[Form of Underwriting Agreement] EXHIBIT 1.0
2,000,000 UNITS
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.
COMMON STOCK AND
WARRANTS TO PURCHASE COMMON STOCK
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UNDERWRITING AGREEMENT
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Philadelphia, Pennsylvania
________ __, 2003
Ladies and Gentlemen:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., a Delaware corporation ("MEI"), proposes to sell
an aggregate of 2,000,000 units ("Units"), consisting of one share of its common
stock, par value $0.00000002 per share ("Common Stock"), and one warrant
("Warrant") to purchase an additional share of Common Stock, subject to the
terms and conditions stated herein. Of the 2,000,000 Units being offered, (i) up
to 1,500,000 (the "Directed Subscription Units"), are being sold by MEI as part
of a directed subscription program ("Directed Subscription Program"), to the
U.S. holders ("Eligible Holders") of Common Stock or of the Ordinary Shares or
American Depositary Receipts of Novogen Limited, an Australian registered
corporation, and the parent of MEI ("Novogen"), and (ii) 500,000 Units ("Firm
Units") are being sold by MEI to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC ("Underwriter"), as
part of a contemporaneous firm commitment underwritten public offering
("Underwritten Offering"). The Directed Subscription Units shall be offered and
sold to the Eligible Holders and the Firm Units shall be offered and sold to the
public at an offering price of $______ per Unit ("Offering Price").
In addition, in the event that the Eligible Holders do not subscribe for
and purchase all of the Directed Subscription Units as part of the Directed
Subscription Program on or before the Closing Date (as defined below)(all such
Units not subscribed for and purchased by the Eligible Holders in the Directed
Subscription Program being referred to herein as "Unsubscribed Units"), MEI
shall issue and sell to the Underwriter, and the Underwriter shall purchase from
MEI the Unsubscribed Units to offer and sell as part of the Underwritten
Offering. The Unsubscribed Units shall be offered and sold to the public at the
Offering Price.
MEI also proposes to grant to the Underwriter an option to purchase for
its own account additional Units representing up to 15% of the Firm Units and
Unsubscribed Units combined, which may be up to an additional 300,000 Units
("Optional Units"), from MEI to cover over-allotments in the sale of the Firm
Units and any Unsubscribed Units, subject to the terms and conditions stated
herein. If any Optional Units are so purchased, the Optional Units shall be
offered to the public by the Underwriter at the Offering Price and in accordance
with the terms and conditions set forth herein. The Directed Subscription Units,
Firm Units and the Optional Units are referred to collectively herein as the
"Units." The shares of Common Stock comprising part of the Units and those
underlying the Warrants are referred to collectively herein as the "Shares."
Any preliminary prospectus included in such registration statement or
filed with the Securities and Exchange Commission (the "SEC"), pursuant to Rule
424(a) Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Regulations") of the SEC promulgated thereunder in effect at
all applicable times, is hereinafter called a "Preliminary Prospectus." The
various parts of such registration statement, including all exhibits thereto and
the information contained in the form of a final prospectus filed with the SEC
pursuant to Rule 424(b) of the Regulations in accordance with Section 7(a) of
this Agreement and deemed by virtue of Rule 424 of the Regulations to be part of
the registration statement at the time it was declared effective, each as
amended at the time the registration statement became effective, including the
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A of the Regulations, are hereinafter
collectively called the "Registration Statement." The final prospectus in the
form included in the Registration Statement or first filed with the SEC pursuant
to Rule 424(b) of the Regulations and any amendments or supplements thereto,
including the information (if any) deemed to be part of that prospectus at the
time of effectiveness pursuant to Rule 430A of the Regulations, is hereinafter
called the "Prospectus." If MEI has filed an abbreviated registration statement
to register additional Units pursuant to Rule 462(b) under the Act (the "Rule
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462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement.
MEI and the Underwriter, intending to be legally bound, hereby
confirm their agreement as follows:
1. REPRESENTATIONS AND WARRANTIES OF MEI. MEI represents and
warrants to, and agrees with, the Underwriter that:
(a) The Registration Statement has become effective under the Act,
and the SEC has not issued any stop order suspending the effectiveness of
the Registration Statement or preventing or suspending the use of the
Preliminary Prospectus, nor has the SEC instituted or, to the knowledge of
MEI, threatened to institute proceedings with respect to such an order. No
stop order suspending the sale of the Units in any jurisdiction designated
by the Underwriter as provided for in Section 5(f) hereof has been issued,
and no proceedings for that purpose have been instituted or, to the
knowledge of MEI, threatened. Each Preliminary Prospectus conformed to all
the requirements of the Act and the Regulations as of its date in all
material respects and did not as of its date contain any untrue statement
of material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Registration
Statement, on the date on which it was declared effective by the SEC (the
"Effective Date") and when any post-effective amendment thereof shall
become effective, and the Prospectus, at the time it is filed with the SEC
including, if applicable, pursuant to Rule 424(b), and on the Closing Date
(as defined in Section 4 hereof) and any Option Closing Date (as defined
in Section 4(b) hereof), conformed and will conform in all material
respects to all the requirements of the Act and the Regulations, and did
not and will not, on any of such dates, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein in the case of the
Prospectus, in the light of the circumstances under which they were made,
not misleading. The two preceding sentences do not apply to statements in
or omissions from the
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Registration Statement or the Prospectus based upon written information
furnished to MEI by or on behalf of the Underwriter expressly for use
therein or the omission of any information regarding the Underwriter.
(b) MEI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has the
corporate power and authority to own or lease and operate its properties
and to conduct its current business as described in the Prospectus, and to
execute, deliver and perform this Agreement. MEI is duly qualified to do
business, and is in good standing, in all jurisdictions in which such
qualification is required, except where the failure to so qualify would
not have a material adverse effect on the financial condition, results of
operations, shareholders' equity or business (collectively, the "Business
Conditions") of MEI.
(c) There are no legal or governmental proceedings pending or, to
the knowledge of MEI, threatened to which MEI is a party or to which any
of the properties of MEI is subject which, if determined adversely to MEI
would individually or in the aggregate have a material adverse effect on
the Business Conditions of MEI.
(d) This Agreement has been duly authorized, executed and delivered
by MEI and constitutes its legal, valid and binding obligation,
enforceable against MEI in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and subject to
applicability of general principles of equity and except, as to this
Agreement, as rights to indemnity and contribution may be limited by
federal and state securities laws or principles of public policy.
(e) The execution, delivery and performance of this Agreement and
the transactions contemplated herein, do not and will not, with or without
the giving of notice or the lapse of time, or both, (i) conflict with any
term or provision of MEI's Restated Certificate of Incorporation; (ii)
result in a breach of, constitute a default under, result in the
termination or modification of, result in the creation or imposition of
any lien, security interest, charge or encumbrance upon any of the
properties of MEI or require any payment by MEI or impose any liability on
MEI pursuant to, any contract, indenture, mortgage, deed of trust,
commitment or other agreement or instrument to which MEI is a
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party or by which any of its properties are bound or affected other than
this Agreement, except where such breach, default, modification,
termination, lien, security interest, charge, encumbrance, payment or
liability could not reasonably be expected to have a material adverse
effect on the Business Conditions of MEI, taken as a whole; (iii) assuming
compliance with the rules of the National Association of Securities
Dealers, Inc. (the "NASD") applicable to the offer and sale of the Units,
violate any law, rule, regulation, judgment, order or decree of any
government or governmental agency, instrumentality or court, domestic or
foreign, having jurisdiction over MEI or any of its properties or
businesses, except where such violation could not reasonably be expected
to have a material adverse effect on the Business Conditions of MEI, taken
as a whole; or (iv) result in a breach, termination or lapse of MEI's
corporate power and authority to own or lease and operate its properties
and conduct its business in any material respect, except as disclosed in
the Prospectus.
