Exhibit 1.1
BENTLEY PHARMACEUTICALS, INC.
$25,000,000
COMMON STOCK, $0.02 PAR VALUE PER SHARE
PLACEMENT AGENCY AGREEMENT
March __, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
as Placement Agent
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sir or Madam:
Bentley Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
proposes to offer and sell shares of common stock (the "Securities"), par value
$0.02 per share (the "Common Stock"), to certain investors (collectively, the
"Investors") in such aggregate principal amount as shall result in gross
proceeds to the Company of $25,000,000.
The Company desires to engage you as its placement agent (the "Placement
Agent") in connection with such offer and sale. The Securities are more fully
described in the Registration Statement (as hereinafter defined).
The Company hereby confirms as follows its agreements with the Placement
Agent.
1. AGREEMENT TO ACT AS PLACEMENT AGENT. On the basis of the
representations, warranties and agreements of the Company herein contained and
subject to the terms and conditions of this agreement (the "Agreement"), the
Placement Agent agrees to act as the exclusive placement agent in connection
with the issuance and sale, on a best efforts basis, by the Company of the
Securities to the Investors. The Company shall pay to the Placement Agent a fee
equal to 6.00% (the "Placement Fee") of the proceeds received from the sale of
the Securities as set forth on the cover page of the Prospectus (as hereinafter
defined).
2. DELIVERY AND PAYMENT. Concurrently with the execution and delivery
of this Agreement, the Company, the Placement Agent, and Citibank, N.A., as
escrow agent (the "Escrow Agent"), are entering into an Escrow Agreement
substantially in the form of
Exhibit A attached hereto (the "Escrow Agreement"), pursuant to which an escrow
account shall be established, at the Company's expense, for the benefit of the
Investors (the "Escrow Account"). The Investors will be instructed to make
checks payable to Citibank, N.A. Prior to the Closing Date (defined below),
(i) each of the Investors shall deposit an amount equal to the price per Share,
as shown on the cover page of the Prospectus multiplied by the number of
Securities purchased by such Investor in the Escrow Account, and (ii) the Escrow
Agent shall notify the Company and the Placement Agent in writing whether the
Investors have deposited in the Escrow Account funds in the amount equal to the
proceeds of the sale of all of the Securities offered hereby (the "Requisite
Funds") into the Escrow Account. At 10:00 a.m., New York City time, on
[____________ __, 2002 (DATE SIX MONTHS FROM THE EXECUTION DATE)], or at such
other time on such other date as may be agreed upon by the Company and the
Placement Agent but in no event prior to the date on which the Escrow Agent
shall have received all of the Requisite Funds (such date is hereinafter
referred to as the "Closing Date"), the Escrow Agent shall release the Requisite
Funds from the Escrow Account for collection by the Company and the Placement
Agent as provided in the Escrow Agreement and the Company shall deliver the
Securities to the Investors, which delivery may be made through the facilities
of the Depository Trust Company. The closing of such purchase and sale (the
"Closing") shall take place at the office of the Placement Agent. All
actions taken at the Closing shall be deemed to have occurred simultaneously.
Certificates evidencing the Securities shall be in definitive form and
shall be registered in such names and in such denominations as the Placement
Agent shall request by written notice to the Company. For the purpose of
expediting the checking and packaging of certificates for the Securities, the
Company agrees to make such certificates available for inspection at least 24
hours prior to delivery to the Investors.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants and covenants to, and agrees with, the Placement Agent
that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and may have filed one
or more amendments thereto, on Form S-3 (Registration No. [___________])
including or incorporated by reference in such registration statement and each
such amendment, the information called for by Part I, audited consolidated
financial statements for at least the past three fiscal years and such other
periods as may be appropriate, the information called for by Part II, the
undertakings to deliver certificates, file reports and file post-effective
amendments, the required signatures, consents of experts, exhibits, a related
Preliminary Prospectus (as hereinafter defined) and any other information or
documents which are required for the registration of the Securities under the
Securities Act of 1933, as amended (the "Act"). As used in this Agreement, the
term "Registration Statement" means such registration statement (including any
amendments), including incorporated documents, all exhibits and consolidated
financial statements and schedules thereto, as amended, when it becomes
effective (the "Effective Date"), and shall include information with respect to
the Securities, the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A of the
General Rules and Regulations promulgated under the Act (the "Regulations"),
which information is deemed to be included therein when it becomes effective as
provided by Rule 430A; the term "Preliminary Prospectus" means each prospectus
included in the Registration
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Statement, or any amendments thereto, before it becomes effective under the Act
and any prospectus filed by the Company with the consent of the Placement Agent
pursuant to Rule 424(a) of the Regulations; and the term "Prospectus" means the
final prospectus included as part of the Registration Statement, except that if
the prospectus relating to the Securities covered by the Registration Statement
in the form first filed on behalf of the Company with the Commission pursuant to
Rule 424(b) of the Regulations shall differ from such final prospectus, the term
"Prospectus" shall mean the prospectus as filed pursuant to Rule 424(b) from and
after the date on which it shall have first been used.
(b) When the Registration Statement becomes effective, and at all
times subsequent thereto, to and including the Closing Date as defined in
Section 2, and during such longer period as the Prospectus may be required to be
delivered in connection with sales by the Placement Agent or any dealer, and
during such longer period until any post-effective amendment thereto shall
become effective, the Registration Statement (and any post-effective amendment
thereto) and the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment or supplement to the Registration
Statement or the Prospectus) shall contain all statements which are required to
be stated therein in accordance with the Act and the Regulations, shall comply
with the Act and the Regulations, and shall not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and no event shall
have occurred which should have been set forth in an amendment or supplement to
the Registration Statement or the Prospectus which has not then been set forth
in such an amendment or supplement; and no Preliminary Prospectus, as of the
date filed with the Commission, included any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or necessary
to make the statements therein not misleading; except that no representation or
warranty is made in this Section 3(b) with respect to statements or omissions
made in reliance upon and in conformity with written information furnished to
the Company with respect to the Placement Agent by or on behalf of the Placement
Agent expressly for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto. The
Company has not distributed any offering material in connection with the
offering or sale of the Securities, other than the Registration Statement, the
Preliminary Prospectus and the Prospectus.
(c) Neither the Commission nor the blue sky or securities
authority of any jurisdiction has issued an order (a "Stop Order") suspending
the effectiveness of the Registration Statement, preventing or suspending the
use of any Preliminary Prospectus, the Prospectus, the Registration Statement,
or any amendment or supplement thereto, refusing to permit the effectiveness of
the Registration Statement, or suspending the registration or qualification of
the Securities, nor has any of such authorities instituted or threatened to
institute any proceedings with respect to a Stop Order.
(d) Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the Prospectus has
been properly described therein. Any contract, agreement, instrument, lease,
or license required to be filed as an exhibit to the Registration Statement
has been filed with the Commission as an exhibit to or has been incorporated
as an exhibit by reference into the Registration Statement. All such
contracts to which the Company or any Subsidiary is a party have been duly
authorized, executed and delivered by the
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Company or the applicable Subsidiary, constitute valid and binding agreements
of the Company or the applicable Subsidiary, and are enforceable against the
Company or the applicable Subsidiary in accordance with the terms thereof,
subject to the effect of applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and equitable principles of general
applicability.
