EXHIBIT 1.1
12,000,000 SHARES
ALLIANCE PHARMACEUTICAL CORP.
COMMON STOCK
PLACEMENT AGENCY AGREEMENT
___________, 1999
Cruttenden Xxxx Incorporated
0000 Xx Xxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Ladies and Gentlemen:
Alliance Pharmaceutical Corp., a New York corporation (the "Company"),
proposes to issue and sell (the "Offering") up to an aggregate of 12,000,000
shares (the "Shares") of common stock, par value $0.01 per share (the "Common
Stock"), to selected investors (collectively, "Investors"). The Company desires
to engage you as its placement agent (the "Placement Agent") in connection with
the Offering.
The Company hereby confirms its agreements with the Placement Agent as
follows:
1. AGREEMENT TO ACT AS PLACEMENT AGENT. On the basis of the
representations, warranties and agreements of the Company herein contained
and subject to all the terms and conditions of this Agreement, the Placement
Agent agrees to act as the Company's exclusive placement agent, on a best
efforts basis, in connection with the issuance and sale by the Company of the
Shares to Investors. The Company shall pay to the Placement Agent 2% of the
proceeds received by the Company from the sale of Shares in the Offering to
Investors who are existing stockholders of the Company and 8% of the proceeds
received by the Company from the sale of the Shares in the Offering to other
Investors, and the Company will issue to the Placement Agent a warrant to
purchase up to 10% of the number of shares sold in the Offering with an
exercise price equal to 120% of the purchase price of the Shares sold in the
Offering. The Company will also reimburse the Placement Agent for certain
out-of-pocket expenses up to a maximum of $_______ in accordance with Section
5 of this Agreement.
2. DELIVERY AND PAYMENT. On or prior to the Effective Date (as
defined below), the Company, the Placement Agent and City National Bank, as
escrow agent (the "Escrow Agent"), shall enter into an escrow agreement in
customary form mutually acceptable to the Company, the Placement Agent and
the Escrow Agent (the "Escrow Agreement"), pursuant to which an escrow
account will be established, at the Company's expense, for the benefit of
Investors (the "Escrow Account"). The Escrow Agreement will provide that,
prior to the Closing Date, (i) each Investor will deposit in the Escrow
Account an amount equal to the price per Share multiplied by the number of
Shares purchased by it, and (ii) the Escrow Agent will notify the Company and
the
1.
Placement Agent in writing whether such Investors have deposited in the
Escrow Account funds in an amount which shall equal the proceeds of the sale
of not fewer than 6,000,000 of the Shares offered in the Offering (the
"Requisite Funds"). At 9:00 a.m., San Diego, California time, on June 30,
1999, or such other date (which shall not be later than September 1, 1999) as
may be agreed upon by the Company and the Placement Agent (such date is
hereinafter referred to as the "Closing Date"), the Escrow Agent will release
the Requisite Funds from the Escrow Account for collection by the Company and
the Placement Agent as provided in the Escrow Agreement and the Company shall
deliver the Shares to Investors, which delivery may be made through the
facilities of the Depository Trust Company. The closing of the Offering (the
"Closing") shall take place at the offices of the Company or such other
location as the Placement Agent and the Company shall agree. All actions
taken at the Closing shall be deemed to have occurred simultaneously.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Placement Agent as follows:
(a) REGISTRATION STATEMENT. A registration statement on Form S-3
(File No. 333-76343) under the Securities Act of 1933 as amended (the
"Securities Act"), with respect to the Shares, including a form of prospectus
subject to completion, has been prepared by the Company in conformity with
the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder (the "Rules
and Regulations"). Such registration statement has been filed with the
Commission under the Securities Act, and one or more amendments to such
registration statement (including any post-effective amendment thereto and
any registration statement filed under Rule 462(b) of the Commission relating
thereto) may also have been so filed. After the execution of this Agreement,
the Company shall file with the Commission either (i) if such registration
statement, as it may have been amended, has been declared by the Commission
to be effective under the Securities Act, a prospectus in the form most
recently included in an amendment to such registration statement filed with
the Commission (or, if no such amendment shall have been filed, in such
registration statement), with such insertions and changes as are required by
Rule 430A under the Securities Act or permitted by Rule 424(b) under the
Securities Act as shall have been provided to and approved by the Placement
Agent prior to the filing thereof, or (ii) if such registration statement, as
it may have been amended, has not been declared by the Commission to be
effective under the Securities Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment has been
furnished to and approved by the Placement Agent prior to the filing thereof.
As used in this Agreement, the term "Registration Statement" shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock (herein called a Rule
462(b) registration statement), and, in the event of any amendment thereto after
the effective date of such registration statement (the "Effective Date"), shall
also mean (from and after the effectiveness of such amendment) such registration
statement as so amended (including any Rule 462(b) registration statement). The
term Prospectus as used in this Agreement shall mean the prospectus relating to
the Shares first filed with the Commission pursuant to Rule 424(b) and
2.
Rule 430A (or if no such filing is required, as included in the Registration
Statement) and, in the event of any supplement or amendment to such
prospectus after the Effective Date, shall also mean (from and after the
filing with the Commission of such supplement or the effectiveness of such
amendment) such prospectus as so supplemented or amended. The term
Preliminary Prospectus as used in this Agreement shall mean each preliminary
prospectus included in such registration statement prior to the time it
becomes effective. Any reference to the Registration Statement or the
Prospectus shall be deemed to refer to and include the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the Securities
Act, as of the date of the Registration Statement or the Prospectus, as the
case may be, and any reference to any amendment or supplement to the
Registration Statement or the Prospectus shall be deemed to refer to and
include any documents filed after such date under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), which, upon filing, are
incorporated by reference therein, as required by paragraph (b) of Item 12 of
Form S-3. As used in this Agreement, the term "Incorporated Documents" means
the documents which at the time are incorporated by reference in the
Registration Statement, the Prospectus or any amendment or supplement thereto.