(f) At the date or dates indicated in the Prospectus, MEI had the
duly authorized and outstanding capitalization set forth in the Prospectus
under the caption "Capitalization" and will have, as of the issuance of
the Units on the Closing Date, the as adjusted capitalization set forth
therein as of the date indicated in the Prospectus assuming the Optional
Units are not issued on the Closing Date. On the Effective Date, the
Closing Date and any Option Closing Date, there will be no options or
warrants or other outstanding rights to purchase, agreements or
obligations to issue or agreements or other rights to convert or exchange
any obligation or security into, capital stock of MEI, except as described
in the Prospectus, or securities convertible into or exchangeable for
capital stock of MEI, except as described in the Prospectus. The
information in the Prospectus insofar as it relates to all outstanding
options and other rights to acquire securities of MEI as of the dates
referred to in the Prospectus is true and correct in all material
respects.
(g) The currently outstanding shares of Common Stock have been duly
authorized and are validly issued, fully paid and non-assessable, and none
of such outstanding shares has been issued in violation of any preemptive
rights of any security holder of MEI. All previous offers and sales of the
outstanding shares of Common Stock made by or on behalf of MEI, whether
described in the Registration Statement or
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otherwise, were made in conformity with applicable federal, state and
foreign securities laws. The authorized capital stock of MEI, including,
without limitation, the outstanding shares of Common Stock, the Units
being issued, and any outstanding options to purchase Common Stock conform
in all material respects with the descriptions thereof in the Prospectus,
and such descriptions conform in all material respects with the
instruments defining the same.
(h) When the Units have been duly delivered against payment therefor
as contemplated by this Agreement, the Common Stock delivered as part of
the Units will be validly issued, fully paid and non-assessable, and the
holders thereof will not be subject to personal liability solely by reason
of being such holders. The certificates representing such shares of Common
Stock are in proper legal form under, and on or before the first time of
delivery conform in all material respects to the requirements of, the laws
of the State of Delaware. Neither the filing of the Registration Statement
nor the offering or sale of Units as contemplated by this Agreement gives
any security holder of MEI any rights for or relating to the registration
of any shares of Common Stock or any other capital stock of MEI or any
rights to convert or have redeemed or otherwise receive anything of value
with respect to any security of MEI.
(i) No consent, approval, authorization, order, registration,
license or permit of, or filing or registration with, any court,
government, governmental agency, instrumentality or other regulatory body
or official is required for the valid and legal execution, delivery and
performance by MEI of this Agreement and the consummation of the
transactions contemplated hereby or described in the Prospectus, except
(i) such as may be required for the registration of the Units under the
Act, the Exchange Act, and for compliance with the applicable state
securities laws or the bylaws, rules and other pronouncements of the NASD
or the Alternative Investment Market of the London Stock Exchange, and
(ii) as disclosed in the Prospectus.
(j) As of the Effective Date, the class of Common Stock (including
the Shares) is registered pursuant to Section 12(g) of the Exchange Act
and has been approved for inclusion and quotation on the Nasdaq SmallCap
Market of The Nasdaq Stock Market, Inc. ("Nasdaq"). Neither MEI nor, to
MEI's knowledge, any other person has taken any action designed to cause,
or likely to result in, the termination of the registration of the Common
Stock as a class under the
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Exchange Act. MEI has not received any notification that the SEC nor
Nasdaq is contemplating terminating such registration or inclusion.
(k) No relationship, direct or indirect, exists between or among MEI
on the one hand, and the directors, officers, stockholders, customers or
suppliers of MEI on the other hand, which is required to be described in
the Registration Statement or Prospectus which is not so described.
(l) Each contract or other instrument (however characterized or
described) to which MEI is a party or by which any of its properties or
businesses is bound or affected and which is material to the conduct of
MEI's business has been (i) duly and validly executed by MEI and, (ii) to
the knowledge of MEI, by the other parties thereto. Each such contract or
other instrument is in full force and effect and is enforceable in all
material respects against the parties thereto in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights
generally and subject to applicability of general principles of equity,
and MEI is not, and to MEI's knowledge, no other party thereto is, in
default thereunder, except where such default would not have a material
adverse effect on the Business Conditions of MEI, and no event has
occurred that, with the lapse of time or the giving of notice, or both,
would constitute a default under any such contract or other instrument.
All necessary consents under such contracts or other instruments to the
disclosure in the Prospectus with respect thereto have been obtained.
(m) The consolidated financial statements of MEI (including the
notes thereto) included in the Prospectus and the Registration Statement
present fairly, in all material respects, the financial position of MEI as
of the respective dates thereof, and the results of operations and cash
flows of MEI for the periods indicated therein, all in conformity with
generally accepted accounting principles, except as disclosed therein. The
supporting notes included in the Registration Statement fairly state in
all material respects the information required to be stated therein in
relation to the financial statements taken as a whole. The financial
information included in the Prospectus under the captions "Prospectus
Summary - Summary Historical Consolidated Financial Data," "Selected
Historical Consolidated Financial Data," "Use of Proceeds" and
"Capitalization" presents fairly
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the information shown therein and has been compiled on a basis consistent
with that of the financial statements included in the Registration
Statement.
(n) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, there has not been (i) any material adverse change (including,
whether or not insured against, any material loss or damage to any
material assets), or to the knowledge of MEI, a development involving a
prospective material adverse change, in the Business Conditions of MEI;
(ii) any material adverse change, loss, reduction, termination or
non-renewal of any material contract to which MEI is a party; (iii) any
transaction entered into by MEI not in the ordinary course of its business
that is material to MEI; (iv) any dividend or distribution of any kind
declared, paid or made by MEI on its capital stock, except for and to the
extent described in the Prospectus; (v) any liabilities or obligations,
direct or indirect, incurred by MEI that are material to MEI other than
the issuance of shares pursuant to the exercise of options or warrants
outstanding as of the date hereof or the grant of options under MEI's
stock option plans; (vi) any change in the capitalization of MEI; or (vii)
any change in the indebtedness of MEI that is material to MEI. MEI has no
contingent liabilities or obligations that are material to MEI that are
required to be disclosed that are not so disclosed in the Registration
Statement and Prospectus.
(o) MEI has not distributed, and will not distribute, any offering
material in connection with the offering and sale of the Units other than
the Registration Statement, a Preliminary Prospectus, the Prospectus and
other material, if any, permitted by the Act and the Regulations, subject
to the prior consent of the Underwriter. Neither MEI nor any of its
officers, directors or affiliates has (i) taken, nor shall MEI or such
persons take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Common Stock, or (ii) since the filing of
the Registration Statement (A) sold, bid for, purchased or paid anyone any
compensation for soliciting purchases of, the Common Stock or (B) paid or
agreed to pay to any person any compensation for soliciting another to
purchase any other securities of MEI.
(p) MEI has filed with the appropriate federal, state and local
governmental agencies, and all required
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foreign countries and political subdivisions thereof, all material tax
returns that are required to be filed or have duly obtained extensions of
time for the filing thereof and have paid all taxes shown on such returns
or otherwise due and all material assessments received by them to the
extent that the same have become due, other than those being contested in
good faith and for which adequate reserves have been provided. MEI has not
executed or filed with any taxing authority, foreign or domestic, any
agreement extending the period for assessment or collection of any income
or other tax and none of them is a party to any pending action or
proceeding by any foreign or domestic governmental agency for the
assessment or collection of taxes, and no claims for assessment or
collection of taxes have been asserted against MEI that might materially
adversely affect the Business Conditions of MEI.
(q) To the knowledge of MEI, Ernst & Young LLP ("E&Y"), which has
given its report on certain financial statements included as part of the
Registration Statement and Prospectus, is a firm of independent certified
public accountants as required by the Act and the Regulations with respect
to MEI.
(r) MEI is not in violation of, or in default under, any of the
terms or provisions of (i) its Restated Certificate of Incorporation and
(ii) except where any such default would not reasonably be expected to
have a material adverse effect on the Business Conditions of MEI, (A) any
indenture, mortgage, deed of trust, contract, commitment or other
agreement or instrument to which it is a party or by which it or any of
its assets or properties is bound or affected, (B) any law, rule,
regulation, judgment, order or decree of any government or governmental
agency, instrumentality or court, domestic or foreign, having jurisdiction
over it or any of its properties or business, or (C) any license, permit,
certification, registration, approval, consent or franchise.