(e) The Company and each Subsidiary is, and at the Closing
Date shall be, a corporation or other legal entity, as applicable, duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of formation, with full power and authority, and all necessary
material consents, authorizations, approvals, orders, licenses, certificates,
and permits of and from, and declarations and filings with, all foreign,
federal, state, local, and other governmental authorities and all courts and
other tribunals, to own, lease, license, and use its properties and assets
and to carry on the business in the manner described in the Registration
Statement, except where the failure to obtain such material consents,
authorizations, approvals, orders, licenses, certificates, and permits would
not have a material adverse affect on the financial condition, results of
operations, business, assets, liabilities or future prospects of the Company,
and its Subsidiaries taken as a whole ("Material Adverse Effect"). The
Company and each Subsidiary is, and at the Closing Date shall be, duly
qualified to do business and is in good standing in every jurisdiction in
which its ownership, leasing, licensing, or use of property and assets or the
conduct of its business makes such qualifications necessary, except in
jurisdictions where the failure to qualify will not have a Material Adverse
Effect. The Company has no Subsidiaries except as disclosed in the
Registration Statement. The Company does not own, and at the Closing Date
shall not own, directly or indirectly, any shares of stock or any other
equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other entity
other than short-term United States treasury bills. Complete and correct
copies of the formation and governing documents of the Company and the
Subsidiaries and all amendments thereto have been delivered to the Placement
Agent, and no changes therein shall be made subsequent to the date hereof and
prior to the Closing Date.
(f) The authorized capital stock of the Company consists of
35,000,000 shares of Common Stock, of which no more than 14,585,200 shares of
Common Stock are issued and outstanding, 3,933,560 shares of Common Stock are
reserved for issuance upon the exercise of currently outstanding warrants and
2,937,256 shares of Common Stock are reserved for issuance upon the exercise
of currently outstanding options. Each outstanding share of Common Stock is
validly authorized, or when issued shall be authorized, validly issued, fully
paid, and nonassessable, without any personal liability attaching to the
ownership thereof, and has not been issued and is not owned or held in
violation of any preemptive rights of stockholders. There is no commitment,
plan, or arrangement to issue, and no outstanding option, warrant, or other
right calling for the issuance of, any share of capital stock of the Company
or any Subsidiary or any security or other instrument which by its terms is
convertible into, exercisable for, or exchangeable for capital stock of the
Company or any Subsidiary, except as set forth above, and as may be properly
described in the Prospectus. The Company directly or indirectly owns all
outstanding shares of capital stock of each of the Subsidiaries.
(g) The consolidated financial statements of the Company included
in the Registration Statement and the Prospectus fairly present with respect to
the Company the consolidated financial position, the results of operations, and
the other information purported to be shown therein at the respective dates and
for the respective periods to which they apply. Such consolidated financial
statements have been prepared in accordance with generally
4
accepted accounting principles, except to the extent that certain footnote
disclosures regarding any stub period may have been omitted in accordance with
the applicable rules of the Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), consistently applied throughout the
periods involved, are materially correct and complete, and are in accordance
with the books and records of the Company. Deloitte & Touche LLP whose report on
the audited consolidated financial statements is filed with the Commission as a
part of the Registration Statement are, and during the periods covered by its
reports included in the Registration Statement and the Prospectus were,
independent certified public accountants with respect to the Company within the
meaning of the Act and the Regulations. Except as set forth therein, no other
financial statements are required by Form S-3 or otherwise to be included in the
Registration Statement or the Prospectus, audited or unaudited. No Material
Adverse Effect has occurred since the date of the financial statements included
in the Registration Statement, except as is described in the Prospectus.
(h) The Company is not, nor upon Closing shall it be, an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(i) There is no litigation, arbitration, claim, governmental
or other proceeding (formal or informal), or investigation pending, or, to
the knowledge of the Company, threatened, with respect to the Company or any
Subsidiary or any of their operations, businesses, properties, or assets,
except as is properly described in the Prospectus or such as individually or
in the aggregate do not now have and shall not in the future have a Material
Adverse Effect. Neither the Company nor any Subsidiary is in violation of, or
in default with respect to, any law, rule, regulation, order, judgment, or
decree except as may be properly described in the Prospectus or such as in
the aggregate do not now have and insofar as can reasonably be foreseen, is
likely to have a Material Adverse Effect; nor is the Company or any
Subsidiary required to take any action in order to avoid any such violation
or default.
(j) All real property owned by the Company or any Subsidiary
is described in the Prospectus. The Company or the applicable Subsidiary has
good and marketable title to all real property and good title to all of the
other properties and assets which the Prospectus indicates are owned by it,
free and clear of all liens, security interests, pledges, charges,
encumbrances, and mortgages except as may be properly described in the
Prospectus or such as in the aggregate do not now have and insofar as can
reasonably be foreseen, is not likely to have a Material Adverse Effect. No
real property owned, leased, licensed, or used by the Company or any
Subsidiary lies in an area which is, or to the knowledge of the Company shall
be, subject to zoning, use, or building code restrictions which would
prohibit, and no state of facts relating to the actions or inaction of
another person or entity or his or its ownership, leasing, licensing, or use
of any real or personal property exists or shall exist which would prevent,
the continued effective ownership, leasing, licensing, or use of such real
property in the business of the Company or the applicable Subsidiary as
presently conducted or as the Prospectus indicates it contemplates
conducting, except as may be properly described in the Prospectus or such as
in the aggregate do not now have and shall not in the future have a Material
Adverse Effect.
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(k) None of the Company, any Subsidiary, nor any other party
is now, or at the Closing Date shall be or is expected by the Company to be
in violation or breach of, or in default with respect to complying with, any
material provision of any contract, agreement, instrument, lease, license,
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, arrangement, or understanding which is material to the
Company, and each such contract, agreement, instrument, lease, license,
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, arrangement, and understanding is in full force and is the
legal, valid, and binding obligation of the parties thereto and is
enforceable as to them in accordance with its terms, except as such may be
limited or otherwise affected by bankruptcy, insolvency, reorganization,
liquidation, receivership, moratorium, fraudulent conveyance, equitable
subordination, or other similar legal principles now or hereafter in effect
governing or affecting the rights and remedies of debtors and creditors
generally, or general principles of equity, regardless of whether considered
in a proceeding at law or in equity. The Company or the applicable Subsidiary
enjoys peaceful and undisturbed possession under all leases and licenses
under which it is operating. Neither the Company nor any Subsidiary is a
party to or bound by any contract, agreement, instrument, lease, license,
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, arrangement, or understanding, or subject to any charter or
other restriction, which has had or is likely in the future to have a
Material Adverse Effect. Neither the Company nor any Subsidiary is in
violation or breach of, or in default with respect to, any term of its
Certificate of Incorporation or by-laws or their other applicable
organizational or governing documents.
(l) All patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises, technology,
know-how and other intangible properties and assets (all of the foregoing
being herein called "Intangibles") that the Company or any Subsidiary owns or
has pending, or under which it is licensed, are in good standing and
uncontested, and with respect to issued patents and registered trademarks,
service marks and copyrights, are valid and enforceable. The Company has
obtained an opinion from competent patent counsel confirming the validity of
U.S. Patent No. 5,023,252. Except as otherwise disclosed in the Registration
Statement, the Intangibles are owned by the Company, free and clear of all
liens, security interests, pledges, and encumbrances. The Company or the
Subsidiaries possess all rights under any Intangible necessary to their
business as presently conducted or as the Prospectus indicates they
contemplate conducting (except as may be so designated in the Prospectus).
