Exhibit 10.10
XXXXXX-XXXX, INC.
0000 X.X. 000xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
PLACEMENT AGENT AGREEMENT
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Xxxxxxx Equities, Inc. January 26, 1996
000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Re: Private Placement
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Gentlemen:
Xxxxxx-Xxxx, Inc., a Delaware corporation (the "Company"),
desires to engage Xxxxxxx Equities, Inc. (the "Placement Agent"
and also referred to herein as "you") on an exclusive basis in
connection with a private offering on a "best efforts" basis, of
1,200,000 shares of common stock, $.0001 par value per share (the
"Shares" and individually a "Share"). The purchase price of each
Share shall be $.85 and shall be paid in cash upon subscription.
The Company is offering the Shares solely to "Accredited
Investors" as defined in Rule 501 of Regulation D as promulgated
by the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Private Placement Memorandum and Exhibits thereto
(hereinafter collectively referred to as "Offering Documents") to
be prepared by counsel to the Company and relating to the
offering of the Shares. For purposes of this Agreement, the
offering will be referred to as the "Offering" and the references
below to the Company also include its subsidiaries unless the
context indicates otherwise. The Company and the Placement Agent
both regard the proceeds of the Offering as being in the nature
of a "bridge" financing as the Company believes it requires
additional capital of up to $10,000,000 to $15,000,000 (the
"Additional Capital") in order to pursue development and
commercialization of the Company's initial proprietary
therapeutic pharmaceutical agents for the treatment of immune
disorders, including those arising from the Human
Immunodeficiency Virus and Acquired Immune Deficiency Syndrome.
In the event that the Offering is completed the Company and the
Placement Agent intend immediately thereafter to utilize best
efforts to secure the Additional Capital upon the terms set forth
in paragraphs 7.(f),(g) and (h) below.
In connection with this Agreement, the Company and the
Placement Agent each are making certain representations,
warranties and, covenants hereunder for the benefit of the other.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
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The Company represents and warrants to the Placement Agent as
follows:
(a) The Offering Documents have been prepared by the
Company and copies of such Offering Documents and any amendments
thereto have been delivered by the Company to the Placement Agent
for distribution to potential Purchasers. The Offering Documents
will not be amended or supplemented and no amendment or
supplement thereto will be made without your prior consent unless
necessary to conform to the representations and warranties
contained in this Agreement.
(b) The Offering Documents conform in all material respects
with the requirements of Section 4(2) of the Securities Act of
1933, as amended and with the requirements of all other published
rules and regulations (including Section 401(f) of Regulation
S-K) of the SEC currently in effect relating to "private
offerings" of the type contemplated by the Company. The Offering
Documents, on the date of their issuance will be and at the
Offering Closing Date will be, accurate in all material respects
and will not contain any 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 existing at
such dates, not misleading and will be, as of each Closing Date
accurate in all material respects and will not contain any 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 existing at each Closing Date, not
misleading.
(c) The Company is, and at each Closing Date will be, a
corporation duly organized, validly existing and in good standing
under the laws of Delaware. The Company has, and at the Closing
will have, full power and authority to conduct all the activities
conducted by it, to own or lease all the assets owned or leased
by it and to conduct its business as described in the Offering
Documents. The Company is, and at each Closing Date will be,
duly licensed or qualified to do business and in good standing as
a foreign corporation in all jurisdictions in which the nature of
the activities conducted by it or the character of the assets
owned or leased by it makes such licensing or qualification
necessary and where the failure to be so licensed or qualified
could have a Material Adverse Effect (as hereinafter defined).
The Company has no material subsidiaries. Complete and correct
copies of the certificate of incorporation and of the by-laws of
the Company and all amendments thereto have been delivered to the
Placement Agent.
(d) The outstanding shares of Common Stock have been, and the
Shares to be issued and sold by the Company upon such issuance
will be, when paid for by the Purchasers as provided herein and
the Warrant Shares, upon issuance will be, when paid for pursuant
to the terms of the Placement Agent Warrants, respectively, duly
authorized, validly issued, fully paid and nonassessable and will
not be subject to any preemptive or similar right. The
description of the Common Stock in the Offering Documents will
be, and at each Closing Date will be, complete and accurate in
all material respects. All prior sales by the Company of the
Company's securities have been made in compliance with or under
an exemption from registration under the Securities Act and
applicable state securities laws. Except as set forth in the
Offering Documents, the Company does not have outstanding, and at
each Closing Date will not have outstanding, any options to
purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or
commitments to issue or sell any of shares of Common Stock or any
such warrants, convertible securities or obligations.
(e) The financial statements of the Company (including the
related notes and supporting schedules) included in the Offering
Documents fairly present the financial condition of the Company,
at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting
principles as applied in the United States on a consistent basis
throughout the periods involved, except as otherwise stated
therein and with respect to interim statements except for normal
year-end adjustments.
