrence has in your reasonable
judgment materially disrupted or will in the immediate future materially
disrupt the nation's securities markets, or if trading on the New York
Stock Exchange shall have been suspended or if the United States shall have
become involved in a war or like military activity, or if a banking
moratorium has been declared by the State of Arizona or the State of New
York or any states contiguous thereto or by any federal authority or
official, or if the Company shall have sustained material loss by fire,
flood, accident, hurricane, earthquake or other calamity that, regardless
of whether said loss shall have been insured, will, in your reasonable
judgment, make it inadvisable to proceed with the offering or delivery of
the Units.
If you elect to terminate this Agreement as provided in this
paragraph, the Company shall be notified promptly by you by telephone or
telegram, confirmed by letter.
(c) This agreement shall automatically terminate if you fail to
continue to be registered and licensed as a broker-dealer with the National
Association of Securities Dealers, Inc. or to be qualified or registered as
a broker-dealer in any state in which you have offered the Company's
securities.
(d) This Agreement shall terminate upon thirty (30) days' prior
written notice to the other party.
10. NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been
duly given on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt, to the party to whom
notice is to be given, or on the fifth day after mailing if mailed to the
party to whom notice is to be given, by registered or certified mail,
return receipt requested, postage prepaid, and properly addressed as
follows: if to Paradise Valley Securities, Inc., at the address of its
principal office as shown in this Agreement; and if to the Company, at its
principal office. Any party may change its address for purposes of this
paragraph by giving the other party written notice of the new address in
the manner set forth above.
11. PARTIES. This Agreement shall inure to the benefit of and be binding
upon you, the Company and your and its respective successors and assigns.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person or corporation, other than the parties hereto
and their respective successors and assigns and the controlling persons,
officers, directors, employees, agents and attorneys of the parties, any
legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of the parties hereto and their respective
successors and assigns and said controlling persons, officers, directors,
employees, agents and attorneys, and for the benefit of no other person or
corporation. No purchaser of any of the Units shall be construed as a
successor or assign by reason of such purchase.
12. INFORMATION FURNISHED. The Company hereby confirms that the
statements with respect to the offering of the Units under the caption
"Terms of the Offering" in the Memorandum and on the cover page thereof are
the only portions of the Disclosure Documents furnished to the Company by
you for use in the Disclosure Documents, and you hereby confirm that such
statements are true and do not omit to state a material fact required to be
stated therein or necessary to make the statements made not misleading.
13. ATTORNEYS' FEES. If any action is necessary to enforce or interpret
the terms of this agreement, the prevailing party shall be entitled to
reasonable attorneys' fees and costs, in addition to any other relief to
which he is or may be entitled. This provision shall be construed as
applicable to the entire agreement.
14. TIME OF ESSENCE. Time shall be of the essence of this Agreement.
15. CONSTRUCTION. This Agreement shall be construed in accordance with
the internal laws of the State of Arizona.
16. EXECUTION. This Agreement may be executed in any number of
counterparts each of which taken together shall constitute one and the same
instrument.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
between the parties with respect to the subject matter hereof. This
Agreement can only be modified, including any extension of the Offering
Period, by a written agreement duly signed by persons authorized to sign
agreements on behalf of the respective parties.
A:\UNITPLAC.AGR
<PAGE>
If the foregoing is in accordance with your understanding, please sign
below and return to us a counterpart hereof, and upon your acceptance
hereof, this letter and the acceptance hereof shall constitute a binding
agreement between you and the Company.
Very truly yours,
THERMOGENESIS CORP.
by /S/ PHILIP H. COELHO
Philip H. Coelho, President
Accepted and agreed to as of the
date first above written by:
PARADISE VALLEY SECURITIES, INC.
by /S/ MICHAEL E. JACOBSON
Michael E. Jacobson,
Senior Vice-President
<PAGE>
LIST OF DESIGNATED STATES AND/OR JURISDICTIONS
ARIZONA
CALIFORNIA
COLORADO
FLORIDA
GEORGIA
ILLINOIS
MINNESOTA
NEVADA
NEW JERSEY
NEW YORK
SCHEDULE 2(B)
LOCK UP AGREEMENT
_________________, 1995
Paradise Valley Securities, Inc.
11811 North Tatum Blvd., Suite 4040
Phoenix, Arizona 85028
Re: THERMOGENESIS CORP.
Gentlemen:
I am a beneficial owner of securities of THERMOGENESIS CORP., a
Delaware corporation (the "Company"). I understand that you propose to
make a private placement of securities of the Company. I acknowledge that
such action by you will be of material benefit to the Company and the
undersigned as a beneficial owner of the Company's securities.
In consideration of the foregoing, and in order to induce you to act
as set forth above, I confirm my agreement that I will not, without your
prior approval, offer for sale, sell, pledge, hypothecate or otherwise
dispose of, directly or indirectly, any of the shares of the Company's
common stock which I may own legally or beneficially ("Shares"), in any
manner whatsoever whether pursuant to Rule 144 of the Regulations or
otherwise, for a period of one hundred eighty (180) days from the
effectiveness of the registration statement filed pursuant to Section 7.2
of the Unit Purchase Agreements entered into between the Company and the
respective purchasers of Units of the aforementioned private placement.
I further understand that the Company will execute an placement
agreement with you concerning the proposed private placement and that such
agreement will provide that the Company will take such steps as may be
necessary to enforce the foregoing provisions and restrict the sale or
transfer of the Shares as provided herein including, but not limited to,
notification to the Company's transfer agent regarding any such
restrictions; and I hereby agree to and authorize any such actions and
acknowledge that the Company and you are relying upon this agreement in
taking any such actions.
Very truly yours,
___________________________________
(Shareholder)
EXHIBIT 5(D)
A:\UNITPLAC.AGR
