Exhibit 10.21
As of December 15, 1997
Xxxxxx, Xxxx & Xxxxxxxx, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
Alfacell Corporation, a Delaware corporation (the "Company"), hereby
confirms its agreement, as amended and restated, with Xxxxxx, Xxxx & Xxxxxxxx,
Inc. (the "Placement Agent") as follows:
1. Description of Transaction. The Company proposes to issue and sell
through the Placement Agent, in a transaction exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), to a limited number
of persons meeting criteria for "Accredited Investor" status (as more fully
described in the confidential private offering memorandum dated the date hereof
and exhibits thereto, as the same may be supplemented from time to time (the
"Memorandum"), up to 2,500,000 units (the "Units"), each consisting of two (2)
shares ("Shares") of the Company's Common Stock, $0.001 par value per share (the
"Common Stock") at an offering price per share which will be determined prior to
each closing of the offering (individually, a "Closing" and collectively, the
"Closings") by negotiation between the Company and the Placement Agent and which
will be based upon the market price of the Common Stock and one (1) three-year
warrant (the "Warrant") to purchase one (1) share of Common Stock (the "Private
Offering"). The Shares and the Warrants which comprise the Units will be
detached and are separately transferable. Each Warrant shall be exercisable at a
price of $2.50 per share of Common Stock during the period commencing three (3)
months after issuance thereof and terminating three (3) years after issuance
thereof. The Private Offering shall be conducted on a "reasonable efforts" basis
by the Company with the assistance of the Placement Agent. The Company may
increase the size of the Private Offering in its discretion.
The full terms of the Private Offering and the securities to be sold in
connection therewith, are more fully described in the Memorandum. Capitalized
terms not defined herein shall have the meaning set forth in the Memorandum.
2. Appointment of the Placement Agent. On the basis of the representations,
warranties, covenants and agreements of the Placement Agent contained herein and
subject to the conditions contained herein, the Company hereby appoints the
Placement Agent as its exclusive agent to offer and sell to Accredited Investors
the Units, on a "reasonable efforts" basis, until the earlier of (i) the date on
which all of the Units offered in the Private Offering have been sold, or (ii)
on or before the close of business on February 22, 1998, or (iii) such earlier
date as shall be determined by the Company in its sole discretion (the "Offering
Expiration Date"). The Placement Agent, on the basis of the representations,
warranties,
covenants and agreements of the Company contained herein, and subject to the
conditions contained herein, accepts such appointment and agrees to use its
reasonable efforts to sell the Units. It is understood that the Placement Agent
has no commitment to sell the Units other than to use its reasonable efforts.
3. Purchase, Sale and Delivery of the Units. On the basis of the
representations and warranties contained herein, and subject to the terms and
conditions set forth herein, the parties agree that:
(a) Regulation D Placement. Neither the offer nor the sale of the
Units has been or will be registered with the U.S. Securities and Exchange
Commission ("SEC"). The Units will be offered and sold in reliance upon the
exemption from registration provided by Regulation D ("Reg D") adopted
under the Securities Act, and will only be sold to "Accredited Investors"
as such term is defined under Reg D; the Units will be offered for sale
only in states in which the Units have been qualified or registered for
sale or are exempt from such qualification or registration and the
conditions for such exemption have been met; and the Company will provide
the Placement Agent for delivery to all offerees and purchasers and their
representatives, if any, with any information, documents and instruments
which the Placement Agent and the Company deem necessary to comply with the
rules, regulations and judicial and administrative interpretations
concerning compliance with applicable federal and state statutes and
regulations.
(b) Subscription for the Units. Subscription for the Units shall occur
by execution and delivery by the subscriber of a subscription agreement
(the "Subscription Agreement") in the form annexed to the Memorandum,
together with the accredited investor status form (the "Accredited Investor
Status Form" and together with the Subscription Agreement the "Subscription
Documents") and such other documents and instruments as are set forth in
the Memorandum and payment of the required subscription amount (the
"Subscription Payment") all in accordance with the terms of the
Subscription Agreement. The Placement Agent will notify Subscribers of the
offering price per Unit prior to submission and acceptance of their
Subscription Documents.
(c) Distribution of Proceeds; Closing; Termination of Private
Offering. The proceeds of the Private Offering will be held in a segregated
non-interest-bearing escrow account maintained by the Placement Agent and
the Company until such funds are released to the Company at each Closing of
the Private Offering (each, a "Closing Date"). The Company shall deliver to
the Placement Agent on each Closing Date, on behalf of the Subscribers, the
certificates evidencing the Unit against payment therefor, after deducting
the amounts set forth in Section 4 below.
(d) Registration Rights. The Subscribers shall have registration
rights, as described in the Subscription Agreement.
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(e) Closing. Each of the Closings will occur on such date and at such
time and place as the Placement Agent and the Company agree, prior to the
Offering Expiration Date. On each Closing Date, the parties shall deliver
the closing documents described in Section 8 of this Agreement as well as
such other documents as the Company and the Placement Agent and their
respective legal counsel reasonably request.
