14,545,000 Shares ADVENTRX PHARMACEUTICALS, INC. Common Stock PLACEMENT AGENCY AGREEMENT
EXHIBIT 10.1
14,545,000 Shares
ADVENTRX PHARMACEUTICALS, INC.
Common Stock
November 2, 2006
THINKEQUITY PARTNERS LLC
FORTIS SECURITIES LLC
c/o ThinkEquity Partners LLC
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FORTIS SECURITIES LLC
c/o ThinkEquity Partners LLC
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Ladies and Gentlemen:
ADVENTRX Pharmaceuticals, Inc., a Delaware corporation (the “Company”), proposes, subject to
the terms and conditions stated herein, to issue and sell up to an
aggregate of 14,545,000 shares (the “Shares”) of the Company’s common stock, $0.001 par value per share (the “Common
Stock”) to certain investors (each an “Investor” and, collectively, the “Investors”). The Company
desires to engage ThinkEquity Partners LLC (“ThinkEquity”) and Fortis Securities LLC (“Fortis” and
together with ThinkEquity, the “Placement Agents”) as its exclusive placement agents as set forth
herein in connection with such issuance and sale. ThinkEquity is acting as representative of the
Placement Agents (the “Representative”). The Shares are more fully described in the Registration
Statement (as hereinafter defined).
1. Agreement to Act as Placement Agents; Delivery and Payment. On the basis of the
representations, warranties and agreements of the Company herein contained, and subject to the
terms and conditions set forth in this Agreement:
(a) The Company hereby engages the Placement Agents to act as its exclusive placement agents
in connection with the issuance and sale by the Company of Shares to the Investors (other than in
connection with the issuance and sale by the Company of Shares to H.B.K. Investments and those
entities over whom H.B.K. Investments has the power to govern the financial and operating policies
or to appoint the management of) and the Placement Agents hereby agree, as agents of the Company,
to use their best efforts to solicit offers to purchase the Shares from the Company upon the terms
and conditions set forth in the Prospectus (as hereinafter defined). Upon the occurrence of the
Closing (as hereinafter defined), the Company shall pay to the Placement Agents, by wire transfer
of immediately available funds payable to the order of the Placement Agents, to an account
designated by the Placement Agents, an aggregate of six percent (6.0%) of the gross proceeds
received by the Company from its sale of the Shares. Prior to the earlier of (i) the date on which
this Agreement is terminated and (ii) the Closing Date (as hereinafter defined), the Company shall
not, without the prior written consent of the Representative, solicit or accept offers to purchase
Shares of the Company (other than pursuant to the
exercise of options or warrants to purchase shares of Common Stock that are outstanding at the
date hereof) otherwise than through the Placement Agents in accordance herewith.
(b) The Company expressly acknowledges and agrees that the Placement Agents’ obligations
hereunder are on a best efforts basis and this Agreement shall not give rise to a commitment by the
Placement Agents or any of their affiliates to underwrite or purchase any of the Shares or
otherwise provide any financing, and the Placement Agents shall have no authority to (and agree not
to purport to) bind the Company in respect of the sale of any Shares. The sale of the Shares shall
be made pursuant to the subscription terms in the form included as Exhibit A hereto (the
“Subscription Terms”). The Company shall have the sole right to accept offers to purchase the
Shares and may reject any such offer in whole or in part, and, except as set forth in Section 4
hereof, in no event shall fees be payable on any proposed purchase which is rejected for any reason
or which otherwise does not close for any reason. Notwithstanding the foregoing, it is understood
and agreed that the Placement Agents or any of their affiliates may, solely at their discretion and
without any obligation to do so, purchase Shares as principals; provided, however, that any such
purchases by the Placement Agents (or their affiliates) shall be fully disclosed to the Company and
approved by the Company in accordance with the previous sentence.
(c) Concurrently with the execution and delivery of this Agreement, the Company, the Placement
Agents and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC, as escrow agent (the “Escrow Agent”), shall enter into an escrow
agreement (the “Escrow Agreement”), pursuant to which an escrow account (the “Escrow Account”) will
be established for the benefit of the Company and the Investors who settle their purchases through
the facilities of The Depository Trust Company’s DWAC system. Prior to the Closing Date (as
hereinafter defined), each such Investor shall deposit into the Escrow Account an amount equal to
the product of (x) the number of Shares such Investor has agreed to purchase and (y) the purchase
price per share as set forth on the cover page of the Prospectus (the “Purchase Amount”). The
aggregate of all such Purchase Amounts is herein referred to as the “Escrow Funds.” On the Closing
Date, the Escrow Agent will disburse the Escrow Funds from the Escrow Account to the Company and
the Placement Agents as provided in the Escrow Agreement, and the Company shall cause its transfer
agent to deliver the Shares purchased by such Investors, which delivery may be made through the
facilities of The Depository Trust Company’s DWAC system.
(d) Payment of the purchase price for, and delivery of, the Shares shall be made at a closing
(the “Closing”) at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel for the Company, located at ▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m., Eastern Standard Time, on the
third or fourth business day (as permitted under Rule 15c6-1 under the Securities Exchange Act of
1934, as amended (collectively with the rules and regulations promulgated thereunder, the “Exchange
Act”)) after the determination of the public offering price of the Shares (such date of payment and
delivery being herein called the “Closing Date”). All such actions taken at the Closing shall be
deemed to have occurred simultaneously. No Shares which the Company has agreed to sell pursuant to
this Agreement and the Subscription Terms shall be deemed to have been purchased and paid for, or
sold by the Company, until such Shares shall have been delivered to the Investor thereof against
payment therefore by such Investor. If the Company shall default in its obligations to deliver
Shares to an Investor whose offer it has accepted, the Company shall indemnify and hold the
Placement Agents harmless against any loss, claim or damage arising from or as a result of such
default by the Company.
(e) The Shares shall be registered in such names and in such denominations as the Placement
Agents shall request by written notice to the Company.
(f) Any Investor not settling its purchase of Shares pursuant to Section 1(c) above shall
deposit its respective Purchase Amount into an account or accounts established with its prime
broker
for purposes of settling the Shares through the Placement Agents by delivery versus payment. On
the
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Closing Date, the Placement Agent shall, with respect to each such Investor, cause the Purchase
Amount for such Shares to be wired to an account designated by the Company in exchange for the
release of such Investor’s Shares.
2. Representations and Warranties of the Company. The Company represents and warrants to the
Placement Agents and the Investors as follows:
(a) Registration Statement and Prospectus. The Company has prepared and filed with the
Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (File
No. 333-133729) under the Securities Act of 1933, as amended, and the rules and regulations (the
“Rules and Regulations”) of the Commission thereunder (collectively, the “Securities Act”), and
such amendments to such registration statement as may have been required to the date of this
Agreement. Such registration statement has been declared effective by the Commission. Such
registration statement, at any given time, including amendments thereto at such time, the exhibits
and any schedules thereto at such time, the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act at such time and the documents and information
otherwise deemed to be a part thereof or included therein by Rule 430A, 430B or 430C under the
Securities Act or otherwise pursuant to the Securities Act at such time, is herein called the
“Registration Statement.” Any registration statement filed by the Company pursuant to Rule 462(b)
under the Securities Act is called the “Rule 462(b) Registration Statement” and, from and after the
date and time of filing of the Rule 462(b) Registration Statement, the term “Registration
Statement” shall include the Rule 462(b) Registration Statement.
The Company proposes to file with the Commission pursuant to Rule 424 under the Securities Act
a final prospectus supplement relating to the Shares to a form of prospectus included in the
Registration Statement relating to the Shares in the form heretofore delivered to the Placement
Agents. Such prospectus included in the Registration Statement at the time it was declared
effective by the Commission or in the form in which it has been most recently filed with the
Commission on or prior to the date of this Agreement is hereinafter called the “Base Prospectus.”
Such supplemental form of prospectus, in the form in which it shall be filed with the Commission
pursuant to Rule 424(b) (including the Base Prospectus as so supplemented) is hereinafter called
the “Prospectus.” Any preliminary form of Prospectus which is filed or used prior to filing of the
Prospectus is hereinafter called a “Preliminary Prospectus.” Any reference herein to the Base
Prospectus, any Preliminary Prospectus or the Prospectus or to any amendment or supplement to any
of the foregoing shall be deemed to refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act as of the date of such prospectus,
and, in the case of any reference herein to the Prospectus, also shall be deemed to include any
documents incorporated by reference therein, and any supplements or amendments thereto, filed with
the Commission after the date of filing of the Prospectus under Rule 424(b) under the Securities
Act, and prior to the termination of the offering of the Shares by the Placement Agents.
For purposes of this Agreement, all references to the Registration Statement, the Rule 462(b)
Registration Statement, the Base Prospectus, any Preliminary Prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“▇▇▇▇▇”).
Any reference to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents incorporated by reference therein pursuant to Form S-3 under the Securities
Act as of the date of such Preliminary Prospectus or the Prospectus, as applicable. Any reference
to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any document filed under the Exchange Act, after the date of such Preliminary
Prospectus or the Prospectus, as applicable, and before the date of such amendment or supplement
and incorporated by reference in
such Preliminary Prospectus or the Prospectus, as applicable; and any reference to any amendment to
the
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Registration Statement shall be deemed to include any annual report of the Company on Form 10-K
filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act after the
Effective Date and before the date of such amendment that is incorporated by reference in the
Registration Statement.
The Company and the transactions contemplated by this Agreement meet the requirements and
comply with the conditions for the use of Form S-3 under the Securities Act. The offering of the
Shares by the Company complies with the applicable requirements of Rule 415 under the Securities
Act. The Company has complied to the Commission’s satisfaction with all requests of the Commission
for additional or supplemental information. The Registration Statement has become effective under
the Securities Act. No stop order preventing or suspending use of the Registration Statement, any
Preliminary Prospectus or the Prospectus or the effectiveness of the Registration Statement, has
been issued by the Commission, and no proceedings for such purpose have been instituted or are
pending or, to the Company’s knowledge, are contemplated or threatened by the Commission.
(b) Compliance with Registration Requirements. Each part of the Registration Statement and
any post-effective amendment thereto, at the time such part became effective (including each deemed
effective date with respect to the Placement Agents pursuant to Rule 430B under the Securities Act)
and as of the Closing Date, complied and will comply, in all material respects, with the
requirements of the Securities Act, the Rules and Regulations and the Exchange Act and did not and
will not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading. The Prospectus (or
any amendment or supplement to the Prospectus), at the time of filing or the time of first use
within the meaning of the Rules and Regulations and as of the Closing Date, complied and will
comply, in all material respects, with the requirements of the Securities Act, the Rules and
Regulations and the Exchange Act and did not and will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided, that the Company
makes no representations or warranty in this paragraph with respect to any Placement Agents
Information (as defined in Section 7).
(c) Disclosure Package. As of the Time of Sale (as hereinafter defined) and as of the Closing
Date, neither (A) any Issuer General Free Writing Prospectus(es) (as defined below) issued at or
prior to the Time of Sale, the Statutory Prospectus (as hereinafter defined) and the information
included on Exhibit D hereto (which information the Placement Agents hereby agree to convey
orally to prospective purchasers at or prior to confirming sales of the shares in the offering),
all considered together (collectively, the “Disclosure Package”), nor (B) any individual Issuer
Limited-Use Free Writing Prospectus (as hereinafter defined), when considered together with the
Disclosure Package, included or will include any untrue statement of a material fact or omitted or
will 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; provided, that the Company
makes no representations or warranty in this paragraph with respect to any Placement Agents
Information. No statement of material fact included in the Prospectus has been omitted from the
Disclosure Package and no statement of material fact included in the Disclosure Package that is
required to be included in the Prospectus has been omitted therefrom. As used in this paragraph and
elsewhere in this Agreement:
(1) “Time of Sale” with respect to any Investor, means 5:00 p.m. Eastern
Standard Time on the date of this Agreement.
(2) “Statutory Prospectus” as of any time means the prospectus (including any
preliminary prospectus) that is included in the Registration Statement immediately
prior to the Time of Sale, including any document incorporated by reference therein.
