PLACEMENT AGENCY AGREEMENT September 30, 2009
Exhibit 1.1
September 30, 2009
Xxxx Capital Partners, LLC
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Boenning & Scattergood, Inc.
4 Tower Bridge
000 Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, XX 00000
4 Tower Bridge
000 Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
RegeneRx Biopharmaceuticals, Inc., a Delaware corporation (the “Company”), proposes, subject
to the terms and conditions herein, to issue and sell an aggregate of up to (i) 4,512,195 shares
(the “Shares”) of its common stock, $0.001 par value per share (the “Common Stock”), and (ii)
2,256,098 warrants to purchase shares of Common Stock (the “Warrants”, and together with the
Shares, the “Securities”), to certain investors (each an “Investor” and, collectively, the
"Investors”), in an offering under its registration statement on Form S-3 (Registration No.
333-150675). The shares of Common Stock issuable upon exercise of the Warrants are hereinafter
referred to as the Warrant Shares. The Securities are more fully described in the Prospectus (as
defined below). The Company desires to engage Xxxx Capital Partners, LLC and Boenning &
Scattergood, Inc. in connection with such issuance and sale of the Securities.
The Company hereby confirms its agreement with you as follows:
Section 1. Agreement to Act as Placement Agents.
(a) On the basis of the representations, warranties and agreements of the Company herein
contained, and subject to all the terms and conditions of this Agreement between the Company and
you, Xxxx Capital Partners, LLC and Boenning & Scattergood, Inc. shall be the Company’s exclusive
placement agents (in such capacity, the “Placement Agents”), on a reasonable efforts basis, in
connection with the issuance and sale by the Company of the Securities to the Investors in a
proposed takedown under the Registration Statement (as defined below), with the terms of each
offering to be subject to market conditions and negotiations between the Company, Xxxx Capital and
the prospective Investors (such takedown shall be referred to herein as the “Offering”). As
compensation for services rendered, and provided that any of the Securities are sold to Investors
in the Offering, on the Closing Date (as defined below) of the Offering, the Company shall pay to
the Placement Agents an amount equal to 7% of the gross proceeds received by the Company from the
sale of the Securities (the “Placement Fee”). The Placement Fee shall be allocated between the
Placement Agents as they may agree. The sale of the Securities shall be made pursuant to a
securities purchase agreement in the form included as Exhibit A hereto (the “Purchase
Agreement”) on the terms described on Exhibit B hereto. The Company shall have the sole
right to accept offers to purchase the Securities and may reject any such offer in whole or in
part. Notwithstanding the foregoing, it is understood and agreed that the Placement Agents or any
of their respective affiliates may, solely at their discretion and without any obligation to do so,
purchase
Securities as principal; provided, however, that any such purchases by the Placement Agents
(or their respective affiliates) shall be fully disclosed to the Company and approved by the
Company in accordance with the previous sentence.
(b) This Agreement shall not give rise to any commitment by the Placement Agents to purchase
any of the Securities, and the Placement Agents shall have no authority to bind the Company. The
Placement Agents shall act on a reasonable efforts basis and do not guarantee that they will be
able to raise new capital in the Offering. The Placement Agents may retain other brokers or
dealers to act as sub-agents on its behalf in connection with the Offering, the fees of which shall
be paid out of the Placement Fee. Prior to the earlier of (i) the date on which this Agreement is
terminated and (ii) the Closing Date (as defined below), the Company shall not, without the prior
written consent of the Placement Agents, solicit or accept offers to purchase Securities 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.
(c) The Company acknowledges and agrees that the Placement Agents shall act as independent
contractors, and not as fiduciaries, and any duties of the Placement Agents with respect to
investment banking services to the Company, including the offering of the Securities contemplated
hereby (including in connection with determining the terms of the Offering), shall be contractual
in nature, as expressly set forth herein, and shall be owed solely to the Company. Each party
disclaims any intention to impose any fiduciary or similar duty on the other. Additionally, the
Placement Agents have not advised, nor are advising, the Company or any other person as to any
legal, tax, investment, accounting or regulatory matters in any jurisdiction with respect to the
transactions contemplated hereby. The Company shall consult with its own advisors concerning such
matters and shall be responsible for making its own independent investigation and appraisal of the
transactions contemplated hereby, and the Placement Agents shall have no responsibility or
liability to the Company with respect thereto. Any review by the Placement Agents of the Company,
the transactions contemplated hereby or other matters relating to such transactions has been and
will be performed solely for the benefit of the Placement Agents and has not been and shall not be
on behalf of the Company or any other person. It is understood that the Placement Agents have not
and will not be rendering an opinion to the Company as to the fairness of the terms of the
Offering. Notwithstanding anything in this Agreement to the contrary, the Company acknowledges that
the Placement Agents may have financial interests in the success of the Offering contemplated
hereby that are not limited to the Placement Fee. 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 fiduciary duty.
(d) Payment of the purchase price for, and delivery of, the Securities shall be made at a
closing (the “Closing”) at the offices of Xxxxxxxxxx Xxxxxxx P.C., counsel for the Placement
Agents, located at 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000 at 10:00 a.m., local time, as soon as
practicable after the determination of the public offering price of the Securities, but not later
than on October 5, 2009 (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
Securities which the Company has agreed to sell pursuant to this Agreement and the Purchase
Agreement shall be deemed to have been purchased and paid for, or sold by the Company, until such
Securities shall have been delivered to the Investor thereof against payment therefore by such
Investor. If the Company shall default in its obligations to deliver Securities to an Investor
whose offer it has accepted, the Company shall indemnify and hold the Placement Agents harmless
against any loss, claim or damage incurred by the Placement Agents arising from or as a result of
such default by the Company.