4. Compensation of Placement Agent. As compensation for its services
rendered as Placement Agent under this Agreement, the Placement Agent shall
receive at each Closing: (i) a placement fee equal to eight percent (8%) of the
gross proceeds from the sale of the Units, provided that no placement fee will
be paid to the Placement Agent for subscriptions received from purchasers
introduced to the Placement Agent by T.C. Management, Inc. ("TCM") and for the
investors listed on Exhibit A hereto, and (ii) Placement Agent warrants (the
"Placement Agent Warrants") to purchase that number of Units equal to ten
percent (10%) of the aggregate number of Units sold, excluding the total amount
of securities sold to purchasers introduced to the Placement Agent by TCM. The
Placement Agent Warrants will be exercisable for a period commencing three (3)
months after and ending three (3) years after issuance of the Units upon which
such Placement Agent Warrants are based, at an exercise price per Unit equal to
110% of the offering price per Unit of the Units upon which such Placement Agent
Warrants are based. The securities underlying the Placement Agent Warrants will
be registered contemporaneously with the registration of the Units. At the first
Closing, the $35,000 paid to the Placement Agent upon the signing of that
certain engagement letter, dated October 24, 1997, will be credited to the
Company and debited against the compensation paid to the Placement Agent
hereunder.
5. Representations and Warranties of the Company. The Company represents
and warrants to the Placement Agent that:
(a) Memorandum. The Company has prepared the Memorandum which contains
information, accurate as of the date specified therein. The Memorandum, as
of its date and at all times subsequent thereto up to and including each
Closing Date, does not and will not include any untrue statement of a
material fact, or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(b) Reg D Qualification. The Company has used its best efforts to
ensure that the offer and sale of the Units by the Company has satisfied,
and on the Closing Date will have satisfied, in all material respects, all
of the requirements of Reg D.
(c) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, with full power and authority to own or lease and
operate its properties and to conduct its business as described in the
Memorandum and to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby. The Company is duly
qualified to do business as a foreign corporation and is in good standing
in all jurisdictions where such
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qualification is necessary and where failure to so qualify could have a
material adverse effect on the financial condition, results of operations,
business or properties of the Company (a "Material Adverse Effect"). The
Company has no subsidiaries or predecessors.
(d) Corporate Authorization. This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, or other similar laws or arrangements
affecting creditors' rights generally and subject to principles of equity
and public policy considerations, including with respect to indemnification
and contribution for liabilities under the Securities Act and the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"). The execution,
delivery and performance of this Agreement by the Company, the consummation
by the Company of the transactions herein contemplated, and the compliance
by the Company with the terms of this Agreement have been duly authorized
by all necessary corporate action and do not and will not, with or without
the giving of notice or the lapse of time, or both: (i) result in any
violation of the Certificate of Incorporation or Bylaws of the Company,
(ii) result in a material breach of or material conflict with any of the
terms or provisions of, or constitute a default under, or result in the
modification or termination of, or result in the creation or imposition of
any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company pursuant to any indenture, mortgage,
note, contract, commitment or other agreement or instrument to which the
Company is a party or by which the Company or any of its properties or
assets are or may be bound or affected, (iii) violate any existing
applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over
the Company or any of its properties or business or (iv) have any effect on
any permit, certification, registration, approval, consent, license or
franchise necessary for the Company to own or lease and operate its
properties and to conduct its business.
(e) Consents. No authorization, approval, consent, order,
registration, license or permit of any court or governmental agency or
body, other than under the Securities Act, the rules and regulations of the
SEC promulgated pursuant thereto (the "Regulations"), and the rules and
regulations of the state securities laws of the states in which offers or
sales will be made, is required for the valid authorization, issuance, sale
and delivery of the Securities in accordance herewith or the consummation
by the Company of the transactions contemplated by this Agreement.
(f) Capitalization. The Company had at the date or dates indicated in
the Memorandum a duly authorized and outstanding capitalization as set
forth in the Memorandum. Based on the assumptions stated in the Memorandum,
the Company will have on each Closing Date the capitalization set forth
therein. Except as set forth in the Memorandum, on each Closing Date, there
will be no options to purchase, warrants, or other rights to subscribe for
securities, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of the Company's capital
stock or any such warrants, convertible securities or obligations;
provided, however, nothing herein shall prohibit the Company from granting
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options to employees and consultants of the Company from the date hereof to
the Closing Date provided such options are granted in the ordinary course
of business and the Placement Agent is notified prior to the grant of such
options. Except as set forth in the Memorandum, no holder of any of the
Company's securities has any rights, "demand," "piggyback" or otherwise, to
have such securities registered under the Securities Act.
(g) Material Contracts. The descriptions in the Memorandum of
contracts and other agreements of the Company do not include any untrue
statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein in light of
the circumstances in which they are made, not misleading and present fairly
the information required to be disclosed, and there are no material
contracts or other agreements which have not been so described.
(h) Financial Statements. KPMG Peat Marwick LLP (the "Accountants"),
the accountants who have audited the financial statements attached as an
exhibit to the Memorandum, except as disclosed in the Memorandum, are
independent public accountants within the meaning of the Securities Act and
the Regulations. The financial statements and schedules and the notes
thereto incorporated by reference in the Memorandum and made a part thereof
are complete and correctly and fairly present the financial position of the
Company as of the dates thereof, and the results of operations and cash
flows of the Company for the periods indicated therein, all in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved except as otherwise stated in the
Memorandum.
(i) Taxes. The Company has filed with the appropriate federal, state
and local governmental agencies, and all foreign countries and political
subdivisions thereof, all tax returns, including franchise tax returns,
which are required to be filed or has duly obtained extensions of time for
the filing thereof and has paid all taxes shown on such returns and all
assessments received by it to the extent that the same have become due; and
the provisions for income taxes payable, if any, shown on the financial
statements included as part of the Memorandum are sufficient for all
accrued and unpaid foreign and domestic taxes, whether or not disputed, and
for all periods to and including the dates of such financial statements.