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(3) “Issuer Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 under the Securities Act (“Rule 433”), relating
to the Shares in the form filed or required to be filed with the Commission or, if
not required to be filed, in the form retained in the Company’s records pursuant to
Rule 433(g) under the Securities Act.
(4) “Issuer General Free Writing Prospectus” means any Issuer Free Writing
Prospectus that is intended for general distribution to prospective investors as
identified on Schedule I hereto, and does not include a “bona fide
electronic road show” as defined in Rule 433.
(5) “Issuer Limited-Use Free Writing Prospectus” means any Issuer Free Writing
Prospectus that is not an Issuer General Free Writing Prospectus, including any
“bona fide electronic road show” as defined in Rule 433, that is made available
without restriction pursuant to Rule 433(d)(8)(ii), even though not required to be
filed with the Commission.
(d) Conflict with Registration Statement. Each Issuer Free Writing Prospectus, as of its
issue date and at all subsequent times through the completion of the offering and sale of the
Shares or until any earlier date that the Company notified or notifies the Placement Agents, did
not, does not and will not include any information that conflicted, conflicts or will conflict with
the information contained in the Registration Statement, any Statutory Prospectus or the Prospectus
including any document incorporated by reference therein and any prospectus supplement deemed to be
a part thereof that has not been superseded or modified; provided, that the Company makes no
representations or warranty in this paragraph with respect to any Placement Agents Information.
(e) Distributed Materials. The Company has not, directly or indirectly, distributed and will
not distribute any prospectus or other offering material in connection with the offering and sale
of the Shares other than any Preliminary Prospectus, the Disclosure Package or the Prospectus, and
other materials, if any, permitted under the Securities Act to be distributed and consistent with
Section 4(d) below. The Company will file with the Commission all Issuer Free Writing
Prospectuses required to be filed in the time required under Rule 433(d) under the Securities Act.
The Company has satisfied or will satisfy the conditions in Rule 433 under the Securities Act to
avoid a requirement to file with the Commission any electronic road show. The parties hereto agree
and understand that the content of any and all “road shows” related to the offering of the Shares
contemplated hereby is solely the property of the Company.
(f) Not an Ineligible Issuer. (1) At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) of the Shares and (2) at the date hereof, the
Company was not and is not an “ineligible issuer,” as defined in Rule 405 under the Securities Act,
without taking account of any determination by the Commission pursuant to Rule 405 that it is not
necessary that the Company be considered an ineligible issuer, including, without limitation, for
purposes of Rules 164 and 433 under the Securities Act with respect to the offering of the Shares
as contemplated by the Registration Statement.
(g) Incorporated Documents. The documents incorporated by reference in the Disclosure Package
and in the Prospectus, when they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and were filed on a timely basis with the Commission and none
of such documents contained an untrue statement of a material fact or omitted to state a
material fact
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necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(h) Due Incorporation. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation, with the
corporate power and authority to own its properties and to conduct its business as currently being
carried on and as described in the Registration Statement, the Disclosure Package and the
Prospectus and is duly qualified to transact business as a foreign corporation in good standing
under the laws of each other jurisdiction in which its ownership or leasing of property or the
conduct of its business requires such qualification, except where the failure to be so qualified
and in good standing would not, individually or in the aggregate, result in any material adverse
effect upon, or change in, the general affairs, business, operations, prospects, properties,
financial condition, or results of operations of the Company taken as a whole (a “Material Adverse
Effect”).
(i) Capitalization. All of the issued and outstanding shares of capital stock of the Company,
including the outstanding shares of Common Stock, have been duly authorized and validly issued and
are fully paid and nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase or acquire any securities of the Company that have not been
waived in writing or otherwise complied with; and the holders thereof are not subject to personal
liability by reason of being such holders.
(j) The Shares. The Shares have been duly and validly authorized by the Company and, when
issued, delivered and paid for in accordance with the terms of this Agreement and the Subscription
Terms, will have been validly issued and will be fully paid and nonassessable and will not be
subject to any statutory or contractual preemptive rights or other rights to subscribe for or
purchase or acquire any shares of Common Stock of the Company, which have not been waived or
complied with.
(k) Description of Capital Stock. The capital stock of the Company, including the Common
Stock, conforms as to legal matters to the description thereof, if any, contained in the
Registration Statement, the Statutory Prospectus and the Prospectus, and as of the date thereof,
the Company had authorized capital stock as set forth therein. The Shares are in due and proper
form and the holders of the Shares will not be subject to personal liability by reason of being
such holders.
(l) No Registration Rights. Except as otherwise described in the Registration Statement, the
Disclosure Package or the Prospectus, there are no preemptive rights or other rights to subscribe
for or to purchase, or any restriction upon the voting or transfer of, any shares of Common Stock
pursuant to the Company’s charter, by-laws or any agreement or other instrument to which the
Company is a party or by which the Company is bound (other than rights which have been waived in
writing in connection with the transactions contemplated by this Agreement or that have been
otherwise satisfied within the time or times required under the terms and conditions of any such
right). Except as otherwise described in the Registration Statement, the Disclosure Package or the
Prospectus, there are no contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be owned by such person or
to require the Company to include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act (other than rights which have been waived
in writing in connection with the transactions contemplated by this Agreement or otherwise
satisfied).
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(m) Subsidiaries. The Company has no significant subsidiaries (as such term is defined in Rule
1-02(w) of Regulation S-X promulgated by the Commission) other than ADVENTRX (Europe) Ltd. and SD
Pharmaceuticals, Inc.
(n) Due Authorization and Enforceability. Each of this Agreement and the Subscription Terms
has been duly authorized, executed and delivered by the Company, and constitutes a valid, legal and
binding obligation of the Company, enforceable against the Company in accordance with its terms,
except as rights to indemnity hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization
or similar laws affecting the rights of creditors generally and subject to general principles of
equity.
(o) No Conflict. The execution, delivery and performance by the Company of this Agreement and
the Subscription Terms and the consummation of the transactions herein contemplated, including the
issuance and sale by the Company of the Shares, will not conflict with or result in a breach or
violation of, or constitute a default under (nor constitute any event which with notice, lapse of
time or both would result in any breach or violation of or constitute a default under) (i) the
provisions of the charter or by-laws of the Company, (ii) any material indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease,
contract or other agreement or instrument to which the Company is a party or by which it or any of
its properties may be bound or affected, or (iii) any federal, state, local or foreign law,
regulation or rule or any decree, judgment or order applicable to the Company.
(p) No Consents Required. No approval, authorization, consent or order of or filing with any
federal, state, local or foreign governmental or regulatory commission, board, body, authority or
agency, or of or with any self-regulatory organization or other non-governmental regulatory
authority or approval of the stockholders of the Company, is required in connection with the
issuance and sale of the Shares or the consummation by the Company of the transactions contemplated
hereby other than (i) as may be required under the Securities Act, (ii) any necessary qualification
of the Shares under the securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Placement Agents and (iii) under the listing standards, policies
and requirements set forth in the Company Guide of the American Stock Exchange (“AMEX”), (iv) under
the rules and regulations of the National Association of Securities Dealers, Inc. (“NASD”). The
Company has full power and authority to enter into this Agreement and the Subscription Terms and to
authorize, issue and sell the Shares as contemplated by this Agreement and the Subscription Terms.
(q) No Violation. The Company is not in breach or violation of or in default (nor has any
event occurred which with notice, lapse of time or both would result in any breach or violation of,
or constitute a default) (i) under the provisions of its charter or bylaws or (ii) in the
performance or observance of any term, covenant, obligation, agreement or condition contained in
any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or instrument to which the Company
is a party or by which it or any of its properties may be bound or affected, or (iii) in the
performance or observance of any statute, law, rule, regulation, ordinance, judgment, order or
decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or any of its properties, as applicable (including,
without limitation, those administered by the Food and Drug Administration of the U.S. Department
of Health and Human Services (the “FDA”) or by any foreign, federal, state or local governmental or
regulatory authority performing functions similar to those performed by the FDA), except, with
respect to clauses (ii) and (iii) above, to the extent any such contravention has been waived or
would not result in a Material Adverse Effect.
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(r) Absence of Material Changes. Subsequent to the respective dates as of which information
is given in the Disclosure Package (and taking into account any update included within the
Disclosure Package), (i) the Company has not sustained any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, (ii) the Company has not incurred
any material liability or obligation, direct or contingent, or entered into any material
transaction not in the ordinary course of business; (iii) the Company has not purchased any of the
Company’s outstanding capital stock, or declared, paid or otherwise made any dividend or
distribution of any kind on the Company’s capital stock; and (iv) there has not been any change in
the capital stock (other than a change in the number of outstanding shares of Common Stock due to
the issuance of shares upon the exercise of outstanding options or warrants or the conversion of
convertible indebtedness), or material change in the short-term debt or long-term debt of the
Company (other than upon conversion of convertible indebtedness) or any issue of options, warrants,
convertible securities or other rights to purchase the capital stock (other than grants of stock
options under the Company’s stock option plans existing on the date hereof) of the Company, or any
Material Adverse Effect.
(s) Permits. The Company possesses, and is operating in compliance in all material respects
with, all necessary franchises, licenses, grants, permits, easements, authorizations, consents,
certificates and orders of any governmental or self-regulatory body required for the conduct of its
business and all such franchises, licenses, grants, permits, easements, authorizations, consents,
certificates and orders are valid and in full force and effect. The Company has made all necessary
filings required under any federal, state, local or foreign law, regulation or rule (including,
without limitation, those from the FDA, and any other foreign, federal, state or local government
or regulatory authorities performing functions similar to those performed by the FDA), in order to
conduct its business. The Company has not received notice of any proceedings relating to
revocation or modification of, any such franchise, license, grant, permit, easement, authorization,
consent, certificate and order except where such violation, default or proceeding would not,
individually or in the aggregate, have a Material Adverse Effect.
(t) Legal Proceedings. There are no legal or governmental proceedings pending or, to the
Company’s knowledge, threatened or contemplated to which the Company is or would be a party or of
which any of its properties is or would be subject at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission, board, body, authority or agency, or
before or by any self-regulatory organization or other non-governmental regulatory authority
(including, without limitation, AMEX), except (i) as described in the Registration Statement, the
Prospectus or the Disclosure Package, (ii) any such proceeding, which if resolved adversely to the
Company, would not result in a judgment, decree or order having, individually or in the aggregate,
a Material Adverse Effect or (iii) any such proceeding that would not prevent or materially and
adversely affect the ability of the Company to consummate the transactions contemplated hereby. The
Disclosure Package contains in all material respects the same description of the foregoing matters
contained in the Prospectus.
(u) Statutes; Contracts. There are no statutes or regulations applicable to the Company or
contracts or other documents of the Company which are required to be described in the Registration
Statement, the Disclosure Package or the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have not been so described or
filed.
(v) Good Title to Property. The Company has good and valid title to all property (whether
real or personal) described in the Registration Statement, the Disclosure Package and the
Prospectus as being owned by it, in each case free and clear of all liens, claims, security
interests,
other encumbrances or defects except such as are described in the Registration Statement, the
Disclosure Package or the Prospectus and those that would not, individually or in the aggregate
materially affect the
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value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company. All of the property described in the
Registration Statement, the Disclosure Package and the Prospectus as being held under lease by the
Company is held thereby under valid, subsisting and enforceable leases, without any liens,
restrictions, encumbrances or claims, except those that, individually or in the aggregate, are not
material and do not materially interfere with the use made and proposed to be made of such property
by the Company.
