Exhibit 10.41
B-G DEVELOPMENT CORPORATION
AND
PACIFIC PHARMACEUTICALS, INC.
PLACEMENT AGENCY AGREEMENT
April 1, 1998
Paramount Capital, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xx.
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
B-G Development Corporation, a Delaware corporation ("BGDC") and
Pacific Pharmaceuticals, Inc., a Delaware Corporation ("Pacific" and
collectively with BGDC sometimes collectively referred to as the "Companies"),
hereby confirms its agreement to retain Paramount Capital, Inc. (the "Placement
Agent") on an exclusive basis to introduce the Companies to and to procure
subscriptions from certain "accredited investors" (as defined in Regulation D
under the Securities Act of 1933, as amended) as prospective purchasers
(collectively "Purchasers") of a minimum of 10 Units (the "Minimum Offering")
and a maximum of 60 Units (the "Maximum Offering"), with an option in favor of
the Placement Agent to offer up to an additional 40 Units to cover
over-allotments at a purchase price of $100,000 per Unit, with each "Unit"
consisting of 50,000 shares of Series A Convertible Exchangeable Preferred
Stock, stated value $2.00 per share (the "Preferred Stock"). Each share of
Preferred Stock is convertible at the option of the holder thereof into one
share of common stock of BGDC, par value $.001 per share (the "BGDC Common
Stock"), initially at a conversion price (the "Conversion Price") equal to $2.00
per share of Preferred Stock. In addition, under certain circumstances more
fully described in the Offering Documents (as defined below), the Preferred
Stock may be put to Pacific.
The sale to such Purchasers (the "Offering") will be made through a
private placement by the Placement Agent (or its designated selected dealers) on
a "best efforts" basis pursuant to the Confidential Term Sheet dated April 22,
1998, and all supplements, amendments and exhibits thereto, all of which
constitute an integral part thereof (the "Term Sheet"), separate subscription
agreements (the "Subscription Agreements") between the Companies and each
purchaser of Units in the Offering and related documents in accordance with
Section 4(2) of the Securities Act of 1933, as amended (the "Act") and
Regulation D promulgated thereunder.
The Term Sheet, the Subscription Agreements, any exhibits to the Term
Sheet, the Escrow Agreement, dated April 13, 1998 (the "Escrow Agreement"), the
Financial Advisory Agreement (as defined in Section 5(j) below), the Placement
Warrants (as defined in Section 4(d) below), the Advisory Warrants (as defined
in Section 5(j) below) and this Placement Agency
Agreement (this "Agreement"), are collectively referred to herein as the
"Offering Documents."
The Companies, at their sole cost, shall prepare and deliver to the
Placement Agent a reasonable number of copies of the Offering Documents in form
and substance satisfactory to the Placement Agent.
Each prospective Purchaser subscribing to purchase Units shall be
required to deliver, among other things, a Subscription Agreement, which shall
include a Confidential Investor Questionnaire (the "Questionnaire"). The
Companies shall make available to each prospective Purchaser, at a reasonable
time prior to the purchase of the Units, the opportunity to ask questions of and
receive answers from the Companies concerning the terms and conditions of the
Offering and the opportunity to obtain additional information necessary to
verify the accuracy of the documents delivered in connection with the purchase
of the Units to the extent it possesses such information or can acquire it
without unreasonable effort or expense. After the prospective Purchasers have
had an opportunity to review the Offering Documents, and to address all
inquiries to the Companies, separate Subscription Agreements shall be completed
by each prospective Purchaser. The Companies, with the consent of the Placement
Agent and the Placement Agent, in its sole discretion, shall have the right to
reject subscriptions in whole or in part. The Companies shall evidence its
acceptance of a subscription by countersigning a copy of the applicable
Subscription Agreement and returning the same to the Placement Agent.
Capitalized terms used in this Agreement, unless otherwise defined
herein or unless the context otherwise indicates, shall have the same meanings
provided in the Offering Documents.
1. APPOINTMENT OF PLACEMENT AGENT.
(a) The Placement Agent is hereby appointed exclusive placement
agent of the Companies (subject to the Placement Agent's right to have Selected
Dealers, as defined in Section 1(c) hereof, participate in the Offering) during
the Offering period herein specified for the purposes of assisting the Companies
in finding qualified subscribers pursuant to the Offering described in the
Offering Documents. The Placement Agent shall not be deemed an agent of the
Companies for any other purpose. The Offering period shall commence on the day
the Offering Documents are first made available to the Placement Agent by the
Companies for delivery in connection with the offering for the sale of the Units
(the "Commencement Date"). Upon receipt of the Minimum Offering amount, the
Placement Agent may conduct a closing (the "Initial Closing Date") and may
conduct subsequent closings on an interim basis until the Maximum Offering
amount (and any over-allotment) has been reached (the "Final Closing Date").
Each
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such closing may be referred to herein as a "Closing." If not terminated
earlier pursuant to this Agreement, the Offering period shall terminate at 11:59
p.m. New York City Time on the date that is 60 days following the Commencement
Date, subject to an extension, at the option of the Placement Agent, for an
additional 60 days (the "Termination Date"). Accordingly, the Offering period
shall terminate on the Final Closing Date or the Termination Date, as the case
may be. If subscriptions for the minimum 10 Units have not been received prior
to the end of the Offering Period, then the Offering will be terminated and all
funds received from subscribers will be returned with interest and without any
deduction.
(b) Subject to the performance by the Companies of all of their
obligations to be performed under this Agreement and to the completeness and
accuracy of all representations and warranties of the Companies contained in
this Agreement, the Placement Agent hereby accepts such agency and agrees to use
its best efforts to assist the Companies in finding qualified subscribers
pursuant to the Offering described in the Offering Documents and to keep the
Companies or their counsel reasonably well informed of subscriptions received.
It is understood that the Placement Agent has no commitment to sell the Units.
The Placement Agent's agency hereunder is not terminable by either Company prior
to the Termination Date, except as set forth in Section 8(g).
(c) The Placement Agent may engage other persons, selected by it
in its sole discretion, who are members of the National Association of
Securities Dealers, Inc., ("NASD") or who are located outside the United States
and who have executed a Selected Dealers Agreement (each such person being
hereinafter referred to as a "Selected Dealer") and the Placement Agent may
allow such persons to receive such part of the compensation and payment of
expenses payable to the Placement Agent hereunder as the Placement Agent shall
determine in its discretion; provided, however, that any such compensation shall
be received pursuant to Section 4(d) hereof.
(d) Subscriptions for Units shall be evidenced by the execution
by qualified subscribers of a Subscription Agreement. No Subscription Agreement
shall be effective unless and until it is accepted by the Companies. Until a
Closing is held, all subscription funds received shall be held as described in
the Escrow Agreement. The Placement Agent shall not have any independent
obligation to verify the accuracy or completeness of any information contained
in any Subscription Agreement or the authenticity, sufficiency, or validity of
any check delivered by any prospective Purchaser in payment for Units nor shall
the Placement Agent incur any liability with respect to any such check.
(e) COMPANY INSIDERS. Officers, directors or principal
stockholders
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of each of the Companies may invest in the Offering. Any such investments will
be included in calculating whether the 10 Units have been sold in the Minimum
Offering, whether the 60 Units have been sold in the Maximum Offering, and
whether the 40 Units have been sold pursuant to the over-allotment option.
(f) PLACEMENT AGENT INSIDERS. Certain affiliates of the
Placement Agent may purchase Units in the Offering. Affiliates of the Placement
Agent will invest net of cash commissions and expenses. Accordingly, the
Placement Agent will not receive a commission on the Units purchased by its
affiliates, and the Companies will receive net proceeds equivalent to the net
proceeds received from the purchase of Units by persons not affiliated with the
Placement Agent. The aggregate offering price of any such investments will be
included in calculating whether the 10 Units have been sold in the Minimum
Offering, whether the 60 Units have been sold in the Maximum Offering, and
whether the 40 Units have been sold pursuant to the over-allotment option.
(g) SUBSCRIPTION CHECKS. All subscription checks and funds
shall be promptly and directly delivered without offset or deduction to the bank
account at the State Street Bank and Trust Company, N.A. (the "Escrow Agent")
described in the Escrow Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES. The Companies
represent, covenant and warrant to the Placement Agent and each Selected Dealer,
if any, as follows:
(a) SECURITIES LAW COMPLIANCE. The Offering Documents, as of
their respective dates, do and shall, as of the date of the Term Sheet and each
Closing, describe the material aspects of an investment in the Companies and
conform in all material respects with the requirements of Section 4(2) of the
Act and Regulation D promulgated thereunder and with the requirements of all
other published rules and regulations of the Securities and Exchange Commission
(the "SEC") currently in effect relating to "private offerings" to "accredited
investors" as that term is defined in Regulation D under the Act. The Offering
Documents will not, as of the date of the Term Sheet and each Closing, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that no
representation is made with respect to information relating to the Placement
Agent that is provided in writing by the Placement Agent to the Companies
specifically for inclusion in the Offering Documents. If at any time prior to
the completion of the Offering or other termination of this Agreement any event
shall occur as a result of which it might become necessary to amend or
supplement the Offering Documents so that they do not include any untrue
statement of any
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material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances then existing, not
misleading, the Companies will promptly notify the Placement Agent and will
supply the Placement Agent (or the prospective Purchasers designated by the
Placement Agent) with amendments or supplements correcting such statement or
omission. The Companies will also provide the Placement Agent for delivery to
all offerees and Purchasers and their representatives, if any, with any
information, documents and instruments which the Placement Agent and the
Companies' counsel reasonably deem necessary to comply with applicable state and
federal law.