Except as disclosed in writing to the Placement Agent, the Company has not
executed or filed with any taxing authority, foreign or domestic, any
agreement extending the period for assessment or collection of any income
taxes and is not a party to any pending action or proceeding by any foreign
or domestic governmental agency for assessment or collection of taxes; and
no claims for assessment or collection of taxes have been asserted against
the Company.
(j) Authorization of Outstanding Shares. The outstanding shares of
Common Stock and outstanding options to purchase shares of Common Stock
have been duly authorized and validly issued. The outstanding shares of
Common Stock are fully paid and non-assessable. The outstanding options to
purchase shares of Common Stock, all as disclosed in the Memorandum,
constitute the valid and binding obligations of the Company, enforceable in
accordance with their terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar statutes, rules,
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regulations or other law affecting the unavailability of, or limitation on
the availability of, a particular right or remedy (whether in a proceeding
in equity or at law) because of an equitable principle or a requirement as
to commercial reasonableness, conscionability or good faith. None of the
outstanding shares of Common Stock or options to purchase shares of Common
Stock has been issued in violation of the preemptive rights of any
stockholder of the Company. None of the holders of the outstanding shares
of Common Stock is subject to personal liability solely by reason of being
such a holder. The authorized shares of Common Stock and outstanding
options to purchase shares of Common Stock conform to the descriptions
thereof contained in the Memorandum. Except as set forth in the Memorandum,
on each Closing Date, there will be no outstanding options, warrants,
debentures or notes for the purchase of, or other outstanding rights to
purchase, Common Stock or securities convertible into Common Stock;
provided, however, nothing herein shall prohibit the Company from granting
options to employees and consultants of the Company from the date hereof to
each Closing Date provided such options are granted in the ordinary course
of business and the Placement Agent is notified prior to the grant of such
options.
(k) Authorization. The issuance and sale of the Units have been duly
authorized and, upon closing of the Private Offering and delivery to the
Company of the net proceeds therefrom, the Shares included in the Units
will be validly issued, fully paid and non-assessable, and holders thereof
will not be subject to personal liability solely by reason of being such
holders. Upon proper exercise of the Warrants and the Placement Agent's
Warrants, the shares of Common Stock issued thereby will be validly issued,
fully paid and non-assessable. Except as described in the Memorandum, the
Common Stock issuable upon exercise of the Warrants and the Placement
Agent's Warrants is not and will not be subject to preemptive rights of any
stockholder of the Company. The Shares, the Warrants and the Placement
Agent's Warrants conform to the descriptions thereof contained in the
Memorandum.
(l) Noncontravention. The Company is not in violation of, or in
default under: (i) any term or provision of its Certificate of
Incorporation or Bylaws; (ii) any material term or provision or any
financial covenants of any indenture, mortgage, contract, commitment or
other agreement or instrument to which it is a party or by which it or its
property or business is or may be bound or affected, or (iii) any existing
applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over
the Company or any its properties or business except for violations or
defaults which, individually or in the aggregate, do not have a Material
Adverse Effect. Except as disclosed in the Memorandum, the Company owns,
possesses or has obtained all governmental and other (including those
obtainable from third parties) licenses, permits, certifications, patents,
registrations, approvals or consents and other authorizations necessary to
own or lease, as the case may be, and to operate its properties, whether
tangible or intangible, of which the failure to obtain could reasonably be
expected to have a Material Adverse Effect, and to conduct any of the
business or operations of the Company as presently conducted and all such
licenses, permits, certifications, patents, registrations, approvals,
consents and other authorizations are outstanding and in good standing, and
there are no proceedings pending or, to the best
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knowledge of the Company, threatened, seeking to cancel, terminate or limit
such licenses, permits, certifications, patents, registrations, approvals
or consents or other authorizations.
(m) Litigation. Except as set forth in the Memorandum, there are no
pending actions, suits, proceedings, or arbitrations, and the Company is
not aware of any claims, investigations or inquiries, before any
governmental agency, court or tribunal, domestic or foreign, or before any
private arbitration tribunal against the Company or involving its
properties or business that, if determined adversely to the Company, could
reasonably, individually or in the aggregate, be expected to result in a
Material Adverse Effect or that question the validity of the capital stock
of the Company or this Agreement or of any action taken or to be taken by
the Company pursuant to, or in connection with, this Agreement. There are
no outstanding orders, judgments or decrees of any court, governmental
agency or other tribunal naming the Company and enjoining the Company from
taking, or requiring the Company to take, any action, or to which the
Company, its properties or businesses are bound or subject.
(n) Finder's Fees. Except for possible finder's fees payable to TCM
with respect to investors introduced to the Placement Agent by TCM, the
Company has not incurred any liability for any finder's fees or payments in
connection with the transaction herein contemplated, except as specifically
provided in this Agreement. The Company agrees to indemnify the Placement
Agent with respect to any claim for a finder's fee based upon any agreement
by or on behalf of the Company in connection with the Private Offering.
