EXHIBIT 10.39
AGENCY AGREEMENT
January 9, 2003
Life Medical Sciences, Inc.
X.X. Xxx 000
Xxxxxx Xxxxxx, XX 00000
U.S.A
Attention: Xx. Xxxxxx X. Xxxxxx
Chairman, President and Chief Executive Officer
Dear Sirs:
Re: Offering of Units
---------------------
Xxxxx BioCapital Limited (the "Agent"), understands that Life Medical Sciences,
Inc. (the "Corporation"), a Delaware corporation, proposes to issue to investors
secured by the Agent, up to 550,000 units ("Units"), each consisting of one
share of the Corporation's Series C Convertible Preferred Stock (a "Preferred
Share"), par value of $0.01 per share, one warrant (a "Two Year Warrant") to
purchase up to ten shares of the Corporation's Common Stock, par value $0.001,
("Shares") at an exercise price of $0.12 per Share, exercisable at any time
until two years after the date of issue and one warrant (a "Short Term Warrant";
together with the Two Year Warrants, the "Warrants") to purchase up to ten
Shares at an exercise price of $0.12 per Share, exercisable for a period
commencing on the date of issue and expiring on June 30, 2003. The Units shall
be issued and sold at a price of $1.20 per Unit or such other price as may be
agreed by the Agent and the Corporation (in either case the "Issue Price"). The
Preferred Shares shall have the attributes described in Appendix I to the form
of subscription agreement attached hereto as Schedule "C" (the "Subscription
Agreement") and the Warrants shall be in substantially the form set forth in
Appendices II and III to the Subscription Agreement. The offering of the Units
(the "Offering") will close no later than February 14, 2003, or such other date
mutually agreed to by the Corporation and the Agent (the "Closing Date"). There
is no minimum number of Units being offered in the Offering, and there may be
multiple closings.
1. Appointment
The Corporation hereby appoints the Agent as its non-exclusive agent and the
Agent accepts the appointment and agrees to act on a "best efforts" basis as a
non-exclusive agent of the Corporation to secure investors for the issuance of
the Units by way of private placement to institutional and other sophisticated
investors in Europe subject to the terms and conditions and in reliance upon the
representations, warranties and covenants of the Corporation set out in this
Agreement.
2
The Agent shall be entitled to retain sub-agents selected by it to participate
in the soliciting of offers to purchase the Units, provided that the Agent
receives from each such sub-agent its agreement to be bound by the obligations
of the Agent hereunder prior to any such appointment. The fees payable to such
sub-agents shall be the responsibility and for the account of the Agent.
2. Sales Restrictions
The Agent represents and agrees that it will comply with the restrictions on
offers and sales of the Units set forth in Schedule "A" hereto, as well as the
other provisions thereof, all of which are hereby incorporated by reference
herein and form a part hereof.
3. Commission and Broker Warrant
In consideration of the services rendered and to be rendered by the Agent in
acting as agent of the Corporation on a best efforts basis to secure investors
for the issuance of the Units, the Corporation agrees to pay to the Agent on the
Closing Date a commission (the "Commission") equal to 10% of that portion of the
gross proceeds of sale of the Units issued on the Closing Date raised by the
Agent, payable at the election of the Agent in either cash or Units at the Issue
Price ("Commission Units") or a combination of the two. The Agent acknowledges
and agrees that no Commission shall be payable on any Units issued to any of the
investors listed on Schedule "B" attached hereto, as the same may subsequently
be amended from time to time through the Closing Date (the "Excluded Parties"),
or on the Commission Units.
In further consideration of the services rendered and to be rendered by the
Agent described above, the Corporation agrees to issue to the Agent for no
additional consideration, a warrant (the "Broker Warrant") to purchase an
aggregate number of Shares equal to 10% of the aggregate number of Shares
issuable upon conversion of the Preferred Shares comprising the Units issued on
the Closing Date, excluding Units issued to Excluded Parties. The Broker Warrant
shall have a term of four (4) years after the date of issue and shall be
exercisable to acquire Shares at a price of $0.12 per Share.
If for any reason the Offering does not close and within a three (3) year period
after termination of the Offering the Corporation raises funding through one or
more investors introduced to the Corporation for the first time by the Agent
("Agent Investors"), the Agent shall be entitled to the Commission and Broker
Warrants in respect thereof as if the Offering had not been terminated.