The Companies acknowledge that the Placement Agent (i) has not
supplied any information for inclusion in the Offering Documents other than
information relating to the Placement Agent furnished in writing to the
Companies by the Placement Agent specifically for inclusion in the Offering
Documents; (ii) has no obligation to independently verify any of the information
in the Offering Documents and (iii) has no responsibility for the accuracy or
completeness of the Offering Documents, except for the information relating to
the Placement Agent furnished in writing by the Placement Agent to the Companies
specifically for inclusion in the Offering Documents.
(b) ORGANIZATION. BGDC is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own and lease its
properties, to conduct its business as proposed in the Term Sheet, to execute
and deliver this Agreement and to carry out the transactions contemplated by
this Agreement. Pacific is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own and lease its properties, to
conduct its business as proposed in the Term Sheet, to execute and deliver this
Agreement and to carry out the transactions contemplated by this Agreement. As
of the Date of the Term Sheet, the Companies shall be duly qualified to conduct
business as a foreign corporation and in good standing in each jurisdiction in
which the conduct of its business or ownership or leasing of its properties
requires it to be so qualified, except where the failure to be so qualified
would not have a material adverse effect on the business, financial condition or
prospects of each of the Companies.
(c) CAPITALIZATION. The authorized, issued and outstanding
capital stock of BGDC prior to the consummation of the transactions contemplated
hereby is as set forth in the Offering Documents. The authorized, issued and
outstanding capital stock of Pacific is as set forth in Exhibit D to the Term
Sheet as of the date of the report reflected thereby. All issued and outstanding
shares of the Companies are validly issued, fully paid and nonassessable and
have not been issued in violation of the preemptive rights of any stockholder of
the Companies. The
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Preferred Stock, when issued, shall have the rights, preferences and privileges
substantially as set forth in the Certificate of Designations attached as an
exhibit to the Term Sheet. All prior sales of securities of the Companies were
either registered under the Act and applicable state securities laws or exempt
from such registration, and no security holder has any rescission rights with
respect thereto. Except as set forth in the Term Sheet, there are no
outstanding options, warrants, agreements, convertible securities, preemptive
rights or other rights to subscribe for or to purchase any shares of capital
stock of either of the Companies. Except as set forth in the Term Sheet and as
otherwise required by law, there are no restrictions upon the voting or transfer
of any shares of the Companies' respective capital stock pursuant to each
Companies' Certificate of Incorporation, By-Laws or other governing documents or
any agreement or other instruments to which either of the Companies is a party
or by which either of the Companies is bound.
(d) WARRANTS, PREEMPTIVE RIGHTS, ETC. Except as set forth in or
contemplated by the Term Sheet or any amendments thereto, there are not now, nor
will there be immediately after any Closing, any outstanding warrants, options,
agreements, convertible securities, rights of first refusal, rights of first
offer, preemptive rights or other rights to subscribe for or to purchase or
other commitments pursuant to which either Company is, or may become, obligated
to issue any shares of its capital stock or other securities of either Company
and this Offering will not cause any anti-dilution adjustments to such
securities or commitments except as reflected in the Term Sheet. There is not
now, nor will there be immediately after any Closing, a requirement for any
anti-dilution adjustments to any outstanding warrants, options, agreements,
convertible securities, rights of first refusal, rights of first offer,
preemptive rights or other rights to subscribe for or to purchase or other
commitments of Pacific, due to the existence of the Exchange Right (as defined
below) providing for the potential future issuance of shares of Pacific Common
Stock (as defined below).
(e) SUBSIDIARIES AND INVESTMENTS. Other than as disclosed in
the Term Sheet, neither of the Companies own, directly or indirectly, capital
stock or other equity ownership or proprietary interests in any other
corporation, association, trust, partnership, joint venture or other entity.
(f) FINANCIAL STATEMENTS. The financial information of BGDC, if
any, contained in the Offering Documents is accurate in all material respects.
Pacific's financial statements as set forth in the exhibits to the Term Sheet
have been prepared in conformity with generally accepted accounting principles
consistently applied and show all material liabilities, absolute or contingent,
of Pacific required to be recorded thereon and present fairly the financial
position and results of operations of Pacific on the dates and for the periods
indicated.
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(g) ABSENCE OF CHANGES. From the date of the Term Sheet, except
as has been or will be reflected in the Term Sheet prior to any Closing, neither
of the Companies has incurred any liabilities or obligations, direct or
contingent, other than those in the ordinary course of business, nor has either
of the Companies entered into any transaction that were not in the ordinary
course of business, which are material to the business of either of the
Companies, and there has been no change in the capital stock of, or any
incurrence of long-term debt by, either of the Companies, or any issuance of
options, warrants or other rights to purchase the capital stock of either of the
Companies, or any adverse change or any development involving a prospective
adverse change in the condition (financial or otherwise), net worth, results of
operations, business, key personnel or properties which would be material to the
business or financial condition of either the Companies, and neither of the
Companies have become a party to, and neither the business nor the property of
either of the Companies has become the subject of, any material litigation
whether or not in the ordinary course of business.
(h) TITLE. Each of the Companies has good and marketable title
to all tangible properties and assets owned by it, free and clear of all liens,
charges, encumbrances or restrictions, except such as are not materially
significant or important in relation to each of the Companies' respective
businesses. Except as has been or will be reflected in the Term Sheet prior to
each Closing, all of the material leases and subleases under which either of the
Companies is a lessor or sublessor of properties or assets or under which either
of the Companies holds properties or assets as lessee or sublessee are in full
force and effect, and neither of the Companies is in default in any material
respect with respect to any of the terms or provisions of any of such leases or
subleases, and no claim has been asserted by anyone adverse to rights of the
Companies as lessor, sublessor, lessee or sublessee under any of the leases or
subleases mentioned above, or affecting or questioning the right of the
Companies to continued possession of the leased or subleased premises or assets
under any such lease or sublease. Each of the Companies owns or leases all such
tangible properties as are necessary to its operations as now conducted and
proposed to be conducted and except to the extent described in the Term Sheet,
neither of the Companies presently anticipates the need for any capital
expenditures.
(i) PROPRIETARY RIGHTS. To the best of each of the Companies'
respective knowledge, except as has been or will be reflected in the Term Sheet
prior to each Closing, each of the Companies owns or possesses adequate and
enforceable rights to use all patents, patent applications, trademarks, trade
names, corporate names, copyrights, trade secrets, licenses, inventions,
formulations, technology and know-how and other intangible property used or
proposed to be used in the conduct of its business as described in or
contemplated by the Term Sheet (the "Proprietary Rights"). To the best of each
of the Companies' respective knowledge, except as has been, or will be,
reflected in the Term Sheet prior to each Closing, each of the
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Companies or the entities from whom the Companies have acquired rights has taken
all necessary action to protect each of the Companies' respective Proprietary
Rights. Except as set forth in the Term Sheet or otherwise disclosed to the
Placement Agent, neither of the Companies has received any notice of, and there
are no facts known to the Companies that indicate the existence of (i) any
infringement or misappropriation by any third party of any of the Proprietary
Rights or (ii) any claim by a third party contesting the validity of any of the
Proprietary Rights. Neither of the Companies has received any notice of any
infringement, misappropriation or violation by either of the Companies or any of
their respective employees of any Proprietary Rights of third parties, and, to
the best of each of each of the Companies' respective knowledge, neither of the
Companies nor any of their employees has infringed, misappropriated or otherwise
violated any Proprietary Rights of any third parties. To the best of each of
the Companies' respective knowledge, no infringement, illicit copying,
misappropriation or violation of any intellectual property rights of any third
party has occurred or will occur with respect to any products currently being
sold by the Companies or with respect to any products currently under
development by either of the Companies or with respect to the conduct of the
Companies' respective businesses as currently contemplated. Except as described
in the Term Sheet, neither of the Companies is aware that any of its employees
are obligated under any contract (including licenses, covenants or commitments
of any nature) or other agreement, or subject to any judgment, decree or order
of any court or administrative agency, that would interfere with the use of the
employee's best efforts to promote the interests of the Companies or that would
conflict with the Companies' respective businesses as presently conducted or as
proposed to be conducted. To the best of the Companies' knowledge, neither the
execution nor delivery of this Agreement, nor the carrying on of the Companies'
respective businesses by the employees of either of the Companies, nor the
conduct of the Companies' respective businesses, as presently conducted or as
proposed to be conducted with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any such employee is now obligated. In addition, all
employees are or shall be required to assign Proprietary Rights developed by any
of them in connection with their employment to either BGDC or Pacific, as
appropriate.