(o) Intangibles. As of the date of this Agreement, the Company owns
and has adequate and enforceable rights to use, or has pending applications
for the requisite rights to use each of the patents described in the
Memorandum as being owned by the Company (the "Patents") and, except as
disclosed in the Memorandum, the Company owns and has adequate and
enforceable rights to use, or has pending applications for the requisite
licenses or other rights to use all trademarks, service marks, service
names, trade names, inventions, product processes and formulations
(collectively with the Patents, "Intangibles") utilized in the conduct of
its business as now conducted or proposed to be conducted without, to the
Company's knowledge, infringing upon or otherwise acting adversely to the
right or claimed right of any person, corporation or other entity under or
with respect to any of the foregoing. The Company, except as disclosed in
the Memorandum, is not obligated or under any liability whatsoever to make
any payments by way of royalties, fees or otherwise to any owner or
licensee of, or other claimant to, any patent, trademark, service xxxx,
trade name, or other intangible asset, with respect to the use thereof or
in connection with the conduct of its business or otherwise. The Company
has not received any notice of conflict with the asserted rights of others
with respect to the Intangibles which, singly or in the aggregate, could
reasonable be expected to have a Material Adverse Effect and, except as
disclosed in the Memorandum, the Company is not aware of any licenses with
respect to the Intangibles which are required to be obtained by the
Company, and the Company knows of no basis therefor; and, except as
disclosed in the Memorandum, to the Company's knowledge, no other persons
or entities have infringed upon or are infringing upon the Intangibles of
the Company.
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(p) No Adverse Change. Since the respective dates as of which
information is given in the Memorandum and the Company's latest financial
statements, except as disclosed in the Memorandum, the Company has not
incurred any material liability or obligation, direct or contingent, or
entered into any material transaction, whether or not in the ordinary
course of business, and has not sustained any material loss or interference
with its business from fire, storm, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree; prior to each Closing Date there will
not be, any changes in the capital stock or any material increases in the
long-term debt of the Company or any materially adverse change in or
affecting the general affairs, management, financial condition,
stockholders' equity, results of operations or prospects of the Company,
other than in the ordinary course of business or as set forth in the
Memorandum.
(q) Title to Properties. The Company has good and marketable title in
fee simple to all real property and good title to all personal property
(tangible and intangible) owned by it, free and clear of all security
interests, charges, mortgages, liens, encumbrances and defects, except as
are described in the Memorandum. The leases, licenses or other contracts or
instruments under which the Company leases, holds or is entitled to use any
property, real or personal, are valid, subsisting and enforceable, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws or arrangements affecting creditors'
rights generally and subject to principles of equity and public policy
considerations. All rentals, royalties or other payments accruing
thereunder that became due prior to the date of this Agreement have been
duly paid (unless disputed in good faith), and neither the Company nor any
other party is in default thereunder, and no event has occurred that, with
the passage of time or the giving of notice, or both, would constitute a
default thereunder. The Company is not in violation of any applicable law,
ordinance, regulation, order or requirement relating to its owned or leased
properties except for violations which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect, and has
not received any notice of an alleged violation. The Company has adequately
insured its properties against loss or damage by fire or other casualty and
maintains, in adequate amounts, such other insurance as is usually
maintained by companies engaged in the same or similar businesses located
in its geographical area.
(r) Enforceability of Contracts. Except as described in the
Memorandum, the Company has in all material respects performed all material
obligations required to be performed by it to date under all material
contracts to which it is party, is not in default in any material respect
under any such contract and has received no notice of any dispute, default
or alleged default thereunder which has not heretofore been cured or which
notice has not heretofore been withdrawn. The Company does not know of any
material default under any such contract by any other party thereto or by
any other person, firm or corporation bound thereunder. Management of the
Company is not aware and the Company has not received notice that any of
the material provisions of such contracts or instruments violates any
existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court having jurisdiction over the Company or any of
its assets or businesses except for violations
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which, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
(s) Employee Benefit Plans. Except as set forth in the Memorandum, the
Company has no employee benefit plans (including, without limitation,
profit sharing and welfare benefit plans) or deferred compensation
arrangements that are subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
(t) Labor Relations. No labor problem exists with any of the Company's
employees or is imminent that could reasonably be expected to have a
Material Adverse Effect.
(u) Foreign Corrupt Practices Act. The Company has not, directly or
indirectly, at any time (i) made any contributions to any candidate for
political office in violation of law or failed to disclose fully any such
contribution, or (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments or contributions
required or allowed by applicable law. The Company's internal accounting
controls and procedures are sufficient to cause the Company to comply in
all material respects with the Foreign Corrupt Practices Act of 1977, as
amended.
(v) Criminal History or Bankruptcy. The Company represents that no
director or executive officer of the Company has been convicted within the
last 5 years of any felony, experienced a personal bankruptcy, or been an
officer or director of any company that during their tenure with such
company experienced any bankruptcy, or had any trustee, receiver, or
conservator appointed with respect to its business or assets.
(w) Exchange Act Compliance. On the date of the Memorandum and on each
Closing Date, the Company shall be in compliance in all material respects
with the Exchange Act and the rules and regulations of the SEC thereunder.
All reports included as Exhibits to the Memorandum and filed with the SEC,
when they were filed (or, if any amendment with respect to any such report
was filed, when such amendment was filed), conformed in all material
respects with the requirements of the Exchange Act and the rules and
regulations of the SEC thereunder; no such report, when it was filed (or,
if an amendment with respect to any such report was filed, when such
amendment was filed), contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
and there are no facts or circumstances existing that would require the
filing of an amendment to any such previously filed report or amendment.
6. Covenants of the Company.
(a) Memorandum. The Company will furnish the Placement Agent, during
the Private Offering, with as many copies of the Memorandum (and any
amendments or supplements thereto) as the Placement Agent may reasonably
request. If, during the Private
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Offering, any event occurs as a result of which the Memorandum, as then
amended or supplemented, would include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made in light of the circumstances in which they were made not
misleading, or if it otherwise shall be necessary to amend or supplement
the Memorandum to comply with applicable law, the Company will forthwith
notify the Placement Agent thereof, and furnish to the Placement Agent in
such quantities as may be reasonably requested, an amendment or supplement
to the Memorandum, or an amended or supplemented Memorandum which corrects
such statements or omissions or causes the Memorandum to comply with
applicable law.