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(e) On or before the Closing Date, each Investor shall pay by wire transfer of immediately
available funds to an account previously specified by the Company an amount equal to the product of
(x) the number of Securities such Investor has agreed to purchase and (y) the purchase price per
unit as set forth on the cover page of the Prospectus (as defined below) (the “Purchase Amount”).
On the Closing Date, upon confirmation of the receipt of the Purchase Amounts from the Investors,
the Company shall (i) deliver or cause to be delivered the Securities to the Investors, with the
delivery of the Shares to be made, if possible, through the facilities of The Depository Trust
Company’s DWAC system, and the delivery of the Warrants to be made by mail to the Investors to the
addresses set forth on the Purchase Agreement and (ii) pay to the Placement Agents (A) the
Placement Fee as directed by the Placement Agents and (B) the out-of-pocket expense reimbursement
to which the Placement Agents are entitled pursuant to Section 4 hereof.
(f) The Securities shall be registered in such names and in such denominations as the
Placement Agents shall request by written notice to the Company.
Section 2. Representations, Warranties and Agreements of the Company.
The Company hereby represents, warrants and covenants to the Placement Agents as of the date
hereof, and as of the Closing Date of the Offering, as follows:
(a) Registration Statement. (i) The Company has prepared and filed with the Securities and
Exchange Commission (the “Commission") a registration statement on Form S-3 (File No. 333-150675)
under the Securities Act of 1933, as amended, and 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. Each part of 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 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 Securities by the Company complies with the applicable requirements of Rule 415
under the Securities Act. The Company has complied with all requests of the Commission for
additional or supplemental information.
(ii) 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, to the
Company’s knowledge, are contemplated or threatened by the Commission.
(iii) The Company proposes to file with the Commission pursuant to Rule 424 under the
Securities Act a final prospectus supplement relating to the Securities to a form of prospectus
included in the Registration Statement relating to the Securities 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 prospectus supplement, 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 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 Securities by the Placement Agents.
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(iv) For purposes of this Agreement, all references to the 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 (“XXXXX”). All references in this Agreement to
amendments or supplements to the Registration Statement, the Base Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to mean and include the subsequent filing of any
document under the Securities Exchange Act of 1934, as amended (collectively with the rules and
regulations promulgated thereunder, the “Exchange Act”)) and which is deemed to be incorporated
therein by reference therein or otherwise deemed to be a part thereof.
(b) Compliance with Registration Requirements. As of the time of filing of the Registration
Statement or any post-effective amendment thereto, at the time it 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, the Registration Statement complied and will comply, in
all material respects, with the requirements of the Securities 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. Each Preliminary Prospectus and
the Prospectus, at the time of filing or the time of first use and as of the Closing Date, complied
and will comply, in all material respects, with the requirements of the Securities 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 Agent Information (as defined in Section 7).
(c) Disclosure Package. As of the Time of Sale (as defined below) and as of the Closing Date,
neither (A) the Issuer General Free Writing Prospectus(es) (as defined below) issued at or prior to
the Time of Sale, the Prospectus (as amended or supplemented as of the Time of Sale) and the
information included on Exhibit C hereto, all considered together (collectively, the
“Disclosure Package”), nor (B) any individual Issuer Limited-Use Free Writing Prospectus (as
defined below), 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 Agent 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” means the time of execution and delivery of the Purchase
Agreement by the Company and each Investor.
(2) “Issuer Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 under the Securities Act (“Rule 433”), relating
to the
Securities 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.
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(3) “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.
(4) “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
Securities 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 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 Agent 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 Securities 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 3(d) below. The Company will file with the Commission all Issuer Free Writing
Prospectuses 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 Securities
contemplated hereby is solely the property of the Company.
(f) Not an Ineligible Issuer. (1) At the time of filing the Registration Statement and (2) at
the date hereof and at the Closing Date, the Company was not, is not and will not be 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 Securities 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
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.
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(h) Due Incorporation. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, 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. The Company is
duly qualified to transact business as a foreign corporation and is 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 material adverse change in, the general affairs, business, operations, prospects, properties,
financial condition, or results of operations of the Company and the Subsidiaries (as defined
below) taken as a whole (a “Material Adverse Effect”).
(i) Subsidiaries. The Company has no subsidiaries. All references herein to “Subsidiary” and
“Subsidiaries” shall be disregarded and have no effect. The Company owns no beneficial interest,
directly or indirectly, in any corporation, partnership, joint venture or other business entity.
(j) Capitalization. The Company has duly and validly authorized capital stock as set forth in
each of the Registration Statement, Disclosure Package and Prospectus; all outstanding shares of
Common Stock of the Company conform, or when issued will conform, to the description thereof in the
Registration Statement, the Disclosure Package and the Prospectus and have been, or, when issued
and paid for in the manner described herein will be, duly authorized, validly issued, fully paid
and non-assessable; and except as disclosed in the Registration Statement, the Disclosure Package
and the Prospectus, the issuance of the Securities to be purchased from the Company hereunder is
not subject to preemptive or other similar rights, or any restriction upon the voting or transfer
thereof pursuant to applicable law or the Company’s Certificate of Incorporation, Bylaws or
governing documents or any agreement to which the Company is a party or by which it may be bound.
