PLACEMENT AGENCY AGREEMENT
Exhibit 10.195
February 9, 2006
Xxxxxxx Xxxxx Ventures, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
The Immune Response Corporation, a Delaware corporation (the “Company”), hereby confirms its
agreement (this “Agreement”) with Xxxxxxx Xxxxx Ventures, Inc., a Delaware corporation (the
“Placement Agent”) as follows:
1. Offering. (a) The Company will offer (the “Offering”) for sale through the Placement
Agent, as exclusive agent for the Company, and its selected dealers, if any, a minimum of 5 units
($500,000) (the “Minimum Amount”) and a maximum of 50 units ($5,000,000) (the “Maximum Amount”);
provided, however, that the Company and the Placement Agent may, in their mutual
discretion, increase the number of Units sold in the Offering. Each unit (a “Unit”) shall consist
of an 8% convertible senior secured promissory note in the principal amount of $100,000 (a “Note”)
convertible into shares of common stock, par value $.0025 per share, of the Company (the “Common
Stock”) at a conversion price of $0.02 per share of Common Stock and a warrant (a “Warrant”) to
purchase 15,000,000 shares of Common Stock (the “Warrant Shares”). The Notes and Warrants shall
have the rights and privileges described in the Memorandum (as defined below). Related persons
and/or affiliates of the Placement Agent and the Company may, but are not obligated to, participate
in the Offering, and any such investments will be counted to determine whether the Minimum and
Maximum Amounts, as applicable, have been satisfied.
(b) Placement of the Units by the Placement Agent will be made on a “reasonable efforts,”
“all-or-none” basis with respect to the Minimum Amount and on a “reasonable efforts” basis as to
the remaining 45 Units. The minimum subscription for Units shall be for 1/4 of one Unit ($25,000);
provided, however, that the Company and the Placement Agent may, in their mutual
discretion, waive such minimum subscription from time to time. The Units will be offered
commencing on the date of the Memorandum for a period of up to 90 days (the “Offering Period”). The
date on which the Offering Period shall terminate shall be referred to as the “Termination Date.”
A Final Closing (as hereinafter defined) may be held up to ten days after the Termination Date.
(c) Subscriptions for the Units will be accepted by the Company at a price of $100,000 per Unit or
such price proportional to the fractional Units that may be offered in accordance with Section 1(b)
hereof (the “Offering Price”); provided, however, that the Placement Agent shall
not make any offer to or tender to the Company, and the Company shall not accept subscriptions
from, or sell Units to, any persons or entities who do not qualify as “accredited investors,” as
such term is
defined in Rule 501 of Regulation D promulgated under Section 4(2) (“Regulation D”) of the
Securities Act of 1933, as amended (the “Act”).
(d) The offering of the Units will be made by the Placement Agent on behalf of the Company solely
pursuant to the Memorandum, which at all times will be in form and substance acceptable to the
Placement Agent, the Company and their respective counsel, and shall contain such legends and other
information as the Placement Agent, the Company and their respective counsel may, from time to
time, deem necessary and desirable to be set forth therein. The term “Memorandum” as used in this
Agreement means the Company’s Confidential Private Placement Memorandum dated February 9, 2006,
inclusive of all annexes, supplements and appendices thereto, if any. Unless otherwise defined,
each capitalized term used in this Agreement has the same meaning ascribed to it in the Memorandum.
2. Representations, Warranties and Covenants of the Company. The Company hereby
represents, warrants and covenants to the Placement Agent that:
(a) The Memorandum has been diligently prepared by the Company, in conformity with all applicable
laws, and is in compliance with Regulation D, the Act and the requirements of all other rules and
regulations (the “Regulations”) of the Securities and Exchange Commission (the “SEC”) relating to
offerings of the type contemplated by the Offering, and the applicable securities laws and the
rules and regulations of those jurisdictions wherein the Units are to be offered and sold. The
Units will be offered and sold pursuant to the registration exemption provided by Regulation D and
Section 4(2) of the Act as a transaction not involving a public offering and the requirements of
any other applicable state securities laws and the respective rules and regulations thereunder in
those United States jurisdictions in which the Placement Agent notifies the Company in writing that
the Units are being offered for sale. The Memorandum describes all material aspects, including
attendant risks, of an investment in the Company. The Company has not taken nor will it take any
action that conflicts with the conditions and requirements of, or that would make unavailable with
respect to the Offering, the exemption(s) from registration available pursuant to Regulation D or
Section 4(2) of the Act, and knows of no reason why any such exemption would be otherwise
unavailable to it. None of the Company, its predecessors or affiliates has been subject to any
order, judgment or decree of any court of competent jurisdiction temporarily, preliminarily or
permanently enjoining such person for failing to comply with Section 503 of Regulation D.
(b) The Memorandum does not include 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 under which they were made, not misleading. None of the statements,
documents, certificates or other items prepared or supplied by the Company with respect to the
transactions contemplated hereby contains an untrue statement of a material fact or omits to state
a material fact necessary to make the statements contained therein not misleading in light of the
circumstances in which they were made. There is no fact which the Company has not disclosed in the
Memorandum and to the Placement Agent and its counsel in writing and of which the Company is aware
that materially adversely affects or that could reasonably be expected to have a material adverse
effect on the prospects, condition (financial or otherwise), operations or assets of the Company or
any of its subsidiaries.
(c) The Company is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Except as set forth in the Memorandum, the Company has no
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subsidiaries and does not have an equity interest in any other firm, partnership, association or
other entity. The Company is duly qualified to transact business as a foreign corporation and is
in good standing under the laws of each jurisdiction where the location of its properties or the
conduct of its business makes such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on the prospects, condition (financial or
otherwise), operations or assets of the Company or its business.
(d) The Company has all corporate power and authority to conduct its business as presently
conducted and as proposed to be conducted (as described in the Memorandum), to enter into and
perform its obligations under this Agreement, the Subscription Agreement substantially in the form
of Annex C to the Memorandum (the “Subscription Agreement”), the Registration Rights Agreement
substantially in the form of Annex D to the Memorandum (the “Registration Rights Agreement”), and
the other agreements contemplated hereby (this Agreement, the Subscription Agreement, the
Registration Rights Agreement and the other agreements contemplated hereby are collectively
referred to herein as the “Transaction Documents”) and to issue, sell and deliver the Units, the
Notes, the Warrants, the shares of Common Stock issuable upon conversion of the Notes (the
“Conversion Shares”), the Warrant Shares, the Agent’s Securities (as hereinafter defined) and the
Additional Agent’s Securities (as hereinafter defined). Prior to the First Closing, as defined
herein, each of the Transaction Documents will have been duly authorized. This Agreement has been
duly authorized, executed and delivered and constitutes, and each of the other Transaction
Documents, upon due execution and delivery, will constitute, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective terms (i) except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect related to laws affecting creditors’ rights
generally, including the effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers and (ii) subject to the limitations imposed by general equitable principles
(regardless of whether such enforceability is considered in a proceeding at law or in equity).
