PLACEMENT AGENT AGREEMENT
Exhibit 10.20
December , 2007
Xxxxxx & Xxxxxxx, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
1. Introductory. PolyMedix Inc., a Delaware corporation (the “Company”) is
offering (the “Offering”) up to (the “Units”) each consisting of
one share of common stock of the Company (the “Shares”) and a warrant, exercisable for five
years, to purchase % of a Share at an exercise price of $ per whole share (the
“Warrants” and together with the Shares, the “Securities”), in an offering at a
purchase price of $ per Unit (the “Offering Price”). The Company hereby confirms
its agreement (the “Engagement Letter”) dated October 16, 2007 with Xxxxxx & Xxxxxxx, LLC
(“Xxxxxx” or the “Placement Agent”).
2. Registration Statement. The Company represents, warrants to each of the Placement
Agent and each sub-placement agent and/or selected dealer, and agrees with each such person
(collectively, the “Agents”) that:
(a) The Company has filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form SB-2 (Registration File No. 333-146180)
under the Securities Act of 1933, as amended (the “Securities Act”), for the registration
under the Securities Act of the Units. At the time of such filing, the Company met the requirements
of Form SB-2 under the Securities Act. Such registration statement meets the requirements set
forth in Rule 430A under the Securities Act and complies with said Rules. The Company will file
with the Commission pursuant to Rule 424(b) under the Securities Act, and the rules and regulations
(the “Rules and Regulations”) of the Commission promulgated thereunder, a supplement to the
form of prospectus included in such registration statement relating to the placement of the Shares
and the plan of distribution thereof and such other information as may have been omitted from the
Base Prospectus in compliance with Rule 430A and has advised the Placement Agent of all further
information (financial and other) with respect to the Company required to be set forth therein.
Such registration statement, including the exhibits thereto, as amended at the date of this
Agreement, is hereinafter called the “Registration Statement”; such prospectus in the form
in which it appears in the Registration Statement is hereinafter called the “Base
Prospectus”; and the supplemented form of prospectus, in the form in which it will be filed
with the Commission pursuant to Rule 424(b) (including the Base Prospectus as so supplemented) is
hereinafter called the “Prospectus Supplement.” No stop order suspending the effectiveness
of the Registration Statement or the use of the Base Prospectus or the Prospectus Supplement has
been issued, and no proceeding for any such purpose is pending or has been initiated or, to the
Company’s knowledge, is threatened by the Commission.
(b) The Registration Statement (and any further documents to be filed with the Commission)
contains all exhibits and schedules as required by the Securities Act. The Registration Statement,
complied in all material respects with the Securities Act and the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) and the applicable Rules and Regulations and did not and,
as amended or supplemented, if applicable, will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. The Base Prospectus, and each Prospectus Supplement, each as of
its respective date, comply in all material respects with the Securities Act and the Exchange Act
and the applicable Rules and Regulations. Each of
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the Base Prospectus and the Prospectus Supplement, as amended or supplemented, did not and
will not contain as of the date thereof any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As of the date hereof, no post-effective amendment to
the Registration Statement reflecting any facts or events arising after the date thereof which
represent, individually or in the aggregate, a fundamental change in the information set forth
therein is required to be filed with the Commission. There are no documents required to be filed
with the Commission in connection with the transaction contemplated hereby that (x) have not been
filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time
period. There are no contracts or other documents required to be described in the Base Prospectus
or Prospectus Supplement, or to be filed as exhibits or schedules to the Registration Statement,
which have not been described or filed as required.
(c) The Company is not eligible to use free writing prospectuses in connection with the
Offering pursuant to Rules 164 and 433 under the Securities Act. The Company will not prepare, use
or refer to, any free writing prospectus.
(d) The Company has delivered, or will as promptly as practicable deliver, to the Placement
Agent complete conformed copies of the Registration Statement and of each consent and certificate
of experts, as applicable, filed as a part thereof, and conformed copies of the Registration
Statement (without exhibits), the Base Prospectus and the Prospectus Supplement, as amended or
supplemented, in such quantities and at such places as the Placement Agent reasonably requests.
Neither the Company nor any of its directors and officers has distributed and none of them will
distribute, prior to the Closing Date, any offering material in connection with the offering and
sale of the Units other than the Base Prospectus, the Prospectus Supplement, the Registration
Statement, copies of the documents incorporated by reference therein and any other materials
permitted by the Securities Act.