(k) Authorization, Issuance. All corporate action required to be taken by the Company for the
authorization, issuance and sale of the Securities has been duly and validly taken. The Shares and
the Warrant Shares have been duly and validly authorized. When the Shares and the Warrant Shares
have been issued and delivered against payment therefor as provided herein and in the Warrant, as
the case may be, the Shares, when so issued and sold, and the Warrant Shares, when issued upon
exercise of the Warrants, will be duly and validly issued, fully paid and non-assessable and the
Investors or other persons in whose names Shares or Warrant Shares are registered will acquire good
and valid title to such Shares or Warrant Shares, in each case free and clear of all liens,
encumbrances, equities, preemptive rights and other claims. The Shares and the Warrant Shares will
conform in all material respects to the description thereof contained in the Registration
Statement, the Disclosure Package and the Prospectus. No further approval or authority of the
shareholders or the Board of Directors of the Company will be required for the issuance and sale of
the Shares, the Warrants or the Warrant Shares as contemplated herein and in the Purchase
Agreement. The Warrants conform, or when issued will conform, to the description thereof contained
in the Disclosure Package and the Prospectus and have been duly and validly authorized by the
Company and upon delivery to the Investors at the Closing Date will be 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 or similar laws
affecting the rights and remedies of creditors generally or subject to general principles of
equity. Except as disclosed in each of the Disclosure Package and Prospectus, there are no
outstanding subscriptions, rights, warrants, options, calls, convertible securities, commitments of
sale or rights related to or entitling any person to purchase or otherwise to acquire any shares
of, or any security convertible into or exchangeable or exercisable for, the capital stock of, or
other ownership interest in, the Company, except for such options or rights as may have been
granted by the Company to employees, directors or consultants pursuant to its stock option or stock
purchase plans.
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(l) No Registration Rights. Except as described in the Prospectus, neither the filing of the
Registration Statement nor the offering or sale of the Securities as contemplated by this Agreement
gives rise to any rights, other than those which have been waived or satisfied, for or relating to
the registration of any shares of Common Stock or other securities of the Company.
(m) Due Authorization and Enforceability. This Agreement and the Purchase Agreement have been
duly authorized, executed and delivered by the Company, and each 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.
(n) No Violation. Neither the Company nor any of the Subsidiaries is 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 Certificate
of Incorporation, Bylaws or other governing documents or (ii) except as set forth in the
Registration Statement, the Disclosure Package and the Prospectus, 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 or any of the Subsidiaries is
a party or by which any of them or any of their 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, the Subsidiaries or any of their respective
properties (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 regulatory authority performing functions similar to those preformed by the FDA), except,
with respect to clauses (ii) and (iii) above, to the extent any such contravention would not result
in a Material Adverse Effect.
(o) No Conflict. Except as set forth in the Registration Statement, the Disclosure Package
and the Prospectus, the execution, delivery and performance by the Company of this Agreement and
the Purchase Agreement and the consummation of the transactions herein contemplated, including the
issuance and sale by the Company of the Securities, 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 Certificate of Incorporation, Bylaws or other governing documents of the Company
or any of the Subsidiaries, (ii) any material indenture, mortgage, deed of trust, bank loan or
credit agreement or other evidence of indebtedness, or any material license, lease, contract or
other agreement or instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective 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 or any of the Subsidiaries.
(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 (including, without limitation, the NYSE Amex), or approval of the stockholders of the
Company (including as may be required pursuant to NYSE Amex Rules), is required in connection with
the issuance and sale of the Securities or the consummation by the Company of the transactions
contemplated hereby other than (i) as may be required under the Securities Act, and (ii) under the
rules and regulations of the Financial Industry Regulatory Authority (“FINRA”). The Company has
full power
and authority to enter into this Agreement and the Purchase Agreement and to authorize, issue
and sell the Securities as contemplated by this Agreement and the Purchase Agreement.
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(q) Absence of Material Changes. Subsequent to the respective dates as of which information is
given in the Disclosure Package, (a) neither the Company nor any of its subsidiaries has incurred
any material liability or obligation, direct or contingent, or entered into any material
transaction not in the ordinary course of business; (b) neither the Company nor any of its
subsidiaries has 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; (c) 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 such share of Common Stock upon the exercise of
outstanding options or warrants), or material change in the short-term debt or long-term debt of
the Company and its Subsidiaries 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 (d) there has not been any material
adverse change, or any development involving a prospective material adverse change, in the
business, properties, management, financial condition or results of operations of the Company and
the Subsidiaries, taken as a whole, from that set forth in the Disclosure Package (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement).
(r) Permits. The Company and each of the Subsidiaries possess all necessary licenses,
authorizations, consents and approvals and have 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.
Neither the Company nor any of the Subsidiaries is in violation of, or in default under, or has
received notice of any proceedings relating to revocation or modification of, any such license,
authorization, consent or approval. The Company and each of the Subsidiaries is in compliance in
all material respects with all applicable federal, state, local and foreign laws, regulations,
orders or decrees.
(s) Legal Proceedings. There are no legal or governmental proceedings pending or, to the
Company’s knowledge, threatened or contemplated to which the Company or any of the Subsidiaries is
or would be a party or of which any of their respective 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, NYSE Amex), except (i) as
described in the Registration Statement, the Disclosure Package and the Prospectus, (ii) any such
proceeding, which if resolved adversely to the Company or any Subsidiary, 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.
(t) 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 which have not been so described or filed.