(e) None of the execution and delivery of, or performance by the Company under this Agreement or
any of the other Transaction Documents or the consummation of the transactions herein or therein
contemplated conflicts with or violates, or will result in the creation or imposition of, any lien,
charge or other encumbrance upon any of the assets of the Company under any agreement or other
instrument to which the Company is a party or by which the Company or its assets may be bound, or
any term of the certificate of incorporation or by-laws of the Company, or any license, permit,
judgment, decree, order, statute, rule or regulation applicable to the Company or any of its
assets.
(f) As of the date of the First Closing (as defined in Section 4(c) hereof), the Company will have
the authorized and outstanding capital stock as set forth in the Memorandum. All outstanding
shares of capital stock of the Company are duly authorized, validly issued and outstanding, fully
paid and nonassessable. Except as described in the Memorandum, as of the date of the First
Closing: (i) there will be no outstanding options, stock subscription agreements, warrants or other
rights permitting or requiring the Company or others to purchase or acquire any shares of capital
stock or other equity securities of the Company or to pay any dividend or make any other
distribution in respect thereof; (ii) there will be no securities issued or outstanding that are
convertible into or exchangeable for any of the foregoing and there are no contracts, commitments
or understandings, whether or not in writing, to issue or grant any such option, warrant, right or
convertible or exchangeable security; (iii) no shares of stock or other securities
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of the Company are reserved for issuance for any purpose; (iv) there will be no voting trusts or
other contracts, commitments, understandings, arrangements or restrictions of any kind with respect
to the ownership, voting or transfer of shares of stock or other securities of the Company,
including without limitation, any preemptive rights, rights of first refusal, proxies or similar
rights, and (v) no person holds a right to require the Company to register any securities of the
Company under the Act or to participate in any such registration. As of the date of the First
Closing, the issued and outstanding shares of capital stock of the Company will conform to all
statements in relation thereto contained in the Memorandum and the Memorandum describes all
material terms and conditions thereof. All issuances by the Company of its securities have been,
at the times of their issuance, registered or were exempt from registration under the Act and any
applicable state securities laws.
(g) Immediately prior to the First Closing, the Notes, the Warrants, the Agent Warrants (as
hereinafter defined) and the Additional Agent Warrants (as hereinafter defined) will have been duly
authorized and, when issued and delivered against payment therefor as provided in the Transaction
Documents, will be validly issued, fully paid and nonassessable. No holder of any of the Notes,
Warrants, Warrant Shares, Conversion Shares, Agent’s Securities or Additional Agent’s Securities
will be subject to personal liability solely by reason of being such a holder, and except as
described in the Memorandum, none of the Notes, Warrants, Warrant Shares, Conversion Shares,
Agent’s Securities or Additional Agent’s Securities are subject to preemptive or similar rights of
any stockholder or security holder of the Company or an adjustment under the antidilution or
exercise rights of any holders of any outstanding shares of capital stock, options, warrants or
other rights to acquire any securities of the Company. Promptly after the Final Closing (as
hereinafter defined), the Company will cause a special meeting of its stockholders (the “Special
Meeting”) to be held for the purpose of amending the Company’s certificate of incorporation to
increase the number of authorized shares of Common Stock (the “Share Increase”) and, upon obtaining
such approval, the Company will at all times reserve and keep available a sufficient number of
authorized but unissued shares of Common Stock for issuance upon the conversion of the Notes,
exercise of the Warrants, the exercise of the Agent Warrants and exercise of the Additional Agent
Warrants. Immediately following the effectiveness of the Share Increase, the issuance of the
Warrant Shares, Conversion Shares, the Agent’s Shares (as hereinafter defined) and the Additional
Agent’s Shares (as hereinafter defined) will be duly authorized and, when issued and delivered
against payment therefore as provided in the Transaction Documents, will be validly issued, fully
paid and nonassessable.
(h) No consent, authorization or filing of or with any court or governmental authority is required
in connection with the issuance or the consummation of the transactions contemplated herein or in
the other Transaction Documents, except for required filings with the SEC and the applicable state
securities commissions relating specifically to the Offering and the Special Meeting (all of which
filings will be duly made by, or on behalf of, the Company), other than those which are required to
be made after the First Closing (all of which will be duly made on a timely basis).
(i) The Company’s financial statements, together with the related notes, if any, included in the
Memorandum or incorporated therein by reference, present fairly, in all material respects, the
financial position of the Company as of the dates specified and the results of operations for the
periods covered thereby. Such financial statements and related notes were prepared in accordance
with United States generally accepted accounting principles applied on a consistent basis
throughout the periods indicated. Except as set forth in such financial statements or in the
Memorandum, the Company has no known material liabilities of any kind, whether accrued,
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absolute or contingent, or otherwise, and subsequent to the date of the Memorandum it shall not
enter into any material transactions or commitments without promptly thereafter notifying the
Placement Agent in writing of any such material transaction or commitment. The other financial and
statistical information with respect to the Company and any pro forma information and related notes
included in the Memorandum present fairly the information shown therein on a basis consistent with
the financial statements of the Company included in the Memorandum. The Company does not know of
any facts, circumstances or conditions which could materially adversely affect its operations,
earnings or prospects that have not been fully disclosed in the Memorandum.
(j) The conduct of business by the Company as presently and proposed to be conducted is not subject
to continuing oversight, supervision, regulation or examination by any governmental official or
body of the United States, or any other jurisdiction wherein the Company conducts or proposes to
conduct such business, except as described in the Memorandum and except as such regulation is
applicable to commercial enterprises generally. The Company has obtained all material licenses,
permits and other governmental authorizations necessary to conduct its business as presently
conducted. The Company has not received any notice of any violation of, or noncompliance with, any
federal, state, local or foreign laws, ordinances, regulations and orders (including, without
limitation, those relating to environmental protection, occupational safety and health, securities
laws, equal employment opportunity, consumer protection, credit reporting, “truth-in-lending”, and
warranties and trade practices) applicable to its business, the violation of, or noncompliance
with, would have a material adverse effect on the prospects, condition (financial or otherwise),
operations or assets of the Company or its business, and the Company knows of no facts or set of
circumstances which could give rise to such a notice.
(k) No default by the Company or, to the best knowledge of the Company, any other party, exists in
the due performance under any material agreement to which the Company is a party or to which any of
its assets is subject (collectively, the “Company Agreements”). The Company Agreements disclosed
in the Memorandum are the only material agreements to which the Company is bound or by which its
assets are subject, are accurately described in the Memorandum and are in full force and effect in
accordance with their respective terms.
(l) Except as set forth in the Memorandum, there are no actions, proceedings, claims or
investigations, before or by any court or governmental authority (or any state of facts which
management of the Company has concluded could give rise thereto) pending or, to the best knowledge
of the Company, threatened, against the Company, or involving its assets or, to the best knowledge
of the Company, involving any of its officers or directors that, if determined adversely to the
Company or such officer or director, could reasonably be expected to result in any material adverse
change in the condition (financial or otherwise) or prospects of the Company or adversely affect
the transactions contemplated by this Agreement or the other Transaction Documents or the
enforceability hereof or thereof.