(b) COMPLIANCE. Neither the Commission nor any state securities
commission has issued any order preventing or suspending the use of any
Preliminary Prospectus or has instituted or threatened to institute any
proceedings with respect to such an order. When any Preliminary Prospectus
was filed with the Commission it (i) contained all statements required to be
stated therein in accordance with, and complied in all material respects with
the requirements of, the Securities Act and the Rules and Regulations and
(ii) did not include 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 under which they were made, not misleading. When
the Registration Statement or any amendment thereto was or is declared
effective, it (A) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Securities Act and the Rules
and Regulations and (B) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus and when any amendment
or supplement thereto is filed with the Commission pursuant to Rule 424(b)
(or, if the Prospectus or such amendment or supplement is not required to be
so filed, when the Registration Statement and when any amendment thereto
containing such amendment or supplement to the Prospectus was or is declared
effective) and at all times subsequent thereto up to and including the
Closing Date (as defined in Section 2 hereof), the Prospectus, as amended or
supplemented at any such time, (I) contained or will contain all statements
required to be stated therein in accordance with, and complied or will comply
in all material respects with the requirements of, the Securities Act and the
Rules and Regulations and (II) did not or will not include 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 under
which they were made, not misleading. The foregoing provisions of this
paragraph (b) shall not apply to statements or omissions made in any
Preliminary Prospectus which have been corrected in a subsequent Preliminary
Prospectus or the Prospectus or to statements or omissions made in any
Preliminary Prospectus, the Registration Statement or any amendment thereto
or the Prospectus or any amendment or supplement thereto in reliance upon,
and in conformity with, information furnished in writing to the Company by
the Placement Agent expressly for use therein. The Company has filed in a
timely manner all documents that the Company was required to file with the
Commission under Sections 13, 14(a)
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and 15(d) of the Exchange Act during the twelve (12) months preceding the
filing date of the Registration Statement and prior to the Closing Date. As
of their respective filing dates (or, if amended, when amended), the
Incorporated Documents filed by the Company with the Commission complied with
the requirements of the Exchange Act. The Company currently and at the date
of filing of the Registration Statement satisfied the requirements for the
use of Form S-3 under the Securities Act.
(c) ORGANIZATION AND STANDING. The Company and each of its
subsidiaries is duly incorporated and validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation with
full power and authority (corporate and other) to own, lease and operate its
properties and conduct its current business as described in the Registration
Statement; the Company and each of its subsidiaries is duly qualified to do
business as a foreign corporation and in good standing in each jurisdiction
in which the ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure to be so
qualified or be in good standing is not reasonably likely to have a material
adverse effect on the condition (financial or otherwise), operations,
business or business prospects of the Company and its subsidiaries taken as a
whole (hereinafter, a "Material Adverse Effect"); no proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or
qualification; except as described in the Registration Statement, the Company
and each of its subsidiaries is in possession of and operating in compliance
with all authorizations, licenses, certificates, consents, orders and permits
from federal, state and other regulatory authorities, all of which are valid
and in full force and effect, except where the failure to possess or be in
compliance with any of the foregoing or where the failure of any of the
foregoing to be valid or in full force and effect, is not reasonably likely
to have a Material Adverse Effect. The Company does not own or control,
directly or indirectly, any corporation, association or other entity other
than the subsidiaries described in the Registration Statement.
(d) CORPORATE POWER; AUTHORIZATION. The Company has full legal
right, power and authority to enter into this Agreement and to perform the
transactions to be performed by it, or contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company (assuming due
authorization, execution and delivery by each of the other parties hereto and
thereto) and is a valid and binding agreement on the part of the Company,
enforceable in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles. The making, execution and performance of this
Agreement by the Company and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, (i) any bond, debenture, note or other evidence of indebtedness, or
under any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to which the
Company is a party or by which its properties may be bound, (ii) the
Certificate of Incorporation or bylaws of the Company or (iii) any law,
order, rule, regulation, writ, injunction, judgment or decree of any court,
administrative agency, regulatory body, government or governmental agency or
body, domestic or foreign, having jurisdiction over the Company or its
properties, except in the case of (i) and (iii) for any conflict, breach,
violation or default which is not reasonably likely to have a Material
Adverse Effect.
4.
(e) FINANCIAL STATEMENTS. The consolidated financial statements
of the Company and its subsidiaries included in the Registration Statement
(the "Financial Statements") comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the
Commission with respect thereto. The Financial Statements have been prepared
in accordance with generally accepted accounting principles consistently
applied ("GAAP") and fairly present the financial position of the Company and
its subsidiaries at the dates thereof and the results of its operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal, recurring adjustments and the absence of complete
footnotes). Except as and to the extent reflected in the Financial
Statements, neither the Company nor any of its subsidiaries had, as of the
date of the Financial Statements, any liabilities or obligations (other than
obligations of continued performance under contracts and other commitments
and arrangements entered into in the ordinary course of business) which GAAP
would require the Company to reflect in the Financial Statements. Except as
otherwise disclosed in the Registration Statement, there have not been any
changes in the assets, liabilities, financial condition or operations of the
Company or its subsidiaries from that reflected in the Financial Statements,
except in the ordinary course of business (which in the aggregate are not
material) and except for continuing operating losses that have not exceeded
$_______________ from the most recent date of such financial statements to
the date hereof, and changes in the ordinary course of business that have not
had a Material Adverse Effect.
(f) INTERNAL CONTROLS. The Company and each of its subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles 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) PROPERTIES. Except as set forth in the Registration
Statement, (i) the Company or one of its subsidiaries has good title to all
properties and assets described in the Registration Statement as owned by any
of them, free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest, other than as would not have a Material Adverse
Effect, (ii) the agreements to which the Company or any of its subsidiaries
is a party described in the Registration Statement are valid agreements,
enforceable by the Company or its subsidiary, as the case may be, except as
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles and, to the
Company's knowledge, the other contracting party or parties thereto are not
in material breach or material default under any of such agreements, and
(iii) the Company or one of its subsidiaries has valid and enforceable leases
for all properties described in the Registration Statement as leased by it,
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles.