Neither the Company nor any Subsidiary (including each product or service
used or sold by them) has infringed, is infringing, or has received notice of
infringement with respect to asserted Intangibles of others (except as may be
so designated in the Prospectus). There is no infringement by others of
Intangibles of the Company or any Subsidiary. There is no Intangible of
others which has had or may in the future have a Materially Adverse Effect on
the financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company.
(m) The Company has obtained freedom of operation opinions from
competent patent and trademark counsel for its commercial products and services
and those products and services which it intends to commercialize as set forth
in the Prospectus.
(n) The Company or the applicable Subsidiary, has obtained
patent or trade secret protection, as applicable, for each of its products
and services that is represented in the Prospectus as proprietary or
exclusive to the Company or the applicable Subsidiary. All pertinent
maintenance and renewal fees on the
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Company's patents and trademarks registrations have been timely paid such that
the patents and trademark registrations are currently enforceable and will be
maintained as such.
(o) The Company or one of the Subsidiaries has received
regulatory approval of all registrations, applications, licenses, requests
for exemptions, permits and other regulatory authorizations necessary for the
conduct of the business of the Company and the Subsidiaries as presently
conducted or as the Prospectus indicates it contemplates conducting (except
as may be so designated in the Prospectus) with the United States Food and
Drug Administration ("FDA"), the Federal Trade Commission ("FTC"), the
Consumer Products Safety Commission ("CPSC"), the United States Department of
Agriculture ("USDA") as applicable, and any other required governmental or
regulatory authority, including the Kingdom of Spain or as otherwise required
by applicable Spanish law. The Company and each Subsidiary is in compliance
in all respects with all registrations, applications, licenses, requests for
exemptions, permits, and other regulatory authorizations, and all applicable
FDA, FTC, CPSC, USDA, foreign (including the Kingdom of Spain), federal,
state and local rules and regulations, including good manufacturing practices
prescribed by the FDA, the Federal Food, Drug and Cosmetic Act, as amended,
21 USC section 301 et seq., section 355 et seq., and the rules and
regulations promulgated thereunder. Each of the Company's or any Subsidiary's
Drug Master Files as provided for in 21 CFR 314.420 contains all of the
information required to be included in it and does not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made in it, in light of the circumstances under
which they were made, not misleading.
(p) No products of the Company or any Subsidiary have been
recalled, withdrawn, suspended or seized, whether voluntarily or otherwise.
There does not currently exist and it is not anticipated that there will
exist any basis for the recall, withdrawal, suspension or seizure of any
product registration, product license, manufacturing license, export license,
or other license, approval, or consent of any governmental or regulatory
authority with respect to the Company or any Subsidiary or any of their
products.
(q) None of the Company, any Subsidiary, nor any director,
officer, agent, employee, or other person associated with or acting on their
behalf has, directly or indirectly: used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment. Neither the Company
nor any Subsidiary has accepted any material advertising allowances or
marketing allowances from suppliers and, to the extent any advertising
allowance has been accepted, proper documentation has been provided to the
supplier with respect to advertising as to which the advertising allowance
has been granted.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded
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accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(s) The Company has all requisite power and authority to
execute and deliver, and to perform thereunder each of this Agreement and the
Escrow Agreement. All necessary corporate proceedings of the Company have
been duly taken to authorize the execution and delivery, and performance
thereunder by the Company of this Agreement and the Escrow Agreement. This
Agreement and the Escrow Agreement have been duly authorized and validly
executed and delivered by the Company, and each is a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with
its terms, subject to the effect of applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and equitable principles
of general applicability. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with,
any federal, state, local, or other governmental authority or any court or
other tribunal is required by the Company for the execution and delivery, or
performance thereunder by the Company of this Agreement or the Escrow
Agreement except filings under the Act which have been or shall be made
before the Closing Date, an order of effectiveness of the Commission, and
such consents consisting only of consents under blue sky or securities laws
or the by-laws and rules of the NASD Regulation, Inc. (the "NASDR") which are
required in connection with the transactions contemplated by this Agreement
and which have been obtained at or prior to the date of this Agreement. No
consent of any party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company or any Subsidiary is a
party, or to which any of its properties or assets are subject, is required
for the execution or delivery, or performance thereunder of this Agreement or
the Escrow Agreement; and the execution and delivery, and performance
thereunder of this Agreement and the Escrow Agreement shall not violate,
result in a breach of, conflict with, or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate or call
a default under any such contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a breach of any term
of the Certificate of Incorporation or by-laws of the Company, or violate,
result in a breach of, or conflict with any law, rule, regulation, order,
judgment, or decree binding on the Company or to which any of its operations,
businesses, properties, Subsidiaries, or assets are subject.
(t) The Securities, when issued and delivered in accordance with
this Agreement, upon payment of the purchase price therefor, will be validly
issued, fully paid, and nonassessable, without any personal liability attaching
to the ownership thereof, and will not be issued in violation of any preemptive
rights of stockholders. The purchasers of Securities shall receive good title to
the Securities purchased. All title to the Securities shall be free and clear of
all liens, security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts.
(u) The Securities conform to all statements relating thereto
contained in the Registration Statement and the Prospectus. The Securities are
currently listed on the American Stock Exchange (the "AMEX").
(v) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as set forth in or contemplated by the Registration Statement and
the Prospectus, (i) there has not
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been and will not have been (A) any change in the capitalization of the
Company other than non-material changes in the ordinary course of business,
or (B) any Material Adverse Effect, (ii) neither the Company nor any
Subsidiary has incurred nor shall they incur any material liabilities or
obligations, direct or contingent, nor have they entered into nor shall they
enter into any material transactions other than pursuant to this Agreement,
the Registration Statement and the transactions referred to herein and
therein and (iii) the Company has not and shall not have paid or declared any
dividends or other distributions of any kind on any class of its capital
stock.
(w) Neither the Company nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or shall take, directly or
indirectly, prior to the termination of the distribution of securities
contemplated by this Agreement, any action designed to stabilize or manipulate
the price of any security of the Company, or which has caused or resulted in, or
which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company, to
facilitate the sale or resale of the Securities.
(x) Except as contemplated by this Agreement, the Company has not
incurred any liability for a fee, commission, or other compensation on account
of the employment of a broker or finder in connection with the transactions
contemplated by this Agreement.
(y) The Company has obtained from each officer, director and
person who, to its knowledge, beneficially owns 5.00% or more of the shares of
the Company's capital stock or derivative securities convertible into shares of
the Company's capital stock, his or her enforceable written agreement that for a
period of 90 days from the Closing Date, he or she shall not, without the
Placement Agent's prior written consent, offer, pledge, sell, contract to sell,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of capital stock or any security or other instrument
which by its terms is convertible into, exercisable for, or exchangeable for
shares of Securities (except that, subject to compliance with applicable
securities laws, any such officer, director or stockholder may transfer his or
her stock in a private transaction, provided that any such transferee shall
agree, as a condition to such transfer, to be bound by the restrictions set
forth in this Agreement and further provided that the transferor, except in the
case of the transferor's death or gifts of securities with a fair market value
of less than $100,000 in the aggregate per transferor, shall continue to be
deemed the beneficial owner of such shares in accordance with Regulation 13d-(3)
of the Exchange Act) (the "Lockup Letter").
(z) Except as otherwise provided in the Registration Statement,
no person or entity has the right to require registration of any securities of
the Company because of the filing or effectiveness of the Registration
Statement.