4. Closing
(a) The issuance of the Units shall be completed (the "Closing") at the
offices of the Corporation, or such other place or places as the
Corporation and the Agent may agree, at 10:00 a.m. (Eastern Standard
Time) (the "Closing Time") on the Closing Date.
(b) On or prior to the Closing Date, the Agent shall provide to the
Corporation a subscription agreement from each purchaser of Units (a
"Purchaser") who is to acquire Units on such Closing Date. Purchasers
shall be required to complete and sign the form of Subscription
Agreement attached hereto as Schedule "C".
3
(c) At the Closing Time on the Closing Date, upon satisfaction of the
conditions contained herein, the Agent shall pay or cause payment to be
made of the net purchase price of the Units sold by the Agent in United
States funds by wire transfer to such bank and account as may be
designated by the Corporation, or in such other manner as may be agreed
with the Corporation, such net purchase price to be equal to the
aggregate Issue Price of the Units sold by the Agent less the cash
portion of the Commission (if the Agent elects to receive all or a part
thereof in cash) and the amount in reimbursement of expenses referred
to in section 9 hereof. Such payment and delivery shall be made
against:
(i) delivery of certificates representing the Preferred Shares,
the Two Year Warrants and the Short Term Warrants issued on
the Closing Date registered in such name or names as are
directed in the Subscription Agreements;
(ii) delivery of the Commission and the Broker Warrants; and
(iii) delivery to the Agent of copies of the certificates, opinions
and other documents contemplated hereby.
5. Representations, Warranties and Covenants of the Corporation
The Corporation represents, warrants and covenants to the Agent as of the date
hereof and as of the Closing Date, which representations, warranties and
covenants shall survive the Closing for a period of two years and any
investigation made by the Agent, that:
(a) the Corporation is a validly existing corporation in good standing
under the laws of the jurisdiction in which it is incorporated, and the
Corporation has no subsidiaries;
(b) the Corporation is duly qualified and authorized to do business in the
jurisdiction(s) in which it carries on business or to own property
where required under the laws of the jurisdiction(s) in which any such
property is located;
(c) the Corporation is current with all material filings required to be
made under the laws of any jurisdiction in which it carries on any
material business, and the Corporation has all necessary licenses,
leases, permits, authorizations and other approvals necessary to permit
it to conduct its business as currently conducted, except where the
failure to have any such license, lease, permit, authorization or
approval would not have a material adverse effect on the Corporation
and its business;
(d) the audited financial statements of the Corporation as at and for the
year ended December 31, 2001 present fairly, in all material respects,
the financial position of the Corporation as at that date, and the
results of its operations and the changes in its financial position for
the 12-month period then ended in accordance with generally accepted
accounting principles, and the unaudited financial statements of the
Corporation as at and for the nine months ended September 30, 2002
present fairly, in all material respects, the financial position of the
Corporation as at that date, and the results of its operations and the
changes in its financial position for the nine-month period then ended;
since September 30, 2002, there has been no material adverse
4
change in the business, affairs or financial or other condition of the
Corporation, except as disclosed in the notes to the financial
statements for the nine-month period then ended;
(e) the Corporation has all requisite power and authority to carry out its
obligations under this Agreement, the investor rights agreement in the
form set forth in Appendix II to the Subscription Agreement ( the
"Investor Rights Agreement"), the Preferred Shares, the Two Year
Warrants and the Short Term Warrants (the Two Year Warrants and the
Short Term Warrants collectively referred to as the "Warrants")
including any Preferred Shares, Two Year Warrants and Short Term
Warrants issued to the Agent in satisfaction or partial satisfaction of
the Commission, (hereinafter referred to as the "Commission Preferred
Shares" and the Two Year Warrants and Short Term Warrants as the
"Commission Warrants", respectively) and any Broker Warrants;
(f) this Agreement and the Investor Rights Agreement have been, and the
Preferred Shares, Warrants, the Commission Preferred Shares, the
Commission Warrants and the Broker Warrants will be on the Closing
Date, duly authorized, executed and delivered by the Corporation and
constitute or on the Closing Date will constitute, legal, valid and
binding obligations of the Corporation enforceable in accordance with
their terms except that: (i) the enforcement hereof or thereof may be
limited by bankruptcy, insolvency, reorganization and other laws
affecting the enforcement of creditors' rights generally, (ii) rights
of indemnity thereunder may be limited under applicable law, and (iii)
equitable remedies, including without limitation specific performance
and injunctive relief, may be granted only in the discretion of a court
of competent jurisdiction;
(g) the Preferred Shares comprising part of the Units and the Commission
Preferred Shares comprising part of any Commission Units are or on the
Closing Date will be duly and validly authorized and, when issued and