Except as set forth in the Registration Statement, the Company and its
subsidiaries own or lease all such properties as are necessary to the
Company's operations as now conducted.
5.
(h) CAPITALIZATION. All outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid
and nonassessable, have been issued in compliance with all applicable federal
and state securities laws, and were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase
securities. The Shares have been duly authorized for issuance and sale to the
Investors pursuant to the Registration Statement and this Agreement, and,
when issued and delivered by the Company against payment therefor in
accordance with the terms of this Agreement, will be duly and validly issued
and fully paid and nonassessable, and will be sold free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest. No
preemptive right, co-sale right, registration right, right of first refusal
or other similar right of shareholders exists with respect to any of the
Shares or the issuance and sale thereof other than those that have been
satisfied or expressly waived prior to the date hereof and those that will
automatically expire upon and will not apply to the consummation of the
transactions contemplated on or before the Closing. No further approval or
authorization of any shareholder or the Board of Directors of the Company is
required for the issuance and sale or transfer of the Shares. Except as
disclosed in the Registration Statement and the Financial Statements, and the
related notes thereto included in the Registration Statement, and subject to
the applicable anti-dilution provisions of securities described in the
Registration Statement, the Company has no outstanding options to purchase,
or any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations.
(i) LITIGATION. Except as described in the Registration
Statement, there is not pending or, to the Company's knowledge, threatened,
any action, suit, claim or proceeding against the Company, any of its
subsidiaries, or any of their respective officers, properties, assets or
rights before any court, administrative agency, regulatory body, government
or governmental agency or body, domestic or foreign, having jurisdiction over
the Company, any of its subsidiaries, or any of their respective officers,
properties, which (i) is reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect or might materially and adversely affect
the Company's properties, assets or rights, (ii) is reasonably likely to
prevent consummation of the transactions contemplated hereby or (iii) is
required to be disclosed in the Registration Statement (as of the date
hereof) and is not so disclosed in the Registration Statement. There are no
agreements, contracts, leases or documents of the Company or any of its
subsidiaries of a character required to be described or referred to in the
Registration Statement (or in any Incorporated Document, or that must be
filed as an exhibit to the Registration Statement by the Securities Act or
the Rules and Regulations thereunder), as of the date hereof, which have not
been accurately described in all material respects in the Registration
Statement or filed as an exhibit to the Registration Statement or an
Incorporated Document. Neither the Company nor any of its subsidiaries is a
party or subject to the provisions of any injunction, judgment, decree or
order of any court, regulatory body, administrative agency, government or
governmental agency or body domestic or foreign, that could reasonably be
expected to have a Material Adverse Effect. The Company and each of its
subsidiaries has conducted and is conducting its business in compliance with
all applicable federal, state, local and foreign statutes, laws, rules,
regulations, ordinances, codes, decisions, decrees, directives and orders,
except where the failure to do so would not reasonably be likely, singly or
in the aggregate, to have a Material Adverse Effect.
6.
(j) LISTED SHARES. The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act, and is approved for quotation on the
Nasdaq National Market (the "NMS"). The Company has taken no action designed
to, or likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act or delisting the Common Stock from the
NMS, nor has the Company received any notification that the Commission or
Nasdaq is contemplating terminating such registration or listing.
(k) INTELLECTUAL PROPERTY.
(i) To the best of the Company's knowledge and except as
disclosed in the Registration Statement, (i) the Company and each of its
subsidiaries has good title to and ownership of or licensed rights to, free
and clear of all liens, claims and encumbrances of any nature, all patents,
patent rights, patent applications, know-how, information, proprietary rights
and processes (collectively, the "Intellectual Property") to conduct the
business of the Company as described in the Registration Statement, and (ii)
the conduct by the Company and its subsidiaries of their businesses in
connection with the Intellectual Property neither conflicts with or
constitutes, or is expected to conflict with or constitute, an infringement
of the rights of others.
(ii) To the best of the Company's knowledge, the Company has
sufficient title to and ownership of, or license rights to, or has applied
for, all patents, trademarks, service marks, trade names, copyrights and
information, proprietary rights and processes necessary to the proper conduct
of its business as described in the Registration Statement.
(iii) The Company has not received any communications
alleging that, and has no knowledge that the Company has violated or, by
conducting its business, would infringe or violate any of the patents,
trademarks, service marks, trade names, copyrights, proprietary rights or
processes of any other person or entity.
(l) NO CHANGE. Subsequent to the respective dates as of which
information is given in the Registration Statement (except as disclosed
therein), there has not been (i) any transaction that is material to the
Company, (ii) any obligation, direct or contingent, incurred by the Company
or any of its subsidiaries, except obligations incurred in the ordinary
course of business, (iii) any change in the capital stock or outstanding
indebtedness of the Company or any of its subsidiaries, except outstanding
trade credit and obligations incurred in the ordinary course consistent with
past practices, (iv) any dividend or distribution of any kind declared, paid
or made on the capital stock of the Company or any of its subsidiaries, (v)
any default in the payment of principal of or interest on any outstanding
debt obligations, or (vi) any loss or damage (whether or not insured) to the
property of the Company or any of its subsidiaries which has been sustained
or will have been sustained which has a Material Adverse Effect.
(m) NO DEFAULTS. Neither the Company nor any of its subsidiaries
is (a) in violation of its Certificate of Incorporation or bylaws or (b),
except as disclosed in the Registration Statement, in default (upon notice or
lapse of time or both) in the performance or observance of any obligation,
agreement, covenant or condition contained in any bond, debenture, note or
other evidence of indebtedness, or in any lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement or
instrument to which it is a
7.
party or by which its properties may be bound, or (c) in violation of any
law, order, rule, regulation, writ, injunction, judgment or decree of any
court, government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company, any of its subsidiaries or their properties
except in the case of (b) or (c) for any default or violation not reasonably
likely to have a Material Adverse Effect.