3. Representations and Warranties of the Company. Except as set forth in the
Registration Statement or under the corresponding section of the Disclosure Schedules which
Disclosure Schedules shall be deemed a part hereof, the Company hereby makes the representations
and warranties set forth below to each of the Agents:
(a) Organization and Qualification. All of the direct and indirect subsidiaries
(individually, a “Subsidiary”) of the Company are set forth in the Registration Statement.
The Company owns, directly or indirectly, all of the capital stock or other equity interests of
each Subsidiary free and clear of any “Liens” (which for purposes of this Agreement shall
mean a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or
other restriction), and all the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good standing, as the
case may be, could not have or reasonably be expected to result in (i) a material adverse effect on
the legality, validity or enforceability of this Agreement or any subscription agreement or Warrant
made with any investor (together with the Agreement, the “Transaction Documents”), (ii) a
material adverse effect on the results of operations, assets, business, prospects or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material
adverse effect on the Company’s ability to perform in any material respect on a
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timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse Effect”) and no “Proceeding” (which for purposes of this
Agreement shall mean any action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened) has been instituted in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or qualification.
(b) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary action on the part of
the Company and no further action is required by the Company, its board of directors or its
stockholders in connection therewith other than in connection with the “Required Approvals”
(as defined in subsection 3(D) below). Each Transaction Document has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with the terms hereof and
thereof, will constitute the valid and binding obligation of the Company enforceable against the
Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of
creditors’ rights generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
(c) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company, the issuance and sale of the Securities and the consummation by the
Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets of the Company or
any Subsidiary, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and regulations), or by which
any property or asset of the Company or a Subsidiary is bound or affected; except in the case of
each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a
Material Adverse Effect.
(d) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority or other
“Person” (defined as an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind, including, without
limitation, any Trading Market (as defined below)) in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than such filings as are required to
be made under applicable federal and state securities laws (collectively, the “Required
Approvals”).
(e) Issuance of the Securities; Registration. The Securities are duly authorized and,
when issued and paid for in accordance with the applicable Transaction Documents, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction Documents. The Company has
reserved from its duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to the Transaction Documents. The
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issuance by the Company of the Securities has been registered under the Securities Act and all
of the Shares are freely transferable and tradable by the persons entering into Subscription
Agreements in respect of the Units (the “Purchasers”) without restriction (other than any
restrictions arising solely from an act or omission of a Purchaser). The Securities are being
issued pursuant to the Registration Statement and the issuance of the Securities has been
registered by the Company under the Securities Act. The Registration Statement is effective and
available for the issuance of the Securities thereunder and the Company has not received any notice
that the Commission has issued or intends to issue a stop-order with respect to the Registration
Statement or that the Commission otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, or intends or has threatened in writing
to do so. The “Plan of Distribution” section under the Registration Statement permits the issuance
and sale of the Securities hereunder. Upon receipt of the Securities, the Purchasers will have
good and marketable title to such Securities and the Shares will be freely tradable on the
“Trading Market” (which, for purposes of this Agreement shall mean means the following
markets or exchanges on which the Common Stock is listed or quoted for trading on the date in
question: the American Stock Exchange, the New York Stock Exchange, the NASDAQ Global Select
Market, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC Bulletin Board).
(f) Capitalization. The capitalization of the Company is as set forth in the
Registration Statement. The Company has not issued any capital stock since its most recently filed
periodic report under the Exchange Act, other than pursuant to the exercise of employee stock
options under the Company’s stock option plans, the issuance of shares of Common Stock to employees
pursuant to the Company’s employee stock purchase plan and pursuant to the conversion or exercise
of securities exercisable, exchangeable or convertible into Common Stock (“Common Stock
Equivalents”). No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions contemplated by the
Transaction Documents. Except as a result of the purchase and sale of the Securities, there are no
outstanding options, warrants, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock
Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares
of Common Stock or other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise, conversion, exchange or
reset price under such securities. All of the outstanding shares of capital stock of the Company
are validly issued, fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, and none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder, the Board of Directors of the Company or others is required
for the issuance and sale of the Securities. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.
(g) SEC Reports; Financial Statements. The Company has complied in all material
respects with requirements to file all reports, schedules, forms, statements and other documents
required to be filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period
as the Company was required by law to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration of any such extension.