delivered against payment therefor, will be duly and validly issued,
fully paid and non-assessable shares in the capital stock of the
Corporation;
(h) the Corporation will reserve a sufficient number of Shares unissued as
may be required to be issued pursuant to the conversion of the
Preferred Shares and the Commission Preferred Shares and the exercise
of the Warrants comprising the Purchased Units, the Commission Warrants
comprising the Commission Units and the Broker Warrants and, when
issued and delivered upon such conversion or exercise, such Shares will
be duly and validly issued as fully paid and non-assessable shares in
the capital stock of the Corporation;
(i) the authorized capital of the Corporation consists of 100,000,000
Common Shares and 5,000,000 shares of preferred stock, $.01 par value
per share. Of the preferred stock, 500,000 shares have been designated
as Series A Convertible Preferred Stock, 1,116,500 shares have been
designated as Series B Convertible Preferred Stock and, on or prior to
the Closing Date, not more than 605,000 shares will be designated as
Preferred Shares. As of December 31, 2002, there are 16,759,316 Common
Shares outstanding, no shares of Series A Convertible Preferred Stock
outstanding, 1,112,500 shares of Series B Convertible Preferred Stock
outstanding and no shares of Preferred Shares outstanding. In addition,
the Corporation has (i) outstanding a convertible note held by Dimotech
Limited (the "Convertible Note") in the principal amount of
5
$40,000 which is convertible, at the holder's option, into Common
Shares at a price of $1.00 per share or into any class of preferred
shares at the price paid by the purchasers thereof; provided, however,
that if any such preferred shares are convertible into Common Shares
(as is the case with the Preferred Shares), the holder would be
entitled to receive no more than the number of preferred shares which,
at the then existing conversion rate, would convert into 40,000 Common
Shares, and (ii) outstanding a convertible note held by Polymer
Technology Group, Inc. ("PTG") (the "PTG Convertible Note") in the
principal amount of $70,000 which is convertible, at the holder's
option, into Common Shares at a price of $1.00 per share and (iii)
available for issuance pursuant to options which have been granted
under its 1992 Stock Option Plan, 2000 Stock Option Plan and 2001 Stock
Option Plan, an aggregate of approximately 9,400,000 Common Shares and
outstanding warrants to purchase an aggregate of approximately
12,000,000 Common Shares;
(j) the Corporation is not, and at the Closing Date will not be: (i) in
breach or violation of any of the terms or provisions of, or in default
under, this Agreement, any other Subscription Agreement for the
purchase of Units, the Preferred Shares, the Commission Preferred
Shares, the Warrants, the Commission Warrants, the Broker Warrants, any
indenture, mortgage, deed of trust or loan agreement, other agreement
(written or oral) or instrument to which it is a party or by which it
is bound or to which any of its property or assets is subject, which
breach or violation or the consequences thereof would result in an
adverse material change to it or its business; or (ii) in violation of
the provisions of its articles, by-laws, resolutions or any statute or
any other rule or regulation of any court or governmental agency or
body having jurisdiction over it or any of its properties which
violation or the consequences thereof would result in a material
adverse change to it or its business;
(k) the issue and sale of the Units and the issue of Preferred Shares,
Commission Preferred Shares, Warrants, Commission Warrants, Broker
Warrants, any Shares on the conversion of Preferred Shares or
Commission Preferred Shares or the exercise of Warrants, Commission
Warrants or Broker Warrants and the performance and consummation of the
transactions contemplated herein will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement (written or oral) or instrument to which the
Corporation or any subsidiary is bound or to which any of the property
or assets of the Corporation or any subsidiary is subject, which breach
or violation or the consequences thereof would result in a material
adverse change to the Corporation and its business, nor will any such
action conflict with or result in any violation of the provisions of
the articles, by-laws or resolutions of the Corporation or any statute
or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Corporation or any subsidiary or any
of its properties which violation or the consequences thereof would
result in a material adverse change to the Corporation and its
business;
(l) the Corporation has established on its books reserves which are
adequate for the payment of all taxes not yet due and payable; there
are no liens or other liabilities for taxes on the assets of the
Corporation except for taxes not yet due; there are no audits of any of
the tax returns of the Corporation which are known by the Corporation's
management to be pending and there are no claims which have been or may
be asserted relating to any such tax returns which, if determined
adversely, would result
6
in the assertion by any government or agency of any deficiency having a
material adverse effect on the properties, business or assets of the
Corporation;
(m) the Corporation has good and valid title to its properties, leaseholds
and assets, including without limitation the properties, leaseholds and
assets reflected in the balance sheet as of September 30, 2002 referred
to in clause 5(d) above, except properties, leaseholds and assets