(n) GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part
of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement ("Consents") except for (a) such
Consents which are not material, (b) compliance with the securities and Blue
Sky laws in the states and other jurisdictions in which Shares are offered
and/or sold, which compliance will be effected in accordance with such laws,
(c) Consents required by the NMS and the SEC, and (d) the effectiveness of
the Registration Statement. The Company has not been advised, and has no
reason to believe, that either it or any of its subsidiaries is not
conducting business in compliance in all material respects with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including but not limited to, all applicable federal,
state, provincial and local environmental laws and regulations, except for
any failure to comply which is not reasonably likely to have a Material
Adverse Effect.
(o) LABOR; EMPLOYEES.
(i) No labor disturbance by the employees of the Company or
any of its subsidiaries exists or, to the Company's knowledge, is imminent.
The Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or any of its subsidiaries' principal suppliers,
subcontractors, authorized dealers or international distributors that is
reasonably likely to result in a Material Adverse Effect. No collective
bargaining agreement exists with any of the Company's or any of its
subsidiaries' employees and, to the Company's knowledge, no such agreement is
imminent.
(ii) If any employee of the Company or any of its
subsidiaries has entered into any non-competition, non-disclosure,
confidentiality or other similar agreement with any party other than the
Company or its subsidiaries, to the Company's knowledge, such employee is
neither in violation thereof nor is expected to be in violation thereof as a
result of the business conducted or expected to be conducted by the Company
or any of its subsidiaries as described in the Registration Statement or such
person's performance of his obligations to the Company or any of its
subsidiaries. To the Company's knowledge, no consultant or scientific advisor
of the Company or any of its subsidiaries is in violation of any
non-competition, non-disclosure, confidentiality or similar agreement between
such consultant or scientific advisor and any party other than the Company or
any of its subsidiaries. Every consultant and scientific advisor
(collectively, "Consultants") engaged by or on behalf of the Company or any
of its subsidiaries to render services for the Company or any of its
subsidiaries has entered into an agreement with the Company or its
subsidiaries providing for terms and conditions of non-disclosure and
confidentiality in connection with such services ("Consulting Agreements").
Assuming due authorization, execution and delivery of the Consulting
Agreements, the Consulting Agreements are legal, valid, binding and
enforceable instruments of the Consultants.
8.
(p) TAXES. The Company and each of its subsidiaries have timely
filed all necessary federal, state and foreign income and franchise tax
returns and have paid all taxes shown thereon as due, and there is no tax
deficiency that has been or, to the Company's knowledge, that might be
asserted against the Company that is reasonably likely to have a Material
Adverse Effect. All tax liabilities are adequately provided for on the books
of the Company.
(q) INSURANCE. The Company and its subsidiaries maintain
insurance with insurers of recognized financial responsibility of the types
and in the amounts generally deemed prudent for its business and consistent
with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and
personal property owned or leased by the Company or its subsidiaries against
theft, damage, destruction, acts of vandalism, products liability, errors and
omissions, and all other risks customarily insured against, all of which
insurance is in full force and effect. The Company has not been refused any
insurance coverage sought or applied for; and the Company does not have any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
(r) INVESTMENT COMPANY ACT. The Company has been advised
concerning the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations thereunder, and is not, and intends in the
future to conduct its and its subsidiaries' affairs in such a manner as to
ensure that it is not and will not become, an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
1940 Act and such rules and regulations.
(s) NO ILLEGAL CONTRIBUTIONS. Neither the Company nor any of its
subsidiaries has at any time during the last five (5) years (i) made any
unlawful contribution to any candidate for foreign office or failed to
disclose fully any contribution in violation of law, or (ii) made any payment
to any federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
(t) NO MANIPULATION. Neither the Company nor any of its
subsidiaries has taken, and neither the Company nor any of its subsidiaries
will take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Shares.
(u) TRANSACTIONS WITH AFFILIATES. There are no outstanding loans,
advances (except normal advances for business expenses in the ordinary course
of business) or guarantees of indebtedness by the Company or any of its
subsidiaries to or for the benefit of any of the officers or directors of the
Company or any of its subsidiaries or any shareholder who owns beneficially
more than five percent (5%) of the Common Shares of the Company or any of the
members of the families of any of them, except as disclosed in the
Registration Statement. No relationship, direct or indirect, exists between
or among the Company or any of its subsidiaries on the one hand and the
directors, officers, shareholders, customers or suppliers of the Company or
any of its subsidiaries on the other hand, that is required by the Securities
Act or the Exchange
9.
Act or the Rules and Regulations promulgated thereunder to be described in
the Registration Statement or any Incorporated Documents that is not
described in the Registration Statement.
(v) REGULATORY MATTERS.
(i) The Company is not aware of any rule making or similar
proceedings before the United States Food and Drug Administration ("FDA") or
comparable federal, state, local or foreign government bodies which involve
or affect the Company or any of its subsidiaries which, if the subject of an
action unfavorable to the Company or any of its subsidiaries, would have a
Material Adverse Effect.
(ii) The descriptions of the results of tests or evaluations
contained in the Registration Statement are accurate and complete in all
material respects, and the Company has no knowledge of any other tests or
evaluations, the results of which reasonably call into question the results
described or referred to in the Registration Statement. Neither the Company
nor any of its subsidiaries has received any notices or correspondence from
the FDA or any other governmental agency requiring the termination,
suspension or modification of any tests or evaluations conducted on behalf of
the Company or any of its subsidiaries that are described in the Registration
Statement or the results of which are referred to in the Registration
Statement.