(f) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(g) Subsequent to the respective dates as of which
information is given in the Offering Documents and prior to each
Closing Date, except as set forth in or contemplated by the
Offering Documents, (i) there has not been and will not have been
any change in the capitalization of the Company, or any material
adverse change in the business, properties, business prospects,
condition (financial or otherwise) or results of operations of
the Company (except for any change in capitalization resulting
from a pending dispute between the Company and Business Concepts,
Inc. regarding the issuance of up to 1,200,000 shares of Common
Stock) (ii) the Company has not and will not have paid or
declared any dividends or other distributions of any kind on any
class of its capital stock. The Company does not anticipate any
material adverse changes in the Company's business, prospects or
financial condition within the next twelve months.
(h) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(i) Except as set forth in the Offering Documents or
elsewhere herein there are no actions, suits, proceedings,
claims, hearings or any investigations pending or, to the
Company's knowledge, threatened against or affecting the Company
or any of its respective officers in their capacity as such,
before or by any federal or state court, commission (including
but not limited to the Food and Drug Administration), regulatory
body, administrative agency or other governmental body, domestic
or foreign, wherein an unfavorable ruling, decision or finding
might adversely affect the Company or its business, properties,
business prospects, conditions (financial or otherwise) or
results of operations taken as a whole (a "Material Adverse
Effect").
(j) Except as disclosed in the Offering Documents, the
Company has, and at each Closing Date will have, (i) all material
governmental licenses, permits, consents, orders, approvals and
other authorizations necessary to carry on its business as
contemplated in the Offering Documents, (ii) complied in all
material respects with all laws, regulations and orders
applicable to it or its business. The Company is not, and at
each Closing Date will not be, in violation of any provision of
its certificate of incorporation or by-laws.
(k) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or
body is required for the consummation by the Company of the
transactions on its part herein contemplated.
(l) The Company has full corporate power and authority to
enter into this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes
a valid and binding agreement of the Company and is enforceable
against the Company in accordance with the terms hereof. The
performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in the creation
or imposition of any lien, charge or encumbrance upon any of the
assets of the Company pursuant to the terms or provisions of, or
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, or give any other party a
right to terminate any of its obligations under, or result in the
acceleration of any obligation under, the certificate of
incorporation or by-laws of the Company, any contract, license or
other agreement to which the Company is a party or by which the
Company or any of its properties is bound or affected, or violate
or conflict with any judgment, ruling, decree, order, statute,
rule or regulation of any court or other governmental agency or
body applicable to the business or properties of the Company.
(m) The Company has good and marketable title to all
properties and assets described in the Offering Documents as
owned by it, free and clear of all liens, charges, encumbrances
or restrictions, except such as are described in the Offering
Documents or are not material to the business of the Company.
(n) No statement, representation, warranty or covenant made
by the Company in this Agreement or made in any certificate or
document required by this Agreement to be delivered to the
Placement Agent was or will be, when made, inaccurate, untrue or
incorrect in any material respect.
(o) The Company is not involved in any material labor dispute
nor, to the knowledge of the Company, is any such dispute
threatened.
(p) The Company owns, or is licensed or otherwise has the
full exclusive right to use, all material trademarks and trade
names which are used in or necessary for the conduct of its
business except as may be described in the Offering Documents.
No claims have been asserted by any person to the use of any such
trademarks or trade names or challenging or questioning the
validity or effectiveness of any such trademark or trade name.
The use, in connection with the business and operations of the
Company of such trademarks and trade names does not, to the
Company's knowledge, infringe on the rights of any person.
(q) Neither the Company nor, to the Company's knowledge, any
person acting on the Company's behalf has (i) used any corporate
funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any other unlawful bribe, rebate, payoff, influence payment
or kickback.
(r) No material relationship (as described in Item 404 of
Regulation S-K), exists between or among the Company on the one
hand, and any director or officer of the Company or any holder of
5% or more of any class of equity security of the Company or any
affiliate of any such director, officer or stockholder of the
Company on the other hand, except as described in the Offering
Documents.
(s) The Company has filed all income, franchise, sales and
other tax returns required to be filed through the date hereof
and has paid all taxes shown as due thereon, and since June 30,
1995 no tax deficiency has been determined adversely to the
Company which has had (nor does the Company have any knowledge of
any questions or disputes pending or threatened relating to a tax
deficiency which, if determined adversely to the Company, might
have) a Material Adverse Effect.
(t) There are no contracts, agreements or understandings
between the Company and any person (other than the Placement
Agent), that would give rise to a valid claim against the Company
or the Placement Agent for a brokerage commission, finder's fee
or like payment in connection with the transactions contemplated
by this Agreement except for the dispute referenced in paragraph
(g)(i) above.
(u) The Company causes to be maintained insurance covering
the properties, operations, personnel and businesses of the
Company in such amounts and against such losses and risks as are
adequate in accordance with customary industry practice to
protect the Company and its business. The Company has not
received notice from any insurer or agent of such insurer that
substantial capital improvements or other expenditures will have
to be made in order to continue such insurance. All such
insurance is outstanding and duly in force on the date hereof,
and will be outstanding and duly in force on each Closing Date.