As of their respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a
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material fact or omitted to state 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. The financial statements of the Company included in the SEC Reports and in
the Base Prospectus comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments.
(h) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date
of the latest audited financial statements included within the Base Prospectus, except as
specifically disclosed in the Base Prospectus, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any material liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent
with past practice and (B) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii)
the Company has not materially altered its method of accounting, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer, director or “Affiliate”
(defined as any Person that, directly or indirectly through one or more intermediaries, controls or
is controlled by or is under common control with a Person, as such terms are used in and construed
under Rule 144 under the Securities Act), except pursuant to existing Company equity compensation
plans. The Company does not have pending before the Commission any request for confidential
treatment of information. Except for the issuance of the Securities contemplated by this Agreement
or as set forth on Schedule 3(H), no material event, liability or development has occurred or
exists with respect to the Company or its Subsidiaries or their respective business, properties,
operations or financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made that has not been publicly
disclosed one (1) Trading Day (any day on which the New York Stock Exchange is open for business)
prior to the date that this representation is made.
(i) Litigation. There is no action, suit, inquiry, notice of violation, Proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty. There has not been,
and to the knowledge of the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange Act or the
Securities Act. None of the Company’s or its Subsidiaries’ employees is a member of a union that
relates to such employee’s relationship with the Company, and neither the Company or any of its
Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relationships with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or
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agreement or any restrictive covenant, and the continued employment of each such executive
officer does not subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S.
federal, state, local and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where the failure to be
in compliance could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(j) Labor Relations. No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company which could reasonably be
expected to result in a Material Adverse Effect.
(k) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company or any Subsidiary under), nor has the Company or
any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such default or violation
has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body,
or (iii) is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws applicable to
its business and all such laws that affect the environment, except in each case as could not have a
Material Adverse Effect.
(l) Regulatory Permits. The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the Base Prospectus,
except where the failure to possess such permits could not have or reasonably be expected to result
in a Material Adverse Effect (“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or modification of any
Material Permit.
(m) Title to Assets. The Company and the Subsidiaries have good and marketable title
in fee simple to all real property owned by them that is material to the business of the Company
and the Subsidiaries and good and marketable title in all personal property owned by them that is
material to the business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property by the Company and
the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which
is neither delinquent nor subject to penalties. Any real property and facilities held under lease
by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases
of which the Company and the Subsidiaries are in compliance.
(n) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications, service marks, trade
names, trade secrets, inventions, copyrights, licenses and other similar intellectual property
rights necessary or material for use in connection with their respective businesses as described in
the Base Prospectus and which the failure to so have could have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary
has received a notice (written or otherwise) that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of
the Company, all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights of others. The Company
and its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where failure to do so
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
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(o) Insurance. The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent and
customary in the businesses in which the Company and the Subsidiaries are engaged, including, but
not limited to, directors and officers insurance coverage of up to $10 million. To the best
knowledge of the Company, such insurance contracts and policies are accurate and complete. Neither
the Company nor any Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a significant increase in
cost.
(p) Transactions with Affiliates and Employees. Except as set forth in the Base
Prospectus, none of the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction with the Company or
any Subsidiary (other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or is an officer,
director, trustee or partner, other than (i) for payment of salary or consulting or director fees
for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
for other employee benefits, including stock option or other agreements under any equity
compensation plan of the Company.
(q) Xxxxxxxx-Xxxxx. The Company is in material compliance with all provisions of the
Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it as of the date hereof and of the closing date
of the Offering.
(r) Certain Fees. Except as otherwise provided in this Agreement, no brokerage or
finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section that may be due in connection with the transactions
contemplated by the Transaction Documents.
(s) Trading Market Rules. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the OTC Bulletin Board.
(t) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940, as amended. The
Company shall conduct its business in a manner so that it will not become subject to the Investment
Company Act.
(u) Registration Rights. No Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.
(v) Listing and Maintenance Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration. The Company has
not, in the 12 months preceding the date hereof, received notice from any Trading Market on which
the Common Stock is or has been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading Market. The
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Company is, and has no reason to believe that it will not in the foreseeable future continue
to be, in compliance with all such listing and maintenance requirements.