(b) State Securities Registration. The Company will take all necessary
action and file all necessary forms and documents in order to qualify or
register the Units for sale under the securities laws of the states in
which offers or sales will be made, such states to be mutually agreed upon
between the Company and the Placement Agent (the "Agreed-Upon States"), or
to take any necessary action and file any necessary forms which are
required to obtain an exemption from such qualification or registration in
such jurisdictions; it being understood that the Company's obligation
herein is subject to the Placement Agent not soliciting investors in states
other than the Agreed-Upon States and advising the Company and its counsel
promptly of the states in which Subscribers who submit Subscription
Documents to the Placement Agent reside. The Company will promptly advise
the Placement Agent:
(i) if any securities regulator of any state shall make a request
or suggestion of or to the Company of any amendment to the Memorandum
or any registration materials or for any additional information,
including the nature and substance thereof; and
(ii) of the issuance of a stop order suspending the qualification
of the Securities for sale in any state, including the initiation or
threatening of any proceeding for such purpose, and the Company will
use its reasonable best efforts to prevent the issuance of such a stop
order, or if such an order shall be issued, to obtain the withdrawal
thereof at the earliest reasonably practicable date.
The Company will provide the Placement Agent with copies of any
additional information, documents and instruments which the Placement
Agent's counsel shall determine to be necessary to comply with the rules,
regulations and judicial and administrative interpretations in those states
and jurisdictions where the Units are to be offered for sale or sold for
delivery to all offerees and purchasers. The Company will file all
post-offering forms, documents or materials and take all other actions
required by states in which the Units have been offered or sold. The
Placement Agent will not make offers or sales of the Units in any
jurisdiction in which the Units have not been qualified or registered, or
are not exempt from such qualification or registration.
(c) Use of Proceeds. The Company intends to apply net proceeds from
this Private Offering in the manner set forth in the Memorandum.
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(d) Reg D Compliance. The Company will use its reasonable best efforts
to determine whether a Subscriber is an "Accredited Investor", and the
Company will comply in all respects with the terms and conditions of Reg D
and applicable state securities laws with respect to the offering and the
sale of the Units to qualified investors.
(e) Listing on Nasdaq. The Company's Common Stock is currently traded
on the Nasdaq SmallCap Market under the symbol "ACEL." Prior to the first
Closing, the Company shall file an additional listing application for the
Shares with the Nasdaq Stock Market, Inc.
(f) Repayment of Indebtedness. Prior to the Closing Date, the Company
shall not repay (or agree to repay) any indebtedness to any of its
stockholders (or incur any indebtedness to any of its stockholders) other
than salaries or other compensation paid in the ordinary course of business
or repayments of indebtedness consistent with past practices, unless the
terms thereof are approved in advance by the Placement Agent.
(g) Reservation of Shares. The Company will reserve for issuance
sufficient shares of Common Stock for issuance in connection with the Units
and the exercise of the Warrants and the Placement Agent Warrants.
(h) Engagement of the Placement Agent as Warrant Solicitation Agent.
The Company hereby appoints the Placement Agent as warrant solicitation
agent for a period of three years after the Effective Date, and the
Placement Agent shall be entitled to receive a 4% solicitation conversion
fee upon exercise of the Warrants (excluding the Placement Agent Warrants
or the Warrants issuable on exercise thereof), pursuant to the NASD Notice
to Members 81-38.
7. Representations, Warranties and Covenants of the Placement Agent. The
Placement Agent represents, warrants and covenants to the Company that:
(a) Duly Registered. The Placement Agent is duly registered, pursuant
to the applicable provisions of the Exchange Act, as a dealer, and is a
member in good standing of the National Association of Securities Dealers,
Inc. ("NASD"), and is duly registered as a broker-dealer in such states as
the Placement Agent is required to be registered in order to complete the
Private Offering contemplated by this Agreement and the Memorandum.
(b) No General Solicitation or Advertising. The Placement Agent has
not and will not offer or sell the Units by means of general solicitation
or general advertising.
(c) Furnish Memoranda. A reasonable time prior to the Closing Date,
the Placement Agent will furnish to each offeree of the Units a copy of the
Memorandum, including each supplement, attachment or amendment thereto, and
the Subscription Documents. Notwithstanding the foregoing, the delivery of
the Memorandum shall not constitute an offer to sell the Units to any
person. Such sale may be made only upon acceptance by the Company of
-11-
a Subscriber's subscription, after a determination that the Subscriber
satisfies all of the applicable requirements.
(d) Reg D Compliance. The Placement Agent will use its reasonable
efforts to determine whether a Subscriber is an Accredited Investor. The
Placement Agent is not disqualified from participation in the Private
Offering by reason of Rules 262(b) and (c) of Regulation A and Reg D or any
other applicable law, order or regulation. The Placement Agent will not
conduct the Private Offering contrary to any of the provisions of Reg D or
corresponding state statutes or regulations.
(e) Blue Sky Compliance. The Placement Agent will solicit purchasers
of the Units only in those jurisdictions where such solicitation could and
can be made in and in which it is so qualified to act and will conduct the
Private Offering in such jurisdictions in full compliance with all
applicable state statutes and regulations.
(f) Authorization. This Agreement has been duly authorized, executed
and delivered by the Placement Agent, constitutes the valid and binding
obligation of the Placement Agent and is enforceable against the Placement
Agent in accordance with its terms, subject, as to enforcement of remedies,
to applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the rights of creditors generally and the discretion of
courts in granting equitable remedies and except that enforceability of the
indemnification provisions and the contribution provisions set forth herein
may be limited by federal or state securities laws or public policy
underlying such laws.