disposed of since such date at fair market value in the ordinary course
of business, and has good title to all its leasehold estates, in each
case subject to no mortgage, pledge, lien, lease, encumbrance, charge,
rights of first refusal or options to purchase, whether or not relating
to extensions of credit or the borrowing of money, other than as
disclosed in such balance sheet except as incurred in the ordinary
course of business since the date of such balance sheet, and except in
any event (i) for a security interest in the Corporation's tangible
assets to secure payment of the Convertible Note, and (ii) where the
failure to hold good title or the existence of a mortgage, pledge,
lien, lease, encumbrance, charge, right of first refusal or option to
purchase would not have a material adverse effect on the Corporation or
its business; there exists no condition which interferes with the
economic value or use of such properties and assets and all tangible
assets are in good working condition and repair (subject to ordinary
wear and tear) except where the existence of any such condition would
not have a material adverse effect on the Corporation or its business;
(n) the Corporation owns, or has applied for registration of, all patents,
trademarks, service marks, trade names, and copyrights necessary for
the conduct of its business, except where the failure to so own or
apply for registration would not have a material adverse effect on the
Corporation or its business; to the best of the knowledge, information
and belief of the Corporation none of the past or present activities of
the Corporation or the products, services or assets of the Corporation
infringe or constitute an unauthorized use of any proprietary rights of
others, and the Corporation has not received any notice of infringement
of, or conflict with, asserted rights of others with respect to any
patent, trade-xxxx, service xxxx, trade name, or copyright that,
individually or in the aggregate, if the subject of an unfavourable
decision, ruling, or finding, would result in a material adverse change
to the Corporation or its business;
(o) the Corporation has taken reasonable measures to protect and preserve
the confidentiality of all trade secrets and other non-patented
proprietary information of the Corporation, including without
limitation the procurement of proprietary invention assignments and
non-disclosure and non-competition agreements from employees,
consultants, subcontractors, customers and other persons who have
access to such information;
(p) the Corporation has filed all necessary federal, state and municipal
property, income and franchise tax returns and has paid all taxes shown
as due thereon or otherwise owed by it to any taxing authority except
those contested in good faith and for which appropriate amounts have
been reserved in accordance with generally accepted accounting
principles; there is no tax deficiency which has been, or to the best
of the knowledge, information and belief of the Corporation might be,
asserted against the Corporation which would materially affect the
business or operations of the Corporation; the Corporation has paid all
applicable federal and state payroll and withholding taxes;
7
(q) there is no collective bargaining or other union agreement to which the
Corporation is a party or by which it is bound, or which is currently
being negotiated; the Corporation does not sponsor, maintain or
contribute to any pension, retirement, profit sharing, incentive
compensation, bonus or other employee benefit plan, including without
limitation any employee benefit plan covered by Title 4 of the Employee
Retirement Income Security Act of 1974 ("ERISA") or any "multi-employer
plan" as defined in Section 4001(a)(3) of ERISA, or any other employee
benefit plan; to the best of the knowledge, information and belief of
the Corporation, (i) no employee of the Corporation is a party to or
bound by any agreement, contract or commitment, or subject to any
restrictions, particularly but without limitation in connection with
any previous employment of any such person, which would result in a
material adverse change to the Corporation and its business, and (ii)
no senior officer has any present intention of terminating his
employment with the Corporation, and the Corporation has no present
intention of terminating any such employment;
(r) there is no adverse claim, action, proceeding or investigation pending
or, to the knowledge, information and belief of the Corporation,
threatened, which questions the validity of the issue or sale of the
Units or the issue of any Preferred Shares, Commission Preferred
Shares, Warrants, Commission Warrants, Broker Warrants or any Shares on
conversion of the Preferred Shares or the Commission Preferred Shares
or exercise of the Warrants, Commission Warrants or Broker Warrants or
the validity of any action taken or to be taken by the Corporation in
connection with this Agreement or which would result in any material
adverse change in the financial condition, results of operations,
business or prospects of the Corporation;
(s) the Corporation will permit the Agent and its legal counsel to conduct
all due diligence which the Agent may reasonably require; and
(t) during the period commencing with the engagement of the Agent on the
date of this Agreement and ending on the Closing Date, the Corporation
will inform the Agent in writing of the full particulars of any
material change (actual, anticipated or threatened) in the assets,
liabilities, business or the financial condition of the Corporation.