(aa) No unregistered securities of the Company, of an affiliate
of the Company or of a predecessor of the Company have been sold within three
years prior to the date hereof, except as described in the Registration
Statement.
(bb) The Company and each Subsidiary has filed all federal and
state tax returns which are required to be filed by it and has paid all taxes
shown on such returns and all assessments
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received by it to the extent such taxes have become due. All taxes with
respect to which the Company or any Subsidiary is obligated have been paid or
adequate accruals have been set up to cover any such unpaid taxes.
(cc) Except as otherwise set forth in the Registration Statement:
(i) To the best of its knowledge, the Company, each
Subsidiary and their respective properties are in
material compliance with all Environmental Laws
including, without limitation, all restrictions,
conditions, standards, limitations, prohibitions,
requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in
any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
(ii) Neither the Company nor any Subsidiary has, and to the
best knowledge of their executive officers, no other
person has, released, placed, stored, buried, dumped or
otherwise improperly disposed of any Medical Wastes,
Hazardous Substances, Oils, Pollutants or Contaminants
or any other wastes produced by, or resulting from, any
business, commercial, or industrial activities,
operations, or processes, at, on, beneath, or adjacent
to the Property or any property formerly owned,
operated or leased by the Company or any Subsidiary
except for inventories of such substances to be used,
and wastes generated therefrom, in the ordinary course
of business of the Company and the Subsidiaries (which
inventories and wastes, if any, were and are stored or
disposed of in accordance with applicable laws and
regulations and in a manner such that, to the knowledge
of the Company, any Subsidiary and their executive
officers, there has been no release of any such
substances into the environment).
(iii) Except as provided to the Placement Agent, there
exists no written or tangible report, synopsis or
summary of any asbestos, toxic waste or Hazardous
Substances, Oils, Pollutants or Contaminants
investigation made with respect to all or any portion
of the assets of the Company or any Subsidiary (whether
or not prepared by experts and whether or not in the
possession of their executive officers).
(dd) Any pro forma financial or other information and related
notes included in the Registration Statement, each Preliminary Prospectus and
the Prospectus comply (or, if the Prospectus has not been filed with the
Commission, as to the Prospectus, shall comply) in all material respects with
the requirements of the Act, the rules and regulations of the Commission
thereunder and SEC Release Nos. 33-8039, 34-45124 and FR-59, and present
10
fairly the pro forma information shown, as of the dates and for the periods
covered by such pro forma information. Such pro forma information, including any
related notes and schedules, has been prepared on a basis consistent with the
historical financial statements and other historical information, as applicable,
included in the Registration Statement, the Preliminary Prospectus and the
Prospectus, except for the pro forma adjustments specified therein, and give
effect to assumptions made on a reasonable basis to give effect to historical
and, if applicable, proposed transactions described in the Registration
Statement, each Preliminary Prospectus and the Prospectus.
(ee) The Company and each Subsidiary maintain insurance of the
types and in the amounts that they reasonably believe is adequate for their
business, including, but not limited to, insurance covering all real and
personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against by similarly situated companies, all of which insurance is in full
force and effect.
(ff) No statement, representation or warranty made by the Company
in this Agreement or made in any certificate or document required by this
Agreement or the Escrow Agreement to be delivered to the Placement Agent, the
Investors or the Escrow Agent was or shall be, when made, inaccurate, untrue or
incorrect in any material respect.
Capitalized terms used in this Section 3 are used as defined elsewhere in this
Agreement unless defined below:
(1) Environmental Laws means all federal, state and local laws,
regulations, rules and ordinances relating to pollution or protection
of the environment, including, without limitation, laws relating to
Releases or threatened Releases of Hazardous Substances, Oils,
Pollutants or Contaminants into the indoor or outdoor environment
(including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, Release, transport or handling of Hazardous Substances, Oils,
Pollutants or Contaminants.
(2) Hazardous Substances, Oils, Pollutants or Contaminants means all
substances defined as such in the National Oil and Hazardous
Substances Pollutant Contingency Plan, 40 C.F.R. section 300.6, or
defined as such under any Environmental Law.
(3) Medical Waste means all substances as defined in 42 U.S.C. section
6903(40) including without limitation "any solid waste which is
generated in the diagnosis, treatment, or immunization of human beings
or animals, in research pertaining thereto, or in the production or
testing of biologicals," and all substances defined as "hazardous
waste" in section 6903(5) which means "a solid waste, or combination
of solid wastes, which because of its quantity, concentration, or
physical, chemical, or infectious characteristics may:
11
(A) cause or significantly contribute to an increase in mortality or
an increase in serious irreversible, or incapacitating
reversible, illness; or
(B) pose a substantial present or potential hazard to human health or
the environment when improperly treated, stored, transported or
disposed of, or otherwise managed."
(4) Release means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environmental (including,
without limitation, ambient air, surface water, groundwater, and
surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Substances, Oils, Pollutants or
Contaminants through or in the air, soil, surface water, groundwater
or any property.
(5) Subsidiary means any and all corporations, partnerships, joint
ventures, associations and other entities controlled directly or
indirectly through or by the Company.
All of the above representations and warranties shall survive the performance or
termination of this Agreement.
4. AGREEMENTS OF THE COMPANY. The Company understands, covenants and
agrees with the Placement Agent as follows:
(a) The Company shall not, either prior to the Effective Date or
thereafter during such period as the Prospectus would be required by law to be
delivered in connection with sales of the Securities by an underwriter or
dealer, file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Placement Agent within a reasonable period of time prior to the filing thereof
and the Placement Agent shall not have objected thereto.
(b) The Company shall use its best efforts to cause the
Registration Statement to become effective, and shall notify the Placement Agent
promptly, and shall confirm such advice in writing, (1) when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective, (2) of any request by the securities or other governmental
authority (including, without limitation, the Commission) of any jurisdiction
for amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (3) of any request by the securities or other
governmental authority (including, without limitation, the Commission) of any
jurisdiction of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose or the threat
thereof, (4) of the happening of any event during the period mentioned in
Section 4(a) that in the reasonable judgment of the Company makes any statement
made in the Registration Statement or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the Prospectus in order
to make the statements therein, in light of the circumstances in which they are
made, not misleading and (5) of receipt by the Company or any agent or attorney
of the Company of any other communication from the securities or other
governmental authority (including, without limitation, the Commission) of any
jurisdiction relating to any of the Registration Statement, any Preliminary
Prospectus or the Prospectus. If at any time any securities or other
governmental authority (including, without limitation, the Commission) of any
jurisdiction
12
shall issue any order suspending the effectiveness of the Registration
Statement, the Company shall make every reasonable effort to obtain the
withdrawal of such order at the earliest possible moment. If the Company has
omitted any information from the Registration Statement, pursuant to Rule 430A,
it shall use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to said Rule 430A and to notify
the Placement Agent promptly of all such filings.
(c) If, at any time when a Prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result of which
the Prospectus, as then amended or supplemented, would, in the judgment of
counsel to the Company or counsel to the Placement Agent, include any 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, or the Registration Statement, as then amended
or supplemented, would, in the judgment of counsel to the Company or counsel to
the Placement Agent, include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading,
or if for any other reason it is necessary, in the judgment of counsel to the
Company or counsel to the Placement Agent, at any time to amend or supplement
the Prospectus or the Registration Statement to comply with the Act or the Rules
and Regulations, the Company shall promptly notify the Placement Agent and,
subject to Section 4(a) hereof, shall promptly prepare and file with the
Commission, at the Company's expense, an amendment to the Registration Statement
or an amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance and shall deliver to the Placement Agent,
without charge, such number of copies thereof as the Placement Agent may
reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Placement Agent.