(w) ENVIRONMENTAL MATTERS. (i) The Company and each of its
subsidiaries is in compliance with all rules, laws and regulations relating
to the use, treatment, storage and disposal of toxic substances and
protection of health or the environment ("Environmental Laws") which are
applicable to its business, except where the failure to comply would not
reasonably be likely to have a Material Adverse Effect, (ii) neither the
Company nor any of its subsidiaries has received any written notice from any
governmental authority or third party of an asserted claim under
Environmental Laws, which claim would be required to be disclosed in the
Registration Statement, (iii) to the Company's knowledge, neither the Company
nor any of its subsidiaries will be required to make future material capital
expenditures to comply with Environmental Laws and (iv) no property which is,
or has been, owned, leased or occupied by the Company or any of its
subsidiaries has, to the Company's knowledge, been designated as a Superfund
site pursuant to the Comprehensive Response, Compensation, and Liability Act
of 1980, as amended, or otherwise designated as a contaminated site under
applicable state or local law.
4. COVENANTS OF THE COMPANY. The company covenants and agrees as follows:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and
any amendments thereto to become effective as promptly as practicable. If
required, the Company will file the Prospectus and any amendment or
supplement thereto with the Commission in the manner and within the time
period required by Rule 424(b) under the Securities Act. During any time when
a prospectus relating to the Shares is required to be delivered under the
Securities Act, the Company (i) will comply with all requirements imposed
upon it by the Securities Act and the Rules and Regulations to the extent
necessary to permit the continuance of sales of or dealings in the Shares in
accordance with the provisions hereof and of the Prospectus, as then amended
or supplemented, and (ii) will not file with the Commission the prospectus or
the amendment referred to in the third sentence of Section 3(a) hereof, any
amendment or supplement to such
10.
prospectus or any amendment to the Registration Statement of which the
Placement Agent shall not previously have been advised and furnished with a
copy a reasonable period of time prior to the proposed filing and as to which
filing the Placement Agent shall not have given their consent.
(b) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Placement Agent (i) when the
Registration Statement, as amended, has become effective; if the provisions
of Rule 430A promulgated under the Securities Act will be relied upon, when
the Prospectus has been filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes effective;
(ii) of any request made by the Commission for amending the Registration
Statement, for supplementing any Preliminary Prospectus or the Prospectus or
for additional information, or (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto or the institution or threat of any investigation or
proceeding for that purpose, and will use its best efforts to prevent the
issuance of any such order and, if issued, to obtain the lifting thereof as
soon as possible.
(c) The Company will (i) use its best efforts to arrange for the
qualification of the Shares for offer and sale under the state securities or
blue sky laws of such jurisdictions as the Placement Agent may designate,
(ii) continue such qualifications in effect for as long as may be necessary
to complete the distribution of the Shares, and (iii) make such applications,
file such documents and furnish such information as may be required for the
purposes set forth in clauses (i) and (ii); provided, however, that the
Company shall not be required to qualify as a foreign corporation or file a
general or unlimited consent to service of process in any such jurisdiction.
(d) The Company consents to the use of the Prospectus (and any
amendment or supplement thereto) by the Placement Agent in connection with
the offering or sale of the Shares and for such period of time thereafter as
the Prospectus is required by law to be delivered in connection therewith.
If, at any time when a prospectus relating to the Shares is required to be
delivered under the Securities Act, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading, or if it becomes necessary at any
time to amend or supplement the Prospectus to comply with the Securities Act
or the Rules and Regulations, the Company promptly will so notify the
Placement Agent and, subject to Section 4(a) hereof, will prepare and file
with the Commission an amendment to the Registration Statement or an
amendment or supplement to the Prospectus which will correct such statement
or omission or effect such compliance, each such amendment or supplement to
be reasonably satisfactory to counsel to the Placement Agent.
(e) The Company will maintain a Transfer Agent and, if necessary
under the jurisdiction of incorporation of the Company, a Registrar (which
may be the same entity as the Transfer Agent) for its Common Stock.
(f) The Company will furnish, without charge, to Placement Agent
or on the Placement Agent's order, at such place as the Placement Agent may
designate, copies of each
11.
Preliminary Prospectus, the Registration Statement and any pre-effective or
post-effective amendments thereto (two of which copies will be signed and
will include all financial statements and exhibits) and the Prospectus, and
all amendments and supplements thereto, in each case as soon as available and
in such quantities as the Placement Agent may reasonably request.
(g) Except as contemplated by the Prospectus, the Company will
not, directly or indirectly, without the prior written consent of the
Placement Agent, issue, offer, sell, grant any option to purchase or
otherwise dispose (or announce any issuance, offer, sale, grant of any option
to purchase or other disposition) of any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable for, shares of
Common Stock for a period of 90 days after the Closing Date, except for
issuances pursuant to the exercise of stock options outstanding on or granted
subsequent to the date hereof, pursuant to a stock option or other employee
benefit plan in existence on the date hereof and except as contemplated by
the Prospectus.
(h) The Company will cause the Shares to be duly included for
quotation on the NMS prior to the Closing Date.
(i) Neither the Company nor any of its officers or directors, nor
affiliates of any of them (within the meaning of the Rules and Regulations)
will take, directly or indirectly, any action designed to, or which might in
the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any securities of the Company.
(j) The Company will apply the net proceeds of the offering
received by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(k) The Company will timely file all such reports, forms or other
documents as may be required from time to time, under the Securities Act, the
Rules and Regulations, the Exchange Act and the rules and regulations
thereunder, and all such reports, forms and documents filed will comply as to
form and substance with the applicable requirements under the Securities Act,
the Rules and Regulations, the Exchange Act and the rules and regulations
thereunder.