(v) The Purchasers of Shares, and the Placement Agent
Warrants when issued and consideration thereof has been received,
will obtain valid and marketable title to the Shares and the
Placement Agent Warrants, free of any adverse claim with respect
thereto. The holders of Placement Agent Warrants, upon
exercising of the Placement Agent Warrants, in accordance with
the terms thereof, will receive shares of Common Stock which will
be free of any adverse claim with respect thereto arising out of
actions of or claims against the Company.
(w) Neither the Company nor any of the officers or directors
of the Company:
(i) Has filed a registration statement which is the
subject of any pending proceeding or examination under Section 8
of the Securities Act of 1933, as amended (the "Securities Act")
or is the subject of any refusal order or stop order thereunder
within five years prior to the date of this Agreement;
(ii) Is subject to any pending proceeding under Rule 261
or any similar rule adopted under Section 3(b) of the Securities
Act or to an order entered thereunder within five years prior to
the date of this Agreement;
(iii) Has been convicted within five years prior to the
date of this Agreement of any felony or misdemeanor in connection
with the purchase or sale of any security or involving the making
of any false filing with the SEC;
(iv) Is subject to any order, judgment or decree of any
court of competent jurisdiction temporarily or preliminary
restraining or enjoining, or is subject to any order, judgment or
decree or any court of competent jurisdiction entered within five
years prior to the date of this Agreement permanently restraining
or enjoining such person from engaging in or continuing any
conduct or practice in connection with the purchase or sale of
any security or involving the making of any false filing with the
SEC;
(v) Is subject to a United States Postal Service false
representation order entered under Section 3005 of Title 39,
United States Code, within five years prior to the date of this
Agreement or is subject to a temporary restraining order or
preliminary injunction entered under Section 3007 of Title 000
Xxxxxx Xxxxxx Code, with respect to conduct alleged to have
violated Section 3005 of Title 000 Xxxxxx Xxxxxx Code;
(vi) Is subject to an order of the SEC entered pursuant
to Section 15(b), 15B(a) or 15B(c) of the Securities Exchange Act
of 1934 (the "Exchange Act") or is subject to any order of the
SEC entered pursuant to Section 203(3) or (f) of the Investment
Advisers Act of 1940;
(vii) Is suspended or expelled from membership in or
suspended or barred from association with a member of an exchange
registered as a national securities exchange pursuant to Section
6 of the Exchange Act, an association registered as a national
securities association under Section 15A of the Exchange Act, or
a Canadian securities exchange or association for any act or
omission to act constituting conduct inconsistent with just and
equitable principles of trade; or
(viii) Is currently the subject of a Formal Order of
Investigation issued by the SEC.
(ix) Is or has been involved with any other legal
proceeding enumerated within Item 401 (f) of Regulation S-K as
promulgated by the SEC.
2. REPRESENTATIONS AND WARRANTIES OF THE PLACEMENT AGENT. You
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represent and warrant to the Company that:
(a) This Agreement has been duly authorized, executed and
delivered by you and is a valid and binding agreement on your
part in accordance with its terms.
(b) You are a broker-dealer duly registered pursuant to the
provisions of the Exchange Act and are a member in good standing
of the National Association of Securities Dealers, Inc. ("NASD")
and you are duly licensed as a broker-dealer under the applicable
statutes and regulations of each state in which you propose to
and do offer or sell the Shares. You agree to maintain all of
the foregoing registrations in good standing throughout the term
of the offer and sale of the Shares and you agree to comply with
all statutes and other requirements applicable to you as a
broker-dealer pursuant to those requirements.
(c) Pursuant to your appointment:
(i) You will limit your offering of the Shares to
persons whom you have reasonable grounds to believe are
"Accredited Investors" as defined in Rule 501 of Regulation D as
promulgated by the SEC under the Securities Act.
(ii) You will provide each offeree with a complete copy
of the Offering Documents and all amendments and supplement(s)
thereto during the course of the Offering and prior to sale.
(iii) In the event you utilize any sales materials,
reports or other analyses other than the Offering Documents, you
will refrain from providing any such materials to any offeree of
the Shares unless such specific materials are approved in advance
and in writing by the Company and Offering Documents are also
delivered to the Purchaser before such Purchaser acquires any
Shares.
(iv) Until the termination of this Agreement, if any
event affecting the Company or you shall occur which, in the
opinion of the Company's counsel, should be set forth in a
supplement or amendment to the Offering Documents, you agree to
distribute such supplement or amendment to all persons who have
previously received a copy of the Offering Documents from you and
further agree to include such supplement or amendment in all
further deliveries of the Offering Documents. The Company will
at its own expense prepare and furnish to you a reasonable number
of copies of that supplement or amendment for such distribution.
(v) You will not offer, offer to sell, offer for sale,
or sell the Shares by means of any form of general solicitation
or general advertising, including but not limited to the
following:
(A) Any advertisement, article, notice or other
communication published in any newspaper, magazine or similar
media or broadcast over television or radio;
(B) Any seminar or meeting whose attendees have
been invited by general solicitation or general advertising.
(d) Information relating to you in the Offering Documents, or
any amendment or supplement thereto, is true and correct, and
there is no material information available to you which should be
included in the Offering Documents in order to comply with
applicable securities laws.