(m) The Company is not in violation of: (i) its certificate of incorporation or by-laws each as may
be amended; (ii) any indenture, mortgage, deed of trust, note or other agreement or instrument to
which the Company is a party or by which it is or may be bound or to which any of its assets may be
subject; (iii) any statute, rule or regulation currently applicable to the Company; or (iv) any
judgment, decree or order applicable to the Company, which violation or violations individually, or
in the aggregate, could reasonably be expected to result in any material adverse change in the
condition (financial or otherwise) or prospects of the Company or adversely affect
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the transactions contemplated by this Agreement or the other Transaction Documents or the
enforceability thereof.
(n) The Company does not own any real property in fee simple, and the Company has good and
marketable title to all property (personal, tangible and intangible) owned by it, free and clear of
all security interests, liens and encumbrances, except for such as are described in the Memorandum.
(o) The Company owns all right, title and interest in, or possesses adequate and enforceable rights
to use, all patents, patent applications, trademarks, service marks, copyrights, rights, licenses,
franchises, trade secrets, confidential information, processes and formulations necessary for the
conduct of its business (collectively, the “Intangibles”). Except as set forth in the Memorandum,
to the best knowledge of the Company it has not infringed upon the rights of others with respect to
the Intangibles and the Company has not received notice that it has or may have infringed or is
infringing upon the rights of others with respect to the Intangibles, or any notice of conflict
with the asserted rights of others with respect to the Intangibles that could, individually or in
the aggregate, materially adversely affect the condition (financial or otherwise) or prospects of
the Company. Except as set forth in the Memorandum, to the best knowledge of the Company, no others
have infringed upon the rights of the Company with respect to the Intangibles.
(p) Subsequent to the respective dates as of which information is given in the Memorandum, the
Company has operated its business in the ordinary course and, except as may otherwise be set forth
in the Memorandum, there has been no: (i) material adverse change in the condition (financial or
otherwise) of the Company; (ii) transaction otherwise than in the ordinary course of business
consistent with past practice; (iii) issuance of any securities (debt or equity) or any rights to
acquire any such securities; (iv) damage, loss or destruction, whether or not covered by insurance,
with respect to any asset or property of the Company; or (v) agreement to permit any of the
foregoing.
(q) The Company has filed, on a timely basis, all federal, state, local and foreign tax return that
was required to be filed, or has requested an extension therefor and has paid all taxes and all
related assessments, penalties and interest to the extent that the same have become due. To the
Company’s knowledge, there are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of limitations relating
to the assessment or collection of any foreign, federal, state or local tax. To the Company’s
knowledge, none of the Company’s tax returns is presently being audited by any taxing authority.
(r) The Company is not obligated to pay, and has not obligated the Placement Agent to pay, a
finder’s or origination fee in connection with the Offering, and hereby agrees to indemnify the
Placement Agent from any such claim made by any other person as more fully set forth in Section 7
hereof. The Company has not offered for sale or solicited offers to purchase the Units except for
negotiations with the Placement Agent. Except as set forth in the Memorandum, no other person has
any right to participate in any offer, sale or distribution of the Company’s securities to which
the Placement Agent’s rights, described herein, shall apply.
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(s) The Company has and will maintain appropriate casualty and liability insurance coverage, in
scope and amounts reasonable and customary for similar businesses of its size.
(t) Neither the sale of the Units by the Company nor its use of the proceeds thereof will violate
the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto. Without limiting the foregoing, the Company is
not (a) a person whose property or interests in property are blocked pursuant to Section 1 of
Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) a
person who engages in any dealings or transactions, or be otherwise associated, with any such
person. The Company and its subsidiaries are in compliance, in all material respects, with the USA
Patriot Act of 2001 (signed into law October 26, 2001).
(u) The Company has filed all reports required to be filed by it under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), including, without limitation, pursuant to Section 13(a)
and 15(d) thereof, (the foregoing materials being collectively referred to herein as the “SEC
Filings”) on a timely basis or has received a valid extension of such time of filing and has filed
any such SEC Filing prior to the expiration of any such extension. As of their respective dates,
the SEC Filings complied in all material respects with the requirements of the Act and the Exchange
Act and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Filings,
when filed, contained any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. All material agreements to which the
Company is a party have been filed as exhibits to the SEC Filings to the extent required. The
financial statements of the Company included in the SEC Filings comply in all material respects
with applicable accounting requirements and the rules and regulations of the SEC with respect
thereto as in effect at the time of filing.
(w) Since the adoption of the Xxxxxxxx-Xxxxx Act of 2002 (the “New Act”), the Company has complied
in all material respects with the laws, rules and regulations under the New Act.
3. Placement Agent Appointment and Compensation. (a) The Company hereby appoints the
Placement Agent and its selected dealers, if any, as its exclusive agent in connection with the
Offering. The Company has not and will not make, or permit to be made, any offers or sales of the
Units other than through the Placement Agent without the Placement Agent’s prior written consent.
The Placement Agent has no obligation to purchase any of the Units. The agency of the Placement
Agent hereunder shall continue until the later of the Termination Date or the Final Closing.
(b) The Company will cause to be delivered to the Placement Agent copies of the Memorandum and has
consented, and hereby consents, to the use of such copies for the purposes permitted by the Act and
applicable securities laws, and hereby authorizes the Placement Agent and its agents, employees and
selected dealers to use the Memorandum in connection with the sale of the Units until the later of
the Final Closing or the Termination Date, and no other person or entity is or will be authorized
to give any information or make any representations other than those contained in the Memorandum or
to use any offering materials other than those contained in the Memorandum in connection with the
sale of the Units.
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(c) The Company will cooperate with the Placement Agent by making available to its representatives
such information as may be reasonably requested in making a reasonable investigation of the Company
and its affairs and shall provide access to such employees as shall be reasonably requested. Prior
to the First Closing, if requested by the Placement Agent, the Company shall provide, at its own
expense, credit or similar reports on such key management persons as the Placement Agent shall
reasonably request.
(d) In connection with the Offering, the Company will pay a cash fee (the “Agent’s Fee”) to the
Placement Agent at each Closing equal to 10% of the aggregate gross proceeds received from the sale
of the Units sold in the Offering. The Placement Agent, in its sole discretion, may discount or
waive the Agent’s Compensation (as hereinafter defined) with respect to gross proceeds received
from the sale of Units sold to investors identified by officers and directors of the Company and/or
large investments made by a single investor in the Offering.