(j) LITIGATION. Except as set forth in the Term Sheet, there is
no material action, suit, claim or proceeding at law or in equity, or to each of
the Companies' respective knowledge, investigation or customer complaint, by or
before any arbitrator, governmental instrumentality or other agency now pending
or, to the knowledge of the respective Companies, threatened against either of
the Companies (or basis therefor known to the either of Companies which the
Companies believe may result in the foregoing) the adverse outcome of which
could reasonably be expected to have a material adverse effect on the Companies'
respective businesses, prospects or financial condition. Neither of the
Companies is subject to any judgment, order, writ, injunction or decree of any
Federal, state, municipal or other
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governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign which would materially adversely affect the Companies'
respective businesses, prospects or financial condition.
(k) NON-DEFAULTS, NON-CONTRAVENTION. Neither of the Companies
is in violation of or default under, nor will the execution or delivery or
performance of this Agreement and any of the Offering Documents, and
consummation of the transactions contemplated herein or therein, result in a
violation of, or constitute a default in the performance or observance of, any
obligation (i) under its Certificate of Incorporation, as amended, or its
By-laws, or any indenture, mortgage, contract, material purchase order or other
agreement or instrument to which either of the Companies is a party or by which
it or its property is bound or affected, or (ii) with respect to any material
order, writ, injunction or decree of any court of any Federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and there is no existing condition, event
or act which constitutes, nor which after notice, the lapse of time or both,
could constitute a default under any of the foregoing, which in either case
(except in respect of the execution and delivery and performance of this
Agreement) would have a material adverse effect on the business, financial
condition or prospects of each of the Companies.
(l) TAXES. The Companies have each filed all Federal, state,
local and foreign tax returns that are required to be filed by each and all such
returns are true and correct in all respects. Each of the Companies has paid
all taxes pursuant to such returns or pursuant to any assessments received by it
or which it is obligated to withhold from amounts owing to any employee,
creditor or third party. The Companies have properly accrued all taxes required
to be accrued. The tax returns of each of the Companies have never been audited
by any state, local or Federal authorities. Neither of the Companies has waived
any statute of limitations with respect to taxes or agreed to any extension of
time with respect to any tax assessment or deficiency.
(m) COMPLIANCE WITH LAWS, LICENSES, ETC. Neither of the
Companies has received notice of any violation of, or non-compliance with, any
Federal, state, local or foreign, laws, ordinances, regulations and orders
applicable to its business, the violation of, or noncompliance with which, could
reasonably be expected to have a material adverse effect on the business,
operations or financial condition of each of the Companies. Each of the
Companies has all governmental licenses and permits and other governmental
certificates, authorizations and permits and approvals (collectively,
"Licenses") required by every Federal, state and local government or regulatory
body for the operation of its business as currently conducted and the use of its
properties, except where the failure to be licensed would not have a material
adverse effect
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on the business, operations, financial condition, or prospects of it. Each of
the Companies' respective Licenses are in full force and effect and no
violations are or have been recorded in respect of any License and no proceeding
is pending or, to the best knowledge of the each of the Companies, threatened to
revoke or limit any License.
(n) AUTHORIZATION OF DOCUMENTS AND UNITS. Each of the Offering
Documents has been, or prior to any Closing will be, duly and validly
authorized, executed and delivered by the Companies and the execution, delivery
and performance by the Companies of the Offering Documents, has been duly
authorized by all requisite corporate action on the part of each of the
Companies and when delivered constitute, or will constitute, the legal, valid
and binding obligations of each of the Companies, enforceable in accordance with
their respective terms, subject to the availability and enforceability of
equitable remedies and to applicable bankruptcy and other laws relating to the
rights of creditors generally and except as the enforcement of the rights to
indemnification and contribution hereunder and under any other Offering
Documents may be limited by federal or state securities laws or public policy.
BGDC has full corporate power and lawful authority to authorize, issue and sell
the Units and the Preferred Stock underlying the Units to be sold to the
Purchasers. Pacific has full corporate power and authority to provide the
Purchasers with the Initial Exchange Right and the Exchange Right (each as
defined in the Subscription Agreement) and Pacific's performance of such
obligation does not constitute a fraudulent transfer or fraudulent conveyance
under Federal or state law. No consent is required by either of the Companies
from stockholders or any third party to perform any of their respective
obligations under this Agreement or any of the Offering Documents
(o) EXEMPTION FROM REGISTRATION. Assuming (i) the accuracy of
the information provided by the respective Purchasers in the Subscription
Agreements, (ii) the timely filing of a Form D by the Companies and (iii) the
accuracy of the representations and warranties of the Placement Agent contained
herein, the offer and sale of the Units and the granting of the Placement
Warrants and Advisory Warrants (as hereinafter defined) pursuant to the terms of
this Agreement are exempt from the registration requirements of the Act and the
rules and regulations promulgated thereunder (the "Regulations"). The Companies
are not disqualified from the exemption under Regulation D by virtue of the
disqualifications contained in Rule 505(b)(2)(iii) or Rule 507 promulgated
thereunder. There exists no fact or set of facts which may cause the Offering
to be integrated with any other offering of either of the Companies' securities
nor which would cause this Offering to lose its exemption under Regulation D.
(p) REGISTRATION RIGHTS. Except as set forth in the Term Sheet
or in Article V of the Subscription Agreement, no person has any right to cause
either of the Companies to effect the registration under the Act of any of
securities of either of the Companies.
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(q) BROKERS. Neither the Companies nor any of their respective
officers, directors, employees or stockholders has employed any broker or finder
in connection with the transactions contemplated by this Agreement other than
the Placement Agent.
(r) TITLE TO UNITS. When certificates representing the
Preferred Stock shall have been duly delivered to the Purchasers and payment
shall have been made for the Units, the several Purchasers shall have good and
valid title to the Preferred Stock, and upon conversion of such Preferred Stock,
will have good and valid title to the Common Stock issuable upon such conversion
(the "Conversion Shares"), in each case, free and clear of all liens,
encumbrances and claims and adverse claims with the exception of claims arising
from the acts of the Purchasers themselves, whatsoever (except as arising from
applicable Federal and state securities laws), and BGDC shall have paid all
taxes, if any, in respect of the original issuance thereof. Upon exercise by a
Purchaser of the Initial Exchange Right or the Exchange Right (each as defined
in the Term Sheet), as applicable, if payment thereof is made by Pacific through
the issuance of shares of common stock of Pacific, par value $.02 per share
("Pacific Common Stock"), each such Purchaser will have good and valid title to
the Pacific Common Stock issuable upon such exercise (the "Exchange Shares"), in
each case, free and clear of all liens, encumbrances and claims and adverse
claims with the exception of claims arising from the acts of the Purchasers
themselves, whatsoever (except as arising from applicable Federal and state
securities laws), and Pacific shall have paid all taxes, if any, in respect of
the original issuance thereof. When certificates representing the Placement and
Advisory Warrants shall have been duly delivered to the Placement Agent and
payment shall have been made for the Placement and Advisory Warrants, the
Placement Agent or its designees shall have good and valid title to the
Placement and Advisory Warrants, and upon exercise of such Placement or Advisory
Warrants, in accordance with their respective terms, will have good and valid
title to the Preferred Stock issuable upon such exercise, and upon conversion of
the Preferred Stock issuable upon exercise of such Placement and Advisory
Warrants, will have good and valid title to the Common Stock into which such
Preferred Stock is converted, in each case, free and clear of all liens,
encumbrances and adverse claims with the exception of claims arising from the
acts of the Purchasers themselves, whatsoever (except as arising from applicable
Federal and state securities laws), and BGDC shall have paid all taxes, if any,
in respect of the original issuance thereof. The Preferred Stock issuable upon
exercise of the Placement and Advisory Warrants, will be entitled to the Initial
Exchange Right and/or the Exchange Right and upon exercise of either the Initial
Exchange Right or the Exchange Right, as applicable, the holders of the
Placement and Advisory Warrants shall have good and valid title to the Exchange
Shares issuable upon such exercise, in each case, free and clear of all liens,
encumbrances and adverse claims with the exception of claims arising from the
acts of the Purchasers themselves, whatsoever (except as arising from applicable
Federal and state securities laws), and Pacific shall have paid all taxes, if
any, in respect of the original issuance thereof.