(u) Independent Accountants. Xxxxxxx Group, P.C., who has audited the financial statements of
the Company and the Subsidiaries, is an independent registered public accounting firm (as defined
in Section 2(a)(12) of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”)) with respect to
the Company within the meaning of the Securities Act and the applicable rules and regulations
thereunder adopted by the Commission and the Public Company Accounting Oversight Board (United
States).
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(v) 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 and the Subsidiaries, taken as a
whole, as of the dates indicated and (ii) the consolidated results of operations, stockholders’
equity and changes in cash flows of the Company and the Subsidiaries, 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 generally accepted accounting principles as in effect in the
United States, 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 and the Subsidiaries do 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), if any, 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.
(w) [reserved].
(x) Not an Investment Company. Neither the Company nor any of the Subsidiaries is or, after
giving effect to the offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will be required to register as an “investment company” as
defined in the Investment Company Act of 1940, as amended.
(y) Good Title to Property. The Company and each of the Subsidiaries 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 each of them, 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 and the Prospectus and those that would not,
individually or in the aggregate materially and adversely affect the value of such property and do
not materially and adversely interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries. All of the property described in the Registration Statement,
the Disclosure Package and the Prospectus as being held under lease by the Company or a Subsidiary
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 and the Subsidiaries.
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(z) Intellectual Property Rights. The Company and the Subsidiaries own, or have 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 and
the Prospectus as being owned or licensed by them or which are necessary for the conduct of their
respective businesses (collectively, “Intellectual Property”), except where the failure to own,
license or have such rights would not, individually or in the aggregate, result in a Material
Adverse Effect. Except as
described in the Registration Statement, the Disclosure Package and 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; (iv) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the Company or any of the Subsidiaries
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; (v) to the Company’s knowledge, there is no patent or patent application that
contains claims that interfere with the issued or pending claims of any of the Intellectual
Property; and (vi) to the Company’s knowledge, there is no prior art that may render any patent
owned by the Company invalid, nor is there any prior art known to the Company that may render any
patent application owned by the Company unpatentable.
(aa) Taxes. The Company and each of the Subsidiaries has timely filed all material federal,
state, local and foreign income and franchise tax returns (or timely filed applicable extensions
therefore) that have been required to be filed and are 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 or any of the Subsidiaries 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. Neither the Company nor any of
its Subsidiaries has 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.
(bb) Insurance. The Company and each of the Subsidiaries maintains insurance in such amounts
and covering such risks as is 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. Neither the Company nor any of the Subsidiaries has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue its business at a
cost that would not have a Material Adverse Effect.
(cc) Accounting Controls. The Company and each of the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles as in effect in the United States and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any differences.
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(dd) 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 those entities, 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. There are no
significant deficiencies and material weaknesses in the design or operation of internal controls
which could adversely affect the Company’s ability to record, process, summarize, and report
financial data to management and the Board of Directors. The Company is not aware of any fraud,
whether or not material, that involves management or other employees who have a role in the
Company’s internal controls; and since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in internal controls or in other
factors that could significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
(ee) 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 or its Subsidiaries has, directly or indirectly, while
acting on behalf of the Company or its Subsidiaries (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.
(ff) No Price Stabilization. Neither the Company nor any of the Subsidiaries nor, to the
Company’s knowledge, any of their respective 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 or resale of the
Securities.
(gg) 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
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. There are no outstanding
loans, advances (except normal advances for business expenses in the ordinary course of business)
or guarantees of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any member of their respective immediate families, except as disclosed
in the Registration Statement, the Disclosure Package and the Prospectus. The Company has not, in
violation of the Sarbanes Oxley Act, directly or indirectly, extended or maintained credit,
arranged for the extension of credit, or renewed an extension of credit, in the form of a personal
loan to or for any director or executive officer of the Company.
(hh) Xxxxxxxx-Xxxxx Act. The Company, and to its knowledge after due inquiry, all of the
Company’s directors or officers, in their capacities as such, are in compliance in all material
respects with all applicable effective provisions of the Xxxxxxxx-Xxxxx Act and any related rules
and regulations promulgated by the Commission.
(ii) Brokers Fees. Neither the Company nor any of the Subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement) that would give
rise to a valid claim against the Company or the Subsidiaries or the Placement Agents for a
brokerage commission, finder’s fee or other like payment in connection with the offering and sale
of the Securities.
(jj) Exchange Act Requirements. The Company has filed in a timely manner (or received an
extension and has filed prior to the expiration of any such extension) 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.
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(kk) FINRA Affiliations. To the Company’s knowledge, there are no affiliations or
associations between (i) any member of FINRA and (ii) the Company or any of the Company’s officers,
directors or 5% or greater securityholders or any beneficial owner of the Company’s unregistered
equity securities that were acquired at any time on or after the one hundred eightieth
(180th) day immediately preceding the date the Registration Statement was initially
filed with the Commission, except as set forth in the Registration Statement, the Disclosure
Package and the Prospectus.
(ll) Compliance with Environmental Laws. The Company and the Subsidiaries (a) are 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”), (b) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and (c) are 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.
(mm) No Labor Disputes. Neither the Company nor any Subsidiary is engaged in any unfair labor
practice; 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 after due inquiry, threatened against the Company or any Subsidiary 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 after due inquiry, threatened against the
Company or any Subsidiary and (C) no union representation dispute currently existing concerning the
employees of the Company or any Subsidiary, and (ii) to the Company’s knowledge (A) no union
organizing activities are currently taking place concerning the employees of the Company or any
Subsidiary 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 or any Subsidiary.