(e) You will not offer the Shares for sale in any state
until the Company's counsel has advised you that the Shares may
be offered for sale in such state(s).
(f) During the offering and sale of the Shares, you will
comply with the requirements of Regulation D promulgated under
the Securities Act and all applicable blue sky laws to the extent
such compliance is within your control. You will retain in your
permanent files copies of all Subscription Documents as completed
by each purchaser to whom you sell Shares.
3. REGISTRATION RIGHTS FOR HOLDERS OF SHARES.
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As promptly as may be practicable after shares of Common Stock
of the Company commence to trade on the over-the-counter or any
other securities market the Company shall use its good faith and
its best efforts to: (i) file with the SEC a registration
statement (the "Registration Statement") registering on the
appropriate form the Shares and the Warrant Shares for resale;
(ii) cause the Registration Statement to be declared effective by
the SEC as soon as possible (the "Effective Date"); and, (iii)
cause the Registration Statement to remain effective through the
second anniversary of the Offering Closing Date or the first
anniversary of the Effective Date, whichever is later (the
"Demand Right"). In the event the Company secures "Additional
Capital" through a "Combination" (as set forth in paragraph 7.(f)
and paragraph 7.(g) hereof) the Demand Right shall become the
obligation of the entity with which the Company combines except
that the Company and such entity shall endeavor to have the
Shares and Warrant Shares registered for resale upon the
Combination or as soon thereafter as may be practicable. In the
event that the Company seeks to obtain Additional Capital through
a public underwritten offering of securities the Demand Right
shall be subject to consent of the underwriter thereof, which
consent shall not be unreasonably withheld.
4. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
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representations and warranties herein contained, and subject to
all the terms and conditions of this Agreement, the Company
hereby employs you as its exclusive agent on a best efforts basis
to solicit subscriptions for the Shares consistent with the
suitability standards described in the Offering Documents and not
inconsistent with the requirements of Regulation D and applicable
requirements of the securities laws of any state in which the
sale of Shares is being made. Such subscriptions shall be
evidenced by execution by the subscriber and the Company of the
Subscription Agreement which shall be attached as an exhibit to
the Offering Documents. It is understood that no sale shall be
regarded as effective unless and until accepted by the Company,
and that the Company reserves the right to refuse to sell Shares,
in whole or in part, to any person. The Offering shall extend
until such date as the Placement Agent has notified the Company
that at least 1,200,000 of the Shares have been sold and gross
proceeds with respect thereto have been received into an escrow
account established by the Company (the "Escrow") with an
independent banking institution satisfactory to the Placement
Agent, but in no event shall the Offering extend for a period
longer than 30 days from the date following the day on which
final Offering Documents are delivered to the Placement Agent
unless the Company and the Placement Agent jointly decide to
extend the Offering for a period of up to an additional 15 days
the ("Offering Closing Date"). The Company shall deliver
certificates evidencing the Shares (and if applicable under
paragraph 5.(b)) the Placement Agent Warrants upon the Offering
Closing Date.
5. COMPENSATION OF PLACEMENT AGENT. You will receive the
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following compensation for acting as Placement Agent pursuant to
the terms of this Agreement.
(a) For each Share sold by you or another broker-dealer
selected by you, the Company shall promptly pay to you a sales
commission of $.0425 (5% of the gross proceeds received by the
Company). Funds from the sale of Shares will be forwarded or
caused to be forwarded directly to the Escrow or returned to the
investor if the subscription is not accepted or if the Company
has not received subscriptions for at least 1,200,000 shares
before the Offering Closing Date. The Company through Escrow
shall remit your cash compensation, including the expenses
referenced in Section 6 below, no later than the Offering Closing
Date.
(b) In lieu of the cash compensation set forth in paragraph
5.(a) above the Placement Agent in its sole discretion may elect
to receive from the Company, and in the event of such election
the Company will issue to you for nominal consideration on the
Offering Closing Date, warrants (the "Placement Agent Warrants"),
substantially in the form attached hereto as Exhibit B, to
purchase one share of common stock at $.935 for each Share sold
in the Offering. The Placement Agent Warrants will expire seven
years from the Offering Closing Date, will contain customary
anti-dilution and other provisions, and will provide at the
expense of the Company for one mandatory and "piggy back"
registration rights. The Placement Agent Warrants will be issued
in one or more certificates and registered in such names as the
Placement Agent may request. The shares of Common Stock
underlying the Placement Agent Warrants are referred to herein as
the "Warrant Shares".
6. EXPENSES. The costs and expenses incurred by the Company and
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by the Placement Agent in connection with the Offering shall be
paid by the Company. The Company shall pay to the Placement
Agent on the Offering Closing Date a non-accountable expense
allowance equal to three percent of the gross proceeds from the
sale of the Shares.
7. COVENANTS OF THE COMPANY. The Company covenants and agrees
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with the Placement Agent:
(a) To deliver to the Placement Agent, at the expense of
the Company, as many copies of the Offering Documents (including
all amendments and supplements thereto) as the Placement Agent
may reasonably request.