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(s) ACCURACY OF REPORTS. All material reports required to be
filed by Pacific within the two years prior to the date of this Agreement under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), have been
duly filed with the SEC, complied at the time of filing in all material respects
with the requirements of their respective forms and, except to the extent
updated or superseded by the Term Sheet or any subsequently filed report, were
complete and correct in all material respects as of the dates at which the
information was furnished, and contained (as of such dates) no untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading.
3. REPRESENTATIONS AND WARRANTIES OF PLACEMENT AGENT. The Placement
Agent represents and warrants as follows:
(a) The Placement Agent is duly organized, validly existing and
in good standing as a corporation under the laws of the State of New York with
full power and authority to enter into and perform this Agreement.
(b) In offering the Units, the Placement Agent shall deliver (or
direct the Companies to deliver) to each prospective purchaser, prior to the
Companies' acceptance of any subscription from such prospective purchaser, the
appropriate Offering Documents. The Placement Agent will not engage in a
general solicitation or employ general advertising in connection with the
Offering.
(c) The Placement Agent shall use its reasonable efforts to
conduct the Offering in material compliance with applicable federal and state
securities laws so as to preserve the exemption provided in Section 4(2) and
Regulation D of the Act and any applicable rules or regulations promulgated
thereunder or under such state securities laws or regulations. The Placement
Agent shall use reasonable efforts to make offers only to persons with whom the
Placement Agent has reasonable grounds to believe are "accredited investors" (as
defined in Regulation D under the Act). The final acceptance of any
subscription shall be made only after each of the Companies has reviewed the
Subscription Agreement and agreed to such final acceptance and determination as
to the status of such subscriber which shall remain solely the responsibility of
the Companies.
(d) The Placement Agent is, and at each Closing will be, (i) a
securities broker-dealer registered with the SEC and any jurisdiction where
broker-dealer registration is required in order for the Companies to sell the
Units in such jurisdiction and (ii) a member in good standing of the NASD.
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4. CLOSING; PLACEMENT AND FEES.
(a) CLOSING. Provided that the Placement Agent has received
subscriptions for the Minimum Offering amount, the Placement Agent may conduct,
in its sole discretion, Closings (the date of each a "Closing Date") at the
offices of the Placement Agent, located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, until the Final Closing Date. On each Closing Date, payment for the Units
issued and sold by the Companies shall be made to the Companies in immediately
available funds against delivery of certificates evidencing the Preferred Stock
comprising such Units.
(b) CONDITIONS TO PLACEMENT AGENT'S OBLIGATIONS. The
obligations of the Placement Agent hereunder are subject to the accuracy of the
representations and warranties of each of the Companies herein contained as of
the date hereof and as of each Closing Date, to the performance by each of the
Companies of their obligations hereunder and to the following additional
conditions:
(i) DUE QUALIFICATION OR EXEMPTION. (A) The Offering
contemplated by this Agreement shall become qualified or be exempt from
qualification under the securities laws of the several states pursuant to
paragraph 4(c) below not later than the Closing Date, subject to any filings to
be made thereafter and (B) at the applicable Closing Date no stop order
suspending the sale of the Units shall have been issued, and no proceeding for
that purpose shall have been initiated or threatened;
(ii) NO MATERIAL MISSTATEMENTS. Neither the Blue Sky
qualification materials, the Offering Documents, nor any attachment or
supplement thereto, will contain an untrue statement of a fact, which in the
opinion of the Placement Agent, is material, or omit to state a fact, which, in
the opinion of the Placement Agent, is material and is required to be stated
therein, or is, in the opinion of the Placement Agent, necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(iii) COMPLIANCE WITH AGREEMENTS. Each of the Companies
shall have complied with all agreements and satisfied all conditions on their
respective parts to be performed or satisfied hereunder and under the
Subscription Agreements at or prior to each Closing;
(iv) CORPORATE ACTION. Each of the Companies shall have
taken all corporate action necessary in order to permit the valid execution,
delivery and performance of
13
the Offering Documents by the Companies, including, without limitation,
obtaining the approval of the Companies' respective boards of directors, for the
execution and delivery of the Offering Documents, the performance by each of the
Companies of their obligations hereunder and the Offering contemplated hereby;
(v) OPINION OF COUNSEL TO THE COMPANIES. The Placement
Agent shall receive the opinion of counsel to the Companies (stating that each
of the Purchasers may rely thereon as though addressed directly to such
Purchaser), dated as of each Closing Date, substantially to the effect that:
(A) each of the Companies is duly incorporated and
validly existing and in good standing under the laws of the State of Delaware,
has all requisite corporate power and authority necessary to own or hold its
properties and conduct its business as described in the Term Sheet and Pacific
is duly qualified or licensed to do business as a foreign corporation and is in
good standing in the State of California and each of the Companies is duly
qualified in each jurisdiction in which the nature of the business conducted, or
as proposed to be conducted in the Term Sheet, by it or the properties owned,
leased or operated by it, makes such qualification or licensing necessary and
where the failure to be so qualified or licensed would have a material adverse
effect upon such Company. To such counsel's best knowledge, except as set forth
in the Term Sheet or otherwise disclosed in filings made by Pacific with the
SEC, neither Company has any subsidiaries and neither Company owns, directly or
indirectly, any capital stock or other equity ownership or proprietary interests
in any other corporation, association, trust, partnership, joint venture or
other entity;
14
(B) the execution, delivery and performance of each of
the Offering Documents to which either Company is a signatory, and the issuance
of (I) the Units, the Preferred Stock comprising the Units, the Placement
Warrants, the Advisory Warrants, (II) the Preferred Stock issuable upon exercise
of the Placement and Advisory Warrants, (III) the Conversion Shares (including
the Conversion Shares underlying the Preferred Stock issuable upon exercise of
the Placement and Advisory Warrants), (IV) the Initial Exchange Shares and/or
Exchange Shares (including the Initial Exchange Shares and/or the Exchange
Shares issuable upon exchange of the Preferred Stock underlying the Placement
and Advisory Warrants), have been duly authorized by all necessary corporate
action on the part of Pacific and no stockholder approval is required for the
issuance of the Initial Exchange Shares or the Exchange Shares. Each of the
Offering Documents to which either of the Companies is a signatory has been duly
executed and delivered by such Companies and constitutes a legal, valid and
binding obligation of such Company enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, receivership or
other laws of general application relating to or affecting generally the
enforcement of creditors' rights and the application of equitable principles in
any action, legal or equitable, and except as rights to indemnity or
contribution may be limited by applicable law.
(C) the authorized, issued and outstanding capital
stock of each of the Companies as of the date hereof (before giving effect to
the transactions contemplated by this Agreement) is as set forth in the Term
Sheet. To the best knowledge of such counsel, there are no outstanding
warrants, options, agreements, convertible securities, preemptive rights or
other commitments pursuant to which either of the Companies is, or may become,
obligated to issue any shares of its capital stock or other securities other
than as set forth in the Term Sheet. All of the issued shares of capital stock
of each of the Companies have been duly and validly authorized and issued, are
fully paid and nonassessable and have not been issued in violation of the
preemptive rights of any security holder;
(D) assuming (x) the accuracy of the information
provided by the Purchasers in the Subscription Documents and (y) the timely
filing with the SEC and any applicable state securities authority of a Form D
and amendments thereto containing accurate and complete information, the
issuance and sale of the Units is exempt from registration under the Securities
Act and Rule 506 of Regulation D promulgated thereunder and is not subject to
integration with any prior or current offering of the Companies's securities;
(E) neither the execution and delivery of the Offering
Documents nor compliance with the terms hereof or thereof, nor the consummation
of the transactions herein or therein contemplated, has, nor will, conflict
with, result in a breach of, or
15
constitute a default under the Certificate of Incorporation or By-laws of either
of the Companies, or any material contract, instrument or document known to such
counsel to which either of the Companies is a party, or by which it or any of
its properties is bound or, to the best knowledge of such counsel, after due
inquiry, violate any applicable order or decree of any governmental agency or
court having jurisdiction over either the Companies or any of its properties or
business;
(F) except as disclosed in the Term Sheet, to such
counsel's best knowledge, there are no claims, actions, suits, investigations or
proceedings before or by any arbitrator, court, governmental authority or
instrumentality pending or threatened against either of the Companies which
could, if adversely determined, materially and adversely affect the business,
properties or financial condition of either of the Companies, the transactions
or other acts contemplated by the Offering Documents or the validity or
enforceability of the Offering Documents. Except as disclosed in the Term
Sheet, to such counsel's knowledge, neither of the Companies is a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality naming such Company;
(G) upon the issuance of the Units, the Preferred
Stock (including the shares of Preferred Stock issuable upon exercise of the
Placement and Advisory Warrants), the Placement and Advisory Warrants, the
Conversion Shares (including the Conversion Shares underlying the Preferred
Stock issuable upon exercise of Placement and Advisory Warrants) and the
Exchange Shares (including the Exchange Shares underlying the Preferred Stock
issuable upon exercise of Placement and Advisory Warrants), each of the
Purchasers or the Placement Agent and its designees, as the case may be, shall
acquire such securities, free and clear of all pledges, liens, claims,
encumbrances, preemptive rights, rights of first offer or right of first refusal
and restrictions known to such counsel after due inquiry, and imposed by or
through each of the Companies, except for the transfer restrictions set forth in
the Subscription Agreements and any action taken to encumber such securities by
the holders thereof;
(H) the Placement Warrants and the Advisory Warrants,
when issued in accordance with the terms of this Agreement and/or the
Subscription Agreement, as applicable, for the consideration expressed therein,
will have been validly issued and will constitute legal, valid and binding
obligations of the Companies enforceable against the Companies in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating or affecting generally the enforcement of
creditors' rights and the application of equitable principles in any action,
legal or equitable. The Units and the Preferred Stock to be issued as of the
date of such opinion, when issued in accordance with the terms of this Agreement
and the Subscription Agreement for the consideration expressed therein, will
have been validly
16
issued and such Preferred Stock will be fully paid and nonassessable. The
Preferred Stock issuable upon exercise of the Placement and Advisory Warrants,
when issued in accordance with the terms thereof for the consideration expressed
therein, will have been duly issued; such Preferred Stock will be fully paid and
nonassessable and will constitute legal, valid and binding obligations of the
Companies enforceable against the Companies in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating or affecting generally the enforcement of creditors' rights and the
application of equitable principles in any action, legal or equitable and shall
be entitled to the rights, preferences and privileges as set forth in the
Certificate of Designations and Article VI of the Subscription Agreement. The
Conversion Shares (including the Conversion Shares underlying the Preferred
Stock issuable upon exercise of the Placement and Advisory Warrants), have been
duly authorized and reserved for issuance and, when issued in accordance with
the terms of the Preferred Stock, will have been validly issued and will be
fully paid and nonassessable.