(nn) 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 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.
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(oo) NYSE Amex; Exchange Act Registration. The Common Stock is registered pursuant to Section
12(b) of the Exchange Act and accepted for listing on the NYSE 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 NYSE Amex, nor, except as
described in the Prospectus, has the Company received any notification that the Commission or NYSE
Amex is contemplating terminating such registration or listing. The Company has complied in all
material respects with the applicable requirements of the NYSE Amex for maintenance of listing of
the Common Stock thereon.
(pp) PFIC Status. The Company is not, for the taxable year ended December 31, 2008, and upon
consummation of the transactions described hereby and the application of the proceeds as described
in the Registration Statement, the Disclosure Package and the Prospectus is not expected to become,
a Passive Foreign Investment Company within the meaning of Section 1297 of the Internal Revenue
Code, as amended.
(qq) 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.
(rr) Clinical Studies. All studies, tests and preclinical and clinical trials conducted by,
or on behalf of, the Company or any Subsidiary have been conducted in material compliance with
experimental protocols, procedures and controls pursuant to accepted professional scientific
standards and applicable local, state and federal laws, rules, regulations and guidances,
including, but not limited to the applicable requirements of Good Laboratory Practices or Good
Clinical Practices, as applicable. To the knowledge of the Company, there are no studies, tests or
trials the results of which call into question the clinical results described or referred to in the
Registration Statement. Neither the Company nor any Subsidiary has received any notices,
correspondence or other communication from the FDA or any other governmental authority requiring
the termination, suspension or material modification of any ongoing or planned clinical trials
conducted by, or on behalf of, the Company or any Subsidiary, or in which the Company or any
Subsidiary has participated, and the Company has no knowledge or reason to believe that the FDA or
any other governmental authority is considering such action. Neither the Company nor any
Subsidiary, nor, to the knowledge of the Company, any officer, employee or agent of the Company or
any Subsidiary has been convicted of any crime or engaged in any conduct that would reasonably be
expected to result in debarment under 21 U.S.C. Section 335a or any similar law or regulation. 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.
(ss) Descriptions of Documents. The statements set forth in each of the Registration
Statement, the Disclosure Package and the Prospectus describing the Securities and this Agreement,
insofar as they purport to describe the provisions of the laws and documents referred to therein,
are accurate, complete and fair in all material respects.
(tt) Money Laundering Laws. The operations of the Company are and have been conducted at all
times in compliance in all material respects with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by any governmental
agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving the Company with
respect to the Money Laundering Laws is pending, or to the knowledge of the Company, threatened.
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(uu) OFAC. Neither the Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or any of its
Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or
indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person or entity that, to the Company’s
knowledge, will use such proceeds, for the purpose of financing the activities of any person
currently subject to any U.S. sanctions administered by OFAC.
Any certificate signed by any officer of the Company or a Subsidiary and delivered to the
Placement Agents or to counsel for the Placement Agents in connection with the offering of the
Securities shall be deemed a representation and warranty by the Company (and not such officer in an
individual capacity) to the Placement Agents as to the matters covered thereby.
Section 3. Covenants.
The Company covenants and agrees with the Placement Agents as follows:
(a) Reporting Obligations; Exchange Act Compliance. The Company will (i) file the Preliminary
Prospectus, if any, and the Prospectus with the Commission within the time periods specified by
Rule 424(b) and Rules 430A, 430B and 430C, 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 promptly all reports required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c) 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 “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 11:00
a.m. Eastern 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 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 in
connection with the Offering contemplated by this Agreement, 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
Placement Agents shall not have reasonably objected thereto in good faith.
(d) Free Writing Prospectuses. The Company will (i) not make any offer relating to the
Securities 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 Placement Agents approve its use in writing prior to first use (each, a
“Permitted Free Writing Prospectus”); provided that the prior written consent of the Placement
Agents hereto shall be deemed to have been given in
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respect of the Issuer Free Writing
Prospectus(es) included in Schedule I 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 the Placement Agents
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) the receipt of any comments of, or
requests for additional information from, the Commission; (ii) 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; (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 any Preliminary Prospectus, the Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus, or the initiation of any proceedings
for that purpose or the threat thereof; (v) of receipt by the Company of any notification with
respect to any suspension or the approval of the Shares and Warrant 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.
(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. 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 Securities 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.
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(g) 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 Preliminary Prospectus or
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 XXXXX 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 Securities under the
Securities Act.
(h) 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 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) and Rule 158 of the
Securities Act.
(i) Use of Proceeds. The Company will apply the net proceeds from the sale of the Securities
in the manner set forth in the Registration Statement, Disclosure Package and the Prospectus under
the heading “Use of Proceeds”.
(j) 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 the earnings, business, operations or
prospects of any of them, or the offering of the Securities, without the prior written consent of
the Placement Agents, unless in the reasonable judgment of the Company and its counsel, and after
notification to the Placement Agents, such press release or communication is required by law, in
which case the Company shall use its reasonable best efforts to allow the Placement Agents
reasonable time to comment on such release or other communication in advance of such issuance.