(e) As additional compensation hereunder, at each Closing the Company will issue to the Placement
Agent (or its designee(s)) for nominal consideration, warrants (the “Agent Warrants”, and together
with the Agent’s Fee, the “Agent’s Compensation”) to purchase shares of Common Stock (the “Agent’s
Shares"; and, collectively with the Agent Warrants, the “Agent’s Securities”). The Agent Warrants
shall be of like tenor to the Warrants sold in the Offering and shall: (i) be exercisable for that
number of shares of Common Stock equal to 20% of the number of shares of Common Stock issuable upon
conversion of the Notes sold in the Offering and (ii) have an initial exercise price equal to $0.02
per share of Common Stock.
The Agent Warrants shall also provide the Placement Agent with a cashless exercise right. The
Agent Warrants shall be exercisable until the date that is seven (7) years after the date of
issuance. The Agent Shares shall be entitled to registration rights equivalent to those to be
granted to the purchasers of the Units (the “Investors”) in the Registration Rights Agreement, as
provided for in the Placement Agent Warrant Agreement (as hereinafter defined). At the First
Closing (as hereinafter defined), the Company and the Placement Agent shall enter into a warrant
agreement in form and substance satisfactory to the Placement Agent and the Company (the “Placement
Agent Warrant Agreement”).
(f) The Company will reimburse the Placement Agent for all reasonable costs and expenses of the
Placement Agent including, without limitation, legal fees of Placement Agent’s counsel, travel
costs, due diligence costs, marketing expenses (including expenses related to Company
presentations) relating to the Offering (the “Agent Expenses”); provided, however,
that the Agent Expenses shall not exceed $150,000 without the prior written consent of the Company.
Payment of the Agent Expenses incurred as of the date of each Closing will be made out of the
proceeds of subscriptions for Units at each such Closing and, at least five (5) business days prior
to the time the Company files a registration statement with the SEC pursuant to the Registration
Rights Agreement, the Company will pay a law firm designated by the Placement Agent the filing fees
attendant with a Rule 2710 filing to be made with the National Association of Securities Dealers,
Inc. along with a retainer of $3,500 for legal fees to be incurred in connection with such filing.
(g) Within three (3) business days after the exercise of each Warrant, the Company will pay a cash
fee (the “Warrant Fee”) to the Placement Agent equal to 10% of the aggregate gross proceeds
received from the exercise of such Warrant. In addition, at the First Closing the Company and the
Placement Agent shall enter into a warrant agreement of like tenor to the
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Placement Agent Warrant Agreement (the “Additional Placement Agent Warrant Agreement”) pursuant to
which the Company will issue to the Placement Agent (or its designee(s)), for nominal
consideration, an unvested and exercisable warrant (the “Additional Agent Warrants”, and together
with the Warrant Fee, the “Additional Agent’s Compensation”) to purchase 150,000,000 shares of
Common Stock (the “Additional Agent’s Shares”; and, collectively with the Additional Agent
Warrants, the “Additional Agent’s Securities”). Upon the exercise of a Warrant, the Additional
Agent Warrants shall vest and become exercisable for that number of shares of Common Stock equal to
20% of the number of shares of Common Stock issued upon the exercise of such Warrant. The
Additional Agent Warrants shall have an initial exercise price equal to $0.02 per share of Common
Stock.
The Additional Agent Warrants shall also provide the Placement Agent with a cashless exercise
right. The vested portion of the Additional Agent Warrants shall be exercisable until the date
that is seven (7) years after the date of issuance. The Additional Agent Shares shall be entitled
to registration rights equivalent to those to be granted to the Investors in the Registration
Rights Agreement, as provided for in the Additional Placement Agent Warrant Agreement.
(h) The Company shall also pay and issue to the Placement Agent the Agent’s Compensation calculated
according to the percentages set forth in Sections 3(d) and (e) of this Agreement, if any person or
entity (excluding any strategic corporate investors) was provided with the Memorandum by the
Placement Agent during the Offering and such person or entity invests in the Company (such
investors being referred to herein as the “Post-Closing Investors”) at any time prior to the date
that is twelve (12) months after the Termination Date or the Final Closing, whichever is
applicable, regardless of whether such Post-Closing Investor purchased Units in the Offering. If
an event or transaction shall occur that would entitle the Placement Agent to receive both the
Agent’s Compensation and the Finder’s Fee (as such term is defined below), then the Placement Agent
shall have the right to elect which fee it shall receive in full satisfaction of the Company’s
obligations pursuant to this Section 3(g) and the Finder’s Agreement, as described in Section 3(h)
below.
4. Subscription and Closing Procedures. (a) Each prospective purchaser will be required to
complete and execute two (2) original omnibus signature pages, for each of the Subscription
Agreement and the Registration Rights Agreement (the “Subscription Documents”), which will be
forwarded or delivered to the Placement Agent at the Placement Agent’s offices at the address set
forth in Section 11 hereof, together with the subscriber’s check or other good funds in the full
amount of the Offering Price for the number of Units desired to be purchased.
(b) All funds for subscriptions received from the Offering will be promptly forwarded by the
Placement Agent or the Company, if received by it, to and deposited into a non-interest bearing
escrow account (the “Escrow Account”) established for such purpose with Signature Bank (the “Escrow
Agent”). All such funds for subscriptions will be held in the Escrow Account pursuant to the terms
of an escrow agreement among the Company, the Placement Agent and the Escrow Agent. The Company
will pay all fees related to the establishment and maintenance of the Escrow Account. Subject to
the receipt of subscriptions for the Minimum Amount, the Company will either accept or reject, for
any or no reason, the Subscription Documents in a timely fashion and at each Closing will
countersign the Subscription Documents and provide duplicate copies of such documents to the
Placement Agent for distribution to the subscribers. The Company will give notice to the Placement
Agent of its acceptance of each subscription. The Company, or the Placement Agent on the Company’s
behalf, will promptly return to subscribers incomplete,
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improperly completed, improperly executed and rejected subscriptions and give written notice
thereof to the Placement Agent upon such return.
(c) If subscriptions for at least the Minimum Amount have been accepted prior to the Termination
Date, the funds therefor have been collected by the Escrow Agent and all of the conditions set
forth elsewhere in this Agreement are fulfilled, a closing shall be held promptly with respect to
Units sold (the “First Closing”). Thereafter, the remaining Units will continue to be offered and
sold until the Termination Date. Additional closings (“Closings”) may from time to time be
conducted at times mutually agreed to between the Placement Agent and the Company with respect to
additional Units sold, with the final closing (“Final Closing”) to occur within 10 days after the
Termination Date. Delivery of payment for the accepted subscriptions for Units from the funds held
in the Escrow Account will be made at each Closing at the Placement Agent’s offices against
delivery of the Units by the Company at the address set forth in Section 11 hereof (or at such
other place as may be mutually agreed upon between the Company and the Placement Agent), net of
amounts due to the Placement Agent and its Blue Sky counsel pursuant to Section 5(j) hereof as of
such Closing. Executed certificates for the Notes and Warrants constituting the Units and the
Agent’s Warrants will be in such authorized denominations and registered in such names as the
Placement Agent may request on or before the date of each Closing (“Closing Date”), and will be
made available to the Placement Agent for checking and packaging at the Placement Agent’s office at
each Closing.