(I) each of the Companies' respective By-laws and/or
Certificate of Incorporation, as in effect as of the date of such opinion,
contain provisions indemnifying all directors against liability and absolving
all directors from liability to the Companies and its stockholders to the
maximum extent permitted under the laws of the State of Delaware;
(J) the issuance of shares of Pacific Common Stock (as
defined below) in satisfaction of the Exchange Right (as defined below) will not
cause any anti-dilution adjustments to any outstanding warrants, options,
agreements, convertible securities, rights of first refusal, rights of first
offer, preemptive rights or other rights to subscribe for or to purchase or
other commitments of Pacific.
Such counsel shall state that, in opining on any matter
stated to be subject to the knowledge of such counsel, such counsel has made
appropriate inquiries of officers of each of the Companies with respect to the
subject matter of such opinion and has reviewed all documents the existence of
which is disclosed by such inquiries or of which such counsel otherwise is aware
of as a result of its representation of the Companies.
In addition, such counsel shall state that in course of
the preparation of the Offering Documents, which involved, among other things,
discussions and inquiries concerning the various legal matters and the review of
certain corporate records, documents and proceedings, counsel participated in
conferences with certain officers and other representatives of each of the
Companies and the Placement Agent during which the contents of
17
the Offering Documents and related matters were discussed. Such counsel shall
advise the Placement Agent in the form of an opinion of counsel that such
counsel has no reason to believe that as of each Closing Date, the Term Sheet or
any document incorporated by reference therein contained any untrue statement of
a material fact relating to either of the Companies or omitted to state a
material fact relating to either of the Companies required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
(vi) OPINION OF PATENT COUNSEL. If requested by the
Placement Agent, the Placement Agent shall receive the opinion of patent counsel
to the Companies (which counsel shall be satisfactory to the Placement Agent),
dated the Closing Date in the form and substance satisfactory to counsel for the
Placement Agent;
(vii) OFFICER'S CERTIFICATE. The Placement Agent shall
receive an Officer's Certificate substantially in the form of Exhibit A hereto,
signed by the appropriate parties of each of BGDC and Pacific and dated as of
each Closing Date. These certificates shall state, among other things, that the
representations and warranties contained in Section 2 hereof are true and
accurate in all material respects at such Closing Date with the same effect as
though expressly made at such Closing Date;
(viii) ESCROW AGREEMENT. The Placement Agent shall receive a
copy of a duly executed Escrow Agreement with the Escrow Agent dated April 13,
1998; and
(ix) TRANSMITTAL LETTERS. The Placement Agent shall receive
copies of all letters from the Companies to the Purchasers transmitting the
Preferred Stock and shall receive a letter from the Companies confirming
transmittal of the securities to the Purchasers.
(c) BLUE SKY. A summary blue sky survey, at the sole cost of
the Companies (including, without limitation, the legal fees and disbursements
in connection therewith), shall be prepared by counsel to the Placement Agent
stating the extent to which and the conditions upon which offers and sales of
the Units may be made in certain jurisdictions. It is understood that such
survey may be based on or rely upon (i) the representations of each Purchaser
set forth in the Subscription Agreement delivered by such Purchaser, (ii) the
representations, warranties and agreements of each of the Companies set forth in
Section 2 of this Agreement, (iii) the representations and warranties of the
Placement Agent, and (iv) the representations of each of the Companies set forth
in the certificate to be delivered at each Closing pursuant to paragraph (viii)
of Section 4(b).
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(d) PLACEMENT FEES AND EXPENSES. Simultaneously with payment
for, and delivery of, the Units at each Closing as provided in paragraph 4(a)
above, the Companies shall at such Closing pay to the Placement Agent (i) a
commission (the "Cash Commission") equal to 9% of the gross proceeds from the
sale of the Units and (ii) a non-accountable expense allowance (the "Expense
Allowance") equal to 4% of the gross proceeds from the sale of the Units. The
Companies shall also pay all expenses in connection with the qualification of
the Units under the securities or Blue Sky laws of the states which the
Placement Agent shall designate. In addition, upon each Closing of the sale of
the Units being offered, the Companies will sell to the Placement Agent and/or
its designees warrants (the "Placement Warrants") to acquire a number of newly
issued Units equal to 10% of the Units issued in the Offering, for $.001 per
warrant, exercisable for a period of 10 years commencing six months after the
Final Closing Date at an exercise price equal to 110% of the initial offering
price of the Units. The Preferred Stock underlying the Placement Warrants shall
be entitled to (A) the rights, preferences and privileges set forth in the
Certificate of Designation attached to the Term Sheet as Exhibit B, (B) the
rights set forth in Article VI of the Subscription Agreement and shall accrue
dividends from the date of initial issuance of the Preferred Stock regardless of
the date on which the Placement Warrants are exercised. In addition, the
Conversion Shares issuable upon conversion of the Preferred Stock underlying the
Placement Warrants shall be entitled to the registration rights as described in
Article V of the Subscription Agreement. The securities underlying the
Placement Warrants shall not be subject to redemption by BGDC nor shall they be
callable or mandatorily convertible by BGDC. The Placement Warrants shall not
be transferred, sold, assigned or hypothecated for a period of six months;
provided, however, that the Placement Agent may assign in whole or in part
during such period to any NASD member participating in the Offering, any officer
or employee of the Placement Agent, or any such NASD member. The Placement
Warrants shall contain a cashless exercise feature, a promissory note exercise
feature and antidilution provisions.
(ii) The Companies shall pay to the Placement Agent with
respect to any investment by any Purchasers introduced to either of the
Companies by the Placement Agent ("Covered Investors") for any purchase of
securities by such Covered Investor from either of the Companies during the 12
months following the Final Closing Date of the Offering: (A) a cash commission
equal to 9% of the aggregate amount of any such investment; (B) a
non-accountable expense allowance equal to 4% of the aggregate amount of any
such investment; and (C) warrants to acquire a number of securities of even
class with the securities purchased by any such Covered Investor equal to 10% of
the number of securities purchased by such Covered Investor.
(e) NO ADVERSE CHANGES. There shall not have occurred, at any
time prior to each Closing (i) any domestic or international event, act or other
similar occurrence which
19
has disrupted, or in the Placement Agent's determination, will materially
disrupt, the securities markets; (ii) a general suspension of, or a general
limitation on prices for, trading in securities on the New York Stock Exchange,
the American Stock Exchange, the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") National Market, the NASDAQ SmallCap
Market, or on the OTC Bulletin Board; (iii) any outbreak of major hostilities or
other national or international calamity not having a material effect on the
performance of this Agreement; (iv) any banking moratorium declared by a state
or federal authority; (v) any moratorium declared in foreign exchange trading by
major international banks or other persons; (vi) any material interruption in
the mail service or other means of communication within the United States;
(vii) any materially adverse change in the business, properties, assets, results
of operations, prospects or financial condition of either of the Companies; or
(viii) any change in the market for securities in general or in political,
financial, or economic conditions which, in the Placement Agent's reasonable
judgment, makes it inadvisable to proceed with the offering, sale, and delivery
of the Units.