(w) Application of Takeover Protections. The Company and its Board of Directors have
taken all necessary action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s Certificate of Incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could become applicable to
the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without limitation as a result
of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.
(x) Solvency. The Company does not intend to incur debts beyond its ability to pay
debts as they mature (taking into account the timing and amounts of cash to be payable on or in
respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to
believe that it will file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date. The SEC Reports set forth as of
the dates thereof all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this
Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed
in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in the Company’s balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of business; and (c) the
present value of any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.
(y) Tax Status. Except for matters that would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, the Company and each
Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and
has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax
deficiency which has been asserted or threatened against the Company or any Subsidiary.
(z) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly,
used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by
any person acting on its behalf of which the Company is aware) which is in violation of law, or
(iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.
(aa) Accountants. The Company’s accountants are Deloitte & Touche LLP. To the
knowledge of the Company, such accountants, who the Company expects will express their opinion with
respect to the financial statements to be included in the Company’s next Annual Report on Form 10-K
or Form 10-KSB, are a registered public accounting firm as required by the Securities Act.
(bb) Regulation M Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, during the Offering, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid
any compensation for soliciting purchases of, any of the
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Securities (other than for the Placement Agent’s or any sub-agent’s placement of the
Securities), or (iii) paid or agreed to pay to any person any compensation for soliciting another
to purchase any other securities of the Company.
(cc) Approvals. The issuance and trading on the OTC Bulletin Board of the Shares
requires no further approvals, including but not limited to, the approval of shareholders.
(dd) FINRA Affiliations. There are no affiliations with any Financial Industry
Regulatory Authority (“FINRA”) member firm among the Company’s officers, directors or, to
the knowledge of the Company, any five percent (5%) or greater stockholder of the Company.
4. Representations, Warranties and Covenants of the Placement Agent. The Placement
Agent represents and warrants to, and agrees with, the Company that:
(a) The Placement Agent is duly organized and is validly existing and in good standing as a
limited liability company under the laws of the State of Delaware, with power and authority to
perform its obligations under this Agreement; it is a broker-dealer registered and in good standing
under the Exchange Act and under the securities or Blue Sky laws of each state in which the Units
are being offered or sold by it, and it is a member in good standing of the FINRA and will comply
with NASD Conduct Rule 2740 and all other applicable federal or state securities laws and FINRA and
NASD rules and regulations.
(b) The Placement Agent has received the representations and warranties of each other Agent
that such Agent is (a) a member in good standing of the FINRA and will comply with NASD Conduct
Rule 2740 and all other applicable federal or state securities laws and FINRA and NASD rules and
regulations, or (b) a foreign dealer or institution that is not eligible for membership in the
FINRA and that has agreed (i) not to sell Securities within the United States of America, its
territories or possessions or to persons who are citizens thereof or residents therein; (ii) that
any and all sales of Securities shall be in compliance with Rule 2110-01 of the NASD’s Conduct
Rules; (iii) to comply, as though it were a member of the FINRA, with Rules 2730, 2740 and 2750 of
the NASD’s Conduct Rules, and to comply with Rule 2420 thereof as that Rule applies to a non-member
broker or dealer in a foreign country.
(c) There are no legal or governmental proceedings pending to which Xxxxxx is a party or of
which any of its properties is the subject or, to its knowledge, threatened, which, if determined
adversely to Xxxxxx, would individually or in the aggregate materially and adversely affect
Xxxxxx’x ability to perform Xxxxxx’x obligations under this Agreement.
(d) No consent, approval, authorization or order of any court or governmental authority or
agency is required for the performance by Xxxxxx of its obligations under this Agreement, except
such as may be required by the FINRA or under Regulation D or state securities or Blue Sky laws.
(e) This Agreement has been duly and validly executed and delivered by or on behalf of Xxxxxx
and constitutes a legal, valid, and binding obligation of Xxxxxx enforceable in accordance with its
terms, except to the extent that its enforceability is limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium, or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally, and (b) laws relating to the availability
of specific performance, injunctive relief, or other equitable remedies and except as
enforceability of the indemnity and contribution provisions contained in Section 7 hereof may be
limited by applicable law or principles of public policy.
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(f) The Placement Agent shall not, without the prior written consent of the Company, which
consent shall not be unreasonably withheld, engage any sub-placement agent and/or selected dealer
for the purpose of placing the Securities, other than Xxxxxx Securities, Inc. and Fordham Financial
Management, Inc.