(b) If, at any time prior to any Closing Date, any event
shall occur as a result of which the Offering Documents, as then
amended or supplemented, would include a statement of fact which
is not true and accurate in all material respects, or omit any
fact the omission of which would make misleading in any material
respect any statement therein, or if for any other reason it
shall be necessary to amend or supplement the Offering Documents,
the Company will so amend or supplement the Offering Documents
and will promptly notify the Placement Agent and will, at the
expense of the Company, supply to the Placement Agent (and to any
persons designated by the Placement Agent) such amendments or
supplements to the Offering Documents as may be necessary so that
the statements in the Offering Documents as so amended or
supplemented will not, in the light of the circumstances existing
at the time, be misleading.
(c) To notify the Placement Agent promptly of any change
having or which is likely to have a Material Adverse Effect
relating to any of the Company's representations, warranties,
covenants or agreements contained herein that occurs at any time
prior to the payment of the Purchase Price to the Company on each
Closing Date.
(d) The Company will use the net proceeds received from the
issuance of the Shares solely in the manner specified in the
Offering Documents under "Use of Proceeds."
(e) For three years after the Offering Closing Date, the
Company shall send to the Placement Agent copies of all filings
with the SEC (contemporaneously with such filing) and copies of
all press releases.
(f) For a period of six months commencing from the Offering
Closing Date the Placement Agent shall have a preferential right,
upon terms no less favorable than those which may be offered in
good faith on a bona fide basis by others, to manage any public
and private financings of the Company including but not limited
to the right to purchase for the account of the Placement Agent
or to sell for the account of the Company, or any subsidiary or
affiliate of or successor to the Company (collectively referred
to as the Company) any securities of the Company. In the event
the Company receives in writing an agreement, letter of intent or
other proposal which has been negotiated at arm's length with any
third party with respect to obtaining the Additional Capital (a
"Proposal"), the Company shall promptly deliver the Proposal to
the Placement Agent who shall thereafter have fifteen business
days in which to accept the terms set forth in the Proposal (an
"Acceptance"). If the Placement Agent fails to deliver an
Acceptance to the Company within such fifteen-day period the
Placement Agent shall have no further claim or right with respect
to the transaction(s) described within the Proposal. If the
Proposal is thereafter modified or if the financing described
within the Proposal is not completed within three months or such
shorter period as may be established by the Proposal the Company
shall adopt the same procedure as with respect to the Proposal
before such modification or expiration. The Company agrees that
any breach by the Company of the Placement Agent's rights of
first refusal shall be enforceable by the Placement Agent through
injunctive relief. The Company represents and warrants that no
other person or entity has any rights to participate in any
offer, sale or distribution of securities with respect to which
the Placement Agent shall have the rights described above in this
paragraph.
(g) If the Company obtains Additional Capital by merging or
otherwise combining the Company with another entity, introduced
to the Company by the Placement Agent and having at least
$10,000,000 in capital (after giving effect to the exercise of
warrants and other options) (the "Combination"), then the Company
covenants to pay the Placement Agent further compensation of not
less than four percent (4%) of such capital except that in its
sole discretion the Placement Agent may elect to receive in lieu
of such compensation 1,200,000 warrants to purchase 1,200,000
shares of the Company's common stock at $.935 per share. These
warrants shall have terms which are similar to those of the
Placement Warrants and shall expire seven years from their date
of issuance. The Company and the Placement Agent intend that the
then shareholders of the Company will own not less than fifty
percent of the outstanding shares of the resulting entity
following completion of the Combination.
(h) In the event that the Placement Agent and the Company
seek to obtain the Additional Capital other than in the
Combination, compensation to the Placement Agent for such
services shall be determined and set forth in a separate
agreement executed by the parties. Notwithstanding the foregoing,
following termination of this Agreement or, if later, the
Offering Closing Date and for a 36-month period thereafter (the
"Non-Circumvention Period") the Company shall not solicit nor
enter into any Financial Transaction (as defined below) with any
individual, entity or other person solicited, introduced or to be
solicited or introduced by the Placement Agent in connection with
the Offering, the Combination or the Additional Capital (a
"Xxxxxxx Introduction"). Each Xxxxxxx introduction shall be
identified in writing to the Company. If during the
Non-Circumvention Period the Company enters into a Financial
Transaction with a Xxxxxxx Introduction, then the Company shall
promptly pay to the Placement Agent a fee equal to not less than
10% of the aggregate cash value of the Financial Transaction
(including the value of all related employment, consulting and
other agreements entered into in connection with the Financial
Transaction), unless the Company and the Placement Agent enter
into or have entered into a written agreement setting forth other
compensation arrangements in advance of such Financial
Transaction. A "Financial Transaction" shall include without
limitation, the selling of equity or debt securities by or on
behalf of the Company, borrowing by or the arranging of loans or
extensions of credit on behalf of the Company, the licensing,
arranging for the manufacture of or selling of the Company's
products or other property (whether tangible or intangible),
selling the Company or any of its subsidiaries in whole or in
part, merging with or acquiring all or part of another entity,
entering into any joint venture or partnership and the like.