(s) Except as expressly disclosed in the Registration Statement and
Prospectus, there are no claims, actions, suits, protests, proceedings,
arbitrations, investigations or inquiries pending before, or, to the
knowledge of MEI, threatened or contemplated by, any governmental agency,
instrumentality, court or tribunal, domestic or foreign, or before any
private arbitration tribunal to which MEI is or may be made a party that
could reasonably be expected to affect the validity of any of the
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outstanding shares of Common Stock, or that, if determined adversely to
MEI would, in any case or in the aggregate, result in any material adverse
change in the Business Conditions of MEI. There are no outstanding orders,
judgments or decrees of any court, governmental agency, instrumentality or
other tribunal enjoining MEI from, or requiring MEI to take or refrain
from taking, any action, or to which MEI or its properties, assets or
businesses are bound or subject, except for such orders, judgments or
decrees which would not have a material adverse effect on the Business
Conditions of MEI.
(t) MEI owns, or possesses adequate rights to use, all patents,
patent applications, trademarks, trademark registrations, applications for
trademark registration, trade names, service marks, licenses, inventions,
copyrights, know-how (including any unpatented and/or unpatentable
proprietary or confidential technology, information, systems, design
methodologies and devices or procedures developed or derived from or for
MEI's, business), trade secrets, confidential information, processes and
formulations and other proprietary information necessary for, used in, or
proposed to be used in, the conduct of the business of MEI as described in
the Prospectus and the Registration Statement (collectively, the
"Intellectual Property"), except where the failure to own or possess or
otherwise be able to acquire such Intellectual Property would not have a
material adverse effect on the Business Conditions of MEI. To the
knowledge of MEI, it has not infringed, is not infringing nor have
received any notice of conflict with, the asserted rights of others with
respect to the Intellectual Property that, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
could materially adversely affect the Business Conditions of MEI, and MEI
knows of no reasonable basis therefor. To the actual knowledge of MEI, no
other parties have infringed upon or are in conflict with any Intellectual
Property. Except as described in the Prospectus and Registration
Statement, MEI is not a party to, or bound by, any agreement pursuant to
which royalties, honorariums or fees are payable by MEI to any person by
reason of the ownership or use of any Intellectual Property.
(u) The executive offices and facilities of MEI (the "Premises"),
and all operations presently or formerly conducted thereon by MEI, are now
and, since MEI began to use such Premises, always have been and, to the
knowledge of MEI prior to when MEI began to use such Premises, always had
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been, in compliance in all material respects with all statutes,
ordinances, regulations, rules, standards and requirements of common law
applicable to the areas in which MEI provides service concerning or
relating to industrial hygiene and the protection of health and the
environment (collectively, the "Environmental Laws"), except to the extent
that any failure in such compliance would not materially adversely affect
the Business Conditions of MEI. To the knowledge of MEI, there are no
conditions on, about, beneath or arising from the Premises, in close
proximity to the Premises or at any other location that might give rise to
liability or the imposition of a statutory lien under any of the
Environmental Laws and that would materially adversely affect the Business
Conditions of MEI, except as described in the Prospectus and Registration
Statement. Except as expressly disclosed in the Prospectus and
Registration Statement, or which will not materially adversely affect the
Business Conditions of MEI (i) MEI has not received written notice or has
knowledge of any claim, demand, investigation, regulatory action, suit or
other action instituted or threatened against MEI or any portion of the
Premises or any parcel in close proximity to the Premises relating to any
of the Environmental Laws and (ii) MEI has not received any written notice
of material violation, citation, complaint, order, directive, request for
information or response thereto, notice letter, demand letter or
compliance schedule to or from any governmental or regulatory agency
arising out of or in connection with "hazardous substances" (as defined by
applicable Environmental Laws) on, about, beneath, arising from or
generated at the Premises, near the Premises or at any other location.
(v) MEI maintains a system of internal accounting controls
sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary in order to
permit preparation of financial statements in accordance with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
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(w) Other than as disclosed in the Prospectus, MEI has not
established, maintained, contributed to, are required to contribute to,
are a party to, or are bound by contractual commitments with respect to,
pension, retirement, or profit-sharing plans, deferred compensation,
bonus, or other incentive plans, or medical, vision, dental, or other
health and welfare benefit plans, or life insurance or disability plans,
or any other employee benefit plans, programs, arrangements, agreements,
or understandings (the "Plans").
(x) MEI has not incurred any liability for any finder's fees or
similar payments in connection with the transactions contemplated herein
other than as disclosed in the Prospectus and Registration Statement.
(y) MEI is familiar with the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations thereunder, and
has in the past conducted, and MEI intends to conduct, its affairs in such
a manner as to ensure that it will not be an "investment company" or an
entity "controlled" by an investment company within the meaning of the
1940 Act and the rules and regulations thereunder.
(z) MEI has received all permits, licenses, franchises,
authorizations, registrations, qualifications and approvals (collectively,
"Permits") of governmental or regulatory authorities as may be required of
it to own its properties and conduct its businesses in the manner
described in the Prospectus and Registration Statement, subject to such
qualifications as may be set forth therein, except to the extent that
failure to receive such Permits would not have a material adverse effect
on the Business Conditions of MEI; and MEI has fulfilled and performed all
of its material obligations with respect to such Permits, and no event has
occurred which allows or, after notice or lapse of time or both, would
allow revocation or termination thereof or result in any other material
impairment of the rights of the holder of any such Permit, subject in each
case to such qualifications as may be set forth in the Prospectus and
Registration Statement; and, except as described therein, such Permits
contain no restrictions that materially affect the ability of MEI to
conduct its business.
(aa) No statement, representation, warranty or covenant made by MEI
in this Agreement or in any certificate or document required by this
Agreement to be delivered to the Underwriter is, or as of the Closing Date
or any Option
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Closing Date will be, inaccurate, untrue or incorrect in any material
respect.
(bb) Neither MEI nor to the knowledge of MEI any officer, director,
employee, partner, agent or other person acting on behalf of MEI has,
directly or indirectly, given or agreed to give any money, property or
similar benefit or consideration to any customer or supplier (including
any employee or agent of any customer or supplier) or official or employee
of any agency or instrumentality of any government (foreign or domestic)
or political party or candidate for office (foreign or domestic) or any
other person who was, is or in the future may be in a position to affect
the Business Conditions of MEI, or any actual or proposed business
transaction of MEI that (i) could subject MEI to any liability (including,
but not limited to, the payment of monetary damages) or penalty in any
civil, criminal or governmental action or proceeding that would have a
material adverse effect on the Business Conditions of MEI, or (ii) with
respect to MEI or any officer or director thereof, violates any law, rule
or regulation to which MEI is subject in any material respect.
Any certificate signed by any officer of MEI in such capacity and
delivered to the Underwriter or to counsel for the Underwriter pursuant to this
Agreement shall be deemed a representation and warranty by MEI to the
Underwriter as to the matters covered thereby.
2. PURCHASE AND SALE OF FIRM UNITS AND UNSUBSCRIBED UNITS. On the
basis of the representations, warranties, covenants and agreements contained
herein, but subject to the terms and conditions set forth herein, MEI shall sell
the Firm Units and Unsubscribed Units, if any, to the Underwriter at the
Offering Price less the Underwriting Discounts and Commissions shown on the
cover page of the Prospectus, and the Underwriter shall purchase from MEI on a
firm commitment basis, at the Offering Price less the Underwriting Discounts and
Commissions shown on the cover page of the Prospectus, the Firm Units and
Unsubscribed Units. The Underwriter shall offer the Firm Units and Unsubscribed
Units to the public as set forth in the Prospectus.
3. PAYMENT AND DELIVERY.
(a) The certificates representing the Common Stock and Warrants
comprising the Firm Units and Unsubscribed Units, if any, sold in the
Underwritten Offering shall be issued in such names as the Underwriter may
request in
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writing upon at least 24 hours' prior notice to MEI, and shall be
delivered by or on behalf of MEI to the Underwriter against payment by the
Underwriter on its behalf of the purchase price therefor by wire transfer
of immediately available funds to such accounts as MEI shall designate in
writing (with all costs and expenses incurred by the Underwriter in
connection with such settlement in immediately available funds, including,
but not limited to, interest or cost of funds and expenses, to be borne by
MEI). The closing of the sale and purchase of the Firm Units and
Unsubscribed Units, if any ("Underwritten Offering Closing"), shall be
held at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, 3000 Two ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Such payment
and delivery will be made at 10:00 a.m., Philadelphia, Pennsylvania time,
on the third business day after the date of this Agreement, or at such
other time on the same or such other date, not later than seven business
days thereafter as shall be designated in writing by the Underwriter. Such
time and date are referred to herein as the "Closing Date." MEI shall make
such certificates available for examination by the Underwriter and counsel
for the Underwriter not less than one full business day prior to the
Closing Date.