5. Offering and Sale of the Units. (a) Each person desiring to purchase Units will
be required to complete, execute, and deliver to Xxxxxx and the Company an executed copy of the
Subscription Agreement between such Purchaser and the Company.
(b) Upon the Company’s acceptance of subscriptions (in its sole discretion), payment of the
purchase price for the Units by the Purchasers, and delivery of the Units, with respect to each
Purchaser, (a “Closing”), shall then be made at such place and time as shall be agreed
upon between Xxxxxx and the Company (a “Closing Date”).
(c) As compensation for Xxxxxx’x services the fees (including issuance of Warrants) set forth
in the Engagement Letter shall be made to Xxxxxx and each other Agent, pursuant to an allocation
instruction therefor made to the Company by Xxxxxx.
(d) Neither Xxxxxx nor the Company shall, directly or indirectly, pay or award any finder’s
fees, commissions or other compensation to any person engaged by a potential investor for
investment advice as an inducement to such advisor to advise the purchase of the Units; provided,
however, that the Agent’s fees and other normal sales commissions payable to a registered
broker-dealer or other properly licensed person for selling the Units shall not be prohibited
hereby.
(e) The Company will prepare and file such statements and reports as are or may be required to
enable the Shares and Warrants to be qualified for sale or eligible for offer and sale pursuant to
an exemption from registration under the securities laws of such jurisdictions as the Placement
Agent may designate.
6. Covenants and Agreements of the Company. The Company covenants and agrees with
each Agent that:
(a) It will cooperate with the Agents to enable the Shares and Warrants to be qualified for
sale or eligible for offer and sale pursuant to an exemption from registration under the securities
laws of such jurisdictions as the Placement Agent may designate, subject to approval by the
Company, and at Xxxxxx’x request will make such applications and furnish such information as may be
required of it for that purpose; provided, however, that the Company shall not be required to
qualify to do business or to file a general consent to service of process in any such jurisdiction
or to subject itself to taxation. It will, from time to time, prepare and file such statements and
reports as are or may be required to continue such qualifications in effect for so long a period as
the Placement Agent may reasonably request for the distribution of the Shares and/or Warrants.
(b) It will make available to the Placement Agent and each purchaser of Units at a reasonable
time prior to the closing the opportunity to ask questions and receive answers concerning the terms
and conditions of the Offering and to obtain any additional information that the Company possesses
or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of
any information in the SEC Reports or otherwise furnished by the Company to the Placement Agent or
any purchaser of Units; provided, however, that the Company shall not be required to disclose any
material nonpublic information to any purchaser of Units.
(c) The Company will file all reports required by applicable law or registration with regard
to sales of the Units and use of the proceeds therefrom.
(d) The Company shall not offer, sell, contract to sell, pledge or other wise dispose of, directly
or indirectly, or file any Securities Act registration statement with the Commission relating to
any shares of Common Stock or common stock equivalents, or publicly disclose the intention to make
any offer, sale, pledge, disposition or filing, without the prior written consent of the Placement
Agent for a period of 90 days from the date of the Prospectus Supplement, except issuances or the
obligation to file a registration statement pursuant to existing contractual rights or obligations
or issuances pursuant to the exercise of employee stock options or warrants outstanding on the date
of the Prospectus Supplement or pursuant to conversion or convertible notes outstanding on the date
of the Prospectus Supplement. Provided, however, that in the event that either (1) during the last
17 days of the 90-day period described herein, the Company release s earnings results or material
news or a material event occurs relating to the Company, or (2) prior to the expiration of such
90-day period, the Company announces that it will release earnings results during the 16-day period
beginning on the last day of the 90-day period, then, in either case, the 90 day period shall be
extended until the expiration of the 18-day period beginning on the actual date of the release of
the earnings results or the occurrence of the material new or event, unless such extension is
waived in writing by the Placement Agent.