(d) The Company shall furnish to the Placement Agent and its
counsel, without charge, (i) one signed copy of the registration statement
described in Section 3(a) hereof and each pre-effective amendment thereto,
including financial statements and schedules, and all exhibits thereto and (ii)
so long as a prospectus relating to the Securities is required to be delivered
under the Act, as many copies of each Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto as the Placement Agent may reasonably
request.
(e) The Company shall comply with all the undertakings contained
in the Registration Statement.
(f) Prior to the sale of the Securities to the Investors, the
Company shall cooperate with the Placement Agent and its counsel in connection
with the registration or qualification of the Securities for offer and sale
under the state securities or blue sky laws of such jurisdictions as the
Placement Agent may request; provided, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject.
(g) The Company shall make generally available to holders of its
securities, as soon as may be practicable, but in no event later than the last
day of the fifteenth
13
full calendar month following the calendar quarter in which the Effective Date
falls, a consolidated earnings statement (which need not be audited but shall be
in reasonable detail) for a period of 12 months ended commencing after the
Effective Date, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(h) The Company shall not at any time, directly or indirectly,
take any action intended, or which might reasonably be expected, to cause or
result in, or which shall constitute, stabilization of the price of the
Securities to facilitate the sale or resale of any of the Securities.
(i) The Company shall apply the net proceeds from the offering
and sale of the Securities in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
(j) The Placement Agent may not, without the Placement Agent's
prior consent, be quoted or referred to in any document, release or
communication prepared, issued or transmitted by the Company, including any
entity controlled by, or under common control with, the Company and any
director, officer, employee or agent thereof.
(k) Following the Closing, the Placement Agent shall have the
right to place usual and customary advertisements in financial and other
newspapers and journals, at its own expense, describing its services to the
Company.
(l) The Company hereby agrees that for a period of 12 months from
the Closing Date it shall not, except for the granting of options under the
Company's 2001 Employee Stock Option Plan and 2001 Directors Plan, as they may
be amended in the future, and the exercise of outstanding options and warrants
(i) offer any Securities for sale to, or solicit any offers to buy from, any
person or persons, whether directly or indirectly, other than through the
Placement Agent or (ii) engage in any discussions with any person other than
representatives of the Placement Agent for the purpose of engaging, or
considering the engagement of, such person as a finder or broker in connection
with the sale by the Company of the Securities to potential investors in the
United States of America or overseas, except that this subsection (l) shall not
apply to an equity investment by a company ("Strategic Partner") engaged in the
same business as the Company that is making an investment in the Company to
complement its existing business.
(m) The Company hereby agrees that it shall not issue any equity
securities for a period of 90 days from the Closing Date without the prior
written consent of the Placement Agent, other than (i) securities issued
pursuant to contractual obligations of the Company in effect as of the date of
this Agreement and disclosed to the Placement Agent or its counsel prior to the
effective date of the Registration Statement; (ii) securities issued on a pro
rata basis to all holders of a class of outstanding equity securities of the
Company; (iii) equity securities issued pursuant to employee benefit or purchase
plans in effect as of the date of this Agreement; and (iv) securities issued to
Strategic Partners of the Company at a price which is equal to or exceeds the
average market price of the Common Stock as traded on the American Stock
Exchange for a reasonable period prior to the sale.
14
5. EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company shall pay
all costs and expenses incident to the performance of the obligations of the
Company under this Agreement, including but not limited to costs and expenses of
or relating to (1) the preparation, printing and filing of the Registration
Statement (including each pre- and post-effective amendment thereto) and
exhibits thereto, each Preliminary Prospectus, the Prospectus and any amendment
or supplement to the Prospectus, including all fees, disbursements and other
charges of counsel to the Company, (2) the preparation and delivery of
certificates representing the Securities, (3) furnishing (including costs of
shipping and mailing) such copies of the Registration Statement (including all
pre- and post-effective amendments thereto), the Prospectus and any Preliminary
Prospectus, and all amendments and supplements to the Prospectus, as may be
requested for use in connection with the direct placement of the Securities, (4)
the listing of the Securities on the AMEX, (5) any filings required to be made
by the Placement Agent with the NASDR, and the fees, disbursements and other
charges of counsel for the Placement Agent in connection therewith, (6) the
registration or qualification of the Securities for offer and sale under the
securities or blue sky laws of such jurisdictions designated pursuant to Section
4(f), including the reasonable fees and disbursements of counsel to the
Placement Agent in connection therewith and the preparation and printing of
preliminary, supplemental and final blue sky memoranda, (7) fees, disbursements
and other charges of counsel to the Company and (8) the fees of the Escrow
Agent. The Company shall promptly reimburse the Placement Agent, on a fully
accountable basis, for all expenses incurred by it (including attorneys' fees)
in connection with the engagement hereunder. The reimbursement of such
out-of-pocket expense shall not exceed $175,000 without the written consent of
the Company. The Placement Agent will obtain the Company's prior consent (which
will not be unreasonably withheld) to expenses in excess of $5,000 and legal
expenses in excess of $125,000. The Placement Agent agrees to provide the
Company with a detailed description of such expenses.
6. CONDITIONS TO THE OBLIGATIONS OF PLACEMENT AGENT. The obligations
of the Placement Agent hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Placement Agent not later than 5:00 p.m.,
St. Petersburg, Florida time, on the date of this Agreement or at such later
date and time as shall be consented to in writing by the Placement Agent and
all filings required by Rule 424 of the Rules and Regulations and Rule 430A
shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceedings for that
purpose shall be pending or threatened by any securities or other governmental
authority (including, without limitation, the Commission), (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Securities under the securities or blue sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by any securities or other
governmental authority (including, without limitation, the Commission), (iii)
any request for additional information on the part of the staff of any
securities or other governmental authority (including, without limitation, the
Commission) shall have been complied with to the satisfaction of the staff of
the Commission
15
or such authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Placement Agent and the Placement Agent did
not object thereto in good faith, and the Placement Agent shall have received
certificates of the Company, dated the Closing Date and signed by the President
and Chief Executive Officer or the Chairman of the Board of Directors of the
Company, and the Chief Financial Officer of the Company, to the effect of
clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) no Material Adverse Effect
will have occurred, whether or not arising from the transactions contemplated
hereby or in the ordinary course of business, in each case other than as set
forth in the Registration Statement and the Prospectus and (ii) the Company
shall not have sustained any material loss or interference with its business or
properties from fire, explosion, flood or other casualty, whether or not covered
by insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree, which is not set forth in the Registration
Statement and the Prospectus, if in the judgment of the Placement Agent any such
development makes it impracticable or inadvisable to consummate the sale and
delivery of the Securities to Investors at the public offering price.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been
no litigation or other proceeding instituted against the Company, any of its
Subsidiaries, or any of their officers or directors in their capacities as
such, before or by any Federal, state or local court, commission, regulatory
body, administrative agency or other governmental body, domestic or foreign,
which litigation or proceeding is reasonably expected by management to have a
Material Adverse Effect.
(e) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at the
Closing Date, as if made on such date, and all covenants and agreements herein
contained to be performed on the part of the Company, and all conditions herein
contained to be fulfilled or complied with by the Company at or prior to the
Closing Date shall have been duly performed, fulfilled or complied with in all
material respects.