(w) Intellectual Property Rights. The Company owns, or has obtained valid and enforceable
licenses for, or other rights to use, the inventions, patent applications, patents, trademarks
(both registered and unregistered), tradenames, copyrights, trade secrets and other proprietary
information described in the Registration Statement, the Disclosure Package or the Prospectus as
being owned or licensed by it or which are necessary for the conduct of its business, except where
the failure to own, license or have such rights would not, individually or in the aggregate, result
in a Material Adverse Effect (collectively, “Intellectual Property”); except as described in the
Registration Statement, the Disclosure Package or the Prospectus (i) there are no third parties who
have or, to the Company’s knowledge, will be able to establish rights to any Intellectual Property,
except for the ownership rights of the owners of the Intellectual Property which is licensed to the
Company; (ii) to the Company’s knowledge, there is no infringement by third parties of any
Intellectual Property; (iii) there is no pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others challenging the Company’s rights in or to, or the validity,
enforceability, or scope of, any Intellectual Property owned by or licensed to the Company, and the
Company is unaware of any facts which could form a reasonable basis for any such claim (other than
claims by Aventis Pharmaceuticals, Inc. and its parent, Sanofi-Aventis, that our use of the word
“ADVENTRX” infringes upon their trademark “AVENTIS”); (iv) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others that the Company infringes or
otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any facts which could form a reasonable basis for any such
claim (other than claims by Aventis Pharmaceuticals, Inc. and its parent, Sanofi-Aventis, that our
use of the word “ADVENTRX” infringes upon their trademark “AVENTIS”); (v) to the Company’s
knowledge, there is no patent or patent application that contains claims to the same patentable
invention claimed by any issued patent owned or licensed by the Company; and (vi) to the Company’s
knowledge, no grounds exist to invalidate or render unenforceable any patent owned or licensed by
the Company.
(x) Financial Statements. The financial statements of the Company, together with the related
schedules and notes thereto, set forth or incorporated by reference in the Registration Statement,
the Disclosure Package and the Prospectus comply in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as applicable, and present fairly in all
material respects (i) the financial condition of the Company, taken as a whole, as of the dates
indicated and (ii) the consolidated results of operations, shareholders’ equity and changes in cash
flows of the Company, taken as a whole, for the periods therein specified; and such financial
statements and related schedules and notes thereto have been prepared in conformity with United
States generally accepted accounting principles, consistently applied throughout the periods
involved (except as otherwise stated therein and subject, in the case of unaudited financial
statements, to the absence of footnotes and normal year-end adjustments). There are no other
financial statements (historical or pro forma) that are required to be included in the Registration
Statement, the Disclosure Package and the Prospectus; and the Company does not have any material
liabilities or obligations, direct or contingent (including any off-balance sheet obligations), not
disclosed in the Registration Statement, the Disclosure Package and the Prospectus; and all
disclosures contained in the Registration Statement, the Disclosure Package and the Prospectus
regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of
the Commission) comply with
Regulation G of the Exchange Act and Item 10(e) of Regulation S-K of the Commission, to the
extent applicable, and present fairly the information shown therein and the Company’s basis for
using such measures.
-9-
(y) Independent Accountants. To the Company’s knowledge, ▇.▇. ▇▇▇▇ LLP, who have certified
certain of the financial statements of the Company, is (i) an independent public accounting firm
within the meaning of the Securities Act and the Rules and Regulations, (ii) a registered public
accounting firm (as defined in Section 2(a)(12) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the
“▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”)), and (iii) not in violation of the auditor independence requirements of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(z) Taxes. The Company has timely filed all federal, state, local and foreign income and
franchise tax returns (or timely filed applicable extensions therefore) that have been required to
be filed and is not in default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto, other than any which the Company is contesting in
good faith and for which adequate reserves have been provided and reflected in the Company’s
financial statements included in the Registration Statement, the Disclosure Package and the
Prospectus. The Company does not have any tax deficiency that has been or, to the knowledge of the
Company, might be asserted or threatened against it that would result in a Material Adverse Effect.
(aa) AMEX; Exchange Act Registration. The Common Stock is registered pursuant to Section
12(b) or 12(g) of the Exchange Act and is accepted for trading on the AMEX, and 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 AMEX, nor has the
Company received any notification that the Commission or the NASD is contemplating terminating such
registration or listing. The Company has complied in all material respects with the applicable
requirements of the AMEX for maintenance of inclusion of the Common Stock thereon. The Company has
filed an application to include the Shares on the AMEX.
(bb) Accounting Controls. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted accounting
principles in the United States of America 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. Except as described in
the Registration Statement, the Disclosure Package or the Prospectus, since the most recent audit
of the effectiveness of the Company’s internal control over financial reporting, there has been (i)
no material weakness in the Company’s internal control over financial reporting (whether or not
remediated) and (ii) no change in the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company’s internal control
over financial reporting.
(cc) Disclosure Controls. The Company has established, maintains and evaluates “disclosure
controls and procedures” (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange Act), which (i) are designed to ensure that material information relating to the Company
is made known to the Company’s principal executive officer and its principal financial officer by
others within the Company, particularly during the periods in which the periodic reports required
under the Exchange Act are being prepared, (ii) have been evaluated for effectiveness as of the end
of the last fiscal period covered by the Registration Statement; and (iii) such disclosure controls
and procedures are effective to perform the functions for which they were established.
(dd) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Company, and to its knowledge after due inquiry, all of the
Company’s directors or officers, in their capacities as such, is in compliance in all material
respects
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with all applicable effective provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and any related rules
and regulations promulgated by the Commission.
(ee) Not an Investment Company. The Company is not, nor after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as described in the Prospectus,
will be, (i) required to register as an “investment company” as defined in the Investment Company
Act of 1940, as amended (the “ Investment Company Act ”), and the rules and regulations of the
Commission thereunder or (ii) a “business development company” (as defined in Section 2(a)(48) of
the Investment Company Act).
(ff) Insurance. The Company maintains insurance in such amounts and covering such risks as is
reasonably considered to be adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in similar industries.
All such insurance is fully in force on the date hereof and will be fully in force as of the
Closing Date. The Company has no 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.
(gg) Brokers Fees. The Company is not a party to any contract, agreement or understanding
with any person that would give rise to a valid claim against the Company or the Placement Agents
for a brokerage commission, finder’s fee or other like payment in connection with the offering and
sale of the Shares, other than this Agreement and the Non-Circumvention and Finder’s Fee Agreement
with Antaeus Capital, Inc., dated as of October 3, 2006.
(hh) Integration. The Company has not sold or issued any securities that would be integrated
with the offering of the Shares contemplated by this Agreement pursuant to the Securities Act, the
Rules and Regulations or the interpretations thereof by the Commission.
(ii) Corrupt Practices. Neither the Company nor, to the Company’s knowledge, any other person
associated with or acting on behalf of the Company, including without limitation any director,
officer, agent or employee of the Company has, directly or indirectly, while acting on behalf of
the Company (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 payment.
(jj) Critical Accounting Policies. The section entitled “Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Critical Accounting Policies” in the Company’s
most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q accurately and fully
describes (i) the accounting policies that the Company believes are the most important in the
portrayal of the Company’s financial condition and results of operations and that require
management’s most difficult, subjective or complex judgments (“Critical Accounting Policies”); and
(ii) the judgments and uncertainties affecting the application of Critical Accounting Policies.
(kk) No Price Stabilization. Neither the Company nor, to the Company’s knowledge, any of its
officers, directors, affiliates or controlling persons has taken or will take, directly or
indirectly, any action designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale of the Shares.
(ll) No Undisclosed Relationships. No relationship, direct or indirect, exists between or
among the Company on the one hand and the directors, officers, stockholders, customers or suppliers
-11-
of the Company on the other hand which is required to be described in the Registration Statement,
the Disclosure Package and the Prospectus which has not been so described.
(mm) Exchange Act Requirements. The Company has filed in a timely manner all reports required
to be filed pursuant to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act during the
preceding 12 months (except to the extent that Section 15(d) requires reports to be filed pursuant
to Sections 13(d) and 13(g) of the Exchange Act, which shall be governed by the next clause of this
sentence); and the Company has filed in a timely manner all reports required to be filed pursuant
to Sections 13(d) and 13(g) of the Exchange Act since January 1, 2003, except where the failure to
timely file could not reasonably be expected individually or in the aggregate to have a Material
Adverse Effect.
(nn) NASD Affiliations. To the Company’s knowledge, there are no affiliations or associations
between (i) any member of the NASD and (ii) the Company or any of the Company’s officers, directors
or 5% or greater securityholders (other than ▇▇▇▇▇▇▇ ▇▇▇▇ Partners, a division of Pali Capital,
Inc. and Antaeus Capital, Inc.).
(oo) Compliance with Environmental Laws. The Company (i) is in compliance with any and all
applicable foreign, federal, state and local laws, orders, rules, regulations, directives, decrees
and judgments relating to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) has received
all permits, licenses or other approvals required of it under applicable Environmental Laws to
conduct its business and (iii) is in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, individually or in the aggregate, result in a
Material Adverse Effect. There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to third parties) which
would, individually or in the aggregate, result in a Material Adverse Effect.
(pp) No Labor Disputes. Except for matters that would not, individually or in the aggregate,
result in a Material Adverse Effect (i) there is (A) no unfair labor practice complaint pending
or, to the Company’s knowledge, threatened against the Company before the National Labor Relations
Board, and no grievance or arbitration proceeding arising out of or under collective bargaining
agreements is pending or threatened, (B) no strike, labor dispute, slowdown or stoppage pending or,
to the Company’s knowledge, threatened against the Company and (C) no union representation dispute
currently existing concerning the employees of the Company, and (ii) to the Company’s knowledge (A)
no union organizing activities are currently taking place concerning the employees of the Company
and (B) there has been no violation of any federal, state, local or foreign law relating to
discrimination in the hiring, promotion or pay of employees or any applicable wage or hour laws
concerning the employees of the Company.
(qq) ERISA. The Company is in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder (“ERISA”); no “reportable event” (as
defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which
the Company would have any liability; the Company has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any
“pension plan” or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the “Code”); and each “pension plan” for
which the Company would have any
-12-
liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(rr) Statistical or Market-Related Data. Any statistical, industry-related and market-related
data included or incorporated by reference in the Registration Statement, the Disclosure Package
and the Prospectus, are based on or derived from sources that the Company reasonably and in good
faith believes to be reliable and accurate, and such data agree with the sources from which they
are derived.
(ss) NASD Review. To enable the Placement Agents to rely on Rule 2710(b)(7)(C)(i) of the
NASD, the Company represents that the Company (i) has a non-affiliate, public common equity float
of at least $150 million or a non-affiliate, public common equity float of at least $100 million
and annual trading volume of at least three million shares and (ii) has been subject to the
Exchange Act reporting requirements for a period of at least 36 months.
(tt) Clinical Studies. The clinical, pre-clinical and other studies and tests conducted by or
on behalf of or sponsored by the Company or in which the Company or products or product candidates
have participated that are described in the Registration Statement, the Disclosure Package and the
Prospectus were and, if still pending, are being conducted in accordance in all material respects
with all statutes, laws, rules and regulations, as applicable (including, without limitation, those
administered by the FDA or by any foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA) and with standard medical and
scientific research procedures. The descriptions in the Registration Statement, the Disclosure
Package and the Prospectus of the results of such studies and tests are accurate and complete in
all material respects and fairly present the published data derived from such studies and tests.
The Company has not received any notices or other correspondence from the FDA or any other foreign,
federal, state or local governmental or regulatory authority performing functions similar to those
performed by the FDA with respect to any ongoing clinical or pre-clinical studies or tests
requiring the termination, suspension or material modification of such studies or tests, which such
termination, suspension or material modification would reasonably be expected to result in a
Material Adverse Effect. The Company is in compliance with all applicable federal, state, local
and foreign laws, regulations, orders and decrees governing its business as prescribed by the FDA,
or any other federal, state or foreign agencies or bodies, including those bodies and agencies
engaged in the regulation of pharmaceuticals or biohazardous substances or materials, except where
noncompliance would not, singly or in the aggregate, result in a Material Adverse Effect.
Any certificate signed by any officer of the Company and delivered to the Placement Agents or
to counsel for the Placement Agents in connection with the offering of the Shares shall be deemed a
representation and warranty by the Company to the Placement Agents and the Investors as to the
matters covered thereby.