5. COVENANTS OF THE COMPANIES.
(a) USE OF PROCEEDS. The net proceeds of the Offering shall be
used by each of the Companies substantially as set forth in the Term Sheet.
Except as set forth in the Term Sheet, neither of the Companies shall use any
proceeds from the Offering to repay any indebtedness (other than capital lease
obligations), including but not limited to any indebtedness to current executive
officers or principal stockholders of either of the Companies, but excluding
accounts payable to non-affiliates incurred in the ordinary course of business.
(b) EXPENSES OF OFFERING. BGDC shall be responsible for and
shall bear all expenses incurred in connection with the proposed Offering,
including but not limited to, the costs of preparing and duplicating the Term
Sheet and all exhibits thereto; the costs of preparing, printing and filing with
the SEC any registration statement described in Article V of the Subscription
Agreement (a "BGDC Registration Statement") and any amendments, post-effective
amendments and supplements thereto; preparing, duplicating and delivering
exhibits thereto and copies of the preliminary, final and supplemental
prospectus; preparing, duplicating and delivering (including by facsimile) all
selling documents, including but not limited to the Term Sheet, the Placement
Agency Agreement, Subscription Agreements, blue sky memorandum and stock
certificates; blue sky fees, filing fees and legal fees and disbursements of the
Placement Agent's counsel in connection with blue sky matters; fees and
disbursements of the transfer; the cost of a total of two sets of bound closing
volumes for the Placement Agent and its counsel; and the cost of three
tombstone advertisements, at least one of which shall appear in a national
business newspaper and one of which shall appear in a major New York newspaper
(or, at the option of
20
the Placement Agent, 40 lucite deal mementos) (collectively, the "Companies
Expenses"). Pacific shall be responsible for and shall bear all expenses
incurred in connection preparing, printing and filing with the SEC any
registration statement for the Exchange Shares described in Article V of the
Subscription Agreement (a "Pacific Registration Statement") and any amendments,
post-effective amendments and supplements thereto; preparing, duplicating and
delivering exhibits thereto and copies of the preliminary, final and
supplemental prospectus. The Companies agrees to use a printer designated by
the Placement Agent and which is reasonably acceptable to the Companies. BGDC
shall pay to the Placement Agent a non-accountable expense allowance equal to 4%
of the gross proceeds from the sale of Units to cover the cost of the Placement
Agent's mailing, telephone, telecopy, travel, due diligence meetings and other
similar expenses including legal fees of the Placement Agent's counsel (other
than legal fees in connection with blue sky matters as to which fees BGDC shall
be responsible and any items designated above as Companies Expenses). If the
proposed financing is not completed for any reason, then the Companies shall be
responsible for and shall reimburse the Placement Agent a fee equal to $100,000
in addition to all reasonable costs incurred in connection with the preparation
of the Offering Documents (including, without limitation, attorney's fees,
expenses and disbursements).
(c) NOTIFICATION. The Companies shall notify the Placement
Agent immediately, and in writing, (i) when any event shall have occurred during
the period commencing on the date hereof and ending on the Final Closing Date as
a result of which the Offering Documents would 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 not misleading in light of the
circumstances under which they were made, and (ii) of the receipt of any
notification with respect to the modification, rescission, withdrawal or
suspension of the qualification or registration of the Units, or of any
exemption from such registration or qualification, in any jurisdiction. The
Companies will use their best efforts to prevent the issuance of any such
modification, rescission, withdrawal or suspension and, if any such
modification, rescission, withdrawal or suspension is issued and the Placement
Agent so requests, to obtain the lifting thereof as promptly as possible.
(d) BLUE SKY. The Companies shall use their best efforts to
qualify the Units for offering and sale under exemptions from qualification or
registration requirements under the securities or "blue sky" laws of such
jurisdictions as the Placement Agent may reasonably request; provided however,
that neither of the Companies will be obligated to qualify as a dealer in
securities in any jurisdiction in which it is not so qualified. The Companies
will not consummate any sale of Units in any jurisdiction in which both
Companies are not so qualified or in any manner in which such sale may not be
lawfully made.
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(e) REGISTRATION STATEMENT FILING. (i) BGDC agrees that if, at
any time, and from time to time, after the earlier of (A) the initial public
offering of BGDC Common Stock (the "IPO") and (B) the first date (the "Trading
Date") on which BGDC Common Stock (or securities received in exchange for BGDC
Common Stock) trades on a national securities exchange or on the National
Association of Securities Dealers, Inc. Automated Quotation System (collectively
"NASDAQ") (a "Trading Event"), and ending on the date that is five years from
the Final Closing Date, the Board of Directors of BGDC shall authorize the
filing of a registration statement (a "BGDC Registration Statement") under the
Securities Act (other than the initial public offering of the BGDC Common Stock,
or other than a registration statement on Form X-0, Xxxx X-0 or any other form
that does not include substantially the same information as would be required in
a form for the general registration of securities) in connection with the
proposed offer of any of its securities by it or any of its stockholders, BGDC
will (1) promptly notify each holder of Preferred Stock that such registration
statement will be filed and that the Conversion Shares then held by such holder
of Preferred Stock will be included in such registration statement at such
holder's request, (2) cause such BGDC Registration Statement to cover all of
such Conversion Shares owned by the holder requesting inclusion, (3) use its
reasonable best efforts to cause such BGDC Registration Statement to become
effective as soon as practicable and (4) take all other action necessary under
any Federal or state law or regulation of any governmental authority to permit
all such Conversion Shares owned by the Purchaser to be sold or otherwise
disposed of, and will maintain such compliance with each such Federal and state
law and regulation of any governmental authority for the period necessary for
the Purchaser to effect the proposed sale or other disposition.
(x) Notwithstanding the foregoing, BGDC may at any
time, abandon or delay any BGDC Registration Statement commenced by BGDC. In
the event of such an abandonment by BGDC, BGDC shall not be required to continue
registration of shares requested by the Purchaser for inclusion and the
Purchaser shall retain the right to request inclusion of shares as set forth
above.
(y) Each Purchaser shall have the right to request
inclusion of any of their Conversion Shares in a BGDC Registration Statement up
to three times. In the event any BGDC Registration Statement is stopped or
delayed prior to the completion of the distribution contemplated by said BGDC
Registration Statement, then the Purchaser shall retain the right to request
inclusion of shares as set forth above in subsequent BGDC Registration
Statements.
(ii) Pacific agrees that in the event that the Exchange
Right is exercised and Pacific elects to pay all or a portion of the Exchange
Purchase Price (as
22
defined in the Term Sheet) through the issuance of Exchange Shares, Pacific
shall file a Pacific Registration Statement including the Exchange Shares then
held by the Purchaser and use its best efforts to effect the registration,
qualifications or compliances (including, without limitation, the execution of
any required undertaking to file post-effective amendments, appropriate
qualifications or exemptions under applicable blue sky or other state securities
laws and appropriate compliance with applicable securities laws, requirements or
regulations) as may be so reasonably requested and as would permit or facilitate
the sale and distribution of all Exchange Shares and will maintain such
compliance with each such Federal and state law and regulation of any
governmental authority for the period necessary for the holder to effect the
proposed sale or other disposition. Notwithstanding the foregoing, Pacific will
not be obligated to enter into any underwriting agreement for the sale of any of
the Exchange Shares.
(f) FORM D FILING. The Companies shall file five copies of a
Notice of Sales of Securities on Form D with the SEC no later than 15 days after
the first Closing Date. The Companies shall file promptly such amendments to
such Notices on Form D as shall become necessary and shall also comply with any
filing requirement imposed by the laws of any state or jurisdiction in which
offers and sales are made. The Companies shall furnish the Placement Agent with
copies of all such filings.
(g) PRESS RELEASES, ETC. Except as otherwise required by
applicable law or the rules of a regulatory body, neither of the Companies
shall, during the period commencing on the date hereof and ending 30 days after
the Final Closing Date, issue any press release or other communication, make any
written or oral statement to any media organization or publication or hold any
press conference, presentation or seminar, or engage in any other publicity with
respect to either of the Companies, its financial condition, results of
operations, business, properties, assets, or liabilities, or the Offering,
without the prior written consent of the Placement Agent. Upon the request of
the Placement Agent, which consent shall not be unreasonably withheld, the
Companies shall make a Rule 135c (under the Act) announcement with respect to
the commencement of the Offering.