8. PLACEMENT AGENT CONDITIONS TO CLOSING. The obligations of the
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Placement Agent hereunder are subject to the accuracy when made
and on each Closing Date of the representations and warranties of
the Company contained herein, to the performance by the Company
of its obligations hereunder, and to each of the following
additional terms and conditions:
(a) The Placement Agent shall not have discovered and
disclosed to the Company on or prior to each Closing Date that
the Offering Documents or any amendment or supplement thereto
contains an untrue statement of a fact which, in the reasonable
opinion of the Placement Agent, is material or omits to state a
fact which, in the reasonable opinion of the Placement Agent, is
material and is required to be stated therein or is necessary to
make the statements therein in light of the circumstances under
which they were made not misleading.
(b) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this
Agreement, the certificates representing the Shares and all other
legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agent, and the
Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to
pass upon such matters.
(c) All proceedings and legal matters incident to the
Shares, including the authorization, form and validity of this
Placement Agent Agreement, the Placement Agent Warrants, the
Shares and the documents to be signed by each Purchaser or
Placement Agent, shall be reasonably satisfactory in all material
respects to counsel for the Placement Agent, and each such
Purchaser and Placement Agent shall have furnished to such
counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(d) Xxxxxxx Key & Xxxxxxxx, P.C., as counsel to the Company,
shall have furnished to the Placement Agent its written opinion
(the "Opinion"), addressed to the Placement Agent and dated each
Closing Date, substantially in the form of Exhibit A which shall
be appended to this Agreement no later than January 5, 1996.
(e) The Company shall have furnished to the Placement Agent
a certificate, dated each Closing Date, of the Chairman of the
Board, President or a Vice President of the Company stating that:
(i) The representations, warranties and agreements of
the Company contained herein are true and correct on and as of
such Closing Date with the same effect as if made on such Closing
Date; the Company has complied in all material respects with all
its agreements contained herein to be performed on or prior to
each Closing Date; and the conditions precedent to the
obligations of the Placement Agent set forth herein have been
fulfilled; and
(ii) Such officers have reviewed, or have had reviewed on
their behalf, the Offering Documents and (A) as of the date
hereof, and as of such Closing Date, the Offering Documents did
not, and will not, include any untrue statement of a material
fact and did not, and will not, omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (B) since the date thereof no event
has occurred which should have been set forth in a supplement or
amendment to the Offering Documents.
(f) Subsequent to the date of the execution of this
Agreement, there shall not have occurred any of the following:
(i) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or in the United States
over-the-counter markets shall have been suspended or limited or
minimum prices shall have been established on any such exchange
or such market by such exchange or by any other regulatory body
or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by the United States Federal,
New York State or California State authority or authorities,
(iii) the United States shall have become engaged in any war or
there shall have been a declaration of a national emergency by
the United States which makes it, in the reasonable judgment of
the Placement Agent, after consultation with the Company,
impracticable or inadvisable to proceed with the offering and
distribution of the Shares in the manner contemplated herein,
(iv) any material adverse change in United States or
international financial, political or economic conditions which,
in the reasonable judgment of the Placement Agent, after
consultation with the Company, impracticable or inadvisable to
proceed with the offering and distribution of the Shares in the
manner contemplated herein, or (v) there shall have occurred any
material event, otherwise than as set forth or contemplated in
the Offering Documents, so as to make it, in any such case in the
reasonable judgment of the Placement Agent, after consultation
with the Company, impracticable or inadvisable to proceed with
the offering and distribution of the Shares in the manner
contemplated herein.
(g) The Company shall have furnished to the Placement Agent
such further information, reports, certificates and documents as
the Placement Agent or its counsel may reasonably request.
(h) The Company shall timely file with the SEC the required
Notice(s) on Form D which contains the information required by
Regulation D under the Securities Act and shall similarly file
the required notice(s) with the California Department of
Corporations and all other applicable jurisdictions.
(i) The Company shall use its best efforts to establish an
exemption of the Shares for sale under the blue sky laws of the
state of California and such other states as you may reasonably
request.
9. INDEMNIFICATION AND CONTRIBUTION.
--------------------------------
(a) The Company agrees with the Placement Agent and for the
benefit of the Placement Agent and its officers, employees and
agents and each person, if any, who controls the Placement Agent
within the meaning of the Securities Act (the Placement Agent,
and its officers, employees and agents and such controlling
person being called, collectively "Xxxxxxx Indemnified Persons"), to
---------------------------
indemnify and hold harmless each such Xxxxxxx Indemnified Person
from and against any and all losses, costs, claims, damages,
expenses, demands and liabilities (including, without limitation,
any legal fees and other expenses incurred in connection with any
suit, action or proceeding or claim asserted) caused by (i) any
breach or alleged breach of the representations, warranties and
covenants contained herein of the Company, (ii) any untrue
statement or alleged untrue statement of a material fact
contained in the Offering Documents (each as amended or
supplemented), or (iii) any omission or alleged omission to state
in the Offering Documents (each as amended or supplemented), a
material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission
or alleged untrue statement or omission based upon information
furnished in writing by or on behalf of any such Xxxxxxx
Indemnified Person to the Company for use therein or otherwise
arising out of the transactions contemplated by this Agreement.