3. Covenants. The Company covenants and agrees with the Placement Agents as follows:
(a) Reporting Obligations; Exchange Act Compliance. The Company will (i) file any Preliminary
Prospectus and the Prospectus with the Commission within the time periods specified by Rule 424(b)
and Rules 430A and 430B, as applicable under the Securities Act, (ii) file any Issuer Free Writing
Prospectus to the extent required by Rule 433 under the Securities Act, if applicable, (iii) file
timely all reports and any definitive proxy or information statements required to be filed by the
Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of the Prospectus and during such period as the Prospectus would be required by law to be
delivered (whether physically or through compliance with Rule 172 under the Securities Act or any
similar rule) (the
-13-
“Prospectus Delivery Period”), and (iv) furnish copies of each Issuer Free
Writing Prospectus, if any, (to the extent not previously delivered) to the Placement Agents prior
to 10:00 a.m., Eastern Standard Time, on the second business day next succeeding the date of this
Agreement in such quantities as the Placement Agents shall reasonably request.
(b) Abbreviated Registration Statement. If the Company elects to rely upon Rule 462(b) under
the Securities Act, the Company shall file a registration statement under Rule 462(b) with the
Commission in compliance with Rule 462(b) by 8:00 a.m., Eastern Standard Time, on the business day
next succeeding the date of this Agreement, and the Company shall at the time of filing either pay
to the Commission the filing fee for such Rule 462(b) registration statement or give irrevocable
instructions for the payment of such fee pursuant to the Rules and Regulations.
(c) Amendments or Supplements. The Company will not, during the Prospectus Delivery Period,
file any amendment or supplement to the Registration Statement or the Prospectus unless a copy
thereof shall first have been submitted to the Placement Agents within a reasonable period of time
prior to the filing thereof and the Representative shall not have reasonably objected thereto in
good faith.
(d) Issuer Free Writing Prospectuses. The Company will (i) not make any offer relating to the
Shares that would constitute an “issuer free writing prospectus” (as defined in Rule 433) or that
would otherwise constitute a “free writing prospectus” (as defined in Rule 405 under the Securities
Act) required to be filed by the Company with the Commission under Rule 433 under the Securities
Act unless the Representative approves its use in writing prior to first use (each, a “Permitted
Free Writing Prospectus”); provided that the prior written consent of the Representative hereto
shall be deemed to have been given in respect of the Issuer Free Writing Prospectus(es) included in
Schedule II hereto, (ii) treat each Permitted Free Writing Prospectus as an Issuer Free
Writing Prospectus, (iii) comply with the requirements of Rules 164 and 433 under the Securities
Act applicable to any Issuer Free Writing Prospectus, including the requirements relating to timely
filing with the Commission, legending and record keeping and (iv) not take any action that would
result in a Placement Agent or the Company being required to file with the Commission pursuant to
Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of such
Placement Agents that such Placement Agents otherwise would not have been required to file
thereunder. The Company will satisfy the conditions in Rule 433 under the Securities Act to avoid a
requirement to file with the Commission any electronic road show.
(e) Notice to Placement Agents. The Company will notify the Placement Agents promptly, and
will, if requested, confirm such notification in writing: (i) of the receipt of any comments of, or
requests for additional or supplemental information from, the Commission; (ii) of the time and date
of any filing of any post-effective amendment to the Registration Statement or any amendment or
supplement to the Disclosure Package or the Prospectus; (iii) the time and date when any
post-effective amendment to the Registration Statement becomes effective, but only during the
Prospectus Delivery Period; (iv) 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 the Disclosure Package, the Prospectus or any Issuer Free
Writing Prospectus, or the initiation of any proceedings for that purpose or the threat thereof,
but only during the Prospectus Delivery Period; (v) of receipt by the Company of any notification
with respect to any suspension or the approval of the Shares from any securities exchange upon
which it is listed for trading or included or designated for quotation, or the initiation or
threatening of any proceeding for such purpose. The Company will use its reasonable best efforts
to prevent the issuance or invocation of any such stop order
or suspension by the Commission and, if any such stop order or suspension is so issued or
invoked, to obtain as soon as possible the withdrawal or removal thereof.
-14-
(f) Filing of Amendments or Supplements. If, during the Prospectus Delivery Period, any event
shall occur or condition exist as a result of which it is necessary to amend or supplement the
Prospectus (or, if the Prospectus is not yet available to prospective purchasers, the Disclosure
Package) in order to make the statements therein, in the light of the circumstances when the
Prospectus (or, if the Prospectus is not yet available to prospective purchasers, the Disclosure
Package) is delivered to an Investor, not misleading, or if, in the opinion of counsel for the
Placement Agents, it is necessary to amend or supplement the Prospectus (or, if the Prospectus is
not yet available to prospective purchasers, the Disclosure Package) to comply with applicable law,
forthwith to prepare, file with the Commission and furnish, at its own expense, to the Placement
Agents, either amendments or supplements to the Prospectus (or, if the Prospectus is not yet
available to prospective purchasers, the Disclosure Package) so that the statements in the
Prospectus (or, if the Prospectus is not yet available to prospective purchasers, the Disclosure
Package) as so amended or supplemented will not, in the light of the circumstances when the
Prospectus (or, if the Prospectus is not yet available to prospective purchasers, the Disclosure
Package) is delivered to an Investor, be misleading or so that the Prospectus (or, if the
Prospectus is not yet available to prospective purchasers, the Disclosure Package), as amended or
supplemented, will comply with law.
(g) Conflicting Issuer Free Writing Prospectus. If at any time following issuance of an
Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of
which such Issuer Free Writing Prospectus conflicted or would conflict with the information
contained in the Registration Statement relating to the Shares or included or would include an
untrue statement of a material fact or omitted or would omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances prevailing at that
subsequent time, not misleading, the Company promptly will notify the Placement Agents and will
promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement or omission.
(h) Delivery of Copies. The Company will deliver promptly to the Placement Agents and their
counsel such number of the following documents as the Placement Agents shall reasonably request:
(i) conformed copies of the Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits), (ii) copies of any Issuer Free Writing
Prospectus, (iii) during the Prospectus Delivery Period, copies of the Prospectus (or any
amendments or supplements thereto); (iii) any document incorporated by reference in the Prospectus
(other than any such document that is filed with the Commission electronically via ▇▇▇▇▇ or any
successor system) and (iv) all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the Securities Act.
(i) Blue Sky Laws. The Company will promptly take or cause to be taken, from time to time,
such actions as the Placement Agents may reasonably request to qualify the Shares for offering and
sale under the state securities, or blue sky, laws of such states or other jurisdictions as the
Placement Agents may reasonably request and to maintain such qualifications in effect so long as
the Placement Agents may request for the distribution of the Shares, provided, that in no event
shall the Company be obligated to qualify as a foreign corporation in any jurisdiction in which it
is not so qualified or to file a general consent to service of process in any jurisdiction or
subject itself to taxation as doing business in any jurisdiction. The Company will advise the
Placement Agents promptly of the suspension of the qualification or registration of (or any
exemption relating to) the Shares for offering, sale or trading in any jurisdiction or any
initiation or threat of any proceeding for any such purpose, and in the event of
the issuance of any order suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at the earliest possible
moment.
(j) Earnings Statement. As soon as practicable, but in any event not later than 15 months
after the end of the Company’s current fiscal quarter, the Company will make generally available
-15-
to
holders of its securities and deliver to the Placement Agents, an earnings statement of the Company
(which need not be audited) that will satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Rules and Regulations.
(k) Use of Proceeds. The Company will apply the net proceeds from the sale of the Shares in
the manner set forth in the Disclosure Package and the Prospectus under the heading “Use of
Proceeds”.
(l) Lock-Up Period. Beginning on the date hereof and continuing for a period of 90 days after
the date of this Agreement (the “Lock-Up Period”), the Company will not (i) offer to sell,
hypothecate, pledge, announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of, directly or indirectly, or establish or increase a
put equivalent position or liquidate or decrease a call equivalent position within the meaning of
Section 16 of the Exchange Act, with respect to, any shares of Common Stock, any securities
convertible into or exercisable or exchangeable for Common Stock; (ii) file or cause to become
effective a registration statement under the Securities Act relating to the offer and sale of any
shares of Common Stock or securities convertible into or exercisable or exchangeable for Common
Stock (other than on a registration statement on Form S-8 or any successor form) or (iii) enter
into any swap or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction described in clause
(i), (ii) or (iii) above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise, without the prior written consent of the Representative (which consent may be
withheld in its sole discretion), other than (A) the Shares to be sold hereunder, (B) the issuance
of stock options, shares of common stock and other awards pursuant to the Company’s 2005 Equity
Incentive Plan and the Company’s 2005 Employee Stock Purchase Plan, (C) issuances of Common Stock
upon the exercise of options or warrants (either upon current terms thereof or upon subsequently
amended terms but excluding a general repricing) disclosed as outstanding in the Registration
Statement (excluding the exhibits thereto), the Disclosure Package or the Prospectus or upon the
conversion or exchange of convertible or exchangeable securities outstanding as of the date of this
Agreement; (D) the issuance by the Company of any shares of Common Stock as consideration for
mergers, acquisitions, other business combinations, or strategic alliances, occurring after the
date of this Agreement; provided that each recipient of shares pursuant to this clause (D) agrees
that all such shares remain subject to restrictions substantially similar to those contained in
this Section 3(l); or (E) the purchase or sale of the Company’s securities pursuant to a
plan, contract or instruction that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B)
that was in effect prior to the date of this Agreement. Notwithstanding the foregoing, for the
purpose of allowing the Placement Agents to comply with NASD Rule 2711(f)(4), if (1) during the
last 17 days of the Lock-Up Period, the Company releases earnings results or publicly announces
other material news or a material event relating to the Company occurs or (2) prior to the
expiration of the Lock-Up Period, the Company announces that it will release earnings results
during the 16 day period beginning on the last day of the Lock-Up Period, then in each case the
Lock-Up Period will be extended until the expiration of the 18 day period beginning on the date of
release of the earnings results or the public announcement regarding the material news or the
occurrence of the material event, as applicable, unless the Representative waives, in writing, such
extension. The Company agrees not to accelerate the vesting of any option or warrant or the lapse
of any repurchase right prior to the expiration of the Lock-Up Period other than pursuant to
contractual obligations in effect prior to the date of this Agreement.
(m) Lock-Up Agreements. The Company will cause each of its executive officers and directors
whose names are set forth on Exhibit C hereto to furnish to the Placement Agents, on and
effective as of the date of this Agreement, a letter, substantially in the form of Exhibit
B hereto (the “Lock-Up Agreement”). The Company will use its reasonable best efforts to
enforce the terms of each Lock-Up Agreement and will issue stop transfer instructions to the
transfer agent for the Common Stock
-16-
with respect to any transaction or contemplated transaction
that would constitute a breach or default under the applicable Lock-Up Agreement.
(n) Public Communications. Prior to the Closing Date, the Company will not issue any press
release or other communication directly or indirectly or hold any press conference with respect to
the Company, its condition, financial or otherwise, or its earnings, business, operations or
prospects, or the offering of the Shares, without the prior written consent of the Representative,
unless in the reasonable judgment of the Company and its counsel, and after notification to the
Representative, such press release or communication is required by law or by AMEX rules, in which
case the Company shall use its reasonable best efforts to allow the Representative reasonable time
to comment on such release or other communication in advance of such issuance.
(o) Stabilization. The Company will not take, directly or indirectly, any action designed, or
that might reasonably be expected to cause or result in, or that will constitute, stabilization or
manipulation of the price of any security of the Company to facilitate the sale of any of the
Shares.
(p) Transfer Agent. The Company shall engage and maintain, at its expense, a transfer agent
and, if necessary under the jurisdiction of incorporation of the Company, a registrar for the
Shares.
(q) Listing. The Company shall use its commercially reasonable efforts to cause the Shares to
be listed for trading on the AMEX and to maintain such listing.
(r) Investment Company Act. The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would require the Company
to register as an investment company under the Investment Company Act.
(s) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Company will comply with all effective applicable provisions of
the Sarbanes Oxley Act.
(t) Broker’s Fee. The Company will not incur any liability for any finder’s or broker’s fee or
agent’s commission in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby (other than as set forth in this Agreement and
the Non-Circumvention and Finder’s Fee Agreement with Antaeus Capital, Inc., dated as of October 3,
2006).