5. EXPENSES. Regardless of whether the transactions contemplated in this
Agreement are consummated, and regardless of whether for any reason this
Agreement is terminated, the Company will pay, and hereby agrees to indemnify
the Placement Agent against, all fees and expenses incident to the performance
of the obligations of the Company under this Agreement, including, but not
limited to, (i) fees and expenses of accountants and counsel for the Company,
(ii) all costs and expenses incurred in connection with the preparation,
duplication, printing, filing, delivery and shipping of copies of the
Registration Statement and any pre-effective or post-effective amendments
thereto, any Preliminary Prospectus and the Prospectus and any amendments or
supplements thereto (including postage costs related to the delivery by the
Placement Agent of any Preliminary Prospectus or Prospectus, or any amendment or
supplement thereto), this Agreement, the Escrow Agreement and all other
documents in connection with the transactions contemplated herein, including the
cost of all copies thereof, (iii) fees and expenses relating to qualification of
the Shares under state securities or blue sky laws, including the cost of
preparing and mailing the preliminary and final blue sky memoranda
12.
and filing fees and disbursements and fees of counsel and other related
expenses, if any, in connection therewith, (iv) filing fees of the Commission
and the NASD relating to the Shares and reasonable fees of counsel to the
Placement Agent in connection with NASD filings, (v) any fees and expenses in
connection with the listing for quotation of the Shares on the NMS, (vi)
costs and expenses incident to the preparation, issuance and delivery to the
escrow Agent of any certificates evidencing the shares, including transfer
agent's and registrar's fees and any applicable transfer taxes incurred in
connection with the delivery to the Escrow Agent of the Shares to be sold by
the company pursuant to this Agreement and (vii) the fees of the Escrow
Agent. In addition, the Company shall reimburse the Placement Agent, upon
invoice on a monthly basis, for all actual, accountable travel, legal
(including fees and expenses of counsel to the Placement Agent) and other
out-of-pocket expenses incurred in connection with its engagement hereunder
up to a maximum of $_______.
6. CONDITIONS OF THE PLACEMENT AGENT'S OBLIGATIONS. The obligations of the
Placement Agent under this Agreement are subject to the accuracy in all material
respects of the representations of the Company herein as of the date hereof and
as of the Closing Date as if they had been made on and as of the Closing Date;
the accuracy, in all material respects, on and as of the Closing Date of the
statements of officers of the Company made pursuant to the provisions hereof;
the performance by the Company on and as of the Closing Date of its covenants
and agreements hereunder; and the following additional conditions:
(a) If the Company has elected to rely on Rule 430A under the
Securities Act, the Registration Statement shall have been declared
effective, and the Prospectus (containing the information omitted pursuant to
Rule 430A) shall have been filed with the Commission not later than the
Commission's close of business on the second business day following the date
hereof or such later time and date to which the Placement Agent shall have
consented; if the Company does not elect to rely on Rule 430A, the
Registration Statement shall have been declared effective not later than
11:00 A.M., California time, on the date hereof or such later time and date
to which the Placement Agent shall have consented; if required, in the case
of any changes in or amendments or supplements to the Prospectus in addition
to those contemplated above, the Company shall have filed such Prospectus as
amended or supplemented with the Commission in the manner and within the time
period required by Rule 424(b) under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereto shall have been issued, and no proceedings for that purpose shall
have been instituted or threatened or, to the knowledge of the Company or the
Placement Agent, shall be contemplated by the Commission; and the Company
shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus
or otherwise).
(b) The Placement Agent shall not have advised the Company that
the Registration Statement, or any amendment thereto, contains an untrue
statement of fact which, in the Placement Agent's opinion, is material, or
omits to state a fact which, in the Placement Agent's opinion, is material
and is required to be stated therein or is necessary to make the statements
therein not misleading, or that the Prospectus, or any supplement thereto,
contains an untrue statement of fact which, in the Placement Agent's opinion,
is material, or omits to state a fact which, in the Placement Agent's
opinion, is material and is required to be stated therein or is
13.
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(c) On the Closing Date, the Placement Agent shall have received
the opinion, dated the Closing Date, of (i) Stroock & Stroock & Xxxxx LLP,
counsel to the Company ("Company Counsel"), and (ii) Knobbe, Martens, Xxxxx &
Bear, LLP, patent counsel to the Company ("Patent Counsel"), in forms
acceptable to Placement Agent's counsel.
(d) On or prior to the Closing Date, counsel to the Placement
Agent shall have been furnished such documents, certificates and opinions as
they may reasonably require in order to evidence the accuracy, completeness
or satisfaction of any of the representations or warranties of the Company or
conditions herein contained.
(e) On the Closing Date, the Placement Agent shall have received
from Ernst & Young LLP (the "Accountants") a letter dated as of the Closing
Date in form and substance satisfactory to the Placement Agent. The letter
shall not disclose any change, or any development involving a prospective
change, in or affecting the business or properties of the Company which, in
your reasonable judgment, makes it impracticable or inadvisable to proceed
with the offering of the Shares as contemplated by the Prospectus. In
addition, you shall have received from the Accountants a letter addressed to
the Company and made available to you for your use stating that its review of
the Company's system of internal accounting controls, to the extent it deemed
necessary in establishing the scope of its latest examination of the
Company's financial statements, did not disclose any weaknesses in internal
controls that it considered to be material weaknesses. All such letters shall
be in a form reasonably satisfactory to the Representatives and their counsel.
(f) On the Closing Date, the Placement Agent shall have received
a certificate, dated the Closing Date, of the principal executive officer and
the principal financial or accounting officer of the Company to the effect
that each of such persons has carefully examined the Registration Statement
and the Prospectus and any amendments or supplements thereto and this
Agreement, and that:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects, as if made on and as
of the Closing Date, and the Company has complied with all agreements and
covenants and satisfied all conditions contained in this Agreement on its
part to be performed or satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or, to the best knowledge of each of such
persons are contemplated or threatened under the Securities Act and any and
all filings required by Rule 424 and Rule 430A have been timely made;
(iii) The Registration Statement and Prospectus and, if any, each
amendment and each supplement thereto, contain all statements and information
required to be included therein, and neither the Registration Statement nor
any amendment thereto includes any
14.