(b) The Placement Agent agrees with the Company and for the
benefit of the Company and its officers, employees and agents and
each person, if any, who controls the Company within the meaning
of the Securities Act (the Company, and its officers, employees
and agents and such controlling persons being called,
collectively "Company Indemnified Persons"), to indemnify and
------------------------------
hold harmless each such Company Indemnified Person from and
against any and all losses, costs, claims, damages, expenses,
demands and liabilities (all of which are collectively referred to
hereafter as "Claims" and which Claims include, without
limitation, any legal fees and other expenses incurred in connection
with any suit, action or proceeding or claim asserted) caused
by any material breach or alleged material breach of the
representations, warranties and covenants contained herein of the
Placement Agent, except insofar as such are caused by any such
untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing by or
on behalf of any such Company Indemnified Person to the
Placement Agent for use therein. Notwithstanding anything set
forth herein or elsewhere in this Section 9 no Xxxxxxx
Indemnified Person shall have any liability
to a Company Indemnified Person unless such liability arises from
Claims which are the direct result of misconduct or negligence of
the Placement Agent or other Xxxxxxx Indemnified Person and
provided that the amount of such liability shall not exceed the
amount which may be received by the Placement Agent pursuant to
paragraph 5.(a) of this Agreement.
(c) If any action, proceeding (including any governmental
investigation), claim or demand shall be brought or asserted
against a Xxxxxxx Indemnified Person or a Company Indemnified
Person (an "Indemnified Person") in respect of which indemnity
may be sought pursuant to the preceding paragraphs, such
Indemnified Person shall promptly notify the Company or the
Placement Agent as indemnitor (the "Indemnitor") in writing, and
the Indemnitor, upon request of such Indemnified Person shall
retain counsel reasonably satisfactory to such Indemnified Person
to represent such Indemnified Person and any others the
Indemnitor may designate in such proceeding and shall pay the
fees and expenses of such counsel related to such proceeding. In
any such proceeding, any Indemnified Person unless (i) the
Indemnitor and the Indemnified Person shall have mutually agreed
to the contrary, (ii) the Indemnitor has failed within a
reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such
proceeding (including any impleaded parties) include the
Indemnitor, on the one hand, and the Indemnified Person, on the
other hand, and representation of all parties by the same counsel
would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnitor
shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons and that all such fees and
expenses shall be reimbursed as they are incurred. Any such firm
shall be designated in writing by the Placement Agent or the
Company as the case may be. The Indemnitor shall not be liable
for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there shall be a
final judgment for the plaintiff, the Indemnitor agrees to
indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. The
Indemnitor shall not, without the written consent of the
Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person
is, or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such
settlement includes an unconditional release of such Indemnified
Person from all liability or claims that are the subject matter
of such proceeding.
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in the
foregoing paragraphs of this Section is applicable in accordance
with its terms but for any reason is held to be unavailable from
the Indemnitor, the Indemnitor, on the one hand, and the
Indemnified Persons, on the other hand, will contribute to the
total losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses reasonably
incurred in connection with, any amount paid in settlement of any
action, suit or proceeding or any claim asserted) to which any
one or more of the Indemnified Persons may be subject in such
proportion as shall be appropriate to reflect the relative
benefits received by the Company, on the one hand, and the
Placement Agent on the other. The relative benefits received by
the Company, on the one hand, and the Placement Agent 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 the Company bear to the total compensation which may
be received by the Placement Agent pursuant to paragraph 5.(a) of
this Agreement. If, but only if, the allocation provided by the
foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to
in the foregoing sentence but also the relative fault of the
Indemnitor, on the one hand, and the Indemnified Persons, on the
other, with respect to the statements, actions or omissions which
resulted in such loss, claim, liability, expense or damage, or
action in respect thereof, as well as any other relevant
equitable considerations with respect to the Offering. Such
relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to
information supplied or violations of laws or this Agreement
committed by the Indemnitor on the one hand or the Indemnified
Persons on the other hand, the intent of the parties and their
relative knowledge, access to information an opportunity to
correct or prevent such statement, action omission or violation.
The Indemnitor and the Indemnified Persons agree that it would
not be just and equitable if contributions pursuant to this
Section were to be allocated by pro rata allocation or by any
other method of allocation which does not take into account the
equitable considerations referred to herein. The amount paid or
payable by the Indemnitor as a result of the loss, claim,
liability, expense or damage, or action in respect thereof,
referred to above in this Section shall be deemed to include, for
purpose of this Section 9, any legal or other expenses reasonably
incurred by the Indemnified Person in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, the Placement
Agent shall not be required to contribute any amount in excess of
the compensation which may be received by it pursuant to
paragraph 5.(a) of this Agreement and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) will be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
Any party entitled to contribution, promptly after receipt of
notice of commencement of any action against such party in
respect of which a claim for contribution may be made hereunder,
will notify any such party or parties from whom contribution may
be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any
other obligation it or they may have hereunder. No party will be
liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be
unreasonably withheld).