(b) The certificates representing the Common Stock and Warrants
comprising the Directed Subscription Units shall be issued in such names
as the Underwriter, in its capacity as dealer manager for the Directed
Subscription Program, may request in writing upon at least 24 hours' prior
notice to MEI, and shall be delivered by or on behalf of MEI to the
Underwriter against payment to MEI by the Underwriter, in its capacity as
dealer manager, of the funds tendered or to be tendered in connection with
subscriptions to purchase Directed Subscription Units ("Subscription
Funds"), less a selling fee payable to the Underwriter, in its capacity as
dealer manager, equal to three percent (3%) of the Subscription Funds, by
wire transfer of immediately available funds to such accounts as MEI shall
designate in writing (with all costs and expenses incurred by the
Underwriter in connection with such settlement in immediately available
funds, including, but not limited to, interest or cost of funds and
expenses, to be borne by MEI). The closing of the sale and purchase of the
Directed Subscription Units shall occur simultaneously with the
Underwritten Offering Closing on the Closing Date. MEI shall make such
certificates available for examination by the Underwriter and counsel for
-14-
the Underwriter not less than one full business day prior to the Closing
Date.
4. OPTION TO PURCHASE OPTIONAL UNITS.
(a) For the purposes of covering any over-allotments in connection
with the distribution and sale of the Firm Units and Unsubscribed Units,
if any, as contemplated by the Prospectus, subject to the terms and
conditions herein set forth, the Underwriter is hereby granted an option
by MEI to purchase all or any part of the Optional Units (the
"Over-Allotment Option"). The purchase price to be paid for the Optional
Units shall be the Offering Price less the Underwriting Discounts and
Commissions shown on the cover page of the Prospectus. The Over-Allotment
Option granted hereby may be exercised by the Underwriter as to all or any
part of the Optional Units at any time and from time to time within 30
days after the date of the Prospectus. The Underwriter shall not be under
any obligation to purchase any Optional Units prior to an exercise of the
Over-Allotment Option.
(b) The Over-Allotment Option granted hereby may be exercised by the
Underwriter by giving notice to MEI by a letter sent by telex, telegraph,
telegram or facsimile (such notice to be effective when received),
addressed as provided in Section 13 hereof, setting forth the number of
Optional Units to be purchased, the date and time for delivery of and
payment for the Optional Units and stating that the Optional Units
referred to therein are to be used for the purpose of covering
over-allotments in connection with the distribution and sale of the Firm
Units and Unsubscribed Units, if any. If such notice is given at least two
full business days prior to the Closing Date, the date set forth therein
for such delivery and payment shall be not earlier than the Closing Date.
If such notice is given after two full business days prior to the Closing
Date, the date set forth therein for such delivery and payment shall be a
date selected by the Underwriter not later than five full business days
after the exercise of the Over-allotment Option. The date and time set
forth in such a notice is referred to herein as an "Option Closing Date,"
and a closing held pursuant to such a notice is referred to herein as an
"Option Closing." Upon each exercise of the Over-Allotment Option, and on
the basis of the representations, warranties, covenants and agreements
herein contained, and subject to the terms and conditions herein set
forth, the Underwriter shall become obligated to
-15-
purchase from MEI the number of Optional Units specified in each notice of
exercise of the Over-Allotment option.
(c) The certificates representing the Common Stock and Warrants
comprising the Optional Units shall be issued in such names as the
Underwriter may request in writing upon at least 48 hours' prior notice to
MEI, and shall be delivered by or on behalf of MEI to the Underwriter
against payment by the Underwriter on its behalf of the purchase price
therefor by wire transfer of immediately available funds to such accounts
as MEI shall designate in writing (with all costs and expenses incurred by
the Underwriter in connection with such settlement in immediately
available funds, including, but not limited to, interest or cost of funds
and expenses, to be borne by MEI). The closing of the sale and purchase of
the Optional Units shall be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
3000 Two ▇▇▇▇▇ Square, Philadelphia, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Such payment and delivery will be made
at 10:00 a.m., Philadelphia, Pennsylvania time, on the Option Closing
Date. MEI shall make such certificates available for examination by the
Underwriter and counsel for the Underwriter not less than one full
business day prior to the Option Closing Date.
5. CERTAIN COVENANTS AND AGREEMENTS OF MEI. MEI covenants and agrees
with the Underwriter as follows:
(a) If Rule 430A of the Regulations is employed, MEI will timely
file the Prospectus pursuant to and in compliance with Rule 424(b) of the
Regulations and will advise the Underwriter of the time and manner of such
filing.
(b) MEI will not file with the SEC, the Prospectus, any amendment or
supplement to the Prospectus or any amendment to the Registration
Statement, unless the Underwriter has been advised or to which the
Underwriter shall reasonably object after being so advised (unless MEI is
advised by counsel that such amendment or supplement is required by law),
and will use its best efforts to cause any such amendment to the
Registration Statement to be declared effective as promptly as possible.
Upon reasonable request of the Underwriter or counsel for the Underwriter,
MEI will promptly prepare and file with the SEC, in accordance with the
Regulations, any amendments to the Registration Statement or amendments or
supplements to the Prospectus that may be necessary or advisable in
connection with the distribution of the Units by the Underwriter and will
use its best efforts to cause any such amendment to the Registration
Statement to be
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declared effective as promptly as possible. If required, MEI will file any
amendment or supplement to the Prospectus with the SEC in the manner and
within the time period required by Rule 424(b) under the Act. MEI will
advise the Underwriter, promptly after receiving notice thereof, of the
time when the Registration Statement or any amendment thereof has been
filed or declared effective or the Prospectus or any amendment or
supplement thereto has been filed and will provide evidence to the
Underwriter of each filing or effectiveness.
(c) MEI will advise the Underwriter immediately, and confirm such
advice in writing, (i) when any post-effective amendment to the
Registration Statement is filed with the SEC under Rule 462(c) under the
Act or otherwise, (ii) any Rule 462(b) Registration Statement is filed,
(iii) of the receipt of any comments from the SEC concerning the
Registration Statement, (iv) when any post-effective amendment to the
Registration Statement becomes effective, or when any supplement to the
Prospectus or any amended Prospectus has been filed, (v) of any request of
the SEC for amendment or supplementation of the Registration Statement or
Prospectus or for additional information, (vi) during the period when the
Prospectus is required to be delivered under the Act and Regulations, of
the happening of any event as a result of which the Registration Statement
or the Prospectus would include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
(vii) during the period noted in clause (vi) above, of the need to amend
the Registration Statement or supplement the Prospectus to comply with the
Act, (viii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, and
(ix) of the suspension of the qualification of any of the Units for
offering or sale in any jurisdiction set forth on Schedule 5(f) in which
the Underwriter intends to make such offers or sales, or the initiation or
threatening of any proceedings for any of such purposes known to MEI. MEI
will use its best efforts to prevent the issuance of any such stop order
or of any order preventing or suspending such use, and if any such order
is issued, to obtain as soon as possible the lifting thereof.
(d) MEI will deliver to the Underwriter, without charge, from time
to time during the period when delivery of
-17-
the Prospectus is required under the Act, such number of copies of the
Prospectus (as supplemented or amended) as the Underwriter may reasonably
request. MEI hereby consents to the use of such copies of the Preliminary
Prospectus and the Prospectus for purposes permitted by the Act, the
Regulations and the securities laws of the states in which the Units are
offered by the Underwriter, both in connection with the offering and sale
of the Units and for such period of time thereafter as the Prospectus is
required by the Act to be delivered in connection with sales by the
Underwriter. MEI has furnished or will furnish to the Underwriter at least
one original signed copy of the Registration Statement as originally filed
and of all amendments and supplements thereto, whether filed before or
after the Effective Date, at least one copy of all exhibits filed
therewith and of all consents and certificates of experts, and will
deliver to the Underwriter such number of conformed copies of the
Registration Statement, including financial statements and exhibits, and
all amendments thereto, as the Underwriter may reasonably request.