(d) If Subscription Documents for the Minimum Amount have not been received and accepted by the
Company on or before the Termination Date for any reason, the Offering will be terminated, no Units
will be sold, and the Escrow Agent will, at the request of the Placement Agent, cause all monies
received from subscribers for the Units to be promptly returned to such subscribers without
interest, penalty, expense or deduction.
5. Further Covenants of the Company. The Company hereby covenants and agrees that:
(a) Except with the prior written consent of the Placement Agent, the Company shall not, at any
time prior to the Final Closing, take any action which would cause any of the representations,
warranties and covenants made by it in this Agreement not to be complete, accurate and correct, in
all material respects, on and as of each Closing Date with the same force and effect as if such
representations, warranties and covenants had been made on and as of each such date.
(b) If, at any time prior to the Final Closing (i) any event shall occur which does or may
materially affect the Company or as a result of which it might become necessary to amend or
supplement the Memorandum so that the representations, warranties and covenants herein remain true,
or (ii) in case it shall, in the reasonable opinion of counsel to the Placement Agent, be necessary
to amend or supplement the Memorandum to comply with Regulation D or any other applicable
securities laws or regulations, the Company shall, in the case of (i) above, promptly notify the
Placement Agent and, in the event of either (i) or (ii) above shall, at its sole cost, prepare and
furnish to the Placement Agent copies of appropriate amendments and/or supplements to the
Memorandum in such quantities as the Placement Agent may request. The Company shall not at any
time, whether before or after the Final Closing, prepare or use any supplement to the Memorandum of
which the Placement Agent shall not previously have been advised and furnished with a copy, or to
which the Placement Agent or its counsel will have reasonably objected in writing or orally
(confirmed in writing within 24 hours), or which is not in compliance in all material respects with
the Act, the Regulations and other applicable
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securities laws. As soon as the Company is advised thereof, the Company shall advise the Placement
Agent and its counsel, and confirm the advice in writing, of any order preventing or suspending the
use of the Memorandum, or the suspension of the qualification or registration of the Units for
offering or the suspension of any exemption for such qualification or registration of the Units for
offering in any jurisdiction, or of the institution or threatened institution of any proceedings
for any of such purposes, and the Company shall use its best efforts to prevent the issuance of any
such order and, if issued, to obtain as soon as reasonably possible the lifting thereof.
(c) The Company shall comply with the Act, the Regulations, the Securities Exchange Act of 1934, as
amended (the “1934 Act”), and the rules and regulations promulgated thereunder, all applicable
state securities laws and the rules and regulations thereunder in the states in which the Units are
to be offered and in which Blue Sky counsel has advised the Placement Agent that the Units are
exempt from qualification or registration requirements, so as to permit the continuance of the
sales of the Units, and will file with the SEC, and shall promptly thereafter forward to the
Placement Agent, any and all reports on Form D as are required.
(d) The Company shall use its best efforts to qualify the Units for sale under the securities laws
of such jurisdictions in the United States as may be mutually agreed to by the Company and the
Placement Agent, and the Company shall make such applications and furnish information as may be
required for such purposes, provided that the Company shall not be required to qualify as a foreign
corporation in any jurisdiction. The Company shall, 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.
(e) The Company shall place a legend on the Notes and the certificates representing the Warrants,
Warrant Shares and the Conversion Shares issued to subscribers stating that the securities
evidenced thereby have not been registered under the Act or applicable state securities laws,
setting forth or referring to the applicable restrictions on transferability and sale of such
securities under the Act and applicable state laws.
(f) The Company shall apply the net proceeds from the sale of the Units to fund its working capital
requirements and for such other purposes as are specifically described under the “Use of Proceeds”
section of the Memorandum. Except as set forth in the Memorandum, the Company shall not use any of
the net proceeds of the Offering to repay indebtedness to officers, directors or stockholders of
the Company without the prior written consent of the Placement Agent.
(g) During the Offering Period, the Company shall make available for review by prospective
purchasers of the Units during normal business hours at the Company’s offices, upon their request,
copies of the Company Agreements to the extent that such shall not violate any obligation on the
part of the Company to maintain the confidentiality thereof and shall afford each prospective
purchaser of Units the opportunity to ask questions of and receive answers from an officer of the
Company concerning the terms and conditions of the Offering and the opportunity to obtain such
other additional information necessary to verify the accuracy of the Memorandum to the extent it
possesses such information or can acquire it without unreasonable expense or effort.
(h) Except with the prior written consent of the Placement Agent, the Company shall not, at any
time prior to the later of the Final Closing or the Termination Date, (i) engage in or commit to
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engage in any transaction outside the ordinary course of business as described in the Memorandum,
(ii) issue, agree to issue or set aside for issuance any securities (debt or equity) or any rights
to acquire any such securities except (A) as contemplated by the Memorandum, (B) upon exercise of
outstanding options or warrants as of the date hereof or (C) the issuance of any options or other
equity awards made under the Company’s existing equity incentive plans, (iii) incur, outside the
ordinary course of business, any material indebtedness, (iv) dispose of any material assets, (v)
make any material acquisition or (vi) change its business or operations.
(i) The Company shall pay all expenses incurred in connection with the preparation and printing of
all necessary offering documents, amendments, and instruments related to the Offering and the
issuance of the Notes, Warrants, Warrant Shares, the Conversion Shares, the Agent’s Securities, and
shall also pay its own expenses for accounting fees, legal fees, bound volumes of closing
documents, and other costs involved with the Offering. The Company shall provide at its own
expense such quantities of the Memorandum and other documents and instruments relating to the
Offering as the Placement Agent may reasonably request. In addition, the Company shall pay all
reasonable filing fees, costs and legal fees for Blue Sky services and related filings and expenses
of the Placement Agent’s counsel with respect to Blue Sky exemptions (collectively, the “Blue Sky
Expenses”), $5,000 of which shall be paid to the Placement Agent’s counsel upon execution of this
Agreement for legal fees in connection with obtaining Blue Sky exemptions, and additional amounts,
if any, of which shall be paid at any Closing, as applicable. The Blue Sky filings shall be
prepared by the Placement Agent’s counsel for the Company’s account.
(j) Until the Termination Date, neither the Company nor any person or entity acting on its behalf
shall negotiate with any other placement agent or underwriter with respect to a private or public
offering of the Company’s or any affiliate’s debt or equity securities. Neither the Company nor
anyone acting on its behalf shall, until the Termination Date, offer for sale to, or solicit offers
to subscribe for Units or other securities of the Company from, or otherwise approach or negotiate
in respect thereof with, any other person, without the prior written consent of the Placement
Agent.
