Exhibit 4.1
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MATRITECH, INC.
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
PLACEMENT MANAGER AGREEMENT
May 28, 1997
Sunrise Securities Corp.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Matritech, Inc., a Delaware corporation (the "Company"), hereby confirms
its agreement with you (the "Placement Manager" and together with the Company,
the "Parties") as follows:
1. Description of Transaction. The Company will make an offer in the
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United States (the "Offering") to sell up to 2,200,000 shares of the Company's
common stock, par value $.01 per share (the "Common Stock", and the shares of
Common Stock to be offered or sold pursuant to the Offering, the "Shares") at a
price of $5.00 (U.S.) per Share (the "Sales Price"). The Offering will be for a
minimum of 1,000,000 Shares, subject to reduction by mutual agreement between
the Company and the Placement Manager (the "Minimum Offering"), and a maximum of
2,200,000 Shares (the "Maximum Offering"). The Offering is described in the
Private Placement Memorandum of the Company dated May 21, 1996, as amended by
Supplement No. 1 dated May 23, 1997 and Supplement No. 2 dated May 28, 1997,
and the appendices annexed hereto (collectively, the "Memorandum"). Terms which
are capitalized but not defined herein shall have the meanings given them in the
Memorandum.
2. Appointment of the Placement Manager. The Company hereby appoints the
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Placement Manager as its exclusive agent to offer and sell the Shares on a "best
efforts" basis. The Placement Manager, on the basis of the representations,
warranties, covenants and agreements of the Company herein, and subject to the
completion of the Placement Manager's due diligence examination of the documents
and records of the Company, and further subject to the conditions herein,
accepts such appointment and agrees that it will endeavor to sell the Shares on
a best efforts basis.
3. Purchase, Sale and Delivery of Shares. Subject to the terms and
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conditions set forth herein, the Company and the Placement Manager agree as
follows:
(a) Regulation D Offering. Neither the Offering nor the sale
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thereunder of the Shares has been or will be registered with the United
States Securities and Exchange Commission (the "Commission") under the
United States Securities Act of 1933, as amended (the "Securities Act").
The Shares will be offered and sold in the United States
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only, in reliance upon and in compliance with the exemptions from
registration provided by Sections 3(b), 4(2) and 4(6) of the Securities Act
and Rule 506 of Regulation D thereunder ("Reg D"), and will only be sold to
Qualified Institutional Buyers ("QIB's") or "accredited investors" as such
terms are defined in Rule 144A promulgated under the Securities Act and Reg
D, respectively. The Shares will be offered for sale only in those states
of the United States in which they will have full compliance with
applicable state Blue Sky laws. The Company will provide the Placement
Manager, for delivery to all offerees and purchasers and their
representatives, any information, documents and instruments which the
Placement Manager deems necessary to comply with the statutes, rules,
regulations and judicial and administrative interpretations applicable to
the Offering.
(b) Subscription for Shares promulgated under the Securities Act.
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Purchases of Shares shall occur by execution and delivery by a subscriber
(the "Subscriber") of two copies of a Subscription Agreement in the form
annexed to the Memorandum (the "Subscription Agreement"), together with
payment for such Shares and such other documents and instruments as the
Company or the Placement Manager shall deem appropriate.
(c) Segregation of Funds. Each Subscriber shall tender a check or
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money order payable to "Sunrise Securities Corp., as Placement Manager for
Matritech, Inc.", or wire transfer funds, in payment of the full purchase
price of the Shares subscribed for, which funds shall be held in a non-
interest-bearing special bank account (the "Special Account") at the United
States Trust Company of New York (the "Bank"). All fees charged by the
Bank in connection with its performance of the functions specified in this
Section 3(c), if any, shall be paid by the Company.
(d) Closing; Termination of Offering. The Offering will terminate on
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August 14, 1997, unless it is extended by mutual agreement of the Company
and the Placement Manager. Any closing of the sale of Shares under the
Offering is hereinafter referred to as a "Closing". The initial Closing of
the Offering (the "Initial Closing") shall occur as soon as practicable
after the Placement Manager has received and accepted Subscription
Agreements for the Minimum Offering. After the Initial Closing, the
Offering may continue until the Placement Manager has received and accepted
Subscription Agreements for the Maximum Offering or until August 14, 1997
or until the offering is terminated by mutual consent of the parties
hereto. The date on which the Initial Closing occurs is hereinafter called
the "Initial Closing Date", the date on which a subsequent Closing occurs
is hereinafter called an "Additional Closing Date", and the date on which
the last Closing occurs shall be referred to herein as the "Final Closing
Date". Each of the Initial Closing Date and each Additional Closing Date
is sometimes hereinafter referred to generally as a "Closing Date". The
Company shall deliver to the Placement Manager within five business days of
each Closing Date, on behalf of the appropriate Subscribers, the
certificates representing the Shares being purchased by such Subscribers
against payment therefor out of the Special Account. If on or before
August 14, 1997, the Placement Manager has not received and accepted
Subscription Agreements for the Minimum Offering, the Offering shall be
terminated and all amounts contained in the Special Account
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will be returned to the Subscribers without interest thereon or deduction
therefrom. In the event of such termination of the Offering, all terms of
this Agreement shall be automatically terminated and neither Party shall
have any further obligation to the other Party under this Agreement other
than the Company's obligation to pay expenses as set forth herein.
4. Compensation of Placement Manager. As compensation for its services
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rendered as Placement Manager under this Agreement, the Placement Manager or its
designees shall receive the following:
(a) A sales commission (the "Sales Commission"), which may be
payable, at the option of the Placement Manager, in whole or in part, in
cash or shares of Common Stock valued at the Sales Price equal to 8% of the
Gross Proceeds (as hereinafter defined) of the Offering. The Sales
Commission shall be payable in cash by deducting the Sales Commission from
the Gross Proceeds received for the Shares closing on the Initial Closing
Date and the Additional Closing Date(s) as the case may be and the Bank
shall be directed to pay the Sales Commission to the Placement Manager
directly out of the Special Account. "Gross Proceeds" is defined as the
total price paid by the Subscribers for the Shares. If the Placement
Manager shall exercise his option pursuant to the terms of this Section
4(a) to have the Sales Commission paid in shares of Common Stock, such
shares of Common Stock (the "Commission Shares") shall be issued within
five business days of each Closing to the extent then earned and the Gross
Proceeds payable to the Company shall not be reduced by the amount of the
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Sales Commission paid in Commission Shares. The Placement Manager
acknowledges that the Commission Shares will be "restricted securities"
within the meaning of Rule 144 under the Securities Act and agrees that
certificates evidencing such shares of Common Stock may bear an appropriate
restrictive legend until such shares of Common Stock are sold pursuant to
an effective registration statement under the Securities Act, or until they
may be resold without registration under Rule 144(k), or until the
Placement Manager or holder shall deliver to the Company an opinion of
counsel (which shall be reasonably acceptable to the Company both as to
form and counsel) that the appropriate Commission Shares may be resold
under the Securities Act in reliance upon a specified exemption other than
Rule 144(k).