(e) MEI will comply with the Act, the Regulations, the Exchange Act
and the Exchange Act Regulations so as to permit the continuance of sales
of and dealings in the Units for as long as may be necessary to complete
the distribution of the Units as contemplated hereby.
(f) MEI will furnish such information and pay such filing fees and
other expenses as may be required, including reasonable legal fees of
Underwriter's counsel not to exceed $_______, and otherwise cooperate in
the registration or qualification of the Units, or exemption therefrom,
for offering and sale by the Underwriter under the securities laws of such
state jurisdictions set forth on Schedule 5(f) in which the Underwriter
determines to offer the Units ("Blue Sky"), and will file such consents to
service of process or other documents necessary or appropriate in order to
effect such registration or qualification; provided, however, that no such
qualification shall be required in any jurisdiction where, solely as a
result thereof, MEI would be subject to taxation or qualification as a
foreign corporation doing business in such jurisdiction where it is not
now so qualified or to take any action which would subject it to service
of process in suits, other than those arising out of the offering or sale
of the Units, in any jurisdiction where it is not now so subject. MEI
will, from time to time, prepare and file such statements and reports as
are or may be required to continue such qualification in effect for so
long a period as is required under the Blue Sky laws of such jurisdictions
for such offering and sale. MEI will furnish such information and pay such
filing fees and other expenses as may be
-18-
required, and otherwise cooperate in the inclusion of the Common Stock,
including the Shares, for quotation on the Nasdaq SmallCap Market. MEI
will, from time to time, prepare and file such statements and reports as
are or may be required to continue such qualification in effect for a
period of three years from the Effective Date.
(g) Subject to Section 5(b) hereof, in case of any event (occurring
at any time within the period during which, in the opinion of counsel for
the Underwriter, a prospectus is required to be delivered under the Act or
the Regulations), as a result of which any Preliminary Prospectus or the
Prospectus, as then amended or supplemented, would contain, in the opinion
of counsel for the Underwriter, an untrue statement of a material fact, or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or, if it is necessary at any time to amend any Preliminary
Prospectus or the Prospectus to comply with the Act or the Regulations or
any applicable securities laws, MEI promptly will prepare and file with
the SEC, and any applicable state securities commission, an amendment,
supplement or document that will correct such statement or omission or
effect such compliance and will furnish to the Underwriter such number of
copies of such amendments, supplements or documents (in form and substance
satisfactory to the Underwriter and counsel for the Underwriter) as the
Underwriter may reasonably request. For purposes of this Section 5(g), MEI
will provide such information to the Underwriter, the Underwriter's
counsel and counsel to MEI as shall be necessary to enable such persons to
consult with MEI with respect to the need to amend or supplement the
Registration Statement, Preliminary Prospectus or Prospectus or file any
document, and shall furnish to the Underwriter and the Underwriter's
counsel such further information as each may from time to time reasonably
request.
(h) MEI will make generally available to its security holders not
later than 45 days after the end of the fiscal quarter first occurring
after the first anniversary of the Effective Date, an earnings statement
of MEI (which need not be audited unless required by the Act or the
Regulations) that shall comply with Section 11(a) of the Act and Rule 158
-19-
thereunder and cover a period of at least 12 consecutive months beginning
not later than the first day of MEI's fiscal quarter next following the
Effective Date (or, if later, the effective date of the Rule 462(b)
Registration Statement).
(i) For a period of three years from the Effective Date, MEI will
deliver to the Underwriter upon request from the Underwriter (i) a copy of
each report or document, including, without limitation, reports on Forms
8-K, 10-K and 10-Q (or such similar forms as may be designated by the
SEC), registration statements and any exhibits thereto, filed or furnished
to the SEC or any securities exchange or Nasdaq, promptly after the date
each such report or document is so filed or furnished; (ii) as soon as
practicable, copies of any reports or communications (financial or other)
of MEI mailed to its security holders; and (iii) every material press
release in respect of MEI or its affairs that is released by MEI.
(j) During the course of the distribution of the Units, MEI will not
and MEI shall cause its officers and directors not to, (i) take, directly
or indirectly, any action designed to, or that could reasonably be
expected to, cause or result in stabilization or manipulation of the price
of the Common Stock or (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of, the Units.
(k) For a period of 120 days after the Effective Date, MEI will not,
without the prior written consent of the Underwriter, issue or make a
disposition of any Common Stock or any securities convertible into or
exercisable or exchangeable for any Common Stock or enter into a
transaction which would have the same effect or enter into any swap, hedge
or other arrangement that transfers, in whole or in part, any of the
economic consequences of ownership of Common Stock, whether any such
aforementioned transaction is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise, or publicly disclose the
intention to issue or make any such disposition or enter into any such
transaction, swap, hedge or other arrangement, except ((i) the issuance of
Common Stock upon the exercise of currently outstanding options and
warrants as described in the Registration Statement and (ii) the grant of
options to purchase Common Stock under MEI's currently outstanding stock
option plans and the issuance of Common Stock upon the exercise thereof.
-20-
(l) For a period of three years from the Effective
Date, MEI will use all reasonable efforts to maintain the listing of
the Common Stock (including the Shares) on the Nasdaq SmallCap Market
or on a national securities exchange.
(m) MEI will use its best efforts to use the net
proceeds from the sale of the Units to be sold by it hereunder
substantially in accordance with the description set forth in the
Prospectus.
6. PAYMENT OF FEES AND EXPENSES.
(a) Whether or not the transactions
contemplated by this Agreement are consummated and regardless of the
reason this Agreement is terminated, MEI will pay or cause to be paid,
and bear or cause to be borne, all costs and expenses incident to the
performance of the obligations of MEI under this Agreement, including:
(i) the fees and expenses of the accountants and counsel for MEI
incurred in the preparation of the Registration Statement and any
post-effective amendments thereto (including financial statements and
exhibits), Preliminary Prospectuses and the Prospectus and any
amendments or supplements thereto; (ii) the fees and expenses of any
information agent or solicitor engaged in connection with the Directed
Subscription Program or otherwise, (iii) printing and mailing expenses
associated with the Registration Statement and any post-effective
amendments thereto, any Preliminary Prospectus, the Prospectus, this
Agreement and related documents; (iv) the fees, expenses and other
costs of, or incident to, securing any review or approvals by or from
the NASD, including the reasonable fees and expenses of Underwriter's
counsel in an amount not to exceed $ ________; (v) the filing fees of
the SEC; (vi) the cost of furnishing to the Underwriter copies of the
Registration Statement, Preliminary Prospectuses and Prospectuses as
herein provided; (vii) MEI's travel expenses in connection with
meetings with the brokerage community and institutional investors;
(viii) the costs and expenses associated with settlement in same day
funds (including, but not limited to, interest or cost of funds
expenses), if desired by MEI; (ix) any fees or costs payable to Nasdaq
as a result of the offering; (x) the cost of preparing, issuing and
delivery to the Underwriter of any certificates evidencing the Shares
and Warrants; (xi) the costs and charges of any transfer agent; (xii)
the reasonable costs of advertising the offering if requested by MEI;
(xiii) all taxes, if any, on the issuance, delivery and transfer of the
Units sold by MEI; and (xiv) all other costs and expenses reasonably
incident to the performance of MEI's obligations
-21-
hereunder that are not otherwise specifically provided for in this
Section 6(a); provided, however, that the Underwriter shall be
responsible for its out-of-pocket expenses, including those associated
with meetings with the brokerage community and institutional investors,
other than MEI's travel expenses, and the fees and expenses of its
counsel for other than with respect to Blue Sky and NASD matters.
(b) MEI shall pay as due any state registration,
qualification and filing fees and any accountable out-of-pocket
disbursements in connection with such Blue Sky registration,
qualification or filing in the states set forth on Schedule 5(f) in
which the Underwriter determines to offer or sell the Units.
(c) If the sale of the Units is completed, in order
to reimburse the Underwriter for costs and expenses associated with the
offering, MEI will pay a non-accountable expense allowance of $150,000
to the Underwriter on the Closing Date.