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading and neither the Prospectus (or any supplement thereto) or any
Preliminary Prospectus includes or included any untrue statement of a
material fact or omits or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus up to and including
the Closing Date, neither the Company nor any of its subsidiaries has
incurred, other than in the ordinary course of its business or as
contemplated by the Prospectus, any material liabilities or obligations,
direct or contingent; neither the Company nor any of its subsidiaries has
purchased any of its outstanding capital stock or paid or declared any
dividends or other distributions on its capital stock; neither the Company
nor any of its subsidiaries has entered into any transactions not in the
ordinary course of business, except as contemplated by the Prospectus; and
there has not been any change in the capital stock or consolidated long-term
debt or any increase in the consolidated short-term borrowings (other than
any increase in short-term borrowings in the ordinary course of business) of
the Company or any material adverse change to the business properties,
assets, net worth, condition (financial or other), results of operations or
prospects of the Company and its subsidiaries taken as a whole, except for
continuing operating losses of not more than $________; neither the Company
nor any of its subsidiaries has sustained any material loss or damage to its
property or assets, whether or not insured; there is no litigation which is
pending or threatened against the Company or any of its subsidiaries which is
required under the Securities Act or the Rules and Regulations to be set
forth in an amended or supplemented Prospectus which has not been set forth;
and there has not occurred any event required to be set forth in an amended
or supplemented Prospectus which has not been set forth therein.
References to the Registration Statement and the Prospectus in this
paragraph (g) are to such documents as amended and supplemented at the date of
the certificate.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus up to and including
the Closing Date there has not been (i) any change or decrease specified in
the letter or letters referred to in paragraph (f) of this Section 6 or (ii)
any change, or any development involving a prospective change, in the
business or properties of the Company or its subsidiaries which change or
decrease in the case of clause (i) or change or development in the case of
clause (ii) makes it impractical or inadvisable in the Placement Agent's
judgment to proceed with the public offering or the delivery of the Shares as
contemplated by the Prospectus.
(h) No order suspending the sale of the Shares in any
jurisdiction designated by you pursuant to Section 4(c) hereof has been
issued on or prior to the Closing Date and no proceedings for that purpose
have been instituted or, to your knowledge or that of the Company, have been
or are contemplated.
(i) The Placement Agent shall have received from each person who
is a director or officer of the Company an agreement to the effect that such
person will not, directly or indirectly, without the prior written consent of
the Placement Agent, offer, sell, grant any
15.
option to purchase or otherwise dispose (or announce any offer, sale, grant
of an option to purchase or other disposition) of any shares of Common Stock
or any securities convertible into, or exchangeable or exercisable for,
shares of Common Stock for a period of 90 days after the Closing Date.
(j) The Shares have been duly authorized for quotation on the NMS.
(k) The Company shall have furnished the Placement Agent with
such further opinions, letters, certificates or documents as the Placement
Agent or counsel for the Placement Agent may reasonably request. All
opinions, certificates, letters and documents to be furnished by the Company
will comply with the provisions hereof only if they are reasonably
satisfactory in all material respects to the Placement Agent and to counsel
for the Placement Agent. The Company shall furnish the Placement Agent with
conformed copies of such opinions, certificates, letters and documents in
such quantities as you reasonably request. The certificates delivered under
this Section 6 shall constitute representations, warranties and agreements of
the Company as to all matters set forth therein as fully and effectively as
if such matters had been set forth in Section 2 of this Agreement.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Placement Agent and each person, if any, who controls such Placement Agent
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any and all losses, claims, damages or liabilities,
joint or several (and actions in respect thereof), to which such Placement
Agent or such controlling person may become subject, under the Securities Act
or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or the
Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements, in light of the circumstances under which they were
made, not misleading and will reimburse, as incurred, such Placement Agent or
such controlling persons for any legal or other expenses incurred by such
Placement Agent or such controlling persons in connection with investigating,
defending or appearing as a third party witness in connection with any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
any of such documents in reliance upon and in conformity with information
furnished in writing to the Company by the Placement Agent expressly for use
therein, and provided, further, that such indemnity with respect to any
Preliminary Prospectus shall not inure to the benefit of the Placement Agent
(or to the benefit of any person controlling such Placement Agent) to the
extent that any such loss, claim, damage, liability or action (i) results
from the fact that such Placement Agent failed to send or give a copy of the
Prospectus (as amended or supplemented) to a purchaser of Shares that is
asserting such loss, claim, damage or liability, at or prior to the
confirmation of the sale of such Shares to such person in any case where such
delivery is required by the Securities Act and (ii) arises out of or is based
upon an untrue statement or omission of a material fact contained in such
Preliminary
16.
Prospectus that was corrected in the Prospectus (as amended and
supplemented), unless such failure resulted from non-compliance by the
Company with Section 4(h) hereof. The indemnity agreement in this paragraph
(a) shall be in addition to any liability which the Company may have at
common law or otherwise.
(b) The Placement Agent agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
Registration Statement, each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all losses, claims, damages or liabilities (and actions
in respect thereof) to which the Company or any such director, officer, or
controlling person may become subject, under the Securities Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or the Prospectus or
any Preliminary Prospectus, or any amendment or supplement thereto or arise
out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with information
furnished in writing by the Placement Agent to the Company expressly for use
therein; and will reimburse, as incurred, all legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action. The Company acknowledges that only the
statements relating to the Placement Agent with respect to the public
offering of the Shares set forth in the second paragraph of the cover page of
the Prospectus and under the heading "Plan of Distribution" in the Prospectus
have been furnished by the Placement Agent to the Company expressly for use
therein and constitute the only information furnished in writing by or on
behalf of the Placement Agent for inclusion in the Prospectus. The indemnity
agreement contained in this subsection (b) shall be in addition to any
liability which the Placement Agent may have at common law or otherwise.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against one or more
indemnifying parties under this Section 7, notify such indemnifying party or
parties of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have
to any indemnified party otherwise than under subsection (a) or (b) of this
Section 7 or to the extent that the indemnifying party was not adversely
affected by such omission. In case any such action is brought against an
indemnified party and it notifies an indemnifying party or parties of the
commencement thereof, the indemnifying party or parties against which a claim
is to be made will be entitled to participate therein and, to the extent that
it or they may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party has reasonably concluded that
there may be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select one
separate counsel for all of them to assume such legal defenses and otherwise
to
17.
participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party under this Section 7 for any legal or
other expenses (other than the reasonable costs of investigation)
subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party has employed such counsel in
connection with the assumption of such different or additional legal defenses
in accordance with the proviso to the immediately preceding sentence, (ii)
the indemnifying party has not employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, or (iii) the indemnifying
party has authorized in writing the employment of counsel for the indemnified
party at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 7 is
unavailable to hold harmless an indemnified party under paragraph (a) or (b)
above in respect of any losses, claims, damages, expenses or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) (i) in such proportion as is appropriate to reflect the relative
benefits received by each of the contributing parties, on the one hand, and
the party to be indemnified, on the other hand, from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of each of the contributing parties, on the one hand, and the
party to be indemnified, on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. In any case where the
Company is a contributing party and the Placement Agent is the indemnified
party, 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 of the Shares (before
deducting expenses) bear to the total placement agent commissions and fees
received by the Placement Agent hereunder, in each case as set forth in the
table on the cover page of the Prospectus. 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 the Company or by the
Placement Agent, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this paragraph (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 paragraph (d), no Placement Agent shall be required to
contribute any amount in excess of the placement agent commissions applicable
to the Shares paid to such Placement Agent hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph
(d), (i) each person, if any, who controls the Placement Agent within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Placement Agent, and (ii)
each director of the Company, each officer of the Company who has signed the
Registration
18.
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Company, subject in each
case to this paragraph (d). Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect to which a claim for contribution may be made
against another party or parties under this paragraph (d), notify such party
or parties from whom contribution may be sought, but the omission so to
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation (x) it or they may have
hereunder or otherwise than under this paragraph (d) or (y) to the extent
that such party or parties were not adversely affected by such omission. The
contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may have at common law or otherwise.
8. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective
representations, warranties, agreements, covenants, indemnities and
statements of, and on behalf of, the Company and its officers and the
Placement Agent, respectively, set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Placement Agent, and will survive
delivery of and payment for the Shares. Any successors to the Placement Agent
shall be entitled to the indemnity, contribution and reimbursement agreements
contained in this Agreement.
9. TERMINATION.
(a) This Agreement (except for the provisions of Sections 5 and 7
hereof) may be terminated by the Placement Agent by notice to the Company in
the event that the Company has failed to comply in any respect with any of
the provisions of this Agreement required on it to be performed at or prior
to the Closing Date, or if any of the representations or warranties of the
Company is not accurate in any material respect or if the covenants,
agreements or conditions of, or applicable to the Company herein contained
have not been complied with in any respect or satisfied within the time
specified on the Closing Date or if prior to the Closing Date:
(i) the Company or any of its subsidiaries shall have
sustained a loss by strike, fire, flood, accident or other calamity of such a
character as to interfere materially with the conduct of the business and
operations of the Company and its subsidiaries takes as a whole regardless of
whether or not such loss was insured;
(ii) trading in the Common Stock shall have been suspended
by the Commission or the Nasdaq National Market or trading in securities
generally on the New York Stock Exchange or the Nasdaq National Market shall
have been suspended or a material limitation on such trading shall have been
imposed or minimum or maximum prices shall have been established on any such
exchange or market system;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
19.
(iv) there shall have been an outbreak or escalation of
hostilities between the United States and any foreign power or an outbreak or
escalation of any other insurrection or armed conflict involving the United
States; or
(v) there shall have been a material adverse change in (A)
general economic, political or financial conditions or (B) the present or
prospective business or condition (financial or other) of the Company and its
subsidiaries taken as a whole that, in each case, in the Placement Agent's
judgment, makes it impracticable or inadvisable to make or consummate the
public offering, sale or delivery of the Shares on the terms and in the
manner contemplated in the Prospectus and the Registration Statement.
(b) This Agreement may be terminated by either party in the event
that the Requisite Funds shall not have been deposited by Investors by the
close of business thirty (30) days after the Effective Date.
(c) Termination of this Agreement shall be without liability of
any party to any other party other than as provided in Sections 5 and 7
hereof.
10. NOTICES. All communications hereunder shall be in writing and if
sent to the Placement Agent shall be mailed or delivered or telegraphed and
confirmed by letter or telecopied and confirmed by letter to Cruttenden Xxxx
Incorporated at 0000 Xx Xxxxx Xxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000,
Attention: Managing Director or, if sent to the Company, shall be mailed or
delivered or telegraphed and confirmed to the Company at 0000 Xxxx Xxxxxxxxx,
Xxx Xxxxx, XX 00000, Attention: President.
11. SUCCESSORS. This agreement shall incur to the benefit of and be
binding upon the Company and the Placement Agent and the Company's and the
Placement Agent's respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons
and for the benefit of no other person, except that the representations,
warranties, indemnities and contribution agreements of the Company contained
in this Agreement shall also be for the benefit of any person or persons, if
any, who control the Placement Agent within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and except that the
Placement Agent's indemnity and contribution agreements shall also be for the
benefit of the directors of the Company, the officers of the Company who have
signed the Registration Statement and each person or persons, if any, who
control the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act.
12. APPLICABLE LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to the choice of law or conflict of law principles thereof.
Each party hereto consents to the jurisdiction of each court in which any
action is commenced seeking indemnity or contribution pursuant to Section 7
above and agrees to accept, either directly or through an agent, service of
process of each such court.
20.
13. COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
21.
If the foregoing correctly sets forth our understanding, please
indicate the Placement Agent's acceptance thereof in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
ALLIANCE PHARMACEUTICAL CORP.
By:
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Name:
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Title:
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Accepted as of the date first above written:
CRUTTENDEN XXXX INCORPORATED
By:
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Name:
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Title:
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22.