6. Closing Conditions for the Benefit of the Agent
The obligations of the Agent hereunder are subject to the satisfaction, on or
before the Closing Time, of the following conditions:
(a) the Corporation shall have complied with all of its obligations
hereunder; the representations and warranties of the Corporation
contained herein shall be true and correct in all material respects on
and as of the Closing Date as if made on and as of the Closing Date;
and the Agent shall have received on the Closing Date a certificate,
dated as of the Closing Date and signed by one or more executive
officers or directors of the Corporation on behalf of the Corporation
and not in his or their personal capacity, to the foregoing effect;
(b) the Agent shall have received on and as of the Closing Date the
favourable opinion of the Corporation's legal counsel on such matters
as the Agent may reasonably request, including:
8
(i) the Corporation is incorporated and validly existing under the
laws of the jurisdiction in which it is incorporated and has
the corporate power and authority to conduct its business as
currently conducted by it and to issue and sell the Preferred
Shares and Warrants comprising the Units, any Commission
Preferred Shares and Commission Warrants comprising the
Commission Units and the Broker Warrants (the Preferred
Shares, any Commission Preferred Shares, Warrants, any
Commission Warrants and the Broker Warrants collectively
referred to as the "Securities") and to enter into and carry
out its obligations under this Agreement, the Subscription
Agreement, the Investor Rights Agreement, and the Securities;
(ii) as to the Corporation's authorized and issued and outstanding
capital;
(iii) each of this Agreement, the Subscription Agreement, the
Investor Rights Agreement and the Securities has been duly
authorized, executed and delivered by the Corporation and is a
legal, valid and binding obligation of the Corporation
enforceable against it in accordance with its terms;
(iv) all necessary action has been taken by the Corporation to
authorize the issue of up to 550,000 Units and the issue to
the Agent of up to 55,000 Commission Units and a Broker
Warrant exercisable for up to 550,000 Shares and the
Corporation has sufficient authorized but unissued Shares as
may be required to be issued upon the exercise of the
Securities;
(v) the execution and delivery of this Agreement, the Subscription
Agreement and the Investor Rights Agreement and the completion
of the transactions contemplated hereby and thereby, the issue
of the Units and of any Commission Units and Broker Warrants,
and the issue of the Shares issuable upon exercise of the
Securities do not violate or constitute a breach of any
provisions of the articles of incorporation or by-laws of the
Corporation, any material contract or other material agreement
to which it is a party or by which it is bound and of which
such counsel is aware, or any New York, Delaware corporate or
United States law or regulation (other than federal and state
Securities or "blue sky" laws, as to which such counsel
expresses no opinion in this paragraph);
(vi) the Preferred Shares comprising part of the Units and any
Commission Preferred Shares comprising part of any Commission
Units have been duly and validly issued by the Corporation and
are outstanding as fully paid and non-assessable shares in the
capital of the Corporation and the Shares issuable upon
exercise of the Warrants, Commission Warrants and Broker
Warrants or upon conversion of the Preferred Shares and
Commission Preferred Shares will, when issued in accordance
with the respective terms and conditions of the Warrants,
Commission Warrants, Broker Warrants, Preferred Shares and
Commission Preferred Shares, be validly issued as fully paid
and non-assessable shares in the capital of the Corporation;
(vii) the certificates representing the Preferred Shares and
Warrants comprising part of the Units and any Commission
Preferred Shares and Commission Warrants comprising part of
the Commission Units and Broker Warrants comply with
9
the requirements of the state laws and any federal laws of the
United States applicable to the Corporation and such
certificates have been duly and properly approved by the
directors of the Corporation;
(viii) the exemption from any consent, approval, authorization,
order, registration, filing or qualification of or with any
governmental authority of the United States (or New York or
Delaware corporate authority) (other than federal and state
securities or "blue sky" laws, as to which such counsel
expresses no opinion in this paragraph) for the valid
authorization, issue, sale and delivery of the Units and
Shares issuable upon exercise of Warrants, Commission Warrants
and Broker Warrants and upon the conversion of Preferred
Shares and Commission Preferred Shares and the issue and
delivery of any Commission Units and Broker Warrants; and
(ix) the exemption from registration of the issuance of the
Securities (including the underlying securities) under the
terms contemplated by the Subscription Agreement and the
Agency Agreement.