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7. Indemnification and Contribution. The following provisions of this Section 7
shall, as to the services provided hereunder, and as to the indirect engagement of Agents other
than Xxxxxx pursuant to the Engagement Letter, supersede the provisions related to indemnification
and contribution set forth in the Engagement Letter:
(a) In connection with the Company’s engagement of Xxxxxx as placement agent, the Company
hereby agrees to indemnify and hold harmless Xxxxxx and its Affiliates and each sub-placement agent
and/or selected dealer, and their respective controlling persons, directors, officers,
shareholders, agents and employees of any of the foregoing (collectively the “Indemnified
Persons”), from and against any and all claims, actions, suits, proceedings (including those of
shareholders), damages, liabilities and expenses incurred by any of them (including the reasonable
fees and expenses of counsel), (collectively a “Claim”), which are (A) related to or arise
out of (i) any actions taken or omitted to be taken (including any untrue statements made or any
statements omitted to be made) by the Company, or (ii) any actions taken or omitted to be taken by
any Indemnified Person in connection with the Company’s engagement (directly or indirectly) of any
Agent, or (B) otherwise relate to or arise out of any Agent’s activities on the Company’s behalf
hereunder or directly or indirectly under the Engagement Letter, and the Company shall reimburse
each such Indemnified Person for all expenses (including the reasonable fees and expenses of not
more than one counsel per Agent) incurred by such Indemnified Person in connection with
investigating, preparing or defending any such claim, action, suit or proceeding, whether or not in
connection with pending or threatened litigation in which any Indemnified Person is a party. The
Company will not, however, be responsible for any Claim, which is finally judicially determined to
have resulted from the gross negligence or willful misconduct of any person seeking indemnification
for such Claim or the result of a violation of any applicable federal or state securities laws or
FINRA or NASD rules or regulations by the Placement Agent or any Indemnified Person. The Company
further agrees that no Indemnified Person shall have any liability to the Company in connection
with services provided hereunder or, directly or indirectly under the Engagement Letter except for
any Claim incurred by the Company as a result of such Indemnified Person’s gross negligence or
willful misconduct or the result of a violation by such Indemnified Person of any applicable
federal or state securities laws or FINRA or NASD rules or regulations.
(b) The Company further agrees that it will not, without the prior written consent of Rodman,
settle, compromise or consent to the entry of any judgment in any pending or threatened Claim in
respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is
an actual or potential party to such Claim, provided that if an Agent (or any controlling persons,
directors, officers, shareholders, agents or employees of such Agent) other than Xxxxxx is an
actual party to such Claim, the consent of such Agent shall also be required), unless such
settlement, compromise or consent includes an unconditional, irrevocable release of each
Indemnified Person from any and all liability arising out of such Claim.
(c) Promptly upon receipt by an Indemnified Person of notice of any complaint or the assertion
or institution of any Claim with respect to which indemnification is being sought hereunder, such
Indemnified Person shall notify the Company in writing of such complaint or of such assertion or
institution but failure to so notify the Company shall not relieve the Company from any obligation
it may have hereunder, except and only to the extent such failure results in the forfeiture by the
Company of substantial rights and defenses. If the Company so elects or is requested by such
Indemnified Person, the Company will assume the defense of such Claim, including the employment of
counsel reasonably satisfactory to such Indemnified Person and the payment of the fees and expenses
of such counsel. In the event, however, that legal counsel to such Indemnified Person reasonably
determines that having common counsel would present such counsel with a conflict of interest or if
the defendant in, or target of, any such Claim, includes an Indemnified Person and the Company, and
legal counsel to such Indemnified Person
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reasonably concludes that there may be legal defenses available to it or other Indemnified Persons
different from or in addition to those available to the Company, then such Indemnified Person may
employ its own separate counsel to represent or defend him, her or it in any such Claim and the
Company shall pay the reasonable fees and expenses of such counsel. Notwithstanding anything
herein to the contrary, if the Company fails to timely or diligently defend, contest, or otherwise
protect against any Claim, the relevant Indemnified Party shall have the right, but not the
obligation, to defend, contest, compromise, settle, assert crossclaims, or counterclaims or
otherwise protect against the same, and shall be fully indemnified by the Company therefor,
including without limitation, for the reasonable fees and expenses of its counsel and all amounts
paid as a result of such Claim or the compromise or settlement thereof. In addition, with respect
to any Claim in which the Company assumes the defense, the Indemnified Person shall have the right
to participate in such Claim and to retain his, her or its own counsel therefor at his, her or its
own expense.