(k) Lock-Up Period. For a period of 30 days after the date hereof (the “Lock-Up Period”), the
Company will not directly or indirectly, (1) offer to sell, hypothecate, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract to purchase (to the extent
such option or contract to purchase is exercisable within one year from the Closing Date), 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, or any securities convertible into or
exercisable or exchangeable for shares of Common Stock; (2) 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 shares of Common
Stock or (3) 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
clauses (1), (2) or (3) above is to be settled by delivery of shares of Common Stock or such other
securities, in cash or otherwise, without the prior written consent of the Placement Agents (which
consent may be withheld in their sole discretion), other than (i) the Securities to be sold
hereunder, (ii) the issuance of stock options or shares of restricted stock to employees, directors
and consultants pursuant to equity compensation plans described in the Registration Statement
(excluding the exhibits thereto) and the Disclosure Package and the Prospectus, (iii) issuances of
shares of Common Stock upon the exercise of options or warrants disclosed as outstanding in the
Registration Statement (excluding the exhibits thereto) and the Disclosure Package and the
Prospectus or upon the conversion or exchange of convertible or exchangeable securities outstanding
as of the date of this Agreement; (iv) the issuance by the
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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 (iv) agrees that all such shares remain
subject to restrictions substantially similar to those contained in this subsection 3(k);
(v) 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; or (vi) the sale of shares and warrants to one or more affiliates of the Sigma Tau
Group in a transaction on substantially the same terms as the transaction contemplated by the
Purchase Agreement pursuant to which Sigma Tau Group and its affiliates do no more than maintain
their collective pro rata ownership of the Company’s securities as in effect as of the date hereof
and for which such securities shall not be registered. Notwithstanding the foregoing, for the
purpose of allowing the Placement Agents to comply with FINRA 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 Placement Agents waive, in writing,
such extension. The Placement Agents agree to waive such extension if the provisions of FINRA Rule
2711(f)(4) are not applicable to the Offering. 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.
(l) 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 or resale of any of
the Securities.
(m) 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 and Warrant Shares.
(n) Investment Company Act. The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Securities in such a manner as would require the
Company to register as an investment company under the Investment Company Act.
(o) Xxxxxxxx-Xxxxx Act. The Company will comply with all effective applicable provisions of
the Sarbanes Oxley Act.
(p) Periodic Reports. The Company will file with the Commission such periodic and special
reports as required by the Exchange Act.
(q) NYSE Amex. The Company will use its reasonable best efforts to obtain approval for, and
maintain the listing of the Shares and the Warrant Shares on the NYSE Amex for so long as the
Common Stock is listed thereon.
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Section 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 actual
out-of-pocket costs and expenses incident to the performance of the obligations of the Company
under this Agreement and 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, each Preliminary 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 Securities
including any stock or transfer taxes and stamp or similar duties payable upon the sale, issuance
or delivery of the Securities and the printing, delivery, and shipping of the certificates
representing the Securities, (iii) the fees and expenses of any transfer agent or registrar for the
Shares and Warrant Shares, (iv) the filing fees required to be paid by the Placement Agents or the
Company with FINRA (including all COBRADesk fees), (v) fees, disbursements and other charges of
counsel to the Company (vi) listing fees, if any, for the listing or quotation of the Shares and
Warrant Shares on the NYSE Amex, (vii) reasonable fees and disbursements of counsel to the
Placement Agents, and (viii) the costs and expenses of the Company and the Placement Agents in
connection with the marketing of the offering and the sale of the Securities 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 by the Company in connection with the road show.
Notwithstanding the foregoing, the expenses of the Placement Agents (other than the filing fees set
forth in clause (iv) above), including attorneys fees and expenses, which the Company shall be
obligated to reimburse hereunder shall not exceed the lesser of (i) an amount equal to $55,000 in
the aggregate less the Advance (as defined below) without the Company’s consent, which shall not be
unreasonably withheld or (ii) 8% of the gross proceeds received by the Company from the sale of the
Securities, less the Placement Fee and the Advance if the Offering is consummated. The Placement
Agents hereby acknowledge receipt of an expense advance of $25,000 (the “Advance”). It is
understood that except as provided in this Section 4, Section 6 and Section
8(b), the Placement Agents shall pay all of their own expenses.
Section 5. Conditions of Placement Agents’ Obligations.
The obligations of the Placement Agents hereunder are subject to the following conditions:
(a) Filings with the Commission. The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) under the Securities Act at or before 5:30 p.m., Eastern time, on the
second full business day after the date of this Agreement (or such earlier time as may be required
under the Securities Act).
(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 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 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, and (ii) 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 Placement Agents.
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(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 Securities; 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 Securities.
(e) Objection of Placement Agents. No Prospectus or amendment or supplement to the
Registration Statement shall have been filed to which the Placement Agents 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. (i) 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 or operations of the Company from that set forth in the
Disclosure Package and the Prospectus that, in the Placement Agents’ judgment, is material and
adverse and that makes it, in the Placement Agents’ judgment, impracticable to market the
Securities on the terms and in the manner contemplated in the Disclosure Package.
(ii) There shall not have occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange, the NASDAQ Stock
Market, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, the
NYSE Amex or the over the counter market or the establishing on such exchanges or market by the SEC
or by such exchanges or markets of minimum or maximum prices that are not in force and effect on
the date hereof; (ii) a suspension or material limitation in trading in the Company’s securities on
the NYSE Amex or any other exchange or market or the establishing on any such market or exchange by
the SEC or by such market of minimum or maximum prices that are not in force and effect on the date
hereof; (iii) a general moratorium on commercial banking activities declared by either federal or
any state authorities; (iv) the outbreak or escalation of hostilities involving the United States
or the declaration by the United States of a national emergency or war, which in the Placement
Agents’ judgment makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities in the manner contemplated in the Prospectus; or (v) any calamity or
crisis, change in national, international or world affairs, act of God, change in the international
or domestic markets, or change in the existing financial, political or economic conditions in the
United States or elsewhere, that in the Placement Agents’ judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Securities in the manner
contemplated in each of the Disclosure Package and the Prospectus.