(h) PUBLIC DOCUMENTS. If applicable, following the Final
Closing Date of the Offering, and for a period of five years thereafter, both
Companies will furnish to the Placement Agent: (i) as soon as practicable (but
in the case of the annual report of the Companies to its stockholders, within
120 days after the end of each fiscal year of the Companies) one copy of: (A)
its annual report to its stockholders (which annual report shall contain
financial statements audited in accordance with generally accepted accounting
principles in the United States of America by a firm of certified public
accountants of recognized standing), (B) if not included in substance in its
annual report to stockholders, its annual report on Form 10-K, (C) each of its
23
quarterly reports to its stockholders, and if not included in substance in its
quarterly reports to stockholders, its quarterly report on Form 10-Q, (D) each
of its current reports on Form 8-K, and (E) a copy of any BGDC or Pacific
Registration Statement described in Article V of the Subscription Agreement,
(the foregoing, in each case, excluding exhibits); and (ii) upon reasonable
request, all exhibits excluded by the parenthetical to the immediately preceding
clause 5(h)(i)(E) and all other information that is generally available to the
public. In addition, upon reasonable request the Companies will meet with the
Placement Agent or its representatives to discuss all information relevant for
disclosure in any Registration Statement covering shares purchased by Purchasers
from the Companies and offered by them for resale and will cooperate in any
reasonable investigation undertaken by the Placement Agent for the purpose of
confirming the accuracy of the Registration Statement, including the production
of information at the Companies' offices.
(i) RESTRICTIONS ON SECURITIES. During the 18 months following
the Final Closing Date, neither of the Companies shall, without the prior
written consent of the Placement Agent, offer or sell any of its securities in
reliance on Regulation S of the Act. During the 18-month period following the
date hereof, the Placement Agent shall have the right of first refusal to act as
placement agent for the offering of any securities of either of the Companies
other than through employee benefit plans. Except as otherwise contemplated
hereby, during the 18-month period following the completion of the Offering,
neither of the Companies will extend the expiration date or lower the exercise
or the conversion price of any options, warrants, convertible securities or
other security purchase rights without the prior written consent of the
Placement Agent.
(j) FINANCIAL ADVISORY AGREEMENT. Upon the Final Closing Date,
BGDC and the Placement Agent will enter into an engagement agreement (the
"Financial Advisory Agreement") whereby the Placement Agent will act as BGDC's
financial advisor. Such engagement will provide that the Placement Agent (i)
receive a retainer commencing upon the Final Closing Date, in an amount equal to
three thousand dollars ($3,000) per month (minimum engagement of 24 months),
(ii) out-of-pocket expenses and (iii) standard cash and equity success fees in
the event that the Placement Agent or any of its affiliates assists the
Companies in connection with financings, business combinations, technology
acquisitions and/or strategic transactions. In addition, pursuant to the
Financial Advisory Agreement, BGDC will sell to the Placement Agent and/or its
designees, for $.001 per warrant, warrants (the "Advisory Warrants") to acquire
a number of newly issued Units equal to 15% of the Units issued in the Offering,
exercisable for a period of 10 years commencing six months after the Closing
Date at an exercise price equal to 110% of the initial offering price of the
Units. The Preferred Stock underlying the Placement Warrants shall be entitled
to (A) the rights, preferences and privileges set forth in the
24
Certificate of Designation attached to the Term Sheet as Exhibit B, (B) the
rights set forth in Article VI of the Subscription Agreement and shall accrue
dividends from the date of initial issuance of the Preferred Stock regardless of
the date on which the Advisory Warrants are exercised. In addition, the
Conversion Shares issuable upon conversion of the Preferred Stock underlying the
Placement Warrants shall be entitled to the registration rights as described in
Article V of the Subscription Agreement. The securities underlying the Placement
Warrants shall not be subject to redemption by BGDC nor shall they be callable
or mandatorily convertible by BGDC. The Advisory Warrants shall not be
transferred, sold, assigned or hypothecated for a period of six months;
provided, however, that the Placement Agent may assign in whole or in part
during such period to any NASD member participating in the Offering, any officer
or employee of the Placement Agent, or any such NASD member. The Advisory
Warrants shall contain a cashless exercise feature, a promissory note exercise
feature and antidilution provisions.
(k) NO OFFERINGS. Pending completion or termination of the
Offering in accordance with the terms of this Agreement, the Companies agree not
to enter into an agreement (whether binding or not) with any other person or
entity relating to a possible public or private offering or placement of its
securities (other than in connection with a corporate partnership, strategic
alliance or government funding) or any other transaction which would prevent the
consummation of the Offering.
(l) LOCK-UP AGREEMENT. If requested by the Placement Agent,
each of the Companies will use their best efforts to obtain from its directors
and executive officers, as well as from beneficial owners of five percent (5%)
or more of the each Companies' respective common stock, an agreement that, for a
period of 12 months from the Final Closing Date in the case of Pacific and 12
months from an IPO or a Trading Event (as defined in the Term Sheet) in the case
of BGDC (or such longer period of time as may be requested by the managing
underwriter), they will not sell, assign or transfer any of their shares of the
Companies' respective securities without the Placement Agent's prior written
consent.
(m) NO STATEMENTS. The Companies shall not use the name of the
Placement Agent or any officer, director, employee or shareholder thereof
without the express written consent of the Placement Agent and such person.
6. INDEMNIFICATION.
(a) Each of the Companies agrees to indemnify and hold harmless
the Placement Agent and each Selected Dealer, if any, and their respective
partners, affiliates,
25
shareholders, directors, officers, agents, advisors, representatives, employees,
counsel and controlling persons within the meaning of the Act (a "Paramount
Indemnified Party") from and against any and all losses, liabilities, claims,
damages and expenses whatsoever (and all actions in respect thereof), and to
reimburse such Paramount Indemnified Party for legal fees and related expenses
as incurred (including, but not limited to the costs of giving testimony or
furnishing documents in response to a subpoena or otherwise, the costs of
investigating, preparing, pursuing or defending any such action or claim whether
or not pending or threatened, whether or not resulting in any liability, and
whether or not the Placement Agent or any Paramount Indemnified Party is a party
thereto), insofar as such losses, liabilities, claims, damages or expenses arise
out of, relate to, whether or not resulting in any liability, are in incurred in
connection with or are in any way a result of (i) the engagement of the
Placement Agent pursuant to this Agreement and in connection with the
transactions contemplated by this Agreement and the other Offering Documents
(the "Engagement"), including any modifications or future additions to such
Engagement and related activities prior to the date hereof, (ii) any act by the
Placement Agent or any Paramount Indemnified Party taken in connection with the
Engagement, (iii) a breach of any representation, warranty, covenant, or
agreement of the Companies contained in this Agreement, (iv) the employment by
either of the Companies of any device, scheme or artifice to defraud, or the
engaging by either of the Companies in any act, practice or course of business
which operates or would operate as a fraud or deceit, or any conspiracy with
respect thereto, in connection with the sale of the Units, or (v) any untrue
statement or alleged untrue statement of a material fact contained in the
Offering Documents or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided, however,
that neither of the Companies will be liable in any such case if and to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by any such
Paramount Indemnified Party in writing specifically for use in the Offering
Documents;
(b) Each of the Companies agrees to indemnify and hold harmless
a Paramount Indemnified Party to the same extent as the foregoing indemnity, and
subject to the limitations set forth therein, against any and all loss,
liability, claim, damage and expense whatsoever directly arising out of the
exercise by any person of any right under the Act or the Exchange Act or the
securities or Blue Sky laws of any state on account of violations of the
representations, warranties or agreements set forth in Section 2 hereof.
(c) The Placement Agent agrees to indemnify and hold harmless
each of the Companies, each of the Companies' respective directors, officers,
employees, counsel,
26
advisors, representatives and agents and controlling persons within the meaning
of the Act (a "Company Indemnified Party") and each and all of them, to the same
extent as set forth in Section 6(a)(v) of the foregoing indemnity from the
Companies to the Placement Agent, but only with reference to information,
relating to the Placement Agent, furnished in writing to the Companies by the
Placement Agent specifically for inclusion in the Offering Documents and only to
the extent that any losses, claims, damages, and liabilities in respect of which
indemnification is claimed are finally judicially determined to have resulted
primarily and directly from the bad faith or gross negligence of the Placement
Agent.
(d) Promptly after receipt by a person entitled to
indemnification pursuant to subsection (a), (b), or (c) (an "indemnified party")
of this Section of notice of the commencement of any action, the indemnified
party will, if a claim in respect thereof is to be made against a person
granting indemnification (an "indemnifying party") under this Section, notify in
writing the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which it
may have to the indemnified party otherwise than under this Section. In case
any such action is brought against an indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
subject to the provisions herein stated, with counsel reasonably satisfactory to
the indemnified party, and after notice from the indemnifying party to the
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to the indemnified party for any legal or
other expenses subsequently incurred by the indemnified party in connection with
the defense thereof other than reasonable costs of investigation. The
indemnified party shall 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 counsel shall 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 that the fees and expenses of
such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party or (ii) the named parties to any such action (including any
impleaded parties) include both the indemnified party or parties and the
indemnifying party and, in the judgment of the indemnified party, it is
advisable for the indemnified party or parties to be represented by separate
counsel in which case the indemnifying party shall not have the right to assume
the defense of such action on behalf of the indemnified party or parties, it
being understood, however, that the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses
27
of more than one separate firm of attorneys for the indemnified party or parties
(plus local counsel). No settlement, compromise, consent to entry of judgment
or other termination of any action (collectively, "Terminations") in respect of
which a Paramount Indemnified Party may seek indemnification hereunder (whether
or not any Paramount Indemnified Party is a party thereto) shall be made without
the prior written consent of the Paramount Indemnified Party, which such consent
may be withheld at the sole discretion of such Paramount Indemnified Party,
provided, however, that the foregoing requirement of prior written consent for
Terminations shall not apply to the Placement Agent who may agree to such
Terminations on behalf of a Paramount Indemnified Party without the prior
written consent of any Paramount Indemnified Party.