(d) The Company agrees that if any indemnity sought by an Indemnified Person hereunder is held
by a court to be unavailable for any reason then (whether or not an Agent is the Indemnified
Person), the Company and each Agent shall contribute to the Claim for which such indemnity is held
unavailable in such proportion as is appropriate to reflect the relative benefits to the Company,
on the one hand, and the Agents on the other, subject to the limitation that in no event shall the
amount of any Agent’s contribution to such Claim exceed the amount of fees actually received by
such Agent from the Company pursuant to the Engagement Letter and this Agreement. The Company
hereby agrees that the relative benefits to the Company, on the one hand, and each Agent on the
other, shall be deemed to be in the same proportion as (i) the total value paid or proposed to be
paid or received by the Company or its stockholders as the case may be, pursuant to the Offering
(whether or not consummated) bears to (ii) the fee paid or proposed to be paid to each Agent in
connection with such engagement.
(e) The Company’s indemnity, reimbursement and contribution obligations under this Agreement
shall be in addition to, and shall in no way limit or otherwise adversely affect any rights that
any Indemnified Party may have at law or at equity.
8. Survival of Indemnities, Representations, Warranties, etc. The respective
representations and warranties of Xxxxxx and the Company as set forth in this Agreement or made by
them respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation made by or on behalf of Xxxxxx, the Company, or any of the officers or directors
of the Company or any controlling person, and shall survive delivery of and payment for the Units
for a period ending on the date two years subsequent to the Closing Date.
9. Conditions of Agents’ Obligations. Xxxxxx’x and each other Agent’s obligations
hereunder are subject to the accuracy in all material respects at and (except as otherwise stated
herein) as of the date hereof and at and as of the Closing Date, of the representations and
warranties made herein by the Company to the compliance in all material respects at and as of the
Closing Date by the Company with its covenants and agreements herein contained and other provisions
hereof to be satisfied at or prior to the Closing Date and to the following additional conditions:
(a) Xxxxxx shall not have stated in writing prior to each Closing Date to the Company that the
Base Prospectus, Prospectus Supplement or any Exchange Act Document, or any amendment or supplement
thereto contains an untrue statement of fact which, in Xxxxxx’x reasonable opinion, is material, or
omits to state a fact which, in the reasonable opinion of Xxxxxx, is necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading.
(b) Xxxxxx shall have received a certificate, dated the Closing Date, on behalf of the Company
by the Chief Executive Officer or the President and the chief financial or accounting officer of
the Company to the effect that:
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(i) To the best of the knowledge of the signers, the representations and warranties of
the Company in this Agreement are true and correct in all material respects at and as of the
Closing Date, and the Company has complied in all material respects with all the agreements
and satisfied in all material respects all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) Between the date of this Agreement and the Closing Date, no litigation has been
instituted or, to the knowledge of the Company, threatened against the Company or the
Company of a character required to be disclosed in an Exchange Act Document, that has not
been so disclosed to the Agents; and
(iii) Between the date of this Agreement and the Closing Date, there has not been any
material adverse change in the financial condition, business, or results of operations of
the Company or the Company.
(c) The Company shall have furnished to the Placement Agent such additional certificates as Xxxxxx
may have reasonably requested as to the accuracy, at and as of the Closing Date, of the
representations and warranties made herein by it, as to compliance at and as of the Closing Date by
it with its covenants and agreements herein contained and other provisions hereof to be satisfied
at or prior to the Closing Date and as to other conditions to the Agents’ obligations hereunder.
(d) The Placement Agent shall have received from outside counsel to the Company such counsel’s
written opinion, addressed to the Placement Agent, with reliance language for any authorized
co-placement agent or selected dealer, date as of the Closing Date, in form and substance
reasonably satisfactory to the Placement Agent.
(e) Each officer and director of the Company shall have executed and delivered to the Placement Agent a
written agreement, in customary form, pursuant to which such individual shall agree that he or she
shall not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly,
any shares of Common Stock or common stock equivalents, enter into a transaction that would have
the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether any such
transaction is to be settled by delivery of Common Stock or other securities, cash or otherwise, or
publicly disclose the intention to enter into any of the foregoing transactions, without the prior
written consent of the Placement Agent for a period of 90 days from the date of the Prospectus
Supplement. Provided, however, that in the event that either (1) during the last 17 days of the
90-day period described herein, the Company releases earnings results or material news or a
material event occurs relating to the Company, or (2) prior to the expiration of such 90-day
period, the Company announces that it will release earnings results during the 16-day period
beginning on the last day of the 90-day period, then, in either case, the 90 day period shall be
extended until the expiration of the 18-day period beginning on the actual date of the release of
the earnings results or the occurrence of the material new or event, unless such extension is
waived in writing by the Placement Agent.