In giving the opinions contemplated above, legal counsel to the
Corporation shall be entitled to rely, where appropriate, upon opinions
of local counsel and, as to matters of fact, to rely upon the
representations and warranties of Purchasers contained in the executed
Subscription Agreements, a certificate of fact of the Corporation
signed by those officers in a position to have knowledge of such facts
and their accuracy, and certificates of such public officials and other
persons as are necessary or desirable, and may qualify its opinion
described in (iii) above with respect to (1) bankruptcy, insolvency,
reorganization and other laws affecting the enforcement of creditors'
rights generally and (2) limitations on the availability of equitable
remedies such as specific performance, and its opinion may include
other reasonable and standard opinion qualifications;
(c) the Agent shall have received copies of the Subscription Agreement and
the Investor Rights Agreement executed by the Corporation;
(d) the Agent shall have received such other agreements, certificates,
opinions or documents as the Agent may reasonably request; and
(e) the fulfilment, to the reasonable satisfaction of counsel for the
Agent, of all legal requirements to permit the offer and sale of the
Units and the issue of any Commission Units and Broker Warrants to the
Agent.
The foregoing conditions are included for the benefit of the Agent and may be
waived in writing by the Agent, in whole or in part.
Notwithstanding anything contained in this Agreement, the Agent may by written
notice to the Corporation terminate this Agreement at any time before the
Closing Time if, in the opinion of the Agent, there shall have been such a
change in national or international financial, political or economic conditions
or currency exchange rates or exchange controls as would in its reasonable view
be likely to prejudice materially the success of the Offering or distribution of
the Units or if the Agent is not reasonably satisfied with the results of its
due diligence review of the Corporation and, upon notice being given, the
parties to this
10
Agreement shall (except for the liability of the Corporation in
relation to expenses as provided in section 8 and except for any liability
arising before or in relation to such termination) be released and discharged
from their respective obligations under this Agreement.
7. Confidentiality
The Agent agrees that it will not disclose the terms of the Offering or any
information it may have acquired from the Corporation in the course of executing
this Agency Agreement which the Corporation has identified as material
non-public information, except to the extent (i) that such terms or other
information becomes generally available to the public other than by disclosure
in violation of this Agency Agreement, (ii) that such information was properly
within the Agent's possession prior to being furnished by the Corporation, (iii)
that such information becomes available to the Agent on a non-confidential
basis, such as through disclosure by third parties who have the right to
disclose the information, and (iv) compelled by judicial process, provided that
in the event of compulsion by judicial process the Agent will inform the
Corporation promptly upon its receipt of notice of judicial process compelling
such disclosure.
8. Expenses
In further consideration of the agreement with the Agent herein contained, the
Corporation covenants and agrees to reimburse the Agent, regardless of whether
the Offering is completed, for the Agent's reasonable fees and expenses
including (without limitation) reasonable fees and expenses of Agent's legal
counsel, due diligence expenses, travel expenses and expenses incurred in
connection with the holding of roadshows, investor meetings and presentations
and printing and preparation of any offering documents and marketing materials
(collectively the "Expenses"). Other than Agent's legal expenses, the Expenses
shall not exceed $1,500, in the aggregate, without the prior written approval of
the Corporation.. The Corporation shall not be responsible for Agent's legal
expenses in excess of $15,000 (the "Cap"). The Corporation acknowledges and
agrees that the Cap has been set based on the parties' joint expectation of the
amount of work involved to complete the Offering (based on, for example, an
existing set of negotiated documents for an earlier financing for the
Corporation in which the Agent participated), and the Corporation further
acknowledges and agrees that in the event of unforeseen circumstances or delay
in closing the Offering resulting in the greater than anticipated workload for
the Agent's legal counsel, it will in good faith consider and discuss with the
Agent the reimbursement by the Corporation of such legal counsel's reasonable
fees and expenses in excess of the Cap. Expenses incurred up to the Closing Date
shall be reimbursed, upon submission to the Corporation of invoices, receipts or
similar proof of expenditure, at the Closing Time and, with the Corporation's
approval, may be deducted by the Agent from the proceeds of sale at the Closing.