(g) Litigation. There are no pending actions, suits, proceedings, or
arbitrations, and the Placement Agent is not aware of any claims,
investigations or inquiries, before any governmental agency, court or
tribunal, domestic or foreign, or before any private arbitration tribunal,
against or involving the Placement Agent or its business that question the
validity of this Agreement or of any action taken or to be taken by the
Placement Agent pursuant to or in connection with this Agreement.
(h) Finder's Fees. The Placement Agent has not incurred any liability
for any finder's fees or payments in connection with the transaction herein
contemplated, except as specifically provided in this Agreement. The
Placement Agent agrees to indemnify the Company with respect to any claim
for a finder's fee, based upon any agreement by or on behalf of the
Placement Agent, in connection with the Private Offering.
(i) Subscription Documents. Promptly, after its receipt of same, the
Placement Agent will furnish to the Company copies of all Subscription
Documents completed by the Subscribers as well as copies of any and all
correspondence between the Placement Agent and the Subscribers.
-12-
8. Conditions to Obligations.
(a) Conditions to Placement Agent's Obligations. The obligations of
the Placement Agent hereunder will be subject to the accuracy of the
representations and warranties of the Company herein contained as of the
date hereof and as of each Closing Date, to the performance by the Company
of its obligations hereunder and to the following additional conditions:
(i) Due Qualification or Exemption. (A) The Private Offering
contemplated by this Agreement will become qualified or be exempt from
qualification under the securities laws of the several states pursuant
to Section 6(b) above not later than each Closing Date, and (B) at
each Closing Date, no stop order suspending the sale of the Units
shall have been issued, and no proceeding for that purpose shall have
been initiated or threatened;
(ii) No Material Misstatements; Satisfactory Memorandum. (A) The
Placement Agent will not have notified the Company that any Blue Sky
Application (as hereinafter defined) or the Memorandum, or any
amendment, attachment or supplement thereto, contains an untrue
statement of a fact which in its opinion is material, or omits to
state a fact, which in its opinion is material and is required to be
stated therein, or is necessary to make the statements therein not
misleading, and (B) the Memorandum shall be reasonably satisfactory in
form and in substance to the Placement Agent and its legal and
accounting advisors;
(iii) Compliance with Agreements. The Company will have complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied in all material respects hereunder at or prior
to each Closing Date;
(iv) Corporate Action. The Company will have taken all necessary
corporate action, including, without limitation, obtaining the
approval of the Company's board of directors for the execution and
delivery of this Agreement, the issuance of the Shares, the Warrants
and the Placement Agent's Warrants and the performance by the Company
of its obligations hereunder and thereunder, if applicable, and the
consummation of the Private Offering;
(v) Opinion of Counsel. On the Closing Date, the Placement Agent
will have received from the Company's counsel, Xxxxxx & Xxxxxxx, LLP
("Company Counsel") and the Company's intellectual property counsel,
Xxxx X. Xxx, P.A. (the "Intellectual Property Counsel"), a signed
opinion reasonably satisfactory to Placement Agent's counsel, in form
and substance reasonably satisfactory to the Placement Agent and its
counsel.
-13-
(vi) Representations and Warranties. The representations and
warranties of the Company, set forth in Section 5 hereof, will be, as
of the Closing Date, accurate in all material respects.
(vii) Certificate of Chief Executive Officer. On the Closing
Date, the Company will have delivered a certificate of its Chief
Executive Officer confirming the satisfaction of the conditions set
forth in this Section 8(a).
(viii) Delivery of Share Certificates. On the Closing Date, the
Company will have delivered to the Placement Agent certificates
evidencing the Shares against payment of good funds for such Shares.
(ix) Delivery of Warrant Certificates. On the Closing Date, the
Company will have delivered to Placement Agent certificates evidencing
the Warrants and the Placement Agent Warrants against payment of good
funds for the Warrants and the Placement Agent Warrants.
(b) Conditions to the Company's Obligations. The obligations of the
Company hereunder will be subject to the accuracy of the representations
and warranties and compliance with the covenants of the Placement Agent
contained herein as of the date hereof and as of each Closing Date, to the
performance by the Placement Agent of its obligations hereunder and to the
following additional conditions:
(i) Absence of Events. At each Closing Date no stop order or
other judicial or administrative action suspending the sale of the
Units will have been issued, and no proceeding for that purpose will
have been initiated or threatened.
(ii) No Material Misstatements. The Company will not have
notified the Placement Agent that the Blue Sky Application (as
hereinafter defined) or the Memorandum, or any amendment, attachment
or supplement thereto, contains an untrue statement of a fact, which
in its opinion is material, or omits to state a fact, which in its
opinion is material and is required to be stated therein or is
necessary to make the statements therein not misleading, in each case
only with respect to information contained therein concerning the
Placement Agent or subscribers for the Units.
(iii) Compliance with Agreements. The Placement Agent will have
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder in all material respects at or
prior to the Closing Date.
(iv) Corporate Action. The Placement Agent will have taken all
necessary corporate action, including, without limitation, obtaining
the approval of the Placement Agent's board of directors for the
execution and delivery of this
-14-
Agreement and the performance by the Placement Agent of its
obligations hereunder and the consummation of the Private Offering.
(v) Registration. The Placement Agent will continue to be duly
registered as a member in good standing of the NASD and as a
broker-dealer in states required for the Private Offering.