(b) Warrants (the "Commission Warrants") for a price of $.001 per
Warrant, which shall entitle the Placement Manager to purchase, at an
initial exercise price per share of Common Stock equal to the Sales Price
($5.00), a number of shares of Common Stock (the "Warrant Shares") equal to
10% of the number of Shares sold in the Offering and the number of
Commission Shares transferred in accordance with the provisions of Section
4(a). The Commission Warrants shall be issued at each Closing to the
extent then earned, pursuant to a Placement Manager (and the Placement
Manager Designees) Warrant Agreement dated May 28, 1997 (the "Placement
Manager Warrant Agreement") being executed simultaneously herewith.
(c) A non-accountable expense allowance equal to three 3% of the
aggregate Gross Proceeds, payable by deducting the non-accountable expense
allowance from the Gross Proceeds. Such non-accountable expense allowance
may be paid, at the option of the
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Placement Manager, in whole or in part, in Commission Shares in accordance
with the terms of Section 4(a).
(d) On the date of the execution by the Company and the Placement
Manager of a letter of intent dated May 14, 1997, $25,000 as an advance for
the Placement Manager's expenses in connection with the Offering. Such
allowance will be refunded to the Company on the Final Closing Date to the
extent that it exceeds the expenses actually incurred by the Placement
Manager in connection with the Offering, and the remaining balance of such
allowance will be deducted from the Gross Proceeds used to calculate the
selling commission in paragraph (a) of this Section 4.
(e) The Subscribers, the Placement Manager and its designees shall
have registration rights under the Securities Act, with respect to the
Shares and the Commission Shares, as provided in Section 9 of this
Agreement. The Placement Manager's (or its Designees') registration rights
with respect to the Warrant Shares issuable upon exercise of the Commission
Warrants are described in the Placement Manager Warrant Agreement.
5. Representations and Warranties of the Company. The Company represents
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and warrants to the Placement Manager as follows:
(a) Placement Memorandum. As of the date of this Agreement, the
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Memorandum, including all supplements and appendices thereto, does not, and
at all times subsequent to such date up to and including the Final Closing
Date will 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, in light of the circumstances in which they were
made, not misleading.
(b) Organization and Existence. The Company is a corporation duly
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organized and validly existing under the laws of Delaware, with full power
and authority, corporate and other, to own or lease and operate its
properties and to conduct its business as currently conducted and described
in the Memorandum. The Company is duly qualified to do business as a
foreign corporation in Massachusetts and in each other jurisdiction in
which the nature of the Company's business would require such qualification
except where the failure so to qualify would not have a material adverse
effect on the financial condition, results of operations, business,
properties or prospects of the Company. The Company has no subsidiaries.
(c) Governmental Authority. Except for such approvals as may be
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required under applicable state securities laws in the United States ("Blue
Sky laws"), no authorization, approval, consent, order, registration,
license or permit of any court or governmental agency or body is required
for the valid authorization, issuance, sale and delivery of the Shares, the
Commission Shares, the Commission Warrants and the Warrant Shares
(collectively, the "Securities"), and the consummation by the Company of
all the transactions contemplated by this Agreement, the Escrow Agreement
among the Company,
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the Placement Manager and the Bank dated May 28, 1997, the Subscription
Agreements and the Placement Manager Warrant Agreement (collectively, the
"Agreements").
(d) Corporate Authorization. The Company has full power and
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authority, corporate and other, to execute, deliver and perform the
Agreements and to consummate the transactions contemplated thereby. The
execution, delivery and performance of the Agreements by the Company, the
consummation by the Company of the transactions therein contemplated, and
the compliance by the Company with the terms of the Agreements have been
duly authorized by all necessary corporate action on the part of the
Company. The Agreements will be duly executed and delivered by the Company
and, assuming that they have been or will be duly authorized, executed and
delivered by the parties thereto other than the Company, the Agreements are
valid and binding obligations of the Company enforceable against it in
accordance with their respective terms, except insofar as enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the rights of creditors generally and by the
discretion of courts in granting equitable remedies, and except that
enforce ability of the indemnification provisions and the contribution
provisions set forth herein may be limited by the federal securities laws
of the United States or state securities laws or the public policy
underlying such laws. The execution, delivery and performance of the
Agreements by the Company, the consummation by the Company of the
transactions therein contemplated, and the compliance by the Company with
the terms of the Agreements do not, and will not, with or without the
giving of notice or the lapse of time, or both, (i) result in any violation
of the Amended and Restated Certificate of Incorporation and Amended and
Restated By-Laws of the Company, (ii) result in a breach of or conflict
with any of the terms or provisions of, or constitute a default under, or
result in the modification or termination of, or result in the creation or
imposition of any material lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company pursuant to, any
indenture, mortgage, note, contract, commitment or other agreement or
instrument to which the Company is a party or by which the Company or any
of its properties or assets are or may be bound or affected; (iii) violate
any existing applicable law, rule, regulation, judgment, order or decree of
any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or its business; or (iv) have any
material adverse effect on any permit, certification, registration,
approval, consent, license or franchise necessary for the Company to own or
lease and operate any of its properties and to conduct its business or the
ability of the Company to make use thereof.
(e) Capitalization. All the outstanding shares of Common Stock have
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been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in the Memorandum, there are, and until
the Final Closing Date there will be, no outstanding securities convertible
into Common Stock ("Convertible Securities") or any options, warrants or
other rights to purchase any shares of Common Stock or Convertible
Securities (collectively, the "Options") except as will be issued pursuant
to the Stock Plans as such term is herein defined. All such outstanding
Options constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except insofar as enforcement may be limited by applicable bankruptcy,
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insolvency, reorganization, moratorium or other laws affecting the rights
of creditors generally, and by the discretion of courts in granting
equitable remedies. None of the outstanding shares of Common Stock or
Options have been issued in violation of the preemptive rights of any
securityholder of the Company, and none of the holders of the outstanding
shares of Common Stock or Options is subject to personal liability solely
by reason of being such a holder. The offers and sales of the outstanding
Shares and Options were at all relevant times either registered under the
Securities Act and the applicable Blue Sky laws or exempt from such
registration requirements, and were in full compliance with the laws of
Delaware. Except as described in Exhibit 5(e) hereto, or as provided in the
Placement Manager Warrant Agreement, no holder of any of the Company's
issued securities has any rights ("demand," "piggyback" or otherwise) to
have such securities registered under the Securities Act.