Expenses incurred after the Closing Date shall be reimbursed, upon submission to
the Corporation of invoices, receipts or similar proof of expenditure, forthwith
following the delivery to the Corporation of accounts in respect thereof and
will be reimbursed by the Corporation upon its approval.
9. Indemnification
(a) The Corporation agrees to indemnify and hold harmless the Agent and
Xxxxx Capital Ltd. and their respective directors, officers, employees
and agents from and against
11
any and all losses, claims, damages and liabilities arising out of or
in relation to or in connection with any breach or non-compliance by
the Corporation of or with any of its covenants or representations and
warranties herein, provided that the Corporation shall not be liable
under this section to the extent that any such loss, claim, liability
or damage arises out of or is based upon a breach by the Agent of the
obligations and agreements set forth in section 2 hereof or Schedule
"A" attached hereto.
(b) In case any proceeding (including any governmental investigation) shall
be instituted involving any indemnified party in respect of which
indemnity may be sought pursuant to the preceding paragraph, such party
shall promptly notify the Corporation in writing, and the Corporation,
upon the request of such party, shall retain counsel reasonably
satisfactory to such party to represent such party and any others the
Corporation may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding.
(c) In any such proceeding, such indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such party unless (i) the Corporation and such
party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded
parties) include the Corporation and such party and representation of
both parties by the same counsel is not appropriate as a result of
differing interests between them. The Corporation shall not be liable
for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final
judgment or determination in respect of which the indemnity referred to
in this section 9 is claimed, the Corporation agrees to indemnify such
party from and against any loss or liability by reason of such
settlement, judgment or determination.
10. Notices, etc.
All notices hereunder may be hand delivered or given by facsimile or any other
means of instantaneous written communication to such respective party hereto as
follows (or at such other address as may hereafter be communicated by either
party hereto to the other party):
If to the Agent:
Xxxxx BioCapital Limited
0 Xxxxxx Xxxxx
Xxxxxx XX0 0XX
Xxxxxxx
Attention: Xxxxx Xxxxxx
Telephone: 00-00-0000-0000
Facsimile: 00-00-0000-0000
12
With a copy to:
Blake, Xxxxxxx & Xxxxxxx LLP
000 Xxx Xxxxxx, Xxxxxxxx Court West
Toronto, ON X0X 0X0
Xxxxxx
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Corporation:
Life Medical Sciences, Inc.
X.X. Xxx 000
Xxxxxx Xxxxxx, XX 00000
U.S.A
Attention: Xxxxxx X. Xxxxxx
- Chairman, President and Chief Executive Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to: Xxxxxxxxxx, Xxxxxxxxx & Xxxxxx LLP
00Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
11. Counterparts
This Agreement may be signed and delivered in counterparts, and by facsimile,
with the same effect as if the signatures thereto and hereto were upon the same
instrument and delivered in person.
12. Survival
All representations, covenants, undertakings and indemnities herein will survive
for a period of two years following each and every Closing Date, notwithstanding
the completion of the transactions contemplated hereby and shall apply
regardless of any investigation made by or on behalf of any indemnified party.
13
13. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York and the federal laws of the United States applicable
therein. The courts of the State of New York shall have exclusive jurisdiction
to entertain any action in respect of this Agreement.
14. Time
Time is of the essence of this Agreement.
15. Entire Agreement
This Agreement constitutes the entire agreement between the parties pertaining
to the subject matter of this Agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written. There are
no conditions, warranties, representations or other agreements between the
parties in connection with the subject matter of this Agreement (whether oral or
written, express or implied, statutory or otherwise) except as specifically set
out in this Agreement.
16. Miscellaneous
This Agreement shall enure to the benefit of, and be binding upon, the
successors of the Corporation and the Agent.
Yours sincerely,
XXXXX BIOCAPITAL LIMITED
By:
-------------------------------
Accepted and agreed as of the day of _________________, 2003.