7. CONDITIONS OF UNDERWRITER' OBLIGATIONS. The obligation of
the Underwriter to purchase and pay for the Firm Units and Unsubscribed Units,
if any, that it has agreed to purchase hereunder on the Closing Date, and to
purchase and pay for any Optional Units as to which it exercises its right to
purchase under Section 4 on an Option Closing Date, is subject at the date
hereof, the Closing Date and any Option Closing Date to the continuing accuracy
and fulfillment of the representations and warranties of MEI, to the performance
by MEI of its covenants and obligations hereunder, and to the following
additional conditions:
(a) If required by the Regulations, the Prospectus
shall have been filed with the SEC pursuant to Rule 424(b) of the
Regulations within the applicable time period prescribed for such
filing by the Regulations. On or prior to the Closing Date or any
Option Closing Date, as the case may be, no stop order or other order
preventing or suspending the effectiveness of the Registration
Statement or the sale of any of the Units shall have been issued under
the Act or any state securities law, and no proceedings for that
purpose shall have been initiated or shall be pending or, to the
Underwriter's knowledge or the knowledge of MEI, shall be contemplated
by the SEC or by any authority in any jurisdiction designated by the
Underwriter pursuant to Section 5(f) hereof. Any request on the part of
the SEC or any state securities authority for additional information
-22-
shall have been complied with to the reasonable satisfaction of counsel
for the Underwriter.
(b) All corporate proceedings and other matters
incident to the authorization, form and validity of this Agreement, the
Units, Shares and Warrants and the form of the Registration Statement
and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be
satisfactory in all material respects to counsel for the Underwriter.
MEI shall have furnished to such counsel all documents and information
that they may have reasonably requested to enable them to pass upon
such matters. The Underwriter shall have received from the
Underwriter's counsel, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP an opinion, dated as of the
Closing Date and any Option Closing Date, as the case may be, and
addressed to the Underwriter, which opinion shall be satisfactory in
all respects to the Underwriter.
(c) On the Closing Date and any Option Closing Date,
there shall have been delivered to the Underwriter signed opinions of
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, counsel for MEI, dated as of each such
date and addressed to the Underwriter to the effect set forth in
Exhibit A hereto or to such effect as is otherwise reasonably
satisfactory to the Underwriter.
(d) At the Closing Date and any Option Closing Date:
(i) the Registration Statement and any post-effective amendment thereto
and the Prospectus and any amendments or supplements thereto shall
comply as to form to the requirements of the Act and the Regulations in
all material respects, and neither the Registration Statement nor any
post-effective amendment thereto nor the Prospectus and any amendments
or supplements thereto shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, and in the case of the
Prospectus, in the light of the circumstances under which they were
made, not misleading; (ii) since the respective dates as of which
information is given in the Registration Statement and any
post-effective amendment thereto and the Prospectus and any amendments
or supplements thereto, except as otherwise stated therein, there shall
have been no material adverse change in the Business Conditions of the
MEI from that set forth therein, whether or not arising in the ordinary
course of business; (iii) the respective dates as of which information
is given in the Registration Statement and the Prospectus or
-23-
any amendment or supplement thereto, there shall have been no event or
transaction, contract or agreement entered into by MEI other than in
the ordinary course of business and as set forth in the Registration
Statement or Prospectus, that has not been, but would be required to
be, set forth in the Registration Statement or Prospectus; (iv) since
the respective dates as of which information is given in the
Registration Statement and any post-effective amendment thereto and the
Prospectus and any amendments or supplements thereto, there shall have
been no material adverse change, loss, reduction, termination or
non-renewal of any contract to which MEI is a party, that has not been,
but would be required to be set forth in the Registration Statement or
Prospectus; and (v) no action, suit or proceeding at law or in equity
shall be pending or to the knowledge of MEI threatened against MEI that
would be required to be set forth in the Prospectus, other than as set
forth therein, and no proceedings shall be pending or to the knowledge
of MEI threatened against or directly affecting MEI before or by any
federal, state or other commission, board or administrative agency
wherein an unfavorable decision, ruling or finding would materially
adversely affect the Business Conditions of MEI.
(e) The Underwriter shall have received at the
Closing Date and any Option Closing Date certificates of the Chief
Executive Officer and the Chief Financial Officer of MEI dated as of
the date of the Closing Date or Option Closing Date, as the case may
be, and addressed to the Underwriter to the effect that (i) the
representations and warranties of MEI in this Agreement are true and
correct in all material respects, as if made at and as of the Closing
Date or the Option Closing Date, as the case may be, and that MEI has
complied in all material respects with all the agreements, fulfilled
all the covenants and satisfied all the conditions on its part to be
performed, fulfilled or satisfied at or prior to the Closing Date or
the Option Closing Date, as the case may be, and (ii) the signers of
the certificate have carefully examined the Registration Statement and
the Prospectus and any amendments or supplements thereto, and the
conditions set forth in Section 7(e) hereof have been satisfied.
(f) At the time this Agreement is executed and at the
Closing Date and any Option Closing Date the Underwriter shall have
received a letter, dated the date of delivery thereof, addressed to the
Underwriter, in form and substance satisfactory to the Underwriter in
all respects (including, without limitation, the non-material nature of
the changes or
-24-
decreases, if any, referred to in clause (iii) below) from E&Y:
(i) confirming they are independent
certified public accountants within the meaning of the Act and
the Regulations;
(ii) stating that, in their opinion, the
consolidated financial statements, schedules and notes of MEI
included in the Registration Statement comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Regulations;
(iii) stating that, on the basis of
specified procedures, which included the procedures specified
by the American Institute of Certified Public Accountants for
a review of interim financial information, as described in SAS
No. 71, Interim Financial Information (with respect to the
latest available unaudited consolidated financial statements
of the Company), a reading of the latest available unaudited
interim consolidated financial statements of MEI (with an
indication of the date of the latest available unaudited
interim financial statements), a reading of the minutes of the
meetings of the stockholders and the Board of Directors of MEI
and the Audit and Executive and Compensation Committees of
such Boards and inquiries to certain officers and other
employees of MEI responsible for operational, financial and
accounting matters and other specified procedures and
inquiries, nothing has come to their attention that would
cause them to believe that, at a specified date not more than
five business days prior to the date of such letter, there was
any: (A) change in the capital stock other than (1) the
issuance of Common Stock upon the exercise of currently
outstanding options and warrants as described in the
Prospectus, and (2) the grant of options to purchase Common
Stock under MEI's currently outstanding stock options plans
and the issuance of Common Stock upon the exercise thereof,
(B) increase in long-term debt of MEI, which is currently
$____________ or (C) any decrease in consolidated net current
assets or shareholders equity of MEI as compared with the
amounts shown in the June 30, 2003 audited balance sheets of
MEI included in the Registration Statement or that for the
periods from June 30, 2003 to the date of the latest available
unaudited financial statements of MEI, if any, and to a
specified date not
-25-
more than five days prior to the date of the letter, there
were any decreases, as compared to the corresponding periods
in the prior year, in operating income or total or per share
amounts of net income, except in all instances for changes,
decreases or increases that the Registration Statement
discloses have occurred or may occur and except for such other
changes, decreases or increases which the Underwriter shall in
their sole discretion accept;
(iv) stating that they have compared
specific dollar amounts (or percentages derived from such
dollar amounts), numbers of shares and other numerical data
and financial information set forth in the Registration
Statement that have been reasonably specified by the
Underwriter prior to the date of this Agreement (in each case
to the extent that such dollar amounts, percentages and other
information is derived from the general accounting records
subject to the internal controls of MEI's accounting systems,
or has been derived directly from such accounting records by
analysis or comparison or has been derived from other records
and analyses maintained or prepared by MEI) with the results
obtained from the application of readings, inquiries and other
appropriate procedures set forth in the letter, and found them
to be in agreement. and
(v) stating that, on the basis of specified
procedures, which included (A) a review of the unaudited
consolidated balance sheet as of September 30, 2003 and the
unaudited consolidated statement of income for the quarter
ended September 30, 2003, included in the Registration
Statement; (B) inquiry of management who have responsibility
for financial and accounting matters, that nothing came to
their attention as a result of the above procedures, that
caused them to believe that the unaudited consolidated
financial statements included in the Registration Statement do
not comply as to form in all material respects with the
applicable accounting requirements of Regulation S-X.