(f) Authorization of Securities. The issuance and sale of the
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Securities have been duly authorized, and when they are issued and paid for
as contemplated by the Agreements, will be validly issued, and all of the
shares of Common Stock which are among the Securities will be fully paid
and nonassessable, and the holders thereof will not be subject to personal
liability solely by reason of being such holders. The Securities will not
be subject to preemptive rights of any securityholder of the Company.
(g) No Anti-Dilution Adjustment. The issuance of the Securities will
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not result in any adjustment in the number of shares of Common Stock, or
the exercise price or conversion ratio per share, under any of the
Company's outstanding Options.
(h) Violations and Defaults. The Company is not in violation of, or
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in default under, any term or provision of (i) its Amended and Restated
Certificate of Incorporation and By-Laws, (ii) any indenture, mortgage,
contract, commitment or other agreement or instrument to which it is a
party or by which it or any of its properties or business is or may be
bound or subject, except for such defaults, if any, that would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company, or (iii)
any existing applicable law, rule, regulation, judgment, order or decree of
any governmental agency or court, having jurisdiction over the Company or
of any of its respective properties or businesses. The Company owns,
possesses or has obtained all governmental and other licenses, permits,
certifications, registrations, approvals or consents and other
authorizations necessary to own or lease, as the case may be, and to
operate its properties and to conduct its business as currently conducted
and described in the Memorandum, and all such licenses, permits,
certifications, registrations, approvals, consents and other authorizations
are outstanding and in good standing. There are no proceedings pending or,
to the best of the Company's knowledge, threatened, nor is there any basis
therefor, seeking to cancel, terminate or limit such licenses, permits,
certifications, registrations, approvals or consents or authorizations.
(i) Litigation. Except as set forth in the Memorandum, there are no
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claims, actions, suits, proceedings, arbitrations, investigations or
inquiries before any governmental agency, court or tribunal, or before any
private arbitration tribunal, pending or, to the best
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of the Company's knowledge, threatened against the Company or involving the
properties or business of the Company which, if determined adversely to the
Company, would, individually or in the aggregate, result in any material
adverse change in the financial position, shareholders' equity, results of
operations, properties, business, management or prospects of the Company,
or which relate in any way to the validity of the capital stock of the
Company or the validity of the Agreements, or of any action taken or to be
taken by the Company pursuant to, or in connection with, the Agreements
nor, to the best of the Company's knowledge, is there any basis for any
such claim, action, suit, proceeding, arbitration, investigation or
inquiry. There are no outstanding orders, judgments or decrees of any
court, governmental agency or other tribunal specifically naming the
Company and enjoining the Company from taking, or requiring the Company to
take, any action, or to which the Company or its properties or business is
bound or subject.
(j) Additional Information. The Company has filed in a timely manner
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all documents that the Company was required to file under the Securities
Exchange Act of 1934 (the "Exchange Act") during the 12 months preceding
the date of this Agreement. The following documents complied in all
material respects with the requirements of the Exchange Act as of their
respective filing dates, and the information contained therein was true and
correct in all material respects as of the date of such documents, and each
of the following documents as of the date thereof did not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which thy were made, not misleading:
(i) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, its Quarterly Report on Form 10-Q for the
quarter year ended March 31, 1997 and its Proxy Statement for the
Annual Meeting of Stockholders to be held on June 13, 1997; and
(ii) all other documents, if any, filed by the Company with the
Commission since the filing of the Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1997, pursuant to the reporting
requirements of the Exchange Act.
(k) Financial Statements. Xxxxxx Xxxxxxxx LLP, the accountants who
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have rendered an audited report with respect to certain of the audited
financial statements included in the Memorandum, are independent public
accountants within the meaning of the Securities Act and regulations
promulgated under the Securities Act (the "Regulations"). The financial
statements and notes thereto included in the Memorandum are complete and
correct and present fairly the financial position of the Company as of the
dates thereof, and the results of operations and changes in financial
position of the Company for the periods indicated therein, all in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved.
(l) Liabilities. Except as and to the extent reflected or reserved
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against in the financial statements of the Company included in the
Memorandum, the Company as at
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March 31, 1997, has no material liabilities, debts, obligations or claims
asserted against it, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, including, but not limited to,
liabilities on account of taxes, other governmental charges or lawsuits
brought subsequent to such date.
(m) Taxes. The Company has filed all tax returns required to be
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filed with the appropriate taxing authorities, including all federal,
state, municipal and other local authorities (whether relating to income,
sales, franchise, withholding or real or personal property taxes, or other
types of taxes) or has duly obtained extensions of time for the filing
thereof, and has paid in full all taxes which have become due pursuant to
such returns or claimed to be due by any such taxing authority or otherwise
due and owing; and the provisions for income taxes payable, if any, shown
on the consolidated financial statements contained in the Memorandum are
sufficient for all accrued and unpaid taxes, whether or not disputed, and
for all periods to and including the dates of such consolidated financial
statements. Each of the tax returns heretofore filed by the Company
correctly and accurately reflects the amount of its tax liability
thereunder. The Company has withheld, collected and paid all other levies,
assessments, license fees and taxes to the extent required and, with
respect to payments, to the extent that the same have become due and
payable. Except as disclosed in writing to the Placement Manager, the
Company has not executed or filed with any taxing authority, any agreement
extending the period for assessment or collection of any income taxes and
is not a party to any pending action or proceeding by any foreign or
domestic governmental agency for assessment or collection of taxes, and no
claims for assessment or collection of taxes have been asserted against the
Company.
(n) Conduct of Business. Since the respective dates as of which
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information is given in the Memorandum, the Company has not (i) canceled,
without payment in full, any notes, loans or other obligations receivable
or other debts or claims held by it other than in the ordinary course of
business; (ii) sold, assigned, transferred, abandoned, mortgaged, pledged
or subjected to lien any of its properties, tangible or intangible, or
rights under any contract, permit, license, franchise or other agreement
other than sales or other dispositions of goods or services in the ordinary
course of business at customary terms and prices; (iii) increased the
compensation payable to any of its officers, directors or other employees
(including salaries, fringe benefits, pensions, profit participation and
payments or benefits of any kind whatsoever); (iv) entered into any line of
business other than that conducted by it on such date or entered into any
transaction not in the ordinary course of its business; (v) conducted any
line of business in any manner except by transactions customary in the
operation of its business as conducted on such date; or (vi) declared, made
or paid or set aside for payment any cash or non-cash distribution on any
shares of its capital stock.