4. Costs and Expenses. The Company, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, will pay or reimburse if paid by the Placement
Agents all costs and expenses incident to the performance of the obligations of the Company under
this Agreement and incurred in connection with the transactions contemplated hereby, including but
not limited to costs and expenses of or relating to (i) the preparation, printing, filing, delivery
and shipping of the Registration Statement, any Issuer Free Writing Prospectus, the Disclosure
Package and the Prospectus, and any amendment or supplement to any of the foregoing and the
printing and furnishing of copies of each thereof to the Placement Agents and dealers (including
costs of mailing and shipment), (ii) the registration, issue, sale and delivery of the Shares
including any stock or transfer
taxes and stamp or similar duties payable upon the sale, issuance or delivery of the Shares
and the printing, delivery, and shipping of the certificates representing the Shares, (iii) the
registration or qualification of the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions designated pursuant to Section 3(i), (including the reasonable
legal fees and filing fees, and other disbursements of counsel to the Placement Agents in
connection therewith), and, if reasonably requested by the Placement Agents, the preparation and
printing and furnishing of copies of any blue sky surveys to the Placement Agents and to
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dealers,
(iv) the fees and expenses of any transfer agent or registrar for the Shares, (v) any filings
required to be made by the Placement Agents or the Company with the NASD, and the reasonable fees,
disbursements and other charges of counsel for the Placement Agents in connection with the NASD’s
review and approval of the Placement Agents’ participation in the offering (including all COBRADesk
fees), (vi) fees, disbursements and other charges of counsel to the Company (vii) listing fees, if
any, for the listing of the Shares on the AMEX, (viii) fees and disbursements of the Company’s
auditor incurred in delivering the letter(s) described in Section 5(i) of this Agreement,
(ix) fees, disbursements and other charges of counsel to the Placement Agents (in addition to (iii)
and (v) above) in an amount not to exceed $50,000, and (x) the costs and expenses of the Company
and the Placement Agents in connection with the marketing of the offering and the sale of the
Shares to prospective investors including, but not limited to, those related to any presentations
or meetings undertaken in connection therewith including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any consultants engaged
with the written consent of the Company in connection with the road show presentations, travel,
lodging and other expenses incurred by the officers of the Company and any such consultants, and
the cost of any aircraft or other transportation chartered in connection with the road show. If
this Agreement shall be terminated by the Placement Agents pursuant to Section 8 hereof,
the Company will, in addition to paying the amounts described in this Section 4, but
subject to reasonably acceptable supporting documentation, reimburse the Placement Agents for all
of their reasonable out—of—pocket disbursements (including, but not limited to, the reasonable fees
and disbursements of their counsel) incurred by the Placement Agents in connection with their
investigation, preparing to market and marketing of the Shares or in contemplation of performing
their obligations hereunder.
5. Conditions of Placement Agents’ Obligations. The obligations of the Placement Agents
hereunder are subject to the following conditions any of which may be waived on behalf of the
Placement Agents by the Representative:
(a) Filings with the Commission. The Prospectus and any Issuer Free Writing Prospectus
required to be filed under the Securities Act or the Rules and Regulations shall have been filed
with the Commission pursuant to Rule 424(b) or Rule 164, as the case may be, in the manner and
within the time period so required.
(b) Abbreviated Registration Statement. If the Company has elected to rely upon Rule 462(b),
the registration statement filed under Rule 462(b) shall have become effective under the Securities
Act by 8:00 a.m., Eastern Standard Time, on the business day next succeeding the date of this
Agreement.
(c) No Stop Orders. Prior to the Closing: (i) no stop order suspending the effectiveness of
the Registration Statement or any part thereof, nor suspending or preventing the use of the
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus shall have been issued
under the Securities Act and no proceedings initiated under Section 8(d) or 8(e) of the Securities
Act for that purpose shall be pending or threatened by the Commission, (ii) no order suspending the
qualification or registration of the Shares under the securities or blue sky laws of any
jurisdiction shall be in effect and (iii) any request for additional information on the part of the
Commission (to be included in the
Registration Statement, the Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus or otherwise) shall have been complied with to the reasonable satisfaction of the
Representative.
(d) Action Preventing Issuance. No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any governmental agency or body
which would, as of the Closing Date, prevent the issuance or sale of the Shares; and no injunction,
restraining order or order of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would prevent the issuance or sale
of the Shares.
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(e) Objection of Placement Agents. No Prospectus or amendment or supplement to the
Registration Statement shall have been filed to which the Representative shall have objected in
writing, which objection shall not be unreasonable. The Placement Agents shall not have advised
the Company that the Registration Statement, the Disclosure Package or the Prospectus, or any
amendment thereof or supplement thereto, or any Issuer Free Writing Prospectus contains an untrue
statement of fact which, in their opinion, is material, or omits to state a fact which, in their
opinion, is material and is required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading.
(f) No Material Adverse Change. Prior to the Closing, there shall not have occurred any
change, or any development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business, operations or prospects of the Company, taken as a whole,
from that set forth in the Disclosure Package and the Prospectus that, in the Representative’s
judgment, is material and adverse and that makes it, in the Representative’s judgment,
impracticable to market the Shares on the terms and in the manner contemplated in the Disclosure
Package.
(g) Representations and Warranties. Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects (except for those
representations and warranties which are qualified by materiality, in which case such
representations and warranties shall be true and correct in all respects) when made and on and as
of the Closing Date, as if made on such date (except that those representations and warranties that
address matters only as of a particular date shall remain true and correct in all material respects
(except for those representations and warranties which are qualified by materiality, in which case
such representations and warranties shall be true and correct in all respects) as of such date),
and all covenants and agreements herein contained to be performed on the part of the Company and
all conditions herein contained to be fulfilled or complied with by the Company at or prior to the
Closing Date shall have been duly performed, fulfilled or complied with in all material respects.
(h) Opinion of Counsel to the Company. The Placement Agents shall have received from ▇▇▇▇▇▇
▇▇▇▇▇▇ LLP, counsel to the Company, such counsel’s written opinion, addressed to the Placement
Agents and the Investors and dated the Closing Date, in form and substance reasonably satisfactory
to the Placement Agents and their counsel. Such counsel shall also have furnished to the Placement
Agents a written statement, addressed to the Placement Agents and dated the Closing Date, in form
and substance reasonably satisfactory to the Placement Agents and their counsel.
(i) Opinion of Counsel to the Placement Agents. The Placement Agents shall have received from
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC, such opinion or opinions, dated the Closing Date and addressed to the
Placement Agents, covering such matters as are customarily covered in transactions of this type.
(j) Accountant’s Comfort Letter. The Placement Agents shall have received on the date of the
Time of Sale, a letter dated the date hereof, (the “Original Letter”), addressed to the Placement
Agents and in form and substance reasonably satisfactory to the Representative and its counsel,
from ▇.▇. ▇▇▇▇ LLP, which letter shall cover, without limitation, the various financial
disclosures, if any, contained in the Disclosure Package and shall contain statements and
information of the type customarily included in accountants’ “comfort letters” to underwriters,
delivered according to Statement of Auditing Standards No. 72 and Statement of Auditing Standard
No. 100 (or successor bulletins), with respect to the audited and unaudited financial statements
and certain financial information contained in or incorporated by reference into the Registration
Statement, the Disclosure Package and the Prospectus. At the Closing Date, the Placement Agents
shall have received from ▇.▇. ▇▇▇▇ LLP a letter, dated the Closing Date, which shall confirm, on
the basis of a review in accordance with the procedures set forth in the Original
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Letter, that
nothing has come to their attention during the period from the date of the Original Letter referred
to in the prior sentence to a date (specified in the letter) not more than three days prior to the
Closing Date which would require any change in the Original Letter if it were required to be dated
and delivered at the Closing Date.
(k) Officer’s Certificate. The Placement Agents shall have received on the Closing Date a
certificate, addressed to the Placement Agents and dated the Closing Date, of the chief executive
or chief operating officer and the chief financial officer or chief accounting officer of the
Company to the effect that:
(i) each of the representations, warranties and agreements of the Company in this Agreement
were true and correct in all material respects in all material respects (except for those
representations and warranties which are qualified by materiality, in which case such
representations and warranties shall be true and correct in all respects) when originally made and
are true and correct in all material respects (except for those representations and warranties
which are qualified by materiality, in which case such representations and warranties shall be true
and correct in all respects) as of the Time of Sale and the Closing Date; and the Company has
complied in all material respects with all agreements and satisfied all the conditions on its part
required under this Agreement to be performed or satisfied at or prior to the Closing Date;
(ii) subsequent to the respective dates as of which information is given in the Disclosure
Package (taking into account any updates included within the Disclosure Package), there has not
been (A) a material adverse change or any development involving a prospective material adverse
change in the general affairs, business, prospects, properties, management, financial condition or
results of operations of the Company, taken as a whole, (B) any transaction that is material to the
Company, taken as a whole, except transactions entered into in the ordinary course of business, (C)
any obligation, direct or contingent, that is material to the Company, taken as a whole, incurred
by the Company, except obligations incurred in the ordinary course of business, (D) except as
disclosed in the Disclosure Package and the Prospectus, any change in the capital stock (other than
a change in the number of outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants) or any material change in the short term or long term
indebtedness of the Company, taken as a whole, (E) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or (F) any loss or damage (whether or
not insured) to the property of the Company which has been sustained or will have been sustained
which has had or is reasonably likely to result in a Material Adverse Effect.
(iii) no stop order suspending the effectiveness of the Registration Statement or any part
thereof or any amendment thereof or the qualification of the Shares for offering or sale, nor
suspending or preventing the use of the Disclosure Package, the Prospectus or any Issuer Free
Writing Prospectus shall have been issued, and no proceedings for that purpose shall be
pending or to their knowledge, threatened by the Commission or any state or regulatory body; and
(iv) the signers of said certificate have reviewed the Registration Statement, the Disclosure
Package and the Prospectus, and any amendments thereof or supplements thereto (and any documents
filed under the Exchange Act and deemed to be incorporated by reference into the Disclosure Package
and the Prospectus), and (A) (i) each part of the Registration Statement and any amendment thereof
do not and did not contain when the Registration Statement (or such amendment) became effective,
any untrue statement of a material fact or omit to state, and did not omit to state when the
Registration Statement (or such amendment) became effective, any material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii) as of the Time of
Sale, neither the Disclosure Package nor any individual Issuer Free Writing Prospectus, when
considered together with the Disclosure Package, contained
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any untrue statement of material fact or
omits to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (iii) the Prospectus, as amended or
supplemented, does not and did not contain, as of its issue date, any untrue statement of material
fact or omit to state and did not omit to state as of such date, a material fact necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading,
and (B) since the Time of Sale, there has occurred no event required to be set forth in an
amendment or supplement to the Registration Statement, the Disclosure Package or the Prospectus
which has not been so set forth and there has been no document required to be filed under the
Exchange Act that upon such filing would be deemed to be incorporated by reference into the
Disclosure Package and into the Prospectus that has not been so filed.
(l) Secretary’s Certificate. On the Closing Date, the Company shall have furnished to the
Placement Agents a Secretary’s Certificate of the Company.
(m) The AMEX. The Shares shall have been listed and authorized for trading on the AMEX.
(n) Other Filings with the Commission. The Company shall have prepared a Current Report on
Form 8-K with respect to the transactions contemplated hereby, to be filed immediately after the
Closing, including as an exhibit thereto this Agreement and any other documents relating to this
Agreement that are required to be filed therewith.
(o) Lock-Up Agreements. The Placement Agents shall have received copies of the executed
Lock-Up Agreements executed by each person listed on Exhibit C hereto, and such Lock-Up
Agreements shall be in full force and effect on the Closing Date.
(p) Additional Documents. Prior to the Closing Date, the Company shall have furnished to the
Placement Agents such further information, certificates or documents as the Placement Agents shall
have reasonably requested for the purpose of enabling it to pass upon the issuance and sale of the
Shares as contemplated herein, or in order to evidence the accuracy of any of the representations
and warranties, or the satisfaction of any of the conditions or agreements, herein contained (it
being understood that the Placement Agents’ customary due diligence has been completed prior to the
execution of this Agreement).