----------
LIFE MEDICAL SCIENCES, INC.
By:
-----------------------------------
Xxxxxx X. Xxxxxx
Chairman, President and Chief Executive Officer
Schedule "A"
Restrictions on Offers and Sales of the Units
1. The Agent represents and agrees that: (i) it has not offered or sold and,
prior to the expiry of the period of six months after the Closing Date, will not
offer or sell any Units to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied and will comply with
all applicable provisions of the Financial Services Xxx 0000 with respect to
anything done by it in relation to the Units in, from or otherwise involving the
United Kingdom, and (iii) it has only issued or passed on and will only issue or
pass on in the United Kingdom any document received by it in connection with the
issue of the Units to a person who is of a kind described in Article 11(3) of
the Financial Services Xxx 0000 (Investment Advertisements) (Exemptions) Order
1995 or is a person to whom such document may otherwise lawfully be issued or
passed on; and (iv) it has complied and will comply with all applicable
securities laws in the United Kingdom and elsewhere in Europe in connection with
the Offering.
2. The Agent acknowledges that the Units and the Shares issuable upon exercise
of the Warrants (collectively the "Securities") have not been and will not be
registered under the 1933 Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. Persons (as defined in Rule
902(o) of Regulation S promulgated under the Securities Act) except in
accordance with Regulation S under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act.
3. Terms with initial capital letters used but not defined in this Schedule
shall have the meanings given to them in the Agency Agreement to which this
Schedule is attached.
Schedule "B"
List of Excluded Investors
As of January 9, 2003
1. Xxxx Xxxxxxx
2. New Enterprise Associates
3. SAE
4. emedsecurities
5. Xxxxx Xxxxx & Co.
6. Xxxxxxxx & Xxxxxxxx
7. Dechert Price & Xxxxxx and Xxxxx Xxxxx
8. Xxxxx Xxxxxxxx
9. Xxxxx Xxxxx
10. Xxxx-Xxxxx Pourny
11. Xxxxx Xxxxxx and Elan
12. Xxxxxxxx Ventures
13. Xxx Xxxxx
14. Sage Group
15. AIG Investors, NY, NY
16. Aura Investments, Xxx Xxxx, Xxxxxx
00. Axiom Partner, Xxxxxxxx, XX
00. XxxXxxxxxx, Xxxxxxxx, Xxxxxx
19. CB Health Ventures, Boston, MA
20. Clarion Capital, Cleveland, OH
21. CPRUS (LibertyView Capital), Jersey City, NJ
22. DCF Capital, Boston, MA
23. EGS Partners, NY, NY
24. Emerald Ventures, Lancaster, PA
25. Xxxxxx Partners, NY, NY
26. Innovative Technology Partner, LA, CA
27. MedCapital, Morristown, NJ
28. Medica Venture Partners, NY, NY
2
29. Micro Capital, Darien, CT
30. Palladin Investors, Maplewood, NJ
31. Xxxxxx Xxxx Partners, Princeton, NJ
32. Perseus - Xxxxx, NY, NY
33. Radius Ventures, NY, NY
34. Trillium Medical Ventures, NY, NY
35. Versant Ventures, Newport Beach, CA
36. Warburg Pincus, NY, NY
37. TL Ventures, Philadelphia, PA
38. AMT Ventures, Gulf Breeze, FL
39. Dorado Fund LP-1, Coconut Grove, FL
40. A.M. Xxxxxx & Co, Research Triangle Park, NC
41. Key Capital Corp, Cleveland, OH
42. Israel Infinity Fund, NY, NY
43. Cardinal Health Ventures, Princeton, NJ
44. Foresight Ventures (A. Patrickoff), NY, NY
45. Essex Woodlands, Irvine, Ca
46. KBL Health Venture, NY, NY
47. Xxxxxxxx & Associates, Princeton, NJ
48. Vertical Group, Summit, NJ
49. Javlin Partners, Mobil AL
50. Rosse Enterprises. Boston, MA
51. Connexus Financial Partners, Bridgewater Township, NJ
52. Early Stage Enterprises, Princeton, NJ
53. Dimotech Limited
54. Schweizerische Gesellschaft fur Aktienhandel und Research AG
Schedule "C"
SUBSCRIPTION AGREEMENT
(European Subscribers)