(o) Properties. The Company has good and marketable title in fee
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simple to all real property, and good title to all personal property
(tangible and intangible), owned by it, free and clear of all security
interests, charges, mortgages, liens, encumbrances and defects, except such
as are described in the Memorandum or such as do not materially affect the
value or transferability of such property and do not interfere with the use
of such property made or proposed to be made by the Company. The leases,
licenses or other contracts or
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instruments under which the Company leases, holds or is entitled to use any
property, real or personal, are valid, subsisting and enforceable only with
such exceptions as are not material and do not interfere with the use of
such property made, or proposed to be made, by the Company, and all
rentals, royalties or other payments accruing thereunder which became due
prior to the date of this Agreement have been duly paid, and neither the
Company nor, to the best of the Company's knowledge, any other party is in
default thereunder and, to the best of the Company's knowledge, no event
has occurred which, with the passage of time or the giving of notice, or
both, would constitute a default thereunder. The Company has not received
notice of any violation of any applicable law, ordinance, regulation, order
or requirement relating to its owned or leased properties.
(p) Insurance. The Company has adequately insured its properties
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against loss or damage by fire or other casualty and maintains, in adequate
amounts, such other insurance, including but not limited to, liability
insurance, as is usually maintained by companies engaged in the businesses
similar to the Company's businesses.
(q) Contracts. Except as described in the Memorandum (i) each
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contract or other instrument (however characterized or described) to which
the Company is a party, or to which its properties or businesses are or may
be subject, has been duly and validly executed, is in full force and effect
in all material respects and is enforceable against the parties thereto in
accordance with its terms, and none of such contracts or instruments has
been assigned by the Company; (ii) to the best of the Company's knowledge,
no party to any such contract or instrument other than the Company is in
default thereunder; and (iii) to the best of the Company's knowledge, no
event has occurred which, with the lapse of time or the giving of notice,
or both, would constitute such a default thereunder. None of the material
provisions of such contracts or instruments violates any existing
applicable law, rule, regulation, judgment/order or decree of any
governmental agency or court having jurisdiction over the Company or any of
its assets or businesses.
(r) Employment Agreements. The confidentiality and non-competition
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agreements between the Company and its officers are valid and binding
agreements enforceable against the Company and the applicable officers in
accordance with their respective terms, except insofar as such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws or arrangements affecting creditors'
rights generally and subject to principles of equity.
(s) Benefit Plans. Except for the Company's 1988 Stock Plan, 1992
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Stock Plan, Amended and Restated 1992 Non-Employee Director Stock Option
Plan, 1992 Employee Stock Purchase Plan, each as amended, (the "Stock
Plans") and the Company's 401(k) plan and various employee health, life and
disability insurance plans as disclosed in the Memorandum, the Company has
no employee benefit plans (including, without limitation, profit sharing
and welfare benefit plans) or deferred compensation arrangements.
(t) Contributions. The Company has not, directly or indirectly, at
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any time made any contributions to any candidate for political office in
the United States, or failed to
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disclose fully any such contribution in violation of law. The Company's
internal accounting controls and procedures are sufficient to comply in all
material respects with Section 13(b)(2) of the United States Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(u) Reg D Qualification. Subject to the warranties and covenants of
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the Placement Manager in Sections 7(a) and (b) of this Agreement, the offer
and sale of the Shares by the Company have satisfied, and on each Closing
Date will have satisfied, all of the requirements of Rule 506 of Reg D, and
the Company is not disqualified from any exemption under Reg D by virtue of
Rule 507.
(v) Finder's Fee. As disclosed in the Memorandum, the Company has
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not incurred any liability for, and is unaware of any claim for, any
finder's or broker's fees or similar payments in connection with the
Offering.
(w) Intangibles. The Company owns or possesses adequate and
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enforceable rights to use all patents, patent applications, trademarks,
service marks, copyrights, rights, trade secrets, confidential information,
processes and formulations used or proposed to be used in the conduct of
its business as currently conducted and described in the Memorandum
(collectively, the "Intangibles"). To the best of the Company's knowledge,
the Company has not infringed upon, and is not infringing upon, the rights
of others with respect to the Intangibles, and the Company has not received
(i) any notice that it has or may have infringed or is infringing upon the
rights of others with respect to the Intangibles, or (ii) any notice of
conflict with the asserted rights of others with respect to the Intangibles
which could, singly or in the aggregate, materially and adversely affect
its business as presently conducted or its prospects, financial condition
or results of operations, and the Company does not know of any basis
therefor. To the best of the Company's knowledge, no others have infringed
upon the Intangibles.
(x) Labor Relations. No labor problem exists with the Company's
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employees or, to its knowledge, is imminent.
(y) No Adverse Change. Since March 31, 1997, except as otherwise
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stated in the Memorandum, the Company has not (i) incurred any material
liability or obligation, direct or contingent, or entered into any material
transaction, whether or not in the ordinary course of business, or
sustained any material loss or interference with its business from fire,
storm, explosion, flood or other casualty, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, and (ii) there have not been, and prior to the Final Closing
Date there will not be, any changes in the capital stock or any material
increases in the long-term debt of the Company or any material adverse
change in or affecting the general affairs, management, financial
condition, shareholders' equity, results of operations or prospects of the
Company, otherwise than as set forth or contemplated in the Memorandum.
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(z) Listing. The Company shall use its best efforts to comply with
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all requirements of the National Association of Securities Dealers, Inc.
(the "NASD") and the Boston Stock Exchange (the "BSE") with respect to the
issuance of the Shares and the listing of the Shares on the Nasdaq Small-
Cap Market and the BSE.
(aa) Registration Rights. The registration rights provided in
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Section 9 of this Agreement are not inconsistent with, and will in no way
be limited by, registration rights previously granted by the Company to its
securityholders.
In addition, any certificate signed by an officer of the Company and
delivered to the Placement Manager, or to counsel for the Placement Manager,
shall be deemed to be a representation and warranty by the Company to the
Placement Manager as to the matters covered thereby.
6. Covenants of the Company.
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(a) Placement Memorandum. The Company will furnish the Placement
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Manager, without charge, during the Offering with as many copies of the
Memorandum as the Placement Manager may reasonably request. If during the
Offering period any event occurs as the result of which the Memorandum, as
then amended or supplemented, would include an untrue statement of a
material fact, or omit to state a material fact necessary in order to make
the statements made, in light of the circumstances in which they were made,
not misleading, or if it shall be necessary to amend or supplement the
Memorandum to comply with applicable law, the Company will forthwith notify
the Placement Manager thereof and furnish to the Placement Manager, in such
quantities as the Placement Manager may reasonably request, an amended or
supplemental Memorandum which corrects such statements or omissions or
causes the Memorandum to comply with applicable law. Without the prior
written consent of the Placement Manager, no copies of the Memorandum or
any other material prepared by the Company in connection with the Offering
will be given by the Company or its counsel, or by any employee, director
or agent of the Company, to any person not a party to this Agreement,
unless such person is a director, employee or principal shareholder of the
Company.
(b) Additional Information. The Company has provided and shall
----------------------
provide the Placement Manager with such other information, documents and
instruments as may be required for an offer made solely to accredited
investors or QIB's under Sections 3(b), 4(2) or 4(6) of the Securities Act
and Rule 144A and Reg D thereunder.