(vi) Representations and Warranties. The representations and
warranties of the Placement Agent will be, as of each Closing Date,
accurate in all material respects.
(vii) Certificate. On the Closing Date, the Placement Agent will
have delivered a certificate of its President or Vice President
confirming the satisfaction of the conditions set forth in this
Section 8(b).
9. Expenses of Sale. In addition to the fees payable to the Placement Agent
pursuant to Section 4 herein, the Company will pay all of its expenses incident
to the proposed sale and delivery of the Units, whether or not the Private
Offering is consummated, including, without limitation, (a) the fees,
disbursements and expenses of its counsel and accountants, (b) all fees and
expenses of registering or qualifying the Units for offer and sale in the
applicable states, or obtaining exemptions therefrom, and (c) all other expenses
relating to the offering of the Units. The Placement Agent shall be responsible
for the fees, disbursements and expenses of its counsel. The Memorandum and the
exhibits thereto shall be reviewed by Company Counsel, whose costs and expenses
shall be paid for by the Company at the time such services are rendered.
If the Private Offering is not completed because (i) of any reason solely
within the control of the Company, its management, or its stockholders
including, without limitation, the inability or unwillingness of the Company to
keep its SEC filings current under the Exchange Act, (ii) the Company
unilaterally terminates the Private Offering or withdraws the Private Offering
from the Placement Agent for any reason, other than unreasonable delays by the
Placement Agent, or (iii) of any material discrepancy in any representation made
by the Company to the Placement Agent or the failure of the Company to meet any
of its material obligations under this Agreement, then the Company will be
obligated to reimburse the Placement Agent as to its out-of-pocket expenses of
up to $25,000 for its reasonable costs, expenses and legal fees incurred in
connection with the Private Offering, of which amount may be increased at the
request of the Placement Agent and with the approval of the Company.
10. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless the Placement Agent and each person, if any, who controls
the Placement Agent within the meaning of the Securities Act or the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which the Placement Agent or such controlling person
-15-
may become subject, under the Securities Act or otherwise, to the extent
and only to the extent such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in
the Memorandum, or (B) in any Blue Sky Application (as hereinafter defined)
or other document executed by the Company specifically for that purpose or
based upon false or misleading written information furnished by the Company
and filed in any state or other jurisdiction in order to qualify any or all
of the Shares under the securities laws thereof (any such application,
document or information being hereinafter called a "Blue Sky Application"),
(ii) the omission or alleged omission to state in the Memorandum or in any
Blue Sky Application a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii) any
untrue statement or alleged untrue statement of a material fact contained
in the Memorandum or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; and will reimburse the Placement Agent and each
such controlling person for any legal or other expenses reasonably incurred
by the Placement Agent or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by the Placement Agent or
counsel for the Placement Agent specifically for use in the preparation of
the Memorandum or any such Blue Sky Application.
(b) Indemnification by the Placement Agent. The Placement Agent agrees
to indemnify and hold harmless the Company, its directors and officers and
each person, if any, who controls the Company within the meaning of the
Securities Act and the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or such controlling
person may become subject, under the Securities Act or otherwise to the
extent such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in the Memorandum, or (B)
in any Blue Sky Application, (ii) the omission or alleged omission to state
in the Memorandum or in any Blue Sky Application a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or (iii) any untrue statement or alleged untrue statement of a
material fact contained in the Memorandum, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and will
reimburse the Company and each director, officer and controlling person for
any legal or other expenses reasonably incurred by the Company or such
director, officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Placement Agent will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the
-16-
Placement Agent or counsel for the Placement Agent specifically for use in
the preparation of the Memorandum or any such Blue Sky Application.
(c) Procedure. Within five (5) business days (unless shorter period is
required) of receipt by an indemnified party under this Section 10 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under
this Section 10, notify in writing the indemnifying party of the
commencement thereof; and the omission so to notify the indemnifying party
will relieve it from any liability under this Section 10 as to the
particular item for which indemnification is then being sought, but not
from any other liability which it may have to any indemnified party. In
case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the
extent that it may wish, jointly with any other indemnifying party,
similarly notified, to assume the defense thereof, with counsel who shall
be to the reasonable satisfaction of such indemnified party, and after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party under this Section 10 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. Any such indemnifying party shall not be liable to any such
indemnified party on account of any settlement of any claim or action
effected without the consent of such indemnifying party.
(d) Contribution. If the indemnification provided for in this Section
10 is unavailable to any indemnified party with respect to any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, will
contribute to the amount paid or payable by such indemnified party, as a
result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand, and the Placement Agent on the other hand,
from the offering of the Shares, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one
hand, and of the Placement Agent on the other hand, in connection with the
statements or omissions which 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 Agent on the other hand, shall be deemed to be in
the same proportion as the total proceeds from the Private Offering (net of
sales commissions and non-accountable expense allowance, but before
deducting expenses) received by the Company relative to the commissions and
non-accountable expense allowance received by the Placement Agent. The
relative fault of the Company on the one hand, and the Placement Agent on
the other hand, will be determined with reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Company or the Placement Agent, and its relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The amount payable by a party as a result of the losses, claims,
-17-
damages, liabilities or expenses referred to above will be deemed to
include, subject to the limitations set forth in Section 10(e) below, any
legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
(e) Equitable Considerations. The Company and the Placement Agent
agree that it would not be just and equitable if contribution pursuant to
this Section 10 were determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No
person committing fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution or
indemnification from any person not committing such fraudulent
misrepresentation.
11. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements of the Company and of the Placement
Agent herein will survive the delivery and execution hereof and the closing
hereunder, and shall remain operative and in full force and effect for a period
of two years from the Closing Date regardless of any investigation made by or on
behalf of the Placement Agent or any person who controls the Placement Agent
within the meaning of the Securities Act, or by the Company or any person who
controls the Company within the meaning of the Securities Act, and will survive
delivery of the securities constituting the Shares hereunder and any termination
of this Agreement. Notwithstanding anything contained herein to the contrary,
the Placement Agent will promptly notify the Company if it becomes aware of any
facts that could be deemed to be a breach of any representation or warranty of
the Company.
12. Termination.
(a) In addition to the Company's right to terminate the Private
Offering pursuant to Section 2 hereof, either the Placement Agent or the
Company will have the right to terminate this Agreement by giving written
notice as herein specified, at any time, at or prior to each Closing Date:
(i) If the other shall have failed, refused, or been unable, at
or prior to the Offering Expiration Date, to perform any of its
respective obligations hereunder; or
(ii) If there has occurred an event materially or adversely
affecting the value of the Shares.
(b) If the Placement Agent or the Company elects to terminate this
Agreement pursuant to Subsections (i) or (ii) hereof, notice will be
provided to the non-terminating party promptly by telephone, telecopier or
telegram, and such notification will be confirmed by written notice as
provided for in Section 13 below.
13. Notices. Any notice hereunder shall be in writing and shall be
effective when delivered, or mailed by certified or registered mail, postage
prepaid, return receipt requested,
-18-
to the appropriate party or parties, at the following addresses: if to the
Placement Agent, to Xxxxxx, Xxxx & Xxxxxxxx, Inc., 0000 Xxx Xxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000, Attention: Xxxxxx X. Xxxxx; with a copy to Broad and
Xxxxxx, Miami Center, 000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx
00000, Attention: Xxxx X. Xxxxxxx, Esq.; if to the Company, Alfacell
Corporation, 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention:
Xxxx X. Xxxxxx, Vice President, Finance, and Chief Financial Officer; with a
copy to Xxxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxx X. Xxxxxxx, Esq., or, in each case, to such other address as
the parties may hereinafter designate by like notice.
14. Parties. This Agreement will inure to the benefit of and be binding
upon the Placement Agent, the Company and their respective successors and
assigns. This Agreement is intended to be, and is for the sole and exclusive
benefit of the parties hereto and the persons described in Sections 10(a) and
10(b) hereof, and their respective successors and assigns, and for the benefit
of no other person, and no other person will have any legal or equitable right,
remedy or claim under, or in respect of this Agreement and the parties hereto
may not assign their rights or obligations hereunder. No purchaser of any of the
Shares will be construed as successor or assign merely by reason of such
purchase.
15. Amendment and/or Modification. Neither this Agreement, nor any term or
provision hereof, may be changed, waived, discharged, amended, modified or
terminated orally, or in any manner other than by an instrument in writing
signed by each of the parties hereto.
16. Further Assurances. Each party to this Agreement will perform any and
all acts and execute any and all documents as may be necessary and proper under
the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.
17. Validity. In case any term of this Agreement will be held invalid,
illegal or unenforceable, in whole or in part, the validity of any of the other
terms of this Agreement will not in any way be affected thereby.
18. Non-Waiver. The failure of any party hereto to insist upon strict
performance of any of the covenants and agreements herein contained, or to
exercise any option or right herein conferred in any one or more instances, will
not be construed to be a waiver or relinquishment of any such option or right,
or of any other covenants or agreements, and the same will be and remain in full
force and effect.
19. Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the entire subject matter hereof,
and there are no representations, inducements, promises or agreements, oral or
otherwise, not embodied herein, except, however, with respect to the section
entitled "Confidential Information" contained in that certain engagement letter
between the Company and the Placement Agent dated October 24, 1997, shall
survive the execution of this Agreement and shall remain in full force and
effect. Any and all prior discussions, negotiations, commitments and
understanding relating thereto are
-19-
superseded hereby, including, without limitation, that certain engagement letter
dated October 24, 1997, between the Company and the Placement Agent. There are
no conditions precedent to the effectiveness of this Agreement other than as
stated herein, and there are no related collateral agreements existing between
the parties that are not referred to herein.
20. Counterparts. This Agreement may be executed in counterparts and each
of such counterparts will for all purposes be deemed to be an original, and such
counterparts will together constitute one and the same instrument.
21. Law. This Agreement will be deemed to have been made and delivered in
Houston, Texas, and will be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of Texas, without application of the principles of conflicts of law.
If the foregoing correctly sets forth our understanding, please so indicate
in the space provided below for that purpose, whereupon this letter will
constitute a binding agreement between us.
ALFACELL CORPORATION, a Delaware
corporation
By: /s/ KUSLIMA SHOGEN
---------------------------
Name: Kuslima Shogen
Title: Chairman/
Chief Executive Officer
CONFIRMED and ACCEPTED as of this 15th day of December, 1997 by the
undersigned authorized representative.
XXXXXX, XXXX & XXXXXXXX, INC., a
Texas corporation
By: /s/ XXXXXX X. XXXXX
---------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
-20-
EXHIBIT A
(No Commission)
Xxxx X. Xxxxx Trust
U/A/Ltd 10/10/80, Revised and
Amended 1/9/96
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxxx
00 Xxx Xxxx Xxxxx
Xxxxxx, XX 00000
Xxxxx XxXxxx
X0000 X. Xxxxx Xxx Xxxxx
Xxxx Xxxxxxxx, XX 00000
A-1