(k) On or prior to the First Closing, the Company and the Placement Agent shall enter into a Right
of First Refusal Agreement (the “ROFR Agreement”) in a form acceptable to the Company and the
Placement Agent and their respective counsels. The ROFR Agreement shall provide that for a period
of twelve (12) months from the First Closing, the Company shall give the Placement Agent the
irrevocable preferential right of first refusal described below to purchase for the Placement
Agent’s account or to act as agent for any proposed private offering of the Company’s securities
(equity or debt) by the Company. The Company agrees to offer the Placement Agent the opportunity
to purchase or sell such securities on terms no less favorable than it can obtain elsewhere. If
within 20 business days of the receipt of such notice of intention and statement of terms the
Placement Agent does not accept in writing such offer to purchase such securities or to act as
agent with respect to such offering upon the terms proposed, the Company shall be free to negotiate
terms with third parties with respect to such offering and to effect such offering on such proposed
terms. Before the Company shall accept any proposal materially less favorable to it than as
originally proposed to the Placement Agent, the Placement Agent’s preferential rights shall be
applied, and the procedure set forth above with respect to such modified proposal shall be adopted.
The Placement Agent’s failure to exercise these preferential rights in any situation shall not
affect the Placement Agent’s preferential rights to any subsequent offering during the term of the
ROFR Agreement. The Company represents and warrants that no other person has
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any right to participate in any offer, sale or distribution of the Company’s securities to which
the Placement Agent’s preferential rights shall apply.
(l) Until the later of the Termination Date or the Final Closing, the Company will not issue any
press release, grant any interview, or otherwise communicate with the media in any manner
whatsoever without the Placement Agent’s prior written consent, which consent will not unreasonably
be withheld.
(m) The Company will file a proxy statement as soon as practicable after the Final Closing for the
Share Increase.
6. Conditions of Placement Agent’s Obligations. The obligations of the Placement Agent
hereunder are subject to the fulfillment, at or before each Closing, of the following additional
conditions:
(a) Each of the representations, warranties and covenants of the Company shall be true and correct,
in all material respects, when made on the date hereof and on and as of each Closing Date as though
made on and as of each Closing Date.
(b) The Company shall have performed and complied with all agreements, covenants and conditions
required to be performed and complied with by it under the Transaction Documents at or before each
Closing.
(c) No order suspending the use of the Memorandum or enjoining the offering or sale of the Units
shall have been issued, and no proceedings for that purpose or a similar purpose shall have been
initiated or pending, or, to the best of the Company’s knowledge, are contemplated or threatened.
(d) As of the First Closing, the Company will have the authorized capitalization as described in
the Memorandum.
(e) The Placement Agent shall have received a certificate of the Chief Executive Officer of the
Company, dated as of each Closing Date, certifying, in such detail as the Placement Agent may
reasonably request, as to the fulfillment of the conditions set forth in paragraphs (a), (b), (c)
and (d) above.
(f) The Company shall have delivered to the Placement Agent: (i) a currently dated good standing
certificate from the Secretary of State of Delaware and each jurisdiction in which the Company is
qualified to do business as a foreign corporation and (ii) at the First Closing, certified
resolutions of the Company’s Board of Directors approving this Agreement and the other Transaction
Documents, and the transactions and agreements contemplated by this Agreement and the other
Transaction Documents, including without limitation, the Charter Amendments (as defined in the
Memorandum).
(g) At each Closing, the Chief Executive Officer and the Chief Financial Officer of the Company
shall have provided a certificate to the Placement Agent confirming that there have been no
material adverse changes in the condition (financial or otherwise) of the Company from the date of
the financial statements included in the Memorandum, the absence of undisclosed known material
liabilities (other than liabilities arising in the ordinary course of business subsequent to
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the date of the most recent balance sheet included in the Memorandum) and such other matters
relating to the financial condition and prospects of the Company that the Placement Agent may
reasonably request.
(h) At each Closing, the Company shall pay and deliver to the Placement Agent the Placement Agent’s
Fee and the Agent’s Expenses, each calculated in accordance with Sections 3(d) and 3(f) hereof,
respectively.
(i) At the First Closing, the Company and the Placement Agent shall have entered into the Placement
Agent Warrant Agreement. At each Closing the Company shall have delivered to the Placement Agent
and/or its designees, the appropriate number of Agent’s Warrants, calculated in accordance with
Section 3(e) hereof.
(j) At the First Closing, the Company and the Placement Agent shall have entered into the ROFR
Agreement.
(k) At the First Closing and each Closing thereafter, (i) the Company and each Investor, as of the
date thereof, shall have entered into a Subscription Agreement and (ii) the Company, the Investors
as of the date thereof and the Placement Agent shall have entered into the Registration Rights
Agreement. At each Closing following the First Closing, additional Investors shall have entered
into a Subscription Agreement and Registration Rights Agreement.
(l) There shall have been delivered to the Placement Agent a signed opinion of counsel to the
Company (“Company Counsel”), dated as of each Closing Date, in form and substance satisfactory to
the Placement Agent and counsel to the Placement Agent, in their sole discretion.
(m) All proceedings taken at or prior to each Closing in connection with the authorization,
issuance and sale of the Notes, Warrants, Warrant Shares, the Conversion Shares and the Agent’s
Securities will be reasonably satisfactory in form and substance to the Placement Agent and its
counsel, and such counsel shall have been furnished with all such documents, certificates and
opinions as it may reasonably request upon reasonable prior notice in connection with the
transactions contemplated hereby.
6A. Mutual Condition. The obligations of the Placement Agent and the Company hereunder are
subject to the execution by each Investor of a Subscription Agreement in form and substance
acceptable to the Placement Agent and the Company.
7. Indemnification. (a) The Company will (i) indemnify and hold harmless the Placement
Agent, its selected dealers and their respective officers, directors, employees and each person, if
any, who controls, within the meaning of the Act, the Placement Agent and such selected dealers
(each an “Indemnitee”) against, and pay or reimburse each Indemnitee for, any and all losses,
claims, damages, liabilities or expenses whatsoever (or actions or proceedings or investigations in
respect thereof), joint or several (which will, for all purposes of this Agreement, include, but
not be limited to, all reasonable costs of defense and investigation and all attorneys’ fees and
disbursements, including appeals), to which any Indemnitee may become subject (x) under the Act or
otherwise, in connection with the offer and sale of the Units, and (y) as a result of the breach of
any representation, warranty or covenant made by the Company herein, regardless of whether such
losses, claims, damages, liabilities or expenses shall result from any claim of any Indemnitee or
any third party; and (ii) reimburse each Indemnitee for any legal or other expenses
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reasonably incurred in connection with investigating or defending against any such loss, claim,
action, damage or liability; provided, however, that the Company will not be liable
in any such case to the extent that any such claim, damage or liability results from (A) an untrue
statement or alleged untrue statement of a material fact made in the Memorandum, or an omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, made solely in reliance upon and in conformity with
written information furnished to the Company by the Placement Agent specifically for use in the
preparation thereof, or (B) any violations by the Placement Agent of the Act or state securities
laws that does not result from a violation thereof by the Company or any of its affiliates. In
addition to the foregoing agreement to indemnify and reimburse, the Company will indemnify and hold
harmless each Indemnitee from and against any and all losses, claims, damages, liabilities or
expenses whatsoever (or actions or proceedings or investigations in respect thereof), joint or
several (which shall for all purposes of this Agreement, include, but not be limited to, all costs
of defense and investigation and all attorneys’ fees, including appeals) to which any Indemnitee
may become subject insofar as such costs, expenses, losses, claims, damages or liabilities arise
out of or are based upon the claim of any person or entity that he or it is entitled to broker’s or
finder’s fees from any Indemnitee in connection with the Offering. The foregoing indemnity
agreements are in addition to any liability that the Company may otherwise have.