(c) State Securities Qualification. The Company will provide its
------------------------------
counsel with all information which such counsel determines to be necessary
and otherwise cooperate with such counsel, to permit such counsel to take
all necessary or appropriate action under the Blue Sky laws of the states
of the United States in which the Placement Manager determines, in
consultation with Company management, that offers or sales will be made.
The Company will promptly advise the Placement Manager:
-12-
(A) Of any order, request or suggestion by a securities
regulator of any state for any amendment to the Memorandum or any
other filed materials, or for additional information; and
(B) Of any action by a securities regulator of any state
suspending the registration or qualification of the Securities for
offer or sale in such state or denying an exemption from such
registration or qualification, or of the initiation or threat of any
proceeding for such purpose, and the Company will use its best efforts
to prevent such action, or if such action shall be taken, to obtain
the withdrawal thereof at the earliest practicable date.
The Company will provide the Placement Manager any additional information,
documents and instruments necessary to comply with the rules, regulations
and judicial and administrative interpretations in those states and
jurisdictions where the Shares are to be offered for sale or sold. The
Company will file all post-Offering forms, documents or materials and take
all other post-Offering actions required by the Blue Sky laws of the states
in which the Shares have been offered or sold.
(d) Use of Proceeds. The Company will use the net proceeds of the
---------------
Offering as set forth in the Memorandum under the caption "Use of
Proceeds."
(e) Restriction on Issuance of Securities. During the period
-------------------------------------
commencing on the date here of and terminating on the Final Closing Date or
(if no Closing occurs) on the termination date of the Offering, the Company
will not, without the prior written consent of the Placement Manager, issue
shares of equity securities which are not Securities, or issue or grant
Options other than shares of Common Stock issuable pursuant to currently
outstanding convertible securities, its Stock Plans or the Commission
Warrants, and, further, the Company shall not, for a period of nine months
--- -------
following the Final Closing Date, or, if no Closing occurs, the termination
date of the Offering, without the consent of the Placement Manager, sell
shares of Common Stock (other than pursuant to options, warrants or other
rights, outstanding as of the date of this Agreement) at a price per share
less than the lesser of (i) the Sales Price, or (ii) the 30-day average
closing price on the date proceeding such sale as quoted by Nasdaq.
(f) Investment Banking Activity. Until August 14, 1997, the Company
---------------------------
will not seek, accept or consider any offer or proposal, other than from
the Placement Manager, relating to any corporate finance or investment
banking activity.
(g) Registration Rights. The Company will register the Shares and
-------------------
the Commission Shares under the Securities Act for the public resale
thereof in the United States in accordance with, and will be bound by the
provisions of, Section 9 of this Agreement.
7. Representations, Warranties and Covenants of the Placement Manager.
------------------------------------------------------------------
The Placement Manager represents, warrants and covenants that (a) it will comply
in all respects with
-13-
the terms and conditions of Rule 506 of Reg D and applicable Blue Sky laws with
respect to the offering and the sale of the Shares only to "accredited
investors" or "QIB's" as set forth in the Memorandum, and (b) it will not make
offers or sales of the Shares in any other jurisdiction in which the Shares have
not been qualified or registered for offer and sale, or are not exempt from such
qualification or registration.
8(a). Conditions to Placement Manager's Obligations. The sale of Shares
---------------------------------------------
and the other obligations of the Placement Manager hereunder on any Closing Date
will be subject to the accuracy of the representations and warranties of the
Company contained herein as of the date hereof and as of such Closing Date, to
the performance by the Company of all its obligations hereunder and to the
following additional conditions:
(i) Absence of Government Action. No order suspending the
offer or sale of the Securities will have been issued by the
Commission or any other governmental authority, and no proceeding
for that purpose will have been initiated or threatened;
(ii) No Material Misstatements. The Placement Manager will
not have notified the Company that any Blue Sky law filing, the
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which in the Placement Manager's opinion is
material, or omits to state a fact which in its opinion is material
and is required to be stated therein or is necessary to make the
statements therein not misleading;
(iii) President Certificate. The Company will have
delivered to the Placement Manager a certificate of the Company's
CEO or President, dated as of such Closing Date, to the effect that
all the representations and warranties of the Company set forth in
Section 5 of this Agreement remain true and in full force and effect
as of such Closing Date;
(iv) Opinion of Counsel. The Placement Manager will have
received from Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, counsel to the
Company, a signed opinion, dated as of such Closing Date,
substantially in the form agreed to by the parties hereto;
(v) Compliance with Agreement. The Company will have
complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the
Closing Date;
(vi) Corporate Action. The Company will have taken all
necessary corporate action, including, without limitation obtaining
the approval of the Company's board of directors for the execution
and delivery of this Agreement, the performance by the Company of
its obligations hereunder and the commencement of the offering
contemplated hereby;
-14-
(vii) Comfort Letter. The Placement Manager will have
received from Xxxxxx Xxxxxxxx LLP, independent certified public
accounts for the Company, containing statements and information of the
type customarily included in accountants' "comfort letters" to
underwriters with respect to certain financial information contained
in the Memorandum.
(b) Conditions of the Company's Obligations. The obligations of the
---------------------------------------
Company hereunder on any Closing Date will be subject to the accuracy of
the representations and warranties of the Placement Manager contained
herein as of the date hereof and as of such Closing Date, to the
performance by the Placement Manager of its obligations hereunder and to
the following additional conditions:
(i) Absence of Government Action. No order suspending the
----------------------------
offer or sale of the Securities will have been issued by the
Commission or any other governmental authority, and no proceeding for
that purpose will have been initiated or threatened; and
(ii) No Material Misstatements. The Company will not have
notified the Placement Manager that any Blue Sky law filing, the
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which in the Company's opinion is material, or
omits to state a fact which in its opinion is material and is required
to be stated therein or is necessary to make the statements therein
not misleading, in each case only with respect to information
contained therein concerning the Placement Manager.