(f) The Placement Agent shall have received an opinion, dated
the Closing Date (or such other date as may be set forth in a representation
or warranty), from each of (i) Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP as
counsel to the Company, (ii) Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. as Spanish
counsel, and (iii) ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ as intellectual property counsel
each in form and substance reasonably satisfactory to the Placement Agent.
(g) Concurrently with the execution and delivery of this
Agreement, or, if the Company elects to rely on Rule 430A, on the date of the
Prospectus, Deloitte & Touche LLP (the "Accountants") shall have furnished to
the Placement Agent a letter, dated the date of its delivery (the "Comfort
Letter"), addressed to the Placement Agent and in form and substance
satisfactory to the Placement Agent, confirming that (i) they are independent
public
16
accountants with respect to the Company within the meaning of the Act and the
Rules and Regulations; (ii) in their opinion, the financial statements and any
supplementary financial information included in the Registration Statement and
examined by them comply as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and Regulations; (iii) on the
basis of procedures, not constituting an examination in accordance with
generally accepted auditing standards, set forth in detail in the Comfort
Letter, a reading of the latest available interim financial statements of the
Company, inspections of the minute books of the Company since the latest audited
financial statements included in the Prospectus, inquiries of officials of the
Company responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in the Comfort Letter to a date not
more than five days prior to the date of the Comfort Letter, nothing came to
their attention that caused them to believe that: (A) as of a specified date not
more than five days prior to the date of the Comfort Letter, there have been any
changes in the capital stock of the Company or any increase in the long-term
debt of the Company, or any decreases in net current assets or net assets or
other items specified by the Placement Agent, or any increases in any items
specified by the Placement Agent, in each case as compared with amounts shown in
the latest balance sheet included in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in the Comfort Letter; and (B) for the period
from the date of the latest financial statements included in the Prospectus to
the specified date referred to in Clause (A), there were any decreases in
revenues or the total or per share amounts of net income or other items
specified by the Placement Agent, or any increases in any items specified by the
Placement Agent, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length specified by
the Placement Agent, except in each case for decreases or increases which the
Prospectus discloses have occurred or may occur or which are described in the
Comfort Letter; and (iv) in addition to the examination referred to in their
reports included in the Prospectus and the procedures referred to in clause
(iii) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Placement Agent, which are derived from the general
accounting, financial or other records of the Company, as the case may be, which
appear in the Prospectus or in Part II of, or in exhibits or schedules to, the
Registration Statement, and have compared such amounts, percentages and
financial information with such accounting, financial and other records and have
found them to be in agreement. At the Closing Date, the Accountants shall have
furnished to the Placement Agent a letter (the "Bring Down Letter"), dated the
date of its delivery, which shall confirm, on the basis of a review in
accordance with the procedures set forth in the Comfort Letter, that nothing has
come to their attention during the period from the date of the Comfort Letter
referred to in the prior sentence to a date (specified in the Bring-Down Letter)
not more than five days prior to the Closing Date which would require any change
in the Comfort Letter if it were required to be dated and delivered at the
Closing Date.
(h) At the Closing Date, there shall be furnished to the
Placement Agent a certificate, dated the date of its delivery, signed by each of
the Chief Executive Officer and the Chief Financial Officer of the Company, in
form and substance satisfactory to the Placement Agent to the effect that to
each of such person's knowledge:
17
(1) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus and (A) as of the date of
such certificate, (x) the Registration Statement does not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading and (y) the Prospectus does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading and (B) since the Effective Date no
event has occurred as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect.
(2) Each of the representations and warranties of the Company contained in
this Agreement were, when originally made, and are, at the time such
certificate is delivered, true and correct in all material respects.
(3) Each of the covenants required herein to be performed by the Company
on or prior to the date of such certificate has been duly, timely and
fully performed and each condition herein required to be complied with
by the Company on or prior to the delivery of such certificate has
been duly, timely and fully complied with.
(4) No stop order suspending the effectiveness of the Registration
Statement or of any part thereof has been issued and no proceedings
for that purpose have been instituted or are contemplated by the
Commission.
(5) Subsequent to the date of the most recent financial statements in the
Prospectus, no Material Adverse Effect has occurred, except as set
forth in or contemplated by the Prospectus.
(i) The Securities shall be qualified for sale in such states as
the Placement Agent may reasonably request, each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing
Date; provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to taxation or general service of process in any
jurisdiction where it is not now so subject.
(j) The Company shall have furnished to the Placement Agent such
certificates, in addition to those specifically mentioned herein, as the
Placement Agent may have reasonably requested as to the accuracy and
completeness at the Closing Date of any statement in the Registration Statement
or the Prospectus, as to the accuracy at the Closing Date of the representations
and warranties of the Company as to the performance by the Company of its
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to the obligations hereunder of the Placement Agent.
18
(k) The Placement Agent shall have received the Lockup Letters
referred to in Section 3(y) hereof substantially in the form of Exhibit B.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Placement Agent, together with its officers, directors, shareholders, employees
and agents, and each person, if any, who controls the Placement Agent and any of
its affiliates within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act (all of the foregoing are referred to collectively as "Indemnified
Parties" and individually as an "Indemnified Party"), from and against any and
all losses, suits, actions, judgments, penalties, fines, costs, expenses,
damages, liabilities or claims of any kind or nature, whether joint or incurred
by an Indemnified Party in connection with, and any amount paid in settlement
of, the preparation for or defense of any action, claim or proceeding asserted,
whether or not resulting in any liability) (all of the foregoing being
collectively defined as the "Indemnified Claims") to which such Indemnified
Party may become subject or liable or which may be incurred by or assessed
against any Indemnified Party under any statute, common law, contract or
otherwise, relating to or arising out of any of: (i) any actions or omissions of
the Company or anyone acting on the Company's behalf, including its employees,
officers, advisors, directors and agents, (ii) this Agreement or the services to
be performed pursuant to this Agreement, (iii) any securities, tax, corporate or
other filings of the Company, (iv) any transactions referred to in this
Agreement or any transactions arising out of the transactions contemplated by
this Agreement, (v) any untrue statement or alleged untrue statement made by the
Company in Section 3 of this Agreement, (vi) any untrue statement or alleged
untrue statement of any material fact contained in (A) any Preliminary
Prospectus, the Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus and (B) any
application or other document, or any amendment or supplement thereto, executed
by the Company based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Securities under the
securities or Blue Sky laws thereof or filed with the Commission or any
securities association or securities exchange (each, an "Application") or (vii)
the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any supplement to the Registration
Statement or the Prospectus or any Application a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; PROVIDED, HOWEVER, that
the Company will not be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Securities pursuant to this
Agreement and is based solely on an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to the Placement Agent furnished in writing to the Company
by the Placement Agent expressly for inclusion in the Registration Statement,
any Preliminary Prospectus or the Prospectus; and PROVIDED, FURTHER, that such
indemnity with respect to any Preliminary Prospectus shall not inure to the
benefit of the Placement Agent (or any person controlling the Placement Agent)
to the extent that any such loss, claim, damage or liability (A) results from
the Placement Agent's failure to send or give a copy of the Prospectus (as
amended or supplemented) to such person at or prior to the confirmation of the
sale of Securities to such person in any case where such delivery is required by
the Act and (B) arises out of or is based upon an untrue statement or omission
of a material fact contained in such Preliminary Prospectus that was corrected
in the Prospectus (or any
19
amendment or supplement thereto), unless such failure to deliver the Prospectus
(as amended or supplemented) was the result of noncompliance by the Company with
Section 4(d); PROVIDED, FURTHER, that the Company shall not be liable to an
Indemnified Party in any such case solely to the extent that any such
Indemnified Claim is found, in a final, unappealable judgment by a court of
competent jurisdiction, to have resulted solely and exclusively and as a direct
and proximate cause from said Indemnified Party's willful misconduct or gross
negligence in the performance of his duties on behalf of the Placement Agent.