All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are in form and
substance reasonably satisfactory to counsel for the Placement Agents.
6. Indemnification and Contribution.
(a) Indemnification of the Placement Agents. The Company agrees to indemnify, defend and hold
harmless the Placement Agents, their directors and officers, and each person, if any, who controls
the Placement Agents within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, and the successors and assigns of all of the foregoing persons, from and against
any loss, damage, claim or liability, which, jointly or severally, the Placement Agents or any such
person may become subject under the Securities Act, the Exchange Act, or other federal or state
statutory law or regulation, the common law or otherwise, (including in settlement of any
litigation, if such settlement is effected with the written consent of the Company), insofar as
such loss, damage, claim or liability (or actions in respect thereof as contemplated below) arises
out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein not misleading; (ii)
any untrue statement or alleged untrue statement of a material fact contained
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in the Disclosure
Package, the Prospectus (or any amendment or supplement thereto including any documents filed under
the Exchange Act and deemed to be incorporated by reference into the Prospectus), any Issuer Free
Writing Prospectus or in any materials or information provided to Investors by, or with the written
approval of, the Company in connection with the marketing of the offering of the Common Stock
(“Marketing Materials”), including any roadshow or investor presentations made to Investors by the
Company (whether in person or electronically) or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading; and, in the case of (i) and
(ii) above, to reimburse the Placement Agents and each such controlling person for any and all
reasonable expenses (including reasonable fees and disbursements of counsel) as such expenses are
incurred by the Placement Agents or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage, liability, expense or
action, (iii) any untrue statement or alleged untrue statement made by the Company in Section
3 hereof or the failure by the Company to perform when and as required any agreement or
covenant contained herein or (iv) any untrue statement or alleged untrue statement of any material
fact contained in any audio or visual materials provided to Investors by or with the written
approval of the Company or based upon written information furnished by or on behalf of the Company
in conformity with the form and substance of such information as furnished including, without
limitation, slides, videos, films or tape recordings used in any road show or investor
presentations made to Investors by the Company (whether in person or electronically) or in
connection with the marketing of the Shares; provided, however, that the foregoing indemnity shall
not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent,
it arises out of or is based upon any untrue statement or alleged untrue statement of a material
fact contained in or omitted from the Registration Statement, the Disclosure Package, the
Prospectus, or any such amendment or supplement, any Issuer Free Writing Prospectus or in any
Marketing Materials, in reliance upon and in conformity with information concerning the Placement
Agents furnished in writing by or on behalf of the Placement Agents to the Company expressly for
use therein, which information the parties hereto agree is limited to the Placement Agents
Information.
(b) Indemnification of the Company. Each Placement Agent, severally and not jointly, agrees
to indemnify, defend and hold harmless the Company, its directors and officers, and any person, if
any, who controls the Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, claim, damage, liability or expense, as incurred to which, jointly or
severally, the Company or any such person may become subject under the Securities Act, the Exchange
Act, or other federal or state statutory law or regulation, the common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written consent of the
Representative), insofar as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises
out of or is based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading; (ii) any untrue statement or alleged untrue statement of a material fact contained in
the Disclosure Package, the Prospectus (or any amendment or supplement thereto) or any Issuer Free
Writing Prospectus, or the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, and in the case of each of (i) and (ii)
above, to the extent but only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in the Registration Statement, the Disclosure Package or
the Prospectus (or any amendment or supplement thereto) or any Issuer Free Writing Prospectus in
reliance upon and in conformity with information concerning the Placement Agents furnished in
writing by or on behalf of the Placement Agents to the Company expressly for use therein, and to
reimburse the Company, or any such director, officer or controlling person for any legal and other
expense reasonably incurred by the Company, or any such director, officer or controlling person in
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connection with investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, that the parties hereto hereby agree that such
written information provided by the Placement Agents consists solely of the Placement Agents
Information. Notwithstanding the provisions of this Section 6(b), in no event shall any
indemnity by any Placement Agent under this Section 6(b) exceed the total compensation
received by such Placement Agent in accordance with Section 1(b).
(c) Notice and Procedures. If any action, suit or proceeding (each, a “Proceeding”) is
brought against a person (an “indemnified party”) in respect of which indemnity may be sought
against the Company or the Placement Agents (as applicable, the “indemnifying party”) pursuant to
subsection (a) or (b), respectively, of this Section 6, such indemnified
party shall promptly notify such indemnifying party in writing of the institution of such
Proceeding and such indemnifying party shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and
expenses; provided, however, that the omission to so notify such indemnifying party shall not
relieve such indemnifying party from any liability which such indemnifying party may have to any
indemnified party or otherwise, except to the extent the indemnifying party does not otherwise
learn of the Proceeding and such failure results in the forfeiture by the indemnifying party of
substantial rights or defenses. The indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel shall be at the
expense of such indemnified party or parties unless (i) the employment of such counsel shall have
been authorized in writing by the indemnifying party in connection with the defense of such
Proceeding, (ii) the indemnifying party shall not have, within a reasonable period of time in light
of the circumstances, employed counsel to defend such Proceeding or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses available to it or them which
are different from, additional to or in conflict with those available to such indemnifying party
(in which case such indemnifying party shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties with respect to such defenses), in any of
which events such reasonable fees and expenses with respect to such defenses shall be borne by such
indemnifying party and paid as incurred (it being understood, however, that such indemnifying party
shall not be liable for the expenses of more than one separate counsel (in addition to any local
counsel) in any one Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). An indemnifying party
shall not be liable for any settlement of any Proceeding effected without its written consent but,
if settled with its written consent or if there be a final judgment for the plaintiff, such
indemnifying party agrees to indemnify and hold harmless the indemnified party or parties from and
against any loss or liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second
sentence
of this Section 6(c), then the indemnifying party agrees that it shall be liable for
any settlement of any Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall not have fully reimbursed the indemnified party in accordance
with such request prior to the date of such settlement all amounts with respect to which the
indemnifying party does not dispute in good faith and (iii) such indemnified party shall have given
the indemnifying party at least 30 days’ prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or threatened Proceeding in respect
of which any indemnified party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter of such Proceeding
and does not include an admission of fault or culpability or a failure to act by or on behalf of
such indemnified party.
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(d) Contribution. If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under subsections (a) or (b) of this
Section 6 or insufficient to hold an indemnified party harmless in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each applicable indemnifying
party shall, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to in subsection (a) or (b) above, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one hand and the
Placement Agents on the other 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 the indemnifying party or parties on the one hand and the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Placement Agents on the other
hand shall be deemed to be in the same respective proportions as the total net proceeds from the
offering of the Shares (before deducting expenses) received by the Company and the total placement
agents commissions received by the Placement Agents, in each case as set forth on the cover of the
Prospectus, bear to the aggregate public offering price of the Shares. The relative fault of the
Company on the one hand and the Placement Agents on the other hand 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, on the one hand, or by the Placement Agents, on the other hand, and the parties’ relevant
intent, knowledge, access to information and opportunity to correct or prevent such untrue
statement or omission. The Company and the Placement Agents agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were to be determined by pro rata
allocation or by any other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this Section 6(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or liabilities referred
to in the first sentence of this Section 6(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with investigating or
defending against any action or claim which is the subject of this Section 6(d).
Notwithstanding the provisions of this Section 6(d), each Placement Agent shall not be
required to contribute any amount in excess of the total commissions received by such Placement
Agent in accordance with Section 1(b). 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. The Placement Agents’
obligations in this Section 6(d) to contribute are several in proportion to the
compensation received by each of the Placement Agents and not joint.
(e) Representations and Agreements to Survive Delivery. The obligations of the Company under
this Section 6 shall be in addition to any liability which the Company may otherwise
have. The indemnity and contribution agreements contained in this Section 6 and the
covenants, warranties and representations of the Company contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of the Placement Agents, any person who controls the
Placement Agents within the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act or any affiliate of the Placement Agents, or by or on behalf of the Company, its
directors or officers or any person who controls the Company within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, and (iii) the issuance and delivery of
the Shares. The Company and the Placement Agents agree promptly to notify each other of the
commencement of any Proceeding against it and, in the case of the Company, against any of the
Company’s officers or directors in connection with the issuance and sale of the Shares, or in
connection with the Registration Statement, the Disclosure Package or the Prospectus.
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7. Information Furnished by Placement Agents. The Company acknowledges that the statements set
forth in (a) the sixth paragraph and (b) the first sentence of the seventh
paragraph under the heading “Plan of Distribution” in the Statutory Prospectus and the Prospectus
(the “Placement Agents Information”) constitute the only information relating to the Placement
Agents furnished in writing to the Company by the Placement Agents as such information is referred
to in Sections 2 and 6 hereof.
8. Termination. (a) The Representative shall have the right to terminate this Agreement by
giving notice as hereinafter specified at any time at or prior to the Closing Date, without
liability on the part of the Placement Agents to the Company, if (i) prior to delivery and payment
for the Shares (A) trading in securities generally shall have been suspended on or by the New York
Stock Exchange, the AMEX or the Nasdaq Global Market, (each, a “Trading Market”), (B) trading in
the Common Stock of the Company shall have been suspended on any exchange, in the over-the-counter
market or by the Commission, (C) a general moratorium on commercial banking activities shall have
been declared by federal or New York state authorities, (D) there shall have occurred any outbreak
or material escalation of hostilities or acts of terrorism involving the United States or there
shall have been a declaration by the United States of a national emergency or war, (E) there shall
have occurred any other calamity or crisis or any material change in general economic, political or
financial conditions in the United States or elsewhere, if the effect of any such event specified
in clause (D) or (E), in the judgment of the Representative, is material and adverse and makes it
impractical or inadvisable to proceed with the completion of the sale of and payment for the Shares
on the Closing Date on the terms and in the manner contemplated by this Agreement, the Disclosure
Package and the Prospectus, (ii) since the time of execution of this Agreement or the earlier
respective dates as of which information is given in the Disclosure Package, there has been any
Material Adverse Effect or the Company shall have sustained a loss by strike, fire, flood,
earthquake, accident or other calamity of such character that in the judgment of the Representative
would, individually or in the aggregate, result in a Material Adverse Effect and which would, in
the judgment of the Representative, make it impracticable or inadvisable to proceed with the
offering or the delivery of the Shares on the terms and in the manner contemplated in the
Disclosure Package, (iii) the Company shall have failed, refused or been unable to comply with the
terms or perform any agreement or obligation of this Agreement or any of the Subscription Terms,
other than by reason of a default by the Placement Agents, or (iv) any condition of the Placement
Agents’ obligations hereunder is not fulfilled. Any such termination shall be without liability of
any party to any other party except that the provisions of Section 4, Section 6,
and Section 11 hereof shall at all times be effective notwithstanding such termination.
9. Notices. All statements, requests, notices and agreements hereunder shall be in writing or
by facsimile, and:
(a) if to the Placement Agents, shall be delivered or sent by mail, telex or facsimile
transmission to the Representative as follows:
ThinkEquity Partners LLC
Fortis Securities LLC
c/o ThinkEquity Partners LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Fortis Securities LLC
c/o ThinkEquity Partners LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
-25-
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to the Company shall be delivered or sent by mail, telex or facsimile transmission
to: ADVENTRX Pharmaceuticals, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: General Counsel, (Facsimile No.: 858-552-0867), with a copy (which shall
not constitute notice) to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, 4350 La Jolla ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., (Facsimile No.:
858-450-8499). Any such notice shall be effective only upon receipt. Any party to this
Agreement may change such address for notices by sending to the parties to this Agreement
written notice of a new address for such purpose.
10. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of
and shall be binding upon the Placement Agents, the Company and their respective successors and
assigns and the controlling persons, officers and directors referred to in Section 6.
Nothing in this Agreement is intended or shall be construed to give to any other person, firm or
corporation, other than the persons, firms or corporations mentioned in the preceding sentence, any
legal or equitable remedy or claim under or in respect of this Agreement, or any provision herein
contained. The term “successors and assigns” as herein used shall not include any purchaser of the
Shares by reason merely of such purchase.
11. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to the conflicts of laws provisions thereof.