9. Registration of Shares: Compliance with the Securities Act. The
----------------------------------------------------------
Company shall:
(a) prepare and file with the SEC a registration statement the
("Registration Statement") covering the resale of the Shares and the
Commission Shares by the Subscribers and the Placement Manager from time to
time on the Nasdaq Small-Cap Market, on the BSE or on such securities
market or system on which the Company's Shares shall then be publicly
traded, or in privately negotiated transactions, no later than 30 days
following the Final Closing Date;
(b) use its best efforts, subject to receipt of necessary information
from the Subscribers and the Placement Manager, to cause the Registration
Statement to become effective as soon as possible thereafter;
(c) prepare and file with the SEC such amendments and supplements to
the Registration Statement and the prospectus used in connection therewith
as may be necessary to comply with the provisions of the Securities Act
until the later of such time as all of the Shares have been sold pursuant
thereto, or by reason of Rule 144(k) under the Securities Act or any other
rule of similar effect, such shares are no longer required to be registered
for the unrestricted sale thereof by the Subscribers;
-15-
(d) furnish to the Subscribers such number of copies of prospectuses
and preliminary prospectuses in conformity with the requirements of the
Securities Act and such other documents as the Subscribers may reasonably
request, in order to facilitate the public sale or other disposition of all
or any of the Shares held by the Subscribers, provided, however, that the
-------- -------
obligations of the Company to deliver copies of prospectuses or preliminary
prospectuses to the Subscribers shall be subject to receipt by the Company
of reasonable assurances from the Subscribers that the Subscribers will
comply with the applicable provisions of the Securities Act and of such
other securities or Blue Sky laws as may be applicable in connection with
any use of such prospectuses or preliminary prospectuses;
(e) bear all expenses in connection with the procedures in paragraphs
(a) through (c) of this Section 9, other than brokerage commissions or
Placement Manager fees and fees and expenses, if any, of counsel or other
advisers to the Subscribers with respect to the registration and resale of
the Shares, and
(f) prepare and file additional listing applications for the Shares
on the Nasdaq Small-Cap Market and the BSE.
(g) (i) in the event that any Registration Statement is filed
pursuant to Section 9(a) hereof, the Company will indemnify and hold
harmless the Placement Manager and each Subscriber (the "Holder")
identified as a selling securityholder therein, and each person, if
any, who controls such Holder within the meaning of the Securities
Act, against any and all losses, claims, damages or liabilities, joint
or several (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted),
to which they or any of them may become subject under the Securities
Act, the Exchange Act or other federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement, or any related
preliminary prospectus, final prospectus, or amendment thereof or
supplement thereto, or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
provided that the Company shall not be liable under this Section 9(g)
in any such case to the extent that any such losses, claims, damages
or liabilities arise solely out of or are based upon an untrue
statement of a material fact contained in, or any omission of a
material fact from, such Registration Statement, preliminary
prospectus, final prospectus or amendment thereof or supplement
thereto in reliance upon, and in conformity with, information
furnished in writing to the Company by such Holder specifically for
use therein. This indemnity will be in addition to any liability which
the Company may otherwise have.
-16-
(ii) Each Holder who is identified as a selling securityholder
in a filed Registration Statement will severally, and not jointly,
indemnify and hold harmless the Company, each other person referred to
in subparts (1), (2) and (3) of Section 11(a) of the Securities Act in
respect of such Registration Statement, and each person, if any, who
controls the Company or any such person within the meaning of Section
15 of the Securities Act, against any and all losses, claims, damages
or liabilities (including any reasonable investigation, legal and
other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted)
to which they, or any of them, may become subject under the Securities
Act, the Exchange Act or other federal or state law or regulation, at
common law, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material
fact contained in such Registration Statement, or any related
preliminary prospectus, final prospectus or amendment thereof or
supplement thereto, or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or omission was made in such Registration Statement,
preliminary prospectus, final prospectus or amendment thereof or
supplement thereto in reliance upon, and in conformity with,
information furnished in writing to the Company by such Holder
specifically for use therein. This indemnity will be in addition to
any liability which a Holder may otherwise have to the Company.
(iii) Any party that proposes to assert the right to be
indemnified under this Section 9(g) shall, promptly after receipt of
notice of the commencement of any action, suit or proceeding against
such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 9(g), notify each
such indemnifying party of the commencement thereof, enclosing a copy
of all papers served. No indemnification provided for in Section 9(g)
shall be available to any party who shall fail to give notice as
provided herein if the party to whom notice was not given was unaware
of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the
omission so to notify such indemnifying party of any such action, suit
or proceeding shall not relieve it from any liability that it may have
to any indemnified party otherwise than under this Sections 9(g) or
9(i) below. In case any such action, suit or proceeding is brought
against any indemnified party and it notifies the indemnifying party
of the commencement thereof, such indemnifying party will be entitled
to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified
party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and
the approval by the indemnified party of such counsel (which approval
shall not be unreasonably withheld), the indemnifying party shall not
be liable to
-17-
such indemnified party for any legal or other expenses, except as
provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ
its own counsel in any such action, suit or proceeding but the fees
and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have reasonably concluded
that there may be differing or additional defenses available to it and
not to one or more of the indemnifying parties in such action, suit or
proceeding so that it would be inappropriate for counsel to represent
both the indemnified party and the indemnifying party in view of
actual or potential conflicts of interest (in which case the
indemnifying parties shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such indemnified party);
or (iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees
and expenses of the indemnified party's counsel shall be at the
expense of the indemnifying parties; however, the indemnifying party
shall not, in connection with any one such action, suit or proceeding
or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for the Holders
and their controlling persons, which firm shall be designated in
writing by a majority in interest of such Holders (based upon the
value of the Shares included in the Registration Statement). An
indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written
consent.
(h) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 9(g) is
due in accordance with its terms but for any reason is held to be
unavailable or insufficient to hold harmless an indemnified party, the
Company (including for this purpose any controlling person of the Company,
any director of the Company and any officer of the Company who signed the
Registration Statement) on the one hand, and the Holders (including for
this purpose any controlling persons thereof) on the other hand, shall, in
lieu of indemnifying such indemnified party, contribute to the aggregate
losses, claims, damages or liabilities referred to in Section 9(g) above
(including any investigation, legal and other expenses reasonably incurred
in connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claims asserted, but after deducting any contribution
received by or payable to the Company from persons other than the Holders,
such as other selling securityholders, persons who control the Company
within the meaning of the Securities Act, officers of the Company who
signed the Registration Statement, and directors of the Company), (a) in
such proportions as is appropriate to reflect the relative benefits
received by the Company and the Holders from the offering or offering
covered by the Registration Statement, or (b) if the allocation provided by
clause (a) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (a)
-18-
but also the relative fault of the Company and the Holders in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and any Holder on the other hand shall be deemed to be in the same
proportion as (x) the total proceeds (if any) received by the Company from
the offering or offerings covered by the Registration Statement (net of
underwriting discounts but before deducting expenses, if applicable), plus
all cash proceeds received by the Company from the Shares of such Holder
included in the Registration Statement, bear to (y) the total proceeds
received by such Holder from the sale of the Shares included in the
Registration Statement. The relative fault of the Company, and any Holder
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or omission related to
information supplied by the Company or such Holder, and their relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Holders agree that
it would not be just and equitable if contribution pursuant to this Section
9(h) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to above. (Notwithstanding the provisions of this Section 9(h), in
no case shall (except as may be provided by agreement among them) shall
such Holder be liable or responsible for any amount in excess of the
proceeds received by such Holder from the sale of the Shares included in
the Registration Statement, provided that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this Section 9, each
person, if any, who controls a Holder within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act shall have the same
rights to contribution as such Holder, and each person, if any, who
controls the Company within the meaning of the Section 15 of the Securities
Act or Section 20(a) of the Exchange Act, each director of the Company and
each officer of the Company who shall have signed the Registration
Statement, shall have the same rights to contribution as the Company,
subject in each case to the immediately preceding sentence of this Section
9(h). Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against another
party or parties under this Section 9(h), notify such party or parties from
whom contribution may be sought, and the omission so to notify such party
or parties from whom contribution may be sought shall relieve the party or
parties from whom contribution may be sought (if such party was unaware of
such action suit, proceeding and was materially prejudiced by such
omission) from any liability under this Section 9(h), but not from any
other obligation it or they may have hereunder or other than under this
Section 9(h). No party shall be liable for contribution with respect to any
settlement of an action, suit, proceeding or claim effected without its
written consent. The obligations of the Holders to contribute pursuant to
this Section 9(h) are several in proportion to their respective number of
Shares included in the Registration Statement, and not joint.