The indemnity, contribution and expense reimbursement agreements and obligations
set forth herein shall be in addition to any other rights, remedies or
indemnification which any Indemnified Party may have or be entitled to at common
law or otherwise, and shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Indemnified Party.
In addition, the Company shall offer such indemnification and expense advance
and reimbursement as it may be permitted to offer or extend pursuant to its
Bylaws, Charter, Certificate of Incorporation, or insurance. The Company further
agrees that the indemnification and expense advance and reimbursement
obligations set forth herein, shall apply whether or not the Placement Agent or
any other Indemnified Party is a formal party in any such Indemnified Claim.
(b) The Placement Agent agrees to indemnify and hold harmless
each of the Company, together with its officers, directors, shareholders,
employees and agents, and each person, if any, who controls the Company and any
of its affiliates within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act (all of the foregoing are referred to collectively as "Selling
Indemnified Parties" and individually as an "Selling Indemnified Party"), from
and against any and all losses, suits, actions, judgments, penalties, fines,
costs, expenses, damages, liabilities or claims of any kind or nature, whether
joint or several, (including, without limitation, any investigative, legal or
any other expenses as they are reasonably incurred by an Selling Indemnified
Party in connection with, and any amount paid in settlement of, the preparation
for or defense of any action, claim or proceeding asserted, whether or not
resulting in any liability) (all of the foregoing being collectively defined as
the "Selling Indemnified Claims") to which such Selling Indemnified Party may
become subject or liable or which may be incurred by or assessed against any
Selling Indemnified Party under any statute, common law, contract or otherwise,
relating to or arising out of (i) any failure to comply with the agreements of
the Placement Agent contained in this Agreement, or (ii) the inaccuracy of any
representation or warranty made by the Placement Agent in this Agreement;
PROVIDED, HOWEVER, that the Placement Agent shall not be liable to a Selling
Indemnified Party in any such case solely to the extent that any such Selling
Indemnified Claim is found, in a final, unappealable judgment by a court of
competent jurisdiction, to have resulted solely and exclusively and as a direct
and proximate cause from said Selling Indemnified Party's willful misconduct or
gross negligence in the performance of their duties on behalf of the Company.
Each Indemnified Party acknowledges that the only information that the Placement
Agent has furnished to the Company expressly for use in the Registration
Statement, any Preliminary Prospectus or the Prospectus are statements set forth
in the "Plan of Distribution" section. The indemnity, contribution and expense
reimbursement agreements and obligations set forth herein shall be in addition
to any other rights, remedies or indemnification which any Selling Indemnified
Party may have or be entitled to at common law or otherwise, and shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Selling Indemnified Party. The Placement Agent further
agrees that the indemnification and expense advance and reimbursement
obligations set forth herein, shall apply whether or not
20
the Placement Agent or any other Selling Indemnified Party is a formal party in
any such Selling Indemnified Claim. No Indemnified Party shall have any
liability to the Company or any other person in connection with the services
rendered pursuant to this Agreement except for any liability for losses, claims,
damages or liabilities finally judicially determined to have resulted solely and
exclusively from actions taken or omitted to be taken as a direct result of such
Indemnified Party's gross negligence or willful misconduct.
(c) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 7 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will immediately assume the full defense of such action (including the
employment of counsel satisfactory to the indemnified party and the payment of
fees and out-of-pocket expenses of such counsel), and after notice from the
indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that a conflict exists (based on advice
of counsel to the indemnified party) between the indemnified party and the
indemnifying party that would prevent the counsel selected by the indemnifying
party from representing the indemnified party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf of
the indemnified party) or (3) the indemnifying party has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for more than the
reasonable fees, disbursements and other charges of more than one separate firm
admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. No
indemnifying party will, without the prior written consent of the indemnified
party or parties (which consent will not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification has been
sought hereunder (whether or not the indemnified party or any person who
controls the indemnified party within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of the indemnified party and each
21
such controlling person from all liability arising out of such claim, action,
suit or proceeding. An indemnifying party will not be liable for any settlement
of any action or claim effected without its written consent (which consent will
not be unreasonably withheld).
(d) If for any reason (other than as specifically provided
herein) the indemnification provided for in this Section 7 is unavailable to or
insufficient to fully hold harmless any Indemnified Party or Selling Indemnified
Party under Section 7(a) or (b) above in respect of any Indemnified Claim or
Selling Indemnified Claim, respectively, then the Placement Agent shall
contribute to the aggregate amount paid or payable by any Selling Indemnified
Party and the Company shall contribute to the aggregate amount paid by any
Indemnified Party in such proportion as is appropriate to reflect the relative
benefits received by and fault of the Indemnified Party or Selling Indemnified
Party on the one hand, and the relative benefits received by and fault of the
Company or Placement Agent on the other hand, as well as any relevant equitable
considerations. It is hereby further agreed that the relative fault shall be
determined by reference to, among other things, whether any untrue or alleged
untrue statement of a material fact or incorrect opinion or conclusion or the
omission or alleged omission to state a material fact related to information
supplied by the Placement Agent on the one hand or by a Selling Indemnified
Party on the other hand, as well as the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement,
opinion, conclusion or omission. The Company and Placement Agent agree that it
would not be just and equitable if contributions pursuant to this Section 7(d)
were determined by any method of allocation which does not take into account the
equitable considerations referred to above in this Section 7(d). Notwithstanding
the provisions of this Section 7(d): (i) the Placement Agent shall not be
required to contribute any amount in excess of the Placement Agent Fee actually
received by the Placement Agent pursuant to this Agreement; and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
8. TERMINATION.
(a) The obligations of the Placement Agent under this Agreement
may be terminated at any time prior to the Closing Date, by notice to the
Company from the Placement Agent, without liability on the part of the Placement
Agent to the Company if, prior to delivery and payment for the Securities, in
the sole judgment of the Placement Agent: (i) trading in the Securities shall
have been suspended by the Commission or by the AMEX, (ii) trading in securities
generally on the AMEX shall have been suspended or limited or minimum or maximum
prices shall have been generally established on any of such exchanges, or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by any
of such exchanges or by order of the Commission or any court or other
governmental authority, (iii) a general banking moratorium shall have been
declared by Federal or New York State authorities, or (iv) there should develop,
occur or come into effect or existence any event, action, state, condition or
major financial occurrence of national or international consequence, or any
outbreak or escalation of national or international hostilities or any crisis or
calamity, including, without limitation, related to terrorist activity or an
increased threat of the same, or any change in the
22
United States or international financial markets, or any substantial change or
development involving a prospective change in the United States' or
international political, financial or economic conditions, or any law or
regulation.
(b) The obligations of the parties under this Agreement shall be
automatically terminated if notice is given to the Escrow Agent prior to the
close of business on the date scheduled for receipt of the Requisite Funds (as
defined in the Escrow Agreement), that the Requisite Funds have not been
deposited by the Investors into the Escrow Account by the close of business on
the Closing Date.