12. No Fiduciary Relationship. The Company hereby acknowledges that the Placement Agents are
acting solely as placement agents in connection with the offering of the Company’s securities. The
Company further acknowledges that the Placement Agents are acting pursuant to a contractual
relationship created solely by this Agreement entered into on an arm’s length basis and in no event
do the parties intend that the Placement Agents act or be responsible as a fiduciary to the
Company, its management, stockholders, creditors or any other person in connection with any
activity that the Placement Agents may undertake or have undertaken in furtherance of the offering
of the Company’s securities, either before or after the date hereof. The Placement Agents hereby
expressly disclaim any fiduciary or similar obligations to the Company, either in connection with
the transactions contemplated by this Agreement or any matters leading up to such transactions, and
the Company hereby confirms its
understanding and agreement to that effect. The Company and the Placement Agents agree that
they are each responsible for making their own independent judgments with respect to any such
transactions. The Company hereby waives and releases, to the fullest extent permitted by law, any
claims that the Company may have against the Placement Agents with respect to any breach or alleged
breach of any fiduciary or similar duty to the Company in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions.
13. Headings. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
14. Entire Agreement; Amendments and Waivers. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or written, of the parties,
and
-26-
there are no warranties, representations or other agreements among the parties in connection
with the subject matter hereof except as set forth specifically herein or contemplated hereby. No
supplement, modification or waiver of this Agreement shall be binding unless executed in writing by
the party to be bound thereby. The failure of a party to exercise any right or remedy shall not be
deemed or constitute a waiver of such right or remedy in the future. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a continuing waiver
unless otherwise expressly provided.
15. Submission to Jurisdiction. Except as set forth below, no Proceeding may be commenced,
prosecuted or continued in any court other than the courts of the State of New York located in the
City and County of New York or in the United States District Court for the Southern District of New
York, which courts shall have jurisdiction over the adjudication of such matters, and the Company
and the Placement Agents each hereby consents to the jurisdiction of such courts and personal
service with respect thereto. The Company hereby waives all right to trial by jury in any
Proceeding (whether based upon contract, tort or otherwise) in any way arising out of or relating
to this Agreement. The Company agrees that a final and no longer appealable judgment in any such
Proceeding brought in any such court shall be conclusive and binding upon the Company and may be
enforced in any other courts in the jurisdiction of which the Company is or may be subject, by suit
upon such judgment.
16. Counterparts. This Agreement may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts shall each be deemed to be an original and
all such counterparts shall together constitute one and the same instrument. Delivery of an
executed counterpart by facsimile or electronic mail shall be effective as delivery of a manually
executed counterpart thereof.
17. Research Analyst Independence. The Company acknowledges that the Placement Agents’
research analysts and research department are required to be independent from their investment
banking division and are subject to certain regulations and internal policies, and that such
Placement Agents’ research analysts may hold views and make statements or investment
recommendations and/or publish research reports with respect to the Company and/or the offering
that differ from the views of their investment banking division. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company may have against the
Placement Agents with respect to any conflict of interest that may arise from the fact that the
views expressed by their independent research analysts and research department may be different
from or inconsistent with the views or advice communicated to the Company by such Placement Agents’
investment banking division. The Company acknowledges that the Placement Agents are full service
securities firms and as such from time to time, subject to applicable securities laws, rules and
regulations, may effect transactions for their own account or the account of their customers and
hold long or short positions in debt or equity securities of the
Company; provided, however, that nothing in this Section 17 shall relieve the
Placement Agents of any responsibility or liability they may otherwise bear in connection with
activities in violation of applicable securities laws, rules and regulations.
[Signature Page Follows]
-27-
If the foregoing is in accordance with your understanding of the agreement between the Company
and the Placement Agents, kindly indicate your acceptance in the space provided for that purpose
below.
| Very truly yours, | ||||||
| ADVENTRX PHARMACEUTICALS, INC. | ||||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||
| Title: | Chief Executive Officer | |||||
Accepted as of
the date first above written:
the date first above written:
| THINKEQUITY PARTNERS LLC | ||||
By: |
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. | |||
| Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. | ||||
| Title: Partner | ||||
| FORTIS SECURITIES LLC | ||||
By: |
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||
| Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | ||||
| Title: Executive Director | ||||
By: |
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: ▇▇▇▇ ▇▇▇▇▇▇▇ | ||||
| Title: Managing Director | ||||
Schedules and Exhibits
Schedule I:
|
Issuer General Free Writing Prospectuses | |
Schedule II:
|
Permitted Free Writing Prospectuses | |
Exhibit A:
|
Form of Subscription Terms | |
Exhibit B:
|
Form of Lock-Up Agreement | |
Exhibit C:
|
List of Directors and Executive Officers Executing Lock-Up Agreements | |
Exhibit D:
|
Pricing Information |
Schedule I
Issuer General Free Writing Prospectuses
None
Schedule II
Permitted Free Writing Prospectuses
None
Exhibit A
Form of Subscription Terms
ADVENTRX Pharmaceuticals, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned (the “Investor”) hereby confirms and agrees with you as follows:
1. The subscription terms set forth herein (this “Subscription”) are made as of the date
set forth below between ADVENTRX Pharmaceuticals, Inc., a Delaware corporation (the “Company”), as
set forth below between the Company and the Investor.
2. As of the Closing (as defined below) and subject to the terms and conditions hereof,
the Company and the Investor agree that the Investor will purchase from the Company and the Company
will issue and sell to the Investor such number of shares of common stock, par value $0.001 per
share, of the Company (the “Common Stock”) as is set forth on the signature page hereto (the
“Signature Page”) for a purchase price of $2.75 per share (the “Shares”). The Investor
acknowledges that the offering is not a firm commitment underwriting and that there is no minimum
offering amount.
3. The completion of the purchase and sale of the Shares shall occur at a closing (the
“Closing”) which, in accordance with Rule 15c6-1 promulgated under the Securities Exchange Act of
1934, as amended, is expected to occur on or about November 8, 2006. At the Closing, (a) the
Company shall cause its transfer agent to release to the Investor the number of Shares being
purchased by the Investor and (b) the aggregate purchase price for the Shares being purchased by
the Investor will be delivered by or on behalf of the Investor to the Company. If the Investor
chooses to settle via DWAC (by checking the appropriate space on the Signature Page hereto), the
provisions set forth in Exhibit A hereto shall be incorporated herein by reference as if
set forth fully herein.
4. The offering and sale of the Shares are being made pursuant to the Registration
Statement and the Prospectus (as such terms are defined below). The Investor acknowledges that the
Company intends to enter into subscriptions in substantially the same form as this Subscription
with certain other investors and intends to offer and sell (the “Offering”) up to an aggregate of
14,545,000 shares of Common Stock pursuant to the Registration Statement and Prospectus. The
Company may accept or reject this Subscription or any one or more other subscriptions with other
investors in its sole discretion.
5. The Company has filed or shall file with the Securities and Exchange Commission (the
“Commission”) a prospectus (the “Base Prospectus”) and a final prospectus supplement (collectively,
the “Prospectus”) with respect to the registration statement (File No. 333-133729) reflecting the
Offering, including all amendments thereto, the exhibits and any schedules thereto, the documents
otherwise deemed to be a part thereof or included therein by the rules and regulations of the
Commission (the “Rules and Regulations”), and any registration statement relating to the Offering
and filed pursuant to Rule 462(b) under the Rules and Regulations (collectively, the “Registration
Statement”), in conformity with the Securities Act of 1933, as amended (the “Securities Act”),
including Rule 424(b) thereunder. The Investor hereby confirms that it has had full access to the
Base Prospectus, the prospectus supplement
and the Company’s periodic reports and other information incorporated by reference therein, and was
able to read, review, download and print such materials.
6. The Company has entered into a Placement Agency Agreement (the “Placement Agreement”),
dated November 2, 2006 with ThinkEquity Partners LLC and Fortis Securities LLC (the “Placement
Agents”), which will act as the Company’s placement agents with respect to the Offering and receive
a fee in connection with the sale of the Shares. The Placement Agreement contains certain
representations and warranties of the Company. The Company acknowledges and agrees that the
Investor may rely on the representations and warranties made by it to the Placement Agents in
Section 2 of the Placement Agreement to the same extent as if such representations and warranties
had been incorporated in full herein and made directly to the Investor. Capitalized terms used,
but not otherwise defined, herein shall have the meanings ascribed to such terms in the Placement
Agreement.
7. The obligations of the Company and the Investor to complete the transactions
contemplated by this Subscription shall be subject to the following:
| a. | The Company’s obligation to issue and sell the Shares to the Investor shall be subject to: (i) the acceptance by the Company of this Subscription (as may be indicated by the Company’s execution of the Signature Page hereto), (ii) the receipt by the Company of the purchase price for the Shares being purchased hereunder as set forth on the Signature Page and (iii) the accuracy of the representations and warranties made by the Investor and the fulfillment of those undertakings of the Investor to be fulfilled prior to the Closing Date. | ||
| b. | The Investor’s obligation to purchase the Shares will be subject to the condition that the Representative shall not have: (i) terminated the Placement Agreement pursuant to the terms thereof or (ii) determined that the conditions to closing in the Placement Agreement have not been satisfied. |
8. The Company hereby makes the following representations, warranties and covenants to
the Investor:
| a. | The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Subscription and otherwise to carry out its obligations hereunder. The execution and delivery of this Subscription by the Company and the consummation by it of the transactions contemplated hereunder have been duly authorized by all necessary action on the part of the Company. This Subscription has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity. | ||
| b. | The Company shall (i) before the opening of trading on the American Stock Exchange on the next trading day after the date hereof, issue a press release, disclosing all material aspects of the transactions contemplated hereby and (ii) make such other filings and notices in the manner and time required by the Commission with respect to the transactions contemplated hereby. The Company shall not identify the Investor by name in any press release or public filing, or otherwise publicly disclose the Investor’s name, without the Investor’s prior written consent, unless required by law or the rules and regulations of any self-regulatory organization which the Company or its securities are subject. |
9. The Investor hereby makes the following representations, warranties and covenants to
the Company:
| a. | The Investor represents that (i) it has had full access to the Base Prospectus, and the prospectus supplement, as well as the Company’s periodic reports and other information incorporated by reference therein, prior to or in connection with its receipt of this Subscription, (ii) it is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in securities representing an investment decision like that involved in the purchase of the Shares, and (iii) it does not have any agreement or understanding, directly or indirectly, with any person or entity to distribute any of the Shares. | ||
| b. | The Investor has the requisite power and authority to enter into this Subscription and to consummate the transactions contemplated hereby. The execution and delivery of this Subscription by the Investor and the consummation by it of the transactions contemplated hereunder have been duly authorized by all necessary action on the part of the Investor. This Subscription has been executed by the Investor and, when delivered in accordance with the terms hereof, will constitute a valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). | ||
| c. | The Investor understands that nothing in this Subscription or any other materials presented to the Investor in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. The Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of Shares. | ||
| d. | Neither the Investor nor any Person acting on behalf of, or pursuant to any understanding with or based upon any information received from, the Investor has, directly or indirectly, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales involving the Company’s securities) since the earlier to occur of (i) the time that the Investor was first contacted by the Placement Agents or the Company with respect to the transactions contemplated hereby and (ii) the date that is the tenth (10th) trading day prior to the date the Investor executes this Subscription. “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not against the box, and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers. The Investor covenants that neither it, nor any Person acting on behalf of, or pursuant to any understanding with or based upon any information received from, the Investor will engage in any transactions in the securities of the Company (including Short Sales) prior to the time that the transactions contemplated by this Subscription are publicly disclosed. | ||
| e. | The Investor represents that, except as set forth below, (i) it has had no position, office or other material relationship within the past three years with the Company or persons known to it to be affiliates of the Company, (ii) it is not a, and it has no direct or indirect affiliation or association with any, NASD member or an Associated Person (as such term is defined under the NASD Membership and Registration Rules Section 1011) as of the date the Investor executes this |
| Subscription, and (iii) neither it nor any group of investors (as identified in a public filing made with the Commission) of which it is a member, acquired, or obtained the right to acquire, 20% or more of the Common Stock (or securities convertible or exercisable for Common Stock) or the voting power of the Company on a post-transaction basis. Exceptions: |
(If no exceptions, write “none.” If left blank, response will be deemed to be “none.”)
| f. | The Investor, if outside the United States, will comply with all applicable laws and regulations in each foreign jurisdiction in which it purchases, offers, sells or delivers Shares or has in its possession or distributes any offering material, in all cases at its own expense. |
10. Notwithstanding any investigation made by any party to this Subscription, all
covenants, agreements, representations and warranties made by the Company and the Investor herein
will survive the execution of this Subscription, the delivery to the Investor of the Shares being
purchased and the payment therefor.