The Company understands that the Subscriber disclaims being an underwriter, but
the Subscriber being deemed an underwriter shall not relieve the Company of any
obligations it has hereunder.
-19-
10. Expenses of Sale. In addition to those items referred to in Sections
----------------
4 and 9 hereof, the Company will pay or cause to be paid all costs and expenses
incident to the Offering, whether or not it is consummated, including, without
limitation, all taxes, if any, payable as a result of the issuance of the
Securities and the fees, disbursements and expenses of (a) the Company's counsel
and accountants, (b) the preparation, printing or other reproduction and the
mailing of the Memorandum and other documents (all in such quantities as the
Placement Manager may require), and (c) all required Blue Sky law filings as
provided in Section 6(c), including, but not limited to, the fees, expenses and
disbursements, if any, of the Placement Manager's counsel in connection with
such filings.
11. Indemnification and Contribution.
--------------------------------
(a) Indemnification by the Company. The Company agrees to indemnify
------------------------------
and hold harmless the Placement Manager and each person, if any, who
controls the Placement Manager within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several
(including any reasonable investigation, legal or other expenses incurred
in connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted) to which the Placement Manager or any
such controlling person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in
the Memorandum and SEC Filings, or (B) in any Blue Sky law filing to the
extent such statement was based on information furnished by the Company, or
(ii) the omission or alleged omission to state in the Memorandum, the SEC
Filings or in any Blue Sky law filing a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and will
reimburse the Placement Manager and each such controlling person for any
legal or other expenses reasonably incurred by the Placement Manager or
such controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided that the Company
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in the Memorandum in reliance upon and in conformity with written
information furnished to the Company by the Placement Manager specifically
for use in the Memorandum.
(b) Indemnification by the Placement Manager. The Placement Manager
----------------------------------------
agrees to indemnify and hold harmless the Company and each person, if any,
who controls the Company within the meaning of the Securities Act against
any losses, claims, damages or liabilities, joint or several, to which the
Company or such controlling person may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained
(A) in the Memorandum, or (B) in any Blue Sky filing to the extent such
statement relates solely to the Placement Manager, or (ii) the omission or
alleged omission to state a material fact required to be
-20-
stated in the Memorandum or (to the extent such omission was of a material
fact relating solely to the Placement Manager) in any Blue Sky law filing,
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
Placement Manager will be liable in any such case based on the Memorandum
only to the extent that such untrue statement or alleged untrue statement
or omission or alleged omission in the Memorandum was made in reliance upon
and in conformity with written information furnished to the Company by the
Placement Manager specifically for use in the Memorandum.
(c) Procedure. Promptly after receipt by an indemnified party under
---------
this Section 11 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 11, notify in writing the
indemnifying party of the commencement thereof; and the omission so to
notify the indemnifying party will relieve it from any liability under this
Section 11 as to the particular item for which indemnification is then
being sought, but not from any other liability which it may have to any
indemnified party. In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may wish, jointly with any
other indemnifying party, similarly notified, to assume the defense
thereof, with counsel who shall be to the reasonable satisfaction of such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 11 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided that if, in the reasonable
judgment of the indemnified party, it is advisable for the indemnified
party to be represented by separate counsel, the indemnified party shall
have the right to employ a single counsel in each jurisdiction to represent
the indemnified parties who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the indemnified
parties thereof against the indemnifying party, in which event the fees and
expenses of such separate counsel shall be borne by the indemnifying party.
Any such indemnifying party shall not be liable to any such indemnified
party on account of any settlement of any claim or action effected without
the consent of such indemnifying party, which consent shall not be
unreasonably withheld.
(d) Contribution. If the indemnification provided for in this
------------
Section 11 is unavailable to any indemnified party in respect to any
losses, claims, damages, liabilities or expenses referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified party,
will contribute to the amount paid or payable by such indemnified party, as
a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand, and the Placement Manager on the other
hand, from the Offering, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand, and
of the Placement Manager on the other hand, in connection with the
statements or omissions which resulted in such losses, claims,
-21-
damages, liabilities or expenses as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand, and the Placement Manager on the other hand, shall be deemed to be in
the same proportion as the total proceeds from the Offering (before
deducting expenses) received by the Company, bear to the initial value of
the Sales Commission, Commission Shares and Commission Warrants as
established pursuant to paragraphs 4(a) and 4(b) of this Agreement. The
relative fault of the Company on the one hand, and the Placement Manager on
the other hand, will be determined with reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Company, and its relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount
payable by a party as a result of the losses, claims, damages, liabilities
or expenses referred to above will be deemed to include any reasonable
legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The Company
and the Placement Manager agree that it would not be just and equitable if
contribution pursuant to this Section 11 were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in this paragraph 11(d).
12. Representations and Covenants to Survive Delivery. All
-------------------------------------------------
representations, warranties and covenants of the Company and of the Placement
Manager herein will survive the delivery and execution hereof and shall remain
operative and in full force and effect until after the Final Closing, regardless
of any investigation made by or on behalf of the Placement Manager or any person
who controls the Placement Manager within the meaning of the Securities Act, or
by the Company or any person who controls the Company within the meaning of the
Securities Act.
13. Termination by Placement Manager. The Placement Manager will have the
--------------------------------
right to terminate this Agreement by giving written notice as herein specified,
at any time:
(a) If the Company shall have failed, refused, or been unable to
perform any of its obligations hereunder;
(b) If any other condition of the Placement Manager's obligations
hereunder is not fulfilled; or
(c) If there has occurred an event materially or adversely affecting
the value of the Shares.