10. NOTICES. All notices hereunder shall be in writing and be
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delivered at, transmitted via telecopier or mailed first class
postage prepaid to the following addresses and shall be deemed
received on delivery if delivered in person or via telecopier and
two (2) days after the date of the mailing if mailed:
To the Company: Xxxxxx-Xxxx, Inc.
0000 X.X. 000xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
President and Chief Executive Officer
Copy to: Xxxxx Key, Esq.
A. Xxxxxx Xxxxxxxxx, Esq.
Xxxxxxx Key & Xxxxxxxx, P.C.
Mellon Financial Center
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
To the Placement Agent: Xxxxxxx Equities, Inc.
000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx,
Managing Director
Copy to: Xxxxx X. Xxxxxxxx, Esq.
Xxxxx Xxxxxxx Xxxxxx & Xxxxxx L.L.P.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
11. TERMINATION. In addition to the termination dates which may
-----------
be described in the Offering Documents:
(a) The Placement Agent shall have the right to terminate
this Agreement by giving notice as specified in Section 10 above:
(i) If the Company shall have failed, refused or been
unable to perform any of its material obligations;
(ii) If any other material condition hereunder which is
required to be fulfilled by the Company (including without
limitation the provisions of paragraph 8.(d) above), is not
fulfilled; or
(iii) If there has occurred a material event adversely
affecting the Company or the marketability of the Shares over
which you have no control.
(b) The Company shall have the right to terminate this
Agreement by giving notice as specified in Section 10 above:
(i) If the Placement Agent shall have failed, refused
or been unable to perform any of its material obligations
hereunder; and
(ii) If any other material condition hereunder which is
required to be fulfilled by the Placement Agent is not fulfilled.
Either party may terminate this Agreement if at least 1,200,000
Shares have not been subscribed for by the close of business on
the Offering Closing Date. In the event of termination by the
Placement Agent pursuant to paragraph 11.(a) the Company will
promptly reimburse you for all out-of-pocket expenses reasonably
incurred in connection with the Offering including without
limitation travel costs and fees, and disbursements of your
counsel. Except for such expenses, and the indemnity and
contribution agreements contained in Section 9 or as otherwise
set forth in Section 12, no party hereto shall be under any
liability to any other in respect of this Agreement.
12. SURVIVAL. The indemnity and contribution agreements, and the
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representations, warranties and covenants contained in this
Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by any party hereto,
(ii) acceptance of any of the Shares, the Placement Agent
Warrants or the Warrant Shares, and payment therefor, or any
termination of this Agreement, except that representations,
warranties and covenants of the Company shall expire on the third
anniversary of the date on which this Agreement terminates.
13. MISCELLANEOUS. This Agreement shall inure to the benefit of
-------------
and be binding upon the Company and you and the respective heirs,
executors, administrators, successors, and assigns of each such
party. Except as set forth in Section 14 nothing expressed or
mentioned in this Agreement is intended or shall be construed to
give any other person (including any purchaser of a Share) any
legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained.
14. GOVERNING LAW: LEGAL FEES. This Agreement shall be construed
-------------------------
in accordance with the laws of the state of California without
giving effect to choice of law or conflict of laws principles.
In the event of any suit or action to enforce any provision of
this Agreement the venue of any such action shall be in the
appropriate state or federal court located in Los Angeles County
and the prevailing party (deemed to mean the party who recovers a
greater relief in the action on this Agreement) shall be awarded
all costs and expenses incurred including without limitation all
filing fees, reasonable attorneys' fees and deposition and court
costs.
15. BOUND VOLUMES. The Company shall supply to the Placement
-------------
Agent and its counsel at the Company's cost a total of five bound
volumes each containing a full and comprehensive set of documents
relating to the Offering. The Company shall deliver these bound
volumes within a reasonable period after the Closing Date, not to
exceed three months thereafter.
16. HEADINGS AND COUNTERPARTS. Titles and headings to sections
-------------------------
herein are inserted for the convenience of reference only and are
not intended to be a part of or to affect the meaning or
interpretation of this Agreement. This Agreement may be executed
in one or more counterparts and all so executed shall each be
deemed an original but all such counterparts shall together
constitute one and the same instrument.
If the foregoing correctly sets forth the agreement between you
and the Company, please indicate your acceptance thereof in the
space provided for that purpose.
Accepted by:
XXXXXX-XXXX, INC. XXXXXXX EQUITIES, INC.
A Delaware Corporation
By: /s/ Xxxxxxx X. Xxxxxx By:
------------------------------ ---------------------------
Xxxxxxx X. Xxxxxx Xxxx Xxxxxxxxxx
President and Chief President
Executive Officer
By: By: /s/ Xxxxxxxxxxx X. Xxxxxxx
----------------------------- ------------------------------
Xxxxxxx X. Xxxxxxxxxxx, Ph.D. Xxxxxxxxxxx X. Xxxxxxx
Managing Director