(b) The Placement Agent will indemnify and hold harmless the Company, its officers, directors,
employees and each person, if any, who controls the Company within the meaning of the Act against,
and pay or reimburse any such person for, any and all losses, claims, damages or liabilities or
expenses whatsoever (or actions, proceedings or investigations in respect thereof) to which the
Company or any such person may become subject under the Act or otherwise, whether such losses,
claims, damages, liabilities or expenses shall result from any claim of the Company, any of its
officers, directors, employees, agents, or any person who controls the Company within the meaning
of the Act or any third party, but only to the extent that such losses, claims, damages or
liabilities are based upon any untrue statement or alleged untrue statement of any material fact
contained in the Memorandum or an omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not misleading, in either
case, if made or omitted in reliance upon and in conformity with written information furnished to
the Company by the Placement Agent, specifically for use in the preparation thereof. The Placement
Agent will reimburse the Company or any such person for any legal or other expenses reasonably
incurred in connection with investigating or defending against any such loss, claim, damage,
liability or action, proceeding or investigation to which such indemnity obligation applies. The
foregoing indemnity agreements are in addition to any liability that the Placement Agent may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, claim, proceeding or investigation (the “Action”), such indemnified
party, if a claim in respect thereof is to be made against the indemnifying party under this
Section 7, will notify the indemnifying party of the commencement thereof, but the omission to so
notify the indemnifying party will not relieve it from any liability that it may have to any
indemnified party under this Section 7 unless the indemnifying party has been substantially
prejudiced by such omission. The indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party, to assume the defense thereof
subject to the provisions herein stated, with counsel reasonably satisfactory to such indemnified
party. The indemnified party will have the right to employ separate counsel in any such Action and
to participate in the defense thereof, but the fees and expenses of such
-15-
counsel will not be at the expense of the indemnifying party if the indemnifying party has assumed
the defense of the Action with counsel reasonably satisfactory to the indemnified party,
provided, however, that if the indemnified party shall be requested by the
indemnifying party to participate in the defense thereof or shall have concluded in good faith and
specifically notified the indemnifying party either that there may be specific defenses available
to it that are different from or additional to those available to the indemnifying party or that
such Action involves or could have a material adverse effect upon it with respect to matters beyond
the scope of the indemnity agreements contained in this Agreement, then the counsel representing
it, to the extent made necessary by such defenses, shall have the right to direct such defenses of
such Action on its behalf and in such case the reasonable fees and expenses of such counsel in
connection with any such participation or defenses shall be paid by the indemnifying party. No
settlement of any Action against an indemnified party will be made without the consent of the
indemnifying party and the indemnified party, which consent shall not be unreasonably withheld or
delayed in light of all factors of importance to such party and no indemnifying party shall be
liable to indemnify any person for any settlement of any such claim effected without such
indemnifying party’s consent.
8. Contribution. To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to Section 7 hereof and it is finally determined,
by a judgment, order or decree not subject to further appeal that such claim for indemnification
may not be enforced, even though this Agreement expressly provides for indemnification in such
case; or (ii) any indemnified or indemnifying party seeks contribution under the Act, the 1934 Act,
or otherwise, then each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only the relative benefits
but also the relative fault of the Company on the one hand and the Placement Agent on the other in
connection with the statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand and the Placement
Agent on the other shall be deemed to be in the same proportion as the total net proceeds from the
Offering (before deducting expenses) received by the Company bear to the total commissions and fees
actually received by the Placement Agent. The relative fault, in the case of an untrue statement,
alleged untrue statement, omission or alleged omission will be determined by, among other things,
whether such statement, alleged statement, omission or alleged omission relates to information
supplied by the Company or by the Placement Agent, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement, alleged statement,
omission or alleged omission. The Company and the Placement Agent agree that it would be unjust and
inequitable if the respective obligations of the Company and the Placement Agent for contribution
were determined by pro rata allocation of the aggregate losses, liabilities, claims, damages and
expenses or by any other method or allocation that does not reflect the equitable considerations
referred to in this Section 8. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) will be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person, if any,
who controls the Placement Agent within the meaning of the Act will have the same rights to
contribution as the Placement Agent, and each person, if any, who controls the Company within the
meaning of the Act will have the same rights to contribution as the Company, subject in each case
to the provisions of this Section 8. Anything in this Section 8 to the contrary notwithstanding, no
party will be liable for contribution with respect to the settlement of any claim or action
effected
-16-
without its written consent. This Section 8 is intended to supersede, to the extent permitted by
law, any right to contribution under the Act, the 1934 Act or otherwise available.
9. Termination. (a) The Offering may be terminated by the Placement Agent at any time prior
to the expiration of the Offering Period in the event that: (i) any of the representations,
warranties or covenants of the Company contained herein, in the Memorandum or in any other
Transaction Document shall prove to have been false or misleading in any material respect when
actually made; (ii) the Company shall have failed to perform any of its material obligations
hereunder or under any other Transaction Document; (iii) there shall occur any event, within the
control of the Company, that could materially adversely affect the transactions contemplated by
this Agreement or the other Transaction Documents or the ability of the Company to perform
hereunder or thereunder; or (iv) the Placement Agent determines that it is reasonably unlikely that
any of the conditions to the First Closing set forth herein will not, or cannot, be satisfied. In
the event of any such termination by the Placement Agent pursuant to clauses (i), (ii) or (iii) of
this Section 9(a), the Placement Agent shall be entitled to receive from the Company, in addition
to any other right or remedy the Placement Agent may have hereunder, at law or otherwise, an amount
equal to the sum of: (x) the Placement Agent’s Fee calculated as if there had been a closing on the
Maximum Amount and (y) the Agent Expenses incurred by the Placement Agent through the date of such
termination (collectively, the “Termination Amount”).
(b) The Offering may be terminated by the Company at any time prior to the expiration of the
Offering Period in the event that the Placement Agent shall have failed to perform any of its
material obligations hereunder. In the event of any such termination by the Company, the Placement
Agent shall not be entitled to any amounts whatsoever except (i) any Agent’s Compensation and Agent
Expenses earned through the Termination Date, provided there has been a Closing and (ii) as may be
due under any indemnity or contribution obligation provided herein or any other Transaction
Document, at law or otherwise. For avoidance of doubt, the Company shall not be required to pay
Agent’s Compensation or Agent Expenses if (x) there has not been a Closing and (y) the Company
terminates the Offering pursuant to this Section 9(b).