If the Placement Manager elects to terminate this Agreement pursuant to
this Section 13, the Company will be notified promptly in accordance with
Section 14 hereof. If this Agreement is terminated prior to a Final Closing,
the Company will reimburse the Placement Manager for all reasonable out-of-
pocket disbursements (including fees and disbursements of the Placement
Manager's counsel) actually incurred by the Placement Manager in connection with
the Offering, to the extent that such disbursements exceed the non-accountable
expense allowance referred to in
-22-
paragraph 4(d). In the event of termination pursuant to this Section 13, Section
6(e) shall be null and void.
Notwithstanding the foregoing, nothing contained in this Section 13 shall
imply that the Placement Manager has undertaken any commitment to sell the
Shares other than to use its best efforts.
14. Termination by the Company. The Company may, at any time during the
--------------------------
Offering, terminate this Agreement, provided, however, that if the Company
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terminates the Offering prior to its termination by the Placement Manager in
accordance with the terms of Section 13 of this Agreement and prior to August
14, 1997, and, within six months of termination by the Company in accordance
with the terms of this Section 14, the Company sells, offers for sale or enters
into an agreement with a third party for the sale or offer for sale of any
equity securities of the Company (the "Actions"), the Company shall pay the
Placement Manager (i) 10% of the Gross Proceeds of the sale resulting from the
Actions and (ii) warrants, exercisable until the fifth anniversary date of the
Termination Date, to purchase, at the price such equity securities of the
Company are sold or offered for sale in accordance with the Actions, a number of
shares of Common Stock equal to 10% of the number of such equity securities of
the Company sold or transferred (including any Commission Shares) as a result of
the Actions. Notwithstanding the foregoing, the restrictions of this Section 14
shall not apply to any issuances of equity securities of the Company in
connection with any joint venture, strategic corporate alliance or similar
arrangement that the Company may undertake, or to any issuances of equity
securities by the Company in connection with any Stock Plans or outstanding
warrants.
15. Notices. Any notice hereunder shall be in writing and shall be
-------
effective when delivered in person or by facsimile transmission, or seven
business days after being mailed by certified or registered mail, postage
prepaid, return receipt requested, to the appropriate party or parties, at the
following addresses: if to the Placement Manager, to Sunrise Securities Corp.,
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (facsimile 212-421-
5924), Attention: Xx. Xxxxxx Low, President, with a copy to Xxxxxx, Xxxxxxx &
Xxxxxxx, 0 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxx,
Esq. (facsimile 212-732-3232); if to the Company, to Matritech, Inc., 000 Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxx (facsimile 617-
928-0821), with a copy to Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, High Street Tower,
000 Xxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, (facsimile 617-248-7100)
Attention: Xxxxx X. Xxxx; or, in each case, to such other address as the parties
may hereinafter designate by like notice.
16. Parties. This Agreement will inure to the benefit of and be binding
-------
upon the Placement Manager, the Company and their respective successors and
assigns. This Agreement is intended to be, and is for the sole and exclusive
benefit of the Parties hereto and the other indemnified parties described in
subsections 11(a) and 11(b) hereof, and their respective successors and assigns,
and for the benefit of no other person, and no other person will have any legal
or equitable right, remedy or claim under, or in respect of this Agreement. No
purchaser of any of the Shares will be construed as successor or assign merely
by reason of such purchase.
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17. Amendment and/or Modification. Neither this Agreement, nor any term
-----------------------------
or provision hereof, may be changed, waived, discharged, amended, modified or
terminated or in any manner other than by an instrument in writing signed by
each of the Parties hereto.
18. Further Assurances. Each Party to this Agreement will perform any and
------------------
all acts and execute any and all documents as may be necessary and proper under
the circumstances in order to accomplish the intent and purposes of this
Agreement and to carry out its provisions.
19. Validity. In case any term of this Agreement will be held invalid,
--------
illegal or unenforceable, in whole or in part, the validity of any of the other
terms of this Agreement will not in any way be affected thereby.
20. Waiver of Breach. The failure of any Party hereto to insist upon
----------------
strict performance of any of the covenants and agreements herein contained, or
to exercise any option or right herein conferred in any one or more instances,
will not be construed to be a waiver or relinquishment of any such option or
right, or of any other covenants or agreements, and the same will be and remain
in full force and effect.
21. Entire Agreement. This Agreement contains the entire agreement and
----------------
understanding of the Parties with respect to the entire subject matter hereof,
and there are no representations, inducements, promises or agreements, oral or
otherwise, not embodied herein. Any and all prior discussions, negotiations,
commitments and understanding relating thereto, including without limitation,
that certain letter of intent dated May 14, 1997, between the Company and the
Placement Manager, are superseded hereby. There are no conditions precedent to
the effectiveness of this Agreement other than as stated herein, and there are
no related collateral agreements existing between the Parties that are not
referred to herein.
22. Counterparts. This Agreement may be executed in counterparts and each
------------
of such counterparts will for all purposes be deemed to be an original, and such
counterparts will together constitute one and the same instrument.
22. Law. This Agreement will be deemed to have been made and delivered in
---
New York City and will be governed as to validity, interpretation, construction,
effect and in all other respects by the internal laws of the State of New York.
The Company (a) agrees that any legal suit, action or proceeding arising out of
or relating to this letter will be instituted exclusively in the Supreme Court
of the State of New York, County of New York, or in the United States District
Court for the Southern District of New York, (b) waives any objection which the
Company may have now or hereafter to the venue of any such suit, action or
proceeding, and (c) irrevocably consents to the jurisdiction of the Supreme
Court of the State of New York, County of New York, and the United States
District Court for the Southern District of New York in any such suit, action or
proceeding.
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If the foregoing correctly sets forth our understanding, please so indicate
in the space provided below for that purpose, whereupon this letter will
constitute a binding agreement between us.
MATRITECH, INC.
By:___________________________
Name:
Title:
CONFIRMED AND ACCEPTED:
SUNRISE SECURITIES CORP.
By:___________________________
Name:
Title:
-25-
Exhibit 5(e)
Registration Rights
The following documents include registration rights provisions:
. Second Amended and Restated Registration Rights Agreement dated May 4, 1990
in connection with the Company's Series C financing.
. Bridge Warrants issued in May 1992 and February 1992, incorporated into the
above referenced Registration Rights Agreement.
. Underwriter's Warrants issued to Xxxxxxx, Xxxxxx Inc. in July 1992 and
August 1992 in connection with the Company's initial public offering and
second closing.
. Underwriter's Warrants issued to Xxxxxx Xxxxx Associates in August 1993 in
connection with an underwritten public offering.
. Securities Purchase Agreements with investors in the Company's September
1994 private placement, and Selling Agent Warrant Agreement and Warrant
issued to Jesup & Xxxxxx Securities Corporation in connection with such
financing.
. Securities Purchase Agreements with investors in the Company's September
1995 private placement.
. Warrant to be issued to Sunrise Financial Group, Inc. for public relations
services pursuant to a letter agreement dated April 18, 1997.