(g) Representations and Warranties. Each of the representations and warranties of the Company
contained herein shall be true and correct in all material 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
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.
(h) Opinion of Counsel to the Company. The Placement Agents shall have received from, Xxxxxx
Godward Kronish 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.
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(i) [reserved].
(j) 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 when originally made and are true
and correct in all material respects as of the Time of Sale and the Closing 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 as of such date); and the Company has
complied 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, there has not been (A) a material adverse change or any development
involving a prospective material adverse change in the general affairs, business,
properties, management, financial condition or results of operations of the Company and the
Subsidiaries taken as a whole, (B) any transaction that is material to the Company and the
Subsidiaries 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 and the
Subsidiaries taken as a whole, incurred by the Company or the Subsidiaries, except
obligations incurred in the ordinary course of business, (D) except as disclosed in the
Disclosure Package and in 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 or any of the Subsidiaries taken as a whole,
(E) any dividend or distribution of any kind declared, paid or made on the capital stock of
the Company or any of the Subsidiaries or (F) any loss or damage (whether or not insured) to
the property of the Company or any of its Subsidiaries which has been sustained or will have
been sustained which has 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 Securities 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 and (ii) as of the Time of Sale, neither the Disclosure
Package nor any individual Issuer Limited Use Free Writing Prospectus, when considered
together with the Disclosure Package, contained any untrue statement of material fact or
omits to state any material fact necessary to make the statements therein, in light of
-20-
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 and as of the Closing 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 in to the Disclosure Package and into the Prospectus that
has not been so filed.
(k) Secretary’s Certificate. On the Closing Date, the Company shall have furnished to the
Placement Agents a Secretary’s Certificate of the Company.
(l) Other Filings with the Commission. The Company shall have prepared and filed with the
Commission a Current Report on Form 8-K with respect to the transactions contemplated hereby,
including as an exhibit thereto this Agreement and any other documents relating thereto.
(m) No FINRA Objection. FINRA shall not have raised any objection with respect to the
fairness and reasonableness of the placement agency terms and arrangements relating to the issuance
and sale of the Securities; provided that if any such objection is raised, the Company and the
Placement Agents shall negotiate promptly and in good faith appropriate modifications to such
placement agency terms and arrangements in order to satisfy such objections.
(n) NYSE Amex. The Shares and the Warrant Shares shall have been approved for listing on the
NYSE Amex, subject to official notice of issuance.
(o) 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 them to pass upon the issuance and sale of
the Securities 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.
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.
If any condition specified in this Section 5 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Placement Agents by notice to the Company at any
time prior to the Closing Date, which termination shall be without liability on the part of any
party to any other party, except that Section 4, Section 6 and Section 8
shall at all times be effective and shall survive such termination.
Section 6. Indemnification and Contribution.
(a) Indemnification of the Placement Agents. The Company agrees to indemnify, defend and hold
harmless each of the Placement Agents, its respective directors and officers, and each person, if
any, who controls such Placement Agent 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, such
Placement Agent or
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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 any amendment thereto 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 any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus (or
any amendment or supplement thereto), 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 such Placement Agent and each such controlling person for any and all
reasonable expenses (including reasonable fees and disbursements of counsel) as such expenses are
incurred by such Placement Agent or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage, liability, expense or
action; 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, and
in conformity with information concerning such Placement Agent furnished in writing by or on behalf
of such Placement Agent to the Company expressly for use therein, which information the parties
hereto agree is limited to the Placement Agent Information (as defined in Section 7), (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 approval of the Company or based
upon written information furnished by or on behalf of the Company with its approval 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 Securities.
(b) Indemnification of the Company. Each Placement Agent, severally and not jointly, will
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 such
Placement Agent), 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 any amendment
thereto, or the omission or alleged omission therefrom 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 any Preliminary Prospectus,
any Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), 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, 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, any Preliminary Prospectus, Issuer Free Writing Prospectus or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with
information concerning such Placement Agent furnished in writing by or on behalf of such Placement
Agent 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 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 Agent 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 its pro rata share of the Placement Fee.
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(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 any Placement Agent (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 any of which events such reasonable fees and expenses 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 (including by consent to the entry of any judgment) 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
(which fees and expenses shall be reasonably documented) 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 90 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 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.
-23-
(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 Securities 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 Securities (before
deducting expenses) received by the Company and the Placement Fee 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 Securities. 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), no Placement Agent shall be required to contribute any amount in excess of
its pro rata share of the Placement Fee less the amount of any damages which such Placement Agent
has otherwise paid or become liable to pay by reason of such untrue statement or alleged untrue
statement or omission or alleged omission. 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 to contribute as provided in this Section 6(b) are several 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 of the parties 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 any Placement Agent, any person who controls any
Placement Agent within the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act or any affiliate of any Placement Agent, 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 Securities. The Company and each of 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 Securities, or in
connection with the Registration Statement, the Disclosure Package or the Prospectus.
-24-
Section 7. Information Furnished by Placement Agents.
The Company acknowledges that the statements set forth in the second paragraph under the
subheading “Fees” under the heading “Plan of Distribution” in the Prospectus (the “Placement Agent
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.
Section 8. Termination.