11. This Subscription may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor.
12. In case any provision contained in this Subscription should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions
contained herein will not in any way be affected or impaired thereby.
13. This Subscription will be governed by, and construed in accordance with, the internal
laws of the State of New York, without giving effect to the principles of conflicts of law that
would require the application of the laws of any other jurisdiction.
14. This Subscription may be executed in one or more counterparts, each of which will
constitute an original, but all of which, when taken together, will constitute but one instrument,
and will become effective when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
15. The Investor acknowledges and agrees that such Investor’s receipt of the Company’s
counterpart to this Subscription shall constitute written confirmation of the Company’s sale of
Shares to such Investor.
16. In the event that the Placement Agreement is terminated by the Placement Agents
pursuant to the terms thereof, this Subscription shall terminate without any further action on the
part of the parties hereto.
INVESTOR SIGNATURE PAGE
Number of Shares:
Purchase Price Per Share: $
Aggregate Purchase Price: $
Please confirm that the foregoing correctly sets forth the agreement between us by signing in the
space provided below for that purpose.
Dated as of: , 2006
INVESTOR
By:
Print Name:
Title:
Name in which Shares are to be registered:
Print Name:
Title:
Name in which Shares are to be registered:
Mailing Address:
|
||||
Taxpayer Identification Number:
Manner of Settlement (check one):
| ___ DWAC (see Exhibit A for explanation and instructions) | |||
| ___ DVP (see Exhibit B for explanation and instructions) |
Agreed and
Accepted this ___ day of 2006:
ADVENTRX PHARMACEUTICALS, INC.
By: |
||||
Title:
|
||||
The sale of the Shares purchased hereunder was made pursuant to a registration statement or in a
transaction in which a final prospectus would have been required to have been delivered in the
absence of Rule 172 promulgated under the Securities Act.
Exhibit A
TO BE COMPLETED BY INVESTOR
SETTLING VIA DWAC
Delivery by electronic book-entry at The Depository Trust Company (“DTC”), registered in the
Investor’s name and address as set forth on the Signature Page of the Subscription to which this
Exhibit A is attached, and released by American Stock Transfer Trust Company, the Company’s
transfer agent (the “Transfer Agent”), to the Investor at the Closing.
| Name of DTC Participant (broker-dealer at which the account or accounts to be credited with the Shares are maintained) | ||||
| DTC Participant Number | ||||
| Name of Account at DTC Participant being credited with the Shares | ||||
| Account Number at DTC Participant being credited with the Shares |
||||
NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THE SUBSCRIPTION TO WHICH THIS
EXHIBIT A IS ATTACHED BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:
| (I) | DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH THE SHARES ARE MAINTAINED TO SET UP A DEPOSIT/WITHDRAWAL AT CUSTODIAN (“DWAC”) INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND | ||
| (II) | REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SHARES BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING ACCOUNT: |
PNC Bank New Jersey
ABA#: ▇▇▇▇▇▇▇▇▇
Account Name: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC Attorney Trust Account
Account #: 8025720123
ABA#: ▇▇▇▇▇▇▇▇▇
Account Name: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC Attorney Trust Account
Account #: 8025720123
Such funds shall be held in escrow pursuant to an escrow agreement entered into between
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC (the “Escrow Agent”), the Placement Agents and the Company (the “Escrow
Agreement”) until the Closing and delivered by the Escrow Agent on behalf of the Investor to the
Company upon the satisfaction, in the sole judgment of the Representative, of the conditions set
forth in Section 7(b) of the Subscription to which this Exhibit A is attached. The Company
and the Investor agree to indemnify and hold the Escrow Agent harmless from and against any and all
losses, costs, damages, expenses and claims (including, without limitation, court costs and
reasonable attorneys fees) (“Losses”) with
respect to the funds held in escrow pursuant hereto or arising under the Escrow Agreement, unless
it is finally determined that such Losses resulted directly from the willful misconduct or gross
negligence of the Escrow Agent. Anything in this paragraph to the contrary notwithstanding, in no
event shall the Escrow Agent be liable for any special, indirect or consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of action.
Investor acknowledges that the Escrow Agent acts as counsel to the Placement Agents, and shall
have the right to continue to represent the Placement Agents, in any action, proceeding, claim,
litigation, dispute, arbitration or negotiation in connection with the Offering, and Investor
hereby consents thereto and waives any objection to the continued representation of the Placement
Agents by the Escrow Agent in connection therewith based upon the services of the Escrow Agent
under the Escrow Agreement, without waiving any duty or obligation the Escrow Agent may have to any
other person.
Exhibit B
TO BE COMPLETED BY INVESTOR
SETTLING VIA DVP
Delivery versus payment (“DVP”) through DTC (i.e., the Company shall deliver Shares registered in
the Investor’s name and address as set forth on the Signature Page of the Subscription to which
this Exhibit B is attached and released by American Stock Transfer Trust Company, the
Company’s transfer agent (the “Transfer Agent”), to the Placement Agents at the Closing for
settlement with such Investor directly to the account(s) at the Investor’s prime broker identified
by the Investor and simultaneously therewith payment shall be made from such account(s) to the
Company through the Placement Agents). NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF
THE SUBSCRIPTION TO WHICH THIS EXHIBIT B IS ATTACHED BY THE INVESTOR AND THE COMPANY, THE
INVESTOR SHALL:
| (I) | NOTIFY THE PLACEMENT AGENT OF THE ACCOUNT OR ACCOUNTS AT THE INVESTOR’S PRIME BROKER TO BE CREDITED WITH THE SHARES BEING PURCHASED BY SUCH INVESTOR, AND | ||
| (II) | CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT THE INVESTOR’S PRIME BROKER TO BE CREDITED WITH THE SHARES BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM CASH BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SHARES BEING PURCHASED BY THE INVESTOR. |
If the Shares are to be credited to an account held elsewhere than at any Placement Agent, please
complete the information requested below in order to facilitate such further credit:
| Name of DTC Participant (broker-dealer at which the account or accounts to be credited with the Shares are maintained) | ||||
| DTC Participant Number | ||||
| Name of Account at DTC Participant being credited with the Shares | ||||
| Account Number at DTC Participant being credited with the Shares |
||||
Exhibit B
Form of Lock-Up Agreement
November 1, 2006
THINKEQUITY PARTNERS LLC
FORTIS SECURITIES LLC
c/o ThinkEquity Partners LLC
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FORTIS SECURITIES LLC
c/o ThinkEquity Partners LLC
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Ladies and Gentlemen:
The undersigned understands that you, as Placement Agents, propose to enter into the Placement
Agency Agreement (the “Placement Agreement”) with ADVENTRX Pharmaceuticals, Inc., a
Delaware corporation (the “Company”), providing for the offering (the “Offering”)
of shares (the “Shares”) of common stock, par value $0.001 per share (the “Common
Stock”), of the Company. Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Placement Agreement.
In consideration of the foregoing, and in order to induce you to participate in the Offering,
and for other good and valuable consideration receipt of which is hereby acknowledged, the
undersigned hereby agrees that, without the Representative’s prior written consent (which consent
may be withheld in the Representative’s sole discretion), the undersigned will not, during the
period (the “Lock-Up Period”) beginning on the date hereof and ending on the date 90 days
after the date of the final prospectus (including the final prospectus supplement) to be used in
confirming the sale of the Shares, (1) offer, pledge, announce the intention to sell, sell,
contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, or file (or participate in the filing of) a registration statement (other than a
registration statement on Form S-8 or any successor form) with the Securities and Exchange
Commission in respect of, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock (including without limitation, Common Stock which may
be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations
of the Securities and Exchange Commission and securities which may be issued upon exercise of a
stock option or warrant), (2) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise, (3) make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock, or (4) publicly announce an intention to effect any
transaction specific in clause (1), (2) or (3) above.
Notwithstanding the foregoing, the restrictions set forth in clause (1) and (2) above shall
not apply to (a) transfers (i) as a bona fide gift or gifts, provided that the donee or donees
thereof agree to be bound in writing by the restrictions set forth herein, (ii) to any trust for
the direct or indirect benefit of the undersigned or the immediate family of the undersigned,
provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth
herein, and provided further that any such transfer shall not involve a disposition for value,
(iii) with the Representative’s prior written consent or (iv) effected
pursuant to any exchange of “underwater” options with the Company, (b) the acquisition or
exercise of any stock option issued pursuant to the Company’s existing stock option plan or
employee stock purchase plan, including any exercise effected by the delivery of Shares of the
Company held by the undersigned, or (c) the purchase or sale of the Company’s securities pursuant
to a plan, contract or instruction that satisfies all of the requirements of Rule
10b5-1(c)(1)(i)(B) that was in effect prior to the date hereof. For purposes of this Lock-Up
Agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin. None of the restrictions set forth in this Lock-Up Agreement shall apply
to Common Stock acquired in open market transactions.
For the purpose of allowing you to comply with NASD Rule 2711(f)(4), if (1) during the last 17
days of the Lock-Up Period, the Company releases earnings results or publicly announces other
material news or a material event relating to the Company occurs or (2) prior to the expiration of
the Lock-Up Period, the Company announces that it will release earnings results during the 16 day
period beginning on the last day of the Lock-Up Period, then in each case the Lock-Up Period will
be extended until the expiration of the 18 day period beginning on the date of release of the
earnings results or the public announcement regarding the material news or the occurrence of the
material event, as applicable, unless the Representative waives, in writing, such extension. The
undersigned hereby acknowledges that the Company has agreed not to accelerate the vesting of any
option or warrant or the lapse of any repurchase right prior to the expiration of the Lock-Up
Period. In furtherance of the foregoing, the Company, and any duly appointed transfer agent for
the registration or transfer of the securities described herein, are hereby authorized to decline
to make any transfer of securities if such transfer would constitute a violation or breach of this
Lock-Up Agreement.
The foregoing restrictions are expressly agreed to preclude the undersigned from engaging in
any hedging or other transaction which is designed to or reasonably expected to lead to or result
in a sale or disposition of the Common Stock even if such Common Stock would be disposed of by
someone other than the undersigned. Such prohibited hedging or other transactions would include
without limitation any short sale or any purchase, sale or grant of any right (including without
limitation any put option or put equivalent position or call option or call equivalent position)
with respect to any of the Common Stock or with respect to any security that includes, relates to,
or derives any significant part of its value from such Common Stock.
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Lock-Up Agreement. All authority herein conferred or agreed to be
conferred and any obligations of the undersigned shall be binding upon the successors, assigns,
heirs or personal representatives of the undersigned.
The undersigned also agrees and consents to the entry of stop transfer instructions with the
Company’s transfer agent and registrar against the transfer of the undersigned’s shares of Common
Stock except in compliance with the foregoing restrictions.
The undersigned understands that, if the Placement Agreement does not become effective, or if
the Placement Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Shares to be sold thereunder,
the undersigned shall be released from all obligations under this Lock-Up Agreement.
This Lock-Up Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflict of laws principles thereof.
| Very truly yours, | ||||
| Print Name: | ||||
| Print Title: | ||||
| Signature: | ||||
Exhibit C
List of Directors and Executive Officers
Executing Lock-Up Agreements
Executing Lock-Up Agreements
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Exhibit D
Pricing Information
Number of
Shares to be Sold: 14,545,000
Offering
Price: $2.75 per Share
Aggregate
Placement Agency Fees: $2,399,925
Estimated
Net Proceeds to the Company (exclusive of estimated expenses of the
Company): $37,598,825