(c) This Offering may be terminated upon mutual agreement of the Company and Placement Agent at any
time prior to the expiration of the Offering Period. If the Offering is terminated pursuant to
this Section 9(c), then the Company shall pay the Placement Agent any Agent Expenses incurred
through the date of such termination.
(d) Before any termination by the Placement Agent under Section 9(a) or by the Company under
Section 9(b) shall become effective, the terminating party shall give written notice to the other
party of its intention to terminate the Offering (the “Termination Notice”). The Termination
Notice shall specify the grounds for the proposed termination. If the specified grounds for
termination, or their resulting adverse effect on the transactions contemplated hereby, are
curable, then the other party shall have ten (10) days from the Termination Notice within which to
remove such grounds or to eliminate all of their material adverse effects on the transactions
contemplated hereby; otherwise, the Offering shall terminate.
(e) Upon any termination pursuant to this Section 9, the Placement Agent and the Company shall
instruct the Escrow Agent to cause all monies received with respect to the subscriptions for Units
not accepted by the Company to be promptly returned to such subscribers without interest, penalty,
expense or deduction. The Company shall be responsible for any outstanding fees owed to the Escrow
Agent.
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10. Survival. (a) The obligations of the parties to pay any costs and expenses hereunder
and to provide indemnification and contribution as provided herein shall survive any termination
hereunder.
(b) The respective indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the Placement Agent set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or on behalf of, and
regardless of any access to information by, the Company or the Placement Agent, or any of their
officers or directors or any controlling person thereof, and will survive the sale of the Units or
any termination of the Offering.
11. Notices. All notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date delivered personally, or
the date mailed if mailed by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at such other address for a party as shall
be specified by like changes of address which shall be effective upon receipt) or sent by
electronic transmission, with confirmation received, if sent to the Placement Agent, will be
mailed, delivered or telefaxed and confirmed to: Xxxxxxx Xxxxx Ventures, Inc., 000 Xxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxxxxx, President, telefax number
(000) 000-0000, with a copy to: Xxxxxxx Xxxxxx LLP, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx X. Xxxxxxx, Esq., telefax number (000) 000-0000, and if
sent to the Company, to: The Immune Response Corporation, 0000 Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxxx X. X’Xxxxx, CEO and President, telefax number (000) 000-0000, with a copy
to: Xxxxxx X. Xxxxxxx, Esq., Xxxxxx Xxxxxx LLP, 4350 La Jolla Xxxxxxx Xxxxx, 0xx Xxxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000, telefax number (000) 000-0000.
12. ARBITRATION, CHOICE OF LAW; COSTS. THE PARTIES HERETO AGREE TO SUBMIT ALL CONTROVERSIES
TO ARBITRATION IN ACCORDANCE WITH THE PROVISIONS SET FORTH BELOW AND UNDERSTAND AND AGREE THAT (A)
ARBITRATION IS FINAL AND BINDING ON THE PARTIES, (B) THE PARTIES ARE WAIVING THEIR RIGHTS TO SEEK
REMEDIES IN COURT, INCLUDING THE RIGHT TO A JURY TRIAL, (C) PRE-ARBITRATION DISCOVERY IS GENERALLY
MORE LIMITED AND DIFFERENT FROM COURT PROCEEDINGS, (D) THE ARBITRATOR’S AWARD IS NOT REQUIRED TO
INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND ANY PARTY’S RIGHT TO APPEAL OR TO SEEK MODIFICATION
OF RULINGS BY ARBITRATORS IS STRICTLY LIMITED, (E) THE PANEL OF NASD, INC. (THE “NASD”) ARBITRATORS
WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES
INDUSTRY, AND (F) ALL CONTROVERSIES THAT MAY ARISE BETWEEN THE PARTIES CONCERNING THIS AGREEMENT
SHALL BE DETERMINED BY ARBITRATION PURSUANT TO THE RULES THEN PERTAINING TO THE NASD IN XXX XXXX XX
XXX XXXX, XXXXX XX XXX XXXX. JUDGMENT ON ANY AWARD OF ANY SUCH ARBITRATION MAY BE ENTERED IN THE
SUPREME COURT OF THE STATE OF NEW YORK OR IN ANY OTHER COURT HAVING JURISDICTION OVER THE PERSON OR
PERSONS AGAINST WHOM SUCH AWARD IS RENDERED. THE PARTIES AGREE THAT THE DETERMINATION OF THE
ARBITRATORS SHALL BE BINDING AND CONCLUSIVE UPON THEM. ANY NOTICE OF SUCH ARBITRATION OR FOR THE
-18-
CONFIRMATION OF ANY AWARD IN ANY ARBITRATION SHALL BE SUFFICIENT IF GIVEN IN ACCORDANCE WITH THE
PROVISIONS OF THIS AGREEMENT. THE PREVAILING PARTY, AS DETERMINED BY SUCH ARBITRATORS IN AN
ARBITRATION PROCEEDING SHALL BE ENTITLED TO COLLECT ANY COSTS, DISBURSEMENTS AND REASONABLE
ATTORNEY’S FEES FROM THE OTHER PARTY.
13. Modification; Performance; Waiver. No provision of this Agreement may be changed or
terminated except by a writing signed by the party or parties to be charged therewith. Unless
expressly so provided, no party to this Agreement will be liable for the performance of any other
party’s obligations hereunder. Any party hereto may waive compliance by the other with any of the
terms, provisions and conditions set forth herein; provided, however, that any such
waiver shall be in writing specifically setting forth those provisions waived thereby. No such
waiver shall be deemed to constitute or imply waiver of any other term, provision or condition of
this Agreement.
14. Entire Agreement. This Agreement, together with any other agreement referred to herein,
supersedes all prior agreements between the parties with respect to the Units to be offered and
sold hereunder and the subject matter hereof.
15. Execution in Counterparts. This Agreement may be executed in counterparts (and by
facsimile), each of which shall be deemed to be an original, and all of which taken together shall
constitute one and the same agreement (and all signatures need not appear on anyone counterpart).
This Agreement shall become effective when one or more counterparts has been signed and delivered
by each of the parties hereto.
16. Severability. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future laws, such provision shall be fully severable. This
Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part of this Agreement, and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of each such illegal,
invalid or unenforceable provision there shall be deemed added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as
may be possible to cause such provision to be legal, valid and enforceable.
17. Headings. The captions and headings used in this Agreement are for convenience only
and do not in any way affect, limit, amplify or modify the terms and provisions of this Agreement.
[SIGNATURE PAGE TO FOLLOW]
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If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return this Agreement, whereupon it will become a binding agreement between the Company and the
Placement Agent in accordance with its terms.
| Very truly yours, | ||||
| THE IMMUNE RESPONSE CORPORATION | ||||
| By: | ||||
| Title: | ||||
| Accepted and agreed to this | ||||
| __ day of February 2006. | ||||
| XXXXXXX XXXXX VENTURES, INC. | ||||
| By: | ||||
| Title: President | ||||
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