(a) The Placement Agents 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 Securities (A)
trading in securities generally shall have been suspended or materially limited on or by the New
York Stock Exchange, the NASDAQ Stock Market, the NASDAQ Global Select Market, the NASDAQ Global
Market, the NASDAQ Capital Market or the NYSE Amex (each, a “Trading Market”), (B) trading in the
shares of Common Stock of the Company shall have been suspended or materially limited on any
exchange or in the over-the-counter market, (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 Placement Agents,
makes it impractical or inadvisable to proceed with the completion of the sale of and payment for
the Securities on the Closing Date on the terms and in the manner contemplated by this Agreement,
the Disclosure Package and the Prospectus, or (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 (A) any Material Adverse Effect or (B) 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
Placement Agents would, individually or in the aggregate, result in a Material Adverse Effect and
which would, in the judgment of the Placement Agents, make it impracticable or inadvisable to
proceed with the offering or the delivery of the Securities on the terms and in the manner
contemplated in the Disclosure Package. Any such termination shall be without liability of any
party to any other party except that the provisions of Section 4, Section 6,
Section 8(b) and Section 11 hereof shall at all times be effective notwithstanding
such termination.
(b) If (1) this Agreement shall be terminated by the Placement Agents pursuant to Section
5, Section 8(a)(i)(B) or Section 8(a)(ii)(A) or (2) the sale of the Securities
to Investors is not consummated because of any failure, refusal or inability on the part of the
Company to comply with the terms or perform any agreement or obligation of this Agreement or the
Purchase Agreement, other than by reason of a default by the Placement Agents, the Company will, in
addition to paying the amounts described in Section 4 hereof, reimburse the Placement
Agents for all of their reasonable and actual out-of-pocket disbursements (including, but not
limited to, the reasonable fees and disbursements of its counsel).
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Section 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:
Xxxx Capital Partners, LLC
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Managing Director
Facsimile No.: (000) 000-0000
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Managing Director
Facsimile No.: (000) 000-0000
And
Boenning & Scattergood, Inc.
4 Tower Bridge
000 Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
4 Tower Bridge
000 Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
(b) if to the Company shall be delivered or sent by mail, telex or facsimile transmission
to:
RegeneRx Biopharmaceuticals, Inc.
0 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
0 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx Godward Kronish LLP
One Freedom Square, Reston Town Center
00000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. XxXxxxxxx
Facsimile No.: (000) 000-0000
One Freedom Square, Reston Town Center
00000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. XxXxxxxxx
Facsimile No.: (000) 000-0000
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.
Section 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 Securities by reason merely of such purchase.
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Section 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.
Section 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, and that any opinions or views expressed by the Placement Agents to the
Company regarding such transactions, including but not limited to any opinions or views with
respect to the price or market for the Company’s securities, do not constitute advice or
recommendations to the Company. 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.
Section 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.
Section 14. Amendments and Waivers.
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.
-27-
Section 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 hereby consents to the
jurisdiction of such courts and personal service with respect thereto. The Company hereby consents
to personal jurisdiction, service
and venue in any court in which any Proceeding arising out of or in any way relating to this
Agreement is brought by any third party against the Placement Agents. 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 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.
Section 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 shall be effective as delivery of a manually executed counterpart thereof.
-28-
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, REGENERX BIOPHARMACEUTICALS, INC. |
||||
| By: | /s/ X. X. Xxxxxxxxxxx | |||
| Name: | X. X. Xxxxxxxxxxx | |||
| Title: | President and Chief Executive Officer | |||
Accepted as of
the date first above written:
the date first above written:
| XXXX CAPITAL PARTNERS, LLC | ||||
By: |
/s/ Xxxx X. Xxxxxxxx | |||
Title: Managing Director |
||||
| BOENNING & SCATTERGOOD, INC. | ||||
By: |
/s/ Xxxxxxx X. Xxxxx | |||
Title: Managing Director |
||||
Schedules and Exhibits
Schedule I: Issuer General Free Writing Prospectuses
Exhibit A: Form of Purchase Agreement
Exhibit B: Pricing Information
Exhibit C: Disclosure Materials
Schedule I
Issuer General Free Writing Prospectuses
None.
Exhibit A
Form of Purchase Agreement
[included as Exhibit 10.1]
Exhibit B
Pricing Information
Number of Shares to be Sold: 4,512,195
Number of Warrants to be Sold: 2,256,098
Offering Price: $0.82 per Share
Per Share Exercise Price of Warrants: $1.12
Aggregate Placement Agency Fees: $259,000
Exhibit C
Disclosure Materials
In addition to the offering covered by the Prospectus, on September 30, 2009, the Company entered
into a securities purchase agreement with an affiliate of Sigma-Tau Group, the Company’s largest
stockholder, with respect to the private placement of an additional 1,219,512 shares of its common
stock at a price per share of $0.82, for gross proceeds of $1,000,000. No placement agent fees are
payable in connection with this transaction. In connection with this private placement, the
Company has agreed to issue to the purchaser a warrant to purchase an additional 609,756 shares of
common stock at an exercise price of $1.12 per share. The warrant will be exercisable beginning
six months from the date of issuance and will expire on September 30, 2014. Under the terms of the
private placement, the purchaser has agreed to vote the shares purchased, and any additional shares
issued pursuant to the exercise of the warrant, as directed by the Company’s board of directors
until September 30, 2012. The completion of the private placement to the affiliate of Sigma-Tau
Group is subject to the satisfaction of customary closing conditions, and the Company expects the
offering to close during the week of October 5, 2009.