(c) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to Section 8(b), or if the sale of
the Securities provided for herein is not consummated because any condition to
the obligations of the Placement Agent set forth herein is not satisfied or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof, the Company
will, subject to demand by the Placement Agent, reimburse the Placement Agent
for all out-of-pocket expenses incurred in connection herewith.
(d) Set forth on Schedule 8(d) is a list of prospective investors
("Special Investors") that have a prior existing relationship with the Company.
If within 12 months after termination of this Agreement, shares of Common Stock
are sold by the Company through a placement to investors, other than a Special
Investor, but previously identified and/or contacted, by the Placement Agent in
its capacity as placement agent hereunder, then the Company shall pay the
Placement Agent, at the time of each such sale, an amount equal to the Placement
Fee with respect to the gross proceeds to the Company from each such sale. With
the exception of the Special Investors, all investors identified and/or
contacted by the Placement Agent during the term of this Agreement in connection
with the transactions contemplated hereby will be identified in writing by the
Placement Agent prior to the 10th day following the termination of this
Agreement. Such list, with the exception of the Special Investors, shall
conclusively establish whether the Placement Agent identified and/or contacted
any prospective investor during the term of this Agreement for purposes of this
paragraph.
(e) Any termination pursuant to Section 8(a) above shall not
affect the compensation, reimbursement, Right of First Refusal or
indemnification provisions set forth herein, all of which will remain in full
force and effect.
9. RIGHT OF FIRST REFUSAL. For a period of 18 months from the Closing
Date, the Company grants the Placement Agent the right (provided the financing
contemplated in this Agreement is completed) to provide investment banking
services to the Company in all matters for which investment banking services are
sought by the Company (such right, the "Right of First Refusal"). For these
purposes, investment banking services shall include, without limitation, (i)
acting as lead manager for any underwritten public offering; (ii) acting as
exclusive placement agent or financial advisor in connection with any private
offering of Common Stock; and (iii) acting as financial advisor in connection
with any sale or other transfer by the Company, directly or indirectly, of a
majority or controlling portion of its capital stock or assets to another
entity, any purchase or other transfer by another entity, directly or
indirectly, of a majority or controlling portion of the capital stock or assets
of the Company,
23
and any merger or consolidation of the Company with another entity. The
Placement Agent shall notify the Company of its intention to exercise the Right
of First Refusal within 15 business days following notice in writing by the
Company of its intent to engage in the foregoing activities. Any decision by the
Placement Agent to act in any such capacity shall be contained in separate
agreements, which agreements would contain, among other matters, provisions for
customary fees for transactions of similar size and nature, as may be mutually
agreed upon, and indemnification of the Placement Agent and its affiliates and
shall be subject to general market conditions. If the Placement Agent declines
to exercise the Right of First Refusal, the Company shall have the right to
retain any other person or persons to provide such services on terms and
conditions which are not materially more favorable to such other person or
persons than the terms declined by the Placement Agent.
10. WAIVER OF JURY TRIAL. All claims arising out of the
interpretation, application or enforcement of this Agreement, including, without
limitation, any breach hereof, shall be settled by final and binding arbitration
in St. Petersburg, Florida in accordance with the commercial rules then
prevailing of the American Arbitration Association by a panel of three (3)
arbitrators appointed by the American Arbitration Association. In any such
arbitration proceeding, the parties agree to provide all discovery required by
the arbitrators. The decision of the arbitrators shall be binding on each of the
Company and the Placement Agent, and may be entered and enforced in any court of
competent jurisdiction by either party. The arbitration shall be pursued and
brought to conclusion as rapidly as is possible. EACH OF THE COMPANY AND THE
PLACEMENT AGENT WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO OR
ARISING OUT OF THE ENGAGEMENT OF THE PLACEMENT AGENT PURSUANT TO, OR THE
PERFORMANCE BY THE PLACEMENT AGENT OF, THE SERVICES CONTEMPLATED BY THIS
AGREEMENT.
11. NOTICES. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, Bentley
Pharmaceuticals, Inc., ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman and Chief Executive Officer, Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇, with a copy to Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, The
Chrysler Building, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇, Esq., Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; or (b) if to the Placement Agent, at the
office of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Vice President,
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy sent to the office of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
P.A. at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Esq., Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇. Any such notice shall be effective only upon
receipt. Any notice under this Agreement may be made by facsimile or telephone,
but if so made shall be subsequently confirmed in writing.
12. SURVIVAL. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company and the Placement
Agent set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement shall remain in full force and effect, regardless of
(i) any investigation made by or on behalf of the Company, any of its officers
or directors, the Placement Agent or any controlling person
24
referred to in Section 7 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 4, 5, 7 and 9-16 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
13. SUCCESSORS. This Agreement shall inure to the benefit of and shall
be binding upon the Placement Agent and the Company and each of their respective
successors and assigns, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained, and all conditions and provisions hereof being intended to be
and being for the sole and exclusive benefit of such persons and for the benefit
of no other person except that (i) the indemnification and contribution
contained in Section 7 of this Agreement shall also be for the benefit of the
directors, officers, employees and agents of the Placement Agent and any person
or persons who control the Placement Agent within the meaning of Section 15 of
the Act or the Section 20 of the Exchange Act, and (ii) the indemnification and
contribution contained in Section 7 of this Agreement shall also be for the
benefit of the directors of the Company and the officers of the Company who have
signed the Registration Statement and any person or persons who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No Investor shall be deemed a successor because of such purchase.
14. APPLICABLE LAW. The validity and interpretations of this
Agreement, and the terms and conditions set forth herein, shall be governed by
and construed in accordance with the laws of the State of Florida, without
giving effect to any provisions relating to conflicts of laws.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties hereto as to the matters covered hereby and
supersedes all prior understandings, written or oral, relating to such subject
matter.
[SIGNATURE PAGE FOLLOWS]
25
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Placement Agent.
Very truly yours,
BENTLEY PHARMACEUTICALS, INC.
By
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
PLACEMENT AGENT:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
By
---------------------------------------
Name:
Title:
26
EXHIBIT A
ESCROW AGREEMENT
EXHIBIT B
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
as Placement Agent
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to a Placement Agency Agreement (the "Placement Agency
Agreement"), which shall be executed between Bentley Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. (the
"Placement Agent").
In consideration of the Placement Agency Agreement, the undersigned hereby
agrees not to, without the prior written consent of the Placement Agent, offer,
sell or otherwise dispose of any shares, directly or indirectly, of the
Company's Common Stock, par value $.02 per share (the "Common Stock"), owned by
the undersigned for a period of 90 days after the date of the Placement Agency
Agreement except that, subject to compliance with applicable securities laws,
the undersigned may transfer his or her stock in a private transaction, provided
that any such transferee shall agree, as a condition to such transfer, to be
bound by the restrictions set forth in the Placement Agent Agreement and further
provided that the transferor, except in the case of the transferor's death or
gifts of securities with a fair market value of less than $100,000 in the
aggregate per transferor, shall continue to be deemed the beneficial owner of
such shares in accordance with Regulation 13d-(3) of the Securities Exchange Act
of 1934.
It is understood that, if the Company notifies you that it does not intend
to proceed with the issuance and sale of Common Stock (as defined in the
Placement Agency Agreement) pursuant to the Placement Agency Agreement, or if
the Placement Agency Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for and delivery
of the Common Stock, the undersigned shall be released from his obligations
under this letter agreement.
Dated: __________ __, 2002
Very truly yours,
----------------------
Signature
----------------------
Name