If any of the conditions provided for in this Section 9 shall not have been satisfied when and as
required by this Agreement, this Agreement may be terminated by Xxxxxx by notifying the Company of
such termination in writing at or prior to a Closing Date, but Xxxxxx shall be entitled to waive
any of such conditions.
10. Effective Date. This Agreement shall become effective at 10:00 A.M., New York
city time, on the date hereof (the “Effective Time”).
11. Termination. (a) This Agreement shall terminate automatically and without further
action by any party upon termination of the Engagement Letter.
(b) This Agreement may be terminated at any time by Xxxxxx by notice to the Company (i) if at
or prior to the Closing Date trading in securities on the New York Stock Exchange, the American
Stock Exchange, any of the NASDAQ stock markets or the OTC Bulletin Board (collectively, the
“Exchanges”) shall have been suspended for longer than four consecutive hours or minimum or
maximum prices shall have been established on any such Exchange, or a banking moratorium shall have
been declared by New York or United States authorities; (ii) if at or prior to the Closing Date
there shall have been a material escalation of hostilities between the United States and any
foreign country, or any other material insurrection or armed conflict involving the United States
which, in Xxxxxx’x reasonable judgment, after consultation with the Company, makes it impracticable
or inadvisable to offer or sell the Units; or (iii) if there shall be any material litigation or
regulatory action, pending or threatened against or involving the Company, which, in the reasonable
judgment of the Placement Agent, after consultation with the Company, makes it impracticable or
inadvisable to offer or deliver the Units on the terms contemplated by this Agreement.
-13-
(c) In the event of any termination of this Agreement under this or any other provision of
this Agreement, there shall be no liability of any party to this Agreement to any other party,
other than as provided in Sections 7 and 11(d).
(d) If the Company terminates this Agreement for any reason (other than Xxxxxx’x material
failure to comply with its obligations under this Agreement or material breach of Xxxxxx’x
representations and warranties) or the Offering fails to close because of the Company’s breach of
any representations or warranties contained in this Agreement or the Company’s failure to fulfill
its covenants and agreements contained in this Agreement, the Company shall pay reasonable
out-of-pocket expenses incurred as provided in the Engagement Letter.
12. Notices. All notices or other communications that are required or permitted under
this Agreement shall be made as provided for in the Engagement Letter. Any notice or other
communication to an Indemnified Person, shall be made to Xxxxxx, the applicable Agent (if such
Agent or any any controlling persons, directors, officers, shareholders, agents or employees of
such Agent is an Indemnified Person) to such address as such Agent may from time-to-time provide to
the Company in writing, and to a non-Agent Indemnified Person, at such address as such person may
from time-to-time provide to the Company in writing.
13. Successors. This Agreement shall inure to the benefit of and be binding upon
Xxxxxx, the Company, and their respective successors and legal representatives, except that neither
the Company nor Xxxxxx may, except as otherwise provided herein, assign or transfer any of its
rights or obligations under this Agreement without the prior written consent of the other.
14. Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. Any judicial proceeding brought against either of the
parties to this agreement or any dispute arising out of this Agreement or any matter related hereto
may be brought in the courts of the State New York or in the United States District Court for the
Southern District of New York and, by its execution and delivery of this agreement, each party to
this Agreement accepts the jurisdiction of such courts. The foregoing consent to jurisdiction shall
not be deemed to confer rights on any person other than the parties to this Agreement. The
prevailing party in any such litigation shall be entitled to receive from the losing party or
parties all costs and expenses, including reasonable attorney fees, incurred by the prevailing
party.
If the foregoing correctly sets forth our understanding please indicate your acceptance
thereof in the space provided below for that purpose, whereupon this letter and your acceptance
shall constitute a binding agreement between us.
| Very truly yours, | ||||
| POLYMEDIX, INC. | ||||
| By | ||||
| Name: | ||||
| Title: | ||||
Accepted as of the date first above written
XXXXXX & XXXXXXX, LLC
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By: |
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Name: |
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Title: |
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