(g) The Common Stock, including the Shares, shall
have been included for quotation on the Nasdaq SmallCap Market.
(h) The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
-26-
(i) At the Closing Date and any Option Closing Date,
the Underwriter shall have been furnished such additional documents,
information and certificates as they shall have reasonably requested.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Underwriter and the Underwriter's
counsel. MEI shall furnish the Underwriter with such conformed copies of such
opinions, certificates, letters and other documents as they shall reasonably
request. If any condition to the Underwriter's obligations hereunder to be
fulfilled prior to or at the Closing Date or any Option Closing Date, as the
case may be, is not fulfilled, the Underwriter may terminate this Agreement with
respect to the Closing Date or such Option Closing Date, as applicable, or, if
they so elect, in its sole discretion waive any such conditions which have not
been fulfilled or extend the time for their fulfillment. Any such termination
shall be without liability of the Underwriter to MEI.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) MEI shall indemnify and hold harmless the
Underwriter, and each person, if any, who controls the Underwriter
within the meaning of the Act, against any and all loss, liability,
claim, damage and expense whatsoever, including, but not limited to,
any and all reasonable expenses incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever or in connection with any investigation or inquiry of, or
action or proceeding that may be brought against, the respective
indemnified parties, arising out of or based upon any untrue statements
or alleged untrue statements of material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus,
any application or other document filed in any jurisdiction in order to
qualify all or any part of the Units under the securities laws thereof
or filed with the SEC or The Nasdaq Stock Market, Inc. (in this Section
8 collectively called "application"), or in any materials or
information provided to investors by, or with the approval of, MEI in
connection with the marketing of the offering (including any materials
provided to Eligible Holders in the Directed Subscription Program), or
the omission or alleged omission from any of the foregoing of a
material fact required to be stated therein or necessary to make the
statements therein and in the case of the Prospectus, in the light of
the circumstances under which
-27-
they were made, not misleading; provided, however, that the foregoing
indemnity shall not apply in respect of any statement or omission made
in reliance upon and in conformity with written information furnished
to MEI by the Underwriter expressly for use in any Preliminary
Prospectus, the Registration Statement or Prospectus, or any amendment
or supplement thereto, or in any application or in any communication to
the SEC, as the case may be (which information consists solely of the
information identified in Section 11 herein); and further provided,
however, that the indemnification contained in this Section 8(a) with
respect to any Preliminary Prospectus shall not inure to the benefit of
the Underwriter (or to the benefit of any person controlling the
Underwriter) on account of any such loss, claim, liability or expense
arising from the sale of the Units by the Underwriter to any person if
a copy of the Prospectus shall not have been delivered or sent to such
person within the time required by the Act and the regulations
thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such
Preliminary Prospectus was corrected in the Prospectus, provided that
MEI has delivered the Prospectus to the Underwriter in requisite
quantity on a timely basis to permit such delivery or sending. The
obligations of MEI under this Section 8(a) will be in addition to any
liability MEI may otherwise have.
(b) The Underwriter shall indemnify and hold harmless
MEI, each of the directors of MEI, each of the officers of MEI who
shall have signed the Registration Statement and each other person, if
any, who controls MEI within the meaning of the Act to the same extent
as the foregoing indemnities from MEI to the Underwriter, but only with
respect to any and all loss, liability, claim, damage or expense
resulting from statements or omissions, or alleged statements or
omissions, if any, made in any Preliminary Prospectus, Registration
Statement or Prospectus or any amendment or supplement thereof or any
application or in any communication to the SEC in reliance upon, and in
conformity with written information furnished to MEI by the Underwriter
expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment or supplement thereof or any
application or in any communication to the SEC, as the case may be. The
obligations of the Underwriter under this Section 8(b) will be in
addition to any liability which the Underwriter may otherwise have.
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(c) If any action, inquiry, investigation or
proceeding is brought against any person in respect of which
indemnification may be sought pursuant to Section 8(a) or (b) hereof,
such person (hereinafter called the "indemnified party") shall,
promptly after notification of, or receipt of service of process or,
such action, inquiry, investigation or proceeding, notify in writing
the party or parties against whom indemnification is to be sought
(hereinafter called the "indemnifying party") of the institution of
such action, inquiry, investigation or proceeding. The indemnifying
party, upon the request of the indemnified party, shall assume the
defense of such action, inquiry, investigation or proceeding,
including, without limitation, the employment of counsel (reasonably
satisfactory to such indemnified party) and payment of expenses. No
indemnification provided for in Section 8 shall be available to any
indemnified party who shall fail to give such notice if the
indemnifying party does not have knowledge of such action, inquiry,
investigation or proceeding to the extent that such indemnifying party
has been materially prejudiced by the failure to give such notice, but
the omission to so notify the indemnifying party shall not relieve the
indemnifying party otherwise than under Section 8. Such indemnified
party shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless the employment of such counsel
shall have been authorized in writing by the indemnifying party in
connection with the defense of such action or if the indemnifying party
shall not have employed counsel reasonably satisfactory to the
indemnified party or if such indemnified party or parties shall have
been advised by counsel that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified
party or parties or that there may be legal defenses available to such
indemnified party or parties different from or in addition to those
available to the indemnifying party or parties, in any of which events
the indemnified party or parties shall be entitled to select counsel to
conduct the defense to the extent determined by such counsel to be
necessary to protect the interests of the indemnified party or parties,
and the reasonable fees and expenses of such counsel shall be borne by
the indemnifying party. The indemnifying party shall be responsible for
the fees and disbursements of only one such counsel so engaged by the
indemnified party or parties. Expenses covered by the indemnification
in Section 8, as the case may be, shall be paid by the indemnifying
party as they are incurred by the indemnified party. No indemnifying
party
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shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party
from all liability on any claims that are the subject matter of such
action. Notwithstanding anything in Section 6 or Section 7 to the
contrary, an indemnifying party shall not be liable for any settlement
of a claim effected without its written consent, which consent shall
not be unreasonably withheld.
(d) If the indemnification provided for in this
Section 8 is unavailable or insufficient to hold harmless an
indemnified party under Section 8(a) or (b) hereof in respect of any
losses, liabilities, claims, damages or expenses (or actions,
inquiries, investigations or proceedings in respect thereof) referred
to therein, except by reason of the failure to give notice as required
in Section 8(c) hereof (provided that the indemnifying party does not
have knowledge of the action, inquiry, investigation or proceeding and
to the extent such party has been materially prejudiced by the failure
to give such notice), then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of
such losses, liabilities, claims, damages or expenses (or actions,
inquiries, investigations or proceedings in respect thereof, in such
proportion as is appropriate to reflect the relative benefits received
by MEI on the one hand and the Underwriter on the other from the
offering of the Units. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable
by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of
MEI on the one hand and the Underwriter on the other in connection with
the statements or omissions which resulted in such losses, liabilities,
claims or expenses (or actions, inquiries, investigations or
proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by MEI on the
one hand and the Underwriter on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by MEI bears to the total underwriting
discount and commissions received by the Underwriter, in each case as
set forth in the table on the
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cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by MEI on the one
hand or the Underwriter on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
MEI and the Underwriter agree that it would not be just and
equitable if contributions to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to above in this Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, liabilities,
claims, damages or expenses (or actions, inquiries, investigations or
proceedings in respect thereof) referred to above in this Section 8(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 8(d) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
9. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. Except
as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements at the Closing Date and any Option Closing Date. All
such representations, warranties and agreements of the Underwriter and MEI,
including, without limitation, the indemnity and contribution agreements
contained in Section 8 hereof and the agreements contained in Sections 5, 6, 10
and 11 hereof, shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Underwriter or any controlling
person, and shall survive delivery of the Units and termination of this
Agreement, whether before or after the Closing Date or any Option Closing Date.
10. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION HEREOF.
(a) This Agreement shall become effective upon the
execution hereof by the parties hereto.
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(b) The Underwriter shall have the right to terminate
this Agreement at any time prior to the Closing Date or any Option
Closing Date as provided in Section 7 hereof or if any of the
following have occurred: (i) any outbreak of hostilities or other
national or international calamity or crisis or change in economic,
political or financial market conditions if the effect on the financial
markets of the United States of such outbreak, calamity, crisis (other
than those that presently exist) or change would, in the Underwriter's
reasonable opinion, make the offering or delivery of the Units
impracticable; (ii) any suspension or limitation of trading generally
in securities on the Nasdaq SmallCap Market or any setting of minimum
prices for trading or the promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority
that in the Underwriter's reasonable opinion materially and adversely
affects trading on such exchange or the over-the-counter market; (iii)
the enactment, publication, decree or other promulgation of any federal
or state statute, regulation, rule or order of any court or other
governmental authority which in the Underwriter's reasonable opinion
materially and adversely affects or will materially or adversely affect
the business or operations of MEI; (iv) declaration of a banking
moratorium by the United States, New York or Pennsylvania authorities;
or (v) trading in any securities of MEI shall have been suspended or
halted on the Alternative Investment Market of the London Stock
Exchange.
(c) If the Underwriter elects to terminate this
Agreement as provided in this Section 10, the Underwriter shall notify
MEI hereof promptly by telephone, telex, telegraph, telegram or
facsimile, confirmed by letter.
11. INFORMATION FURNISHED BY UNDERWRITER. The statement set
forth on the [third] paragraph from the bottom of the cover page of the
Prospectus regarding the terms of the Offering by the Underwriter, the
information set forth under the heading "Underwritten Public Offering" and the
last two paragraphs under the section "Plan of Distribution" constitute the only
written information furnished by reference or on behalf of the Underwriter.
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12. NOTICE. All communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be mailed,
delivered, telexed, telegrammed, telegraphed or telecopied and confirmed to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, 3000 Two ▇▇▇▇▇ Square, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.;
facsimile ▇▇▇-▇▇▇-▇▇▇▇; if sent to MEI, shall be mailed, delivered, telexed,
telegrammed, telegraphed or telecopied and confirmed to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Secretary, facsimile number 011-61-2-8877-6273, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇ &
Bockius LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esq., facsimile number ▇▇▇-▇▇▇-▇▇▇▇.
14. PARTIES. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the Underwriter, MEI and the controlling persons,
directors and officers thereof, and their respective successors, assigns, heirs
and legal representative, and no other person shall have or be construed to have
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. The terms
"successors" and "assigns" shall not include any purchaser of the Units merely
because of such purchase.
15. DEFINITION OF BUSINESS DAY. For purposes of this
Agreement, "business day" means any day on which the Nasdaq SmallCap Market is
opened for trading.
16. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and all such counterparts will constitute one and the same
instrument.
17. CONSTRUCTION. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and performed entirely within such Commonwealth.
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If the foregoing correctly sets forth your understanding of
our agreement, please sign and return to MEI the enclosed duplicate hereof,
whereupon it will become a binding agreement in accordance with its terms.
Very truly yours,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.
By: _______________________________
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
By: _______________________________
Name:
Title:
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EXHIBIT A
Matters to be Covered in the Opinion of Counsel for MEI
1. MEI has been duly organized and is validly existing as a
corporation in good standing under the laws of Delaware with corporate power and
authority to own its properties and conduct its business as described in the
Prospectus.
2. MEI has authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus. The outstanding
shares of Common Stock have been duly authorized and validly issued, to such
counsel's knowledge, and are fully paid and non-assessable. The Common Stock
conforms as to legal matters in all material respects to the description thereof
contained in the Prospectus. Certificates for the Shares are in due and proper
form and the Shares have been duly authorized and will be validly issued, fully
paid and non-assessable when issued and paid for as contemplated by this
Agreement; and no preemptive rights of stockholders, by operation of law, or to
the knowledge of such counsel, by contract exists with respect to any of the
Shares or the issue and sale thereof.
3. Based on the oral advice of a staff member of the SEC, the
Registration Statement has become effective under the Act, and no stop order
proceedings with respect thereto have been instituted or are pending or, to the
best knowledge of such counsel, threatened under the Act.
4. The Registration Statement, the Prospectus and each
amendment or supplement thereto when filed with the SEC comply as to form in all
material respects with the requirements of the Act, as applicable, and the
applicable rules and regulations thereunder (except that such counsel need
express no opinion as to the financial statements and notes thereto, schedules
and other financial, accounting and statistical information included therein).
5. The statements under the caption "Description of Capital
Stock" and "Shares Eligible for Future Sale" in the Prospectus, insofar as such
statements constitute a summary of documents referred to therein or matters of
law, are accurate and fairly present in all material respects the information
called for with respect to such documents and matters.
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6. Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described in
the Registration Statement or the Prospectus that are not so filed or described
as required, and such required contracts and documents as are summarized in the
Registration Statement or the Prospectus are fairly summarized in all material
respects.
7. To such counsel's knowledge, there are no material legal
proceedings pending or threatened against MEI, except as set forth in the
Prospectus.
8. This Agreement has been duly authorized, executed and
delivered by MEI, and, assuming due authorization and execution by the
Underwriter, constitutes the valid and binding agreement of MEI, enforceable
against MEI, in accordance with its terms, subject, as to enforcement, to
applicable bankruptcy, insolvency, reorganization and moratorium laws and other
laws relating to or affecting the enforcement of creditors' rights generally and
to general equitable principles (regardless of whether such enforceability is
considered a proceeding in equity or law) and except as the enforceability of
rights to indemnity and contribution under this Agreement may be limited under
applicable securities laws or the public policy underlying such laws. The
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated does not and will not conflict with or result
in a breach of any of the terms or provisions of, or constitute a default under,
the Restated Certificate of Incorporation or Amended and Restated Bylaws of MEI,
or to such counsel's knowledge, any agreement or instrument to which MEI is a
party or by which it may be bound that is filed as an exhibit to the
Registration Statement.
9. No approval, consent, order or authorization by any
regulatory, administrative or other governmental body is necessary in connection
with the execution and delivery of this Agreement and the consummation of the
transactions herein contemplated (other than as may be required by the NASD or
by state securities and Blue Sky laws as to which such counsel need express no
opinion) other than such as have been obtained, including without limitation,
registration of the Units, Shares and Warrants under the Act and of the Common
Stock under the Exchange Act.
10. Neither MEI nor any of its subsidiaries is an "investment
company" or an entity "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.
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11. Such counsel shall state that: although such counsel is
not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, except as and to the extent set forth in paragraph
5 of such counsel's opinion, on the basis of the foregoing and the information
disclosed to such counsel, but without independent check and verification, and
relying as to materiality to a large extent on representations and statements of
officers and other representatives of MEI, such counsel has participated in
conferences with officers and other representatives of MEI, representatives of
the Underwriter and its counsel, and representatives of the independent public
accountants of MEI, at which conferences the contents of the Registration
Statement and the Prospectus were discussed, and no facts have come to the
attention of those lawyers in such counsel's firm who have participated in the
preparation of the Registration Statement and the Prospectus that would cause
such counsel to have reason to believe that, insofar as relevant to the offering
of the Units, (a) the Registration Statement or any post-effective amendment
thereto as of the time it became effective, contained any untrue statement of a
material fact or omitted to state any material fact necessary to make the
statements therein not misleading, or that (b) the Prospectus on the Effective
Date, on the date it was filed pursuant to Rule 424(b) and on the Closing Date
or Option Closing Date, as the case may be, contained or contains any untrue
statement of material fact or omits to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; except that with respect to both clause (a) and (b) above
such counsel need make no statement with respect to the financial statements and
notes thereto, financial schedules and financial, accounting and statistical
information included in the Registration Statement or the Prospectus or with
respect to the validity, enforceability or non-infringement of any patent or
license of a patent.
The foregoing opinion may be limited to the laws of the
Commonwealth of Pennsylvania, the General Corporation Law of the State of
Delaware and the federal securities laws of the United States and include such
other limitations and assumptions as are customary. Such counsel may rely as to
questions of fact upon the representations of MEI set forth in this Agreement
and upon certificates of officers of MEI and of government officials, all of
which certificates must be satisfactory in form and scope to counsel for the
Underwriter.
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