(e) Notwithstanding any of the provisions of this Agreement, the
aggregate indemnification or contribution of the Placement Agent for or on
account of any losses, claims, damages, liabilities or actions under this
Section 6, Section 7 or any other applicable section of this Agreement, SHALL
NOT exceed the Cash Commissions actually paid to the Placement Agent. The
respective indemnity and contribution agreements by each of the Companies and
the Placement Agent contained in subsections (a), (b), (c) and (d) of this
Section 6 and Section 7, and the covenants, representations and warranties of
each of the Companies and the Placement Agent set forth in Sections 1, 2, 3, 4
and 5 shall remain operative and in full force and effect regardless of (i) any
investigation made by the Placement Agent, on the Placement Agent's behalf or by
or on behalf of any person who controls the Placement Agent, the Companies or
any controlling person of either of the Companies or any director or officer of
either of the Companies, (ii) acceptance of any of the Units and payment
therefor or (iii) any termination of this Agreement, and shall survive the
delivery of the Units, and any successor of the Placement Agent or of either of
the Companies or of any person who controls the Placement Agent or either of the
Companies, as the case may be, shall be entitled to the benefit of such
respective indemnity and contribution agreements. The respective indemnity and
contribution agreements by each of the Companies and the Placement Agent
contained in subsections (a), (b) and (c) of this Section 6 and Section 7 shall
be in addition to any liability which the Companies and the Placement Agent may
otherwise have.
7. CONTRIBUTION.
(a) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 6 but it
is found in a final judicial determination, by a court of competent
jurisdiction, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act, or otherwise, then each of
the Companies (including for this
28
purpose any contribution made by or on behalf of any officer, director, employee
or agent for each of the Companies, or any controlling person of either of the
Companies), on the one hand, and the Placement Agent and any Selected Dealers
(including for this purpose any contribution by or on behalf of an indemnified
party), on the other hand, shall contribute to the losses, liabilities, claims,
damages, and expenses whatsoever to which any of them may be subject, in such
proportions as are appropriate to reflect the relative benefits received by the
Companies, on the one hand, and the Placement Agent and the Selected Dealers, on
the other hand; provided, however, that if applicable law does not permit such
allocation, then other relevant equitable considerations such as the relative
fault of the Companies and the Placement Agent and the Selected Dealers in
connection with the facts which resulted in such losses, liabilities, claims,
damages, and expenses shall also be considered. In no case shall the Placement
Agent or a Selected Dealer be responsible for a portion of the contribution
obligation in excess of the compensation received by it pursuant to Section 4
hereof or the Selected Dealer Agreement, as the case may be. No person guilty
of a fraudulent misrepresentation shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. For purposes of
this Section 7, each person, if any, who controls the Placement Agent or a
Selected Dealer within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act and each officer, director, stockholder, employee and agent of
the Placement Agent or a Selected Dealer, shall have the same rights to
contribution as the Placement Agent or the Selected Dealer, and each person, if
any who controls either of the Companies within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act and each officer, director, employee
and agent of either of the Companies, shall have the same rights to contribution
as the Companies, subject in each case to the provisions of this Section 7.
Anything in this Section 7 to the contrary notwithstanding, no party shall be
liable for contribution with respect to the settlement of any claim or action
effected without its written consent. This Section 7 is intended to supersede
any right to contribution under the Act, the Exchange Act, or otherwise.
8. MISCELLANEOUS.
(a) SURVIVAL. Any termination of the Offering without any
Closing shall be without obligation on the part of any party except that the
provisions regarding fees and expenses contained in Section 5(b), the
indemnification provided in Section 6 hereof and the contribution provided in
Section 7 hereof shall survive any termination and shall survive any Closing.
(b) REPRESENTATIONS, WARRANTIES AND COVENANTS TO SURVIVE
DELIVERY. Except as provided in Section 8(a), the respective representations,
warranties, indemnities,
29
agreements, covenants and other statements of either of the Companies and the
Placement Agent as of the date hereof shall survive execution of this Agreement
and delivery of the Units and the termination of this Agreement.
(c) NO OTHER BENEFICIARIES. This Agreement is intended for the
sole and exclusive benefit of the parties hereto and their respective successors
and controlling persons, and no other person, firm or corporation shall have any
third-party beneficiary or other rights hereunder.
(d) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of New York without regard to
conflict of law provisions. Any disputes between the parties hereto shall be
settled by binding arbitration in New York, New York.
(e) COUNTERPARTS. This Agreement may be signed in counterparts
with the same effect as if both parties had signed one and the same instrument.
(f) NOTICES. Any communications specifically required hereunder
to be in writing, if sent to the Placement Agent, shall be mailed, delivered and
confirmed to it at Paramount Capital, Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, 00000, Attn: Xxxxxxx X. Xxxxx and if sent to BGDC or Pacific, shall be
mailed, delivered or telegraphed and confirmed to it at 0000 Xxxx Xxxxx Xxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000 Attn: H. Xxxxxxxx Xxxx, M.D.
(g) TERMINATION. Subject to the general survival provisions
contained in Sections 8(a) and 8(b) and payment of all amounts due to the
Placement Agent, this Agreement may be terminated by either party prior to any
Closing upon written notice to the other party.
(h) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties with respect to the matters herein referred and
supersedes all prior agreements and understandings, written and oral, between
the parties with respect to the subject matter hereof. Neither this Agreement
nor any term hereof may be changed, waived or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver or termination is sought.
(i) INDEPENDENT CONTRACTOR. The Placement Agent shall act as an
independent contractor and nothing contained herein or otherwise shall be
construed to create any partnership or joint venture between the Placement Agent
and each of the Companies.
30
(j) HEADINGS. The headings and captions of the various
subdivisions of this Agreement are for convenience or reference only and shall
in no way modify or affect the meaning or construction of any of the terms or
provisions hereof.
31
If you find the foregoing is in accordance with our understanding,
kindly sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between us.
Very truly yours,
B-G Development Corporation
By: /s/ H. XXXXXXXX XXXX, M.D.
------------------------------
Name: H. Xxxxxxxx Xxxx, M.D.
Title: Chief Executive Officer
Pacific Pharmaceuticals, Inc.
By: /s/ H. XXXXXXXX XXXX, M.D.
------------------------------
Name: H. Xxxxxxxx Xxxx, M.D.
Title: Chief Executive Officer
Agreed to by:
PARAMOUNT CAPITAL, INC.
By: /s/ XXXXXXX X. XXXXXXXXX, M.D.
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, M.D.
Title: Chairman
32
EXHIBIT A
[ ]
OFFICERS' CERTIFICATE
[Month] __, 1997
I, H. Xxxxxxxx Xxxx, M.D. certify that I am the Chief Executive
Officer of both B-G Development Corporation ("BGDC") and Pacific
Pharmaceuticals, Inc. ("Pacific"), each a Delaware corporation (the
"Companies"), and that, as such, I am authorized to execute this certificate on
behalf of the Companies. All capitalized terms used herein but not otherwise
defined herein shall the meanings ascribed to such terms in the Placement Agency
Agreement (as defined below). Reference is made herein to the closing held on
[DATE] (the "Closing Date"). In connection with the offering and sale of up to
60 units (the "Units") with an option in favor of the Placement Agent to offer
up to an additional 40 Units to cover over-allotments at a purchase price equal
to $100,000 per Unit, with each Unit consisting of 50,000 shares of Series A
Convertible Exchangeable Preferred Stock of the BGDC, stated value $2.00 per
share. I do hereby certify that I have carefully examined all of the Offering
Documents (as defined in the Placement Agency Agreement dated as of March __,
1998 (the "Placement Agency Agreement") between each of the Companies and
Paramount Capital, Inc. ("Paramount"), and do hereby further certify that:
1. All of the representations and warranties of each of the
Companies contained in the subscription agreements (the "Subscription
Agreements") between the Companies and the purchasers (the "Purchasers") of the
Units of Series A Convertible Exchangeable Preferred Stock (the "Preferred
Stock") of BGDC contemplated by the Companies's Confidential Term Sheet, dated
March __, 1998, as supplemented and amended, (the "Term Sheet") are true and
correct in all respects on the Closing Date with the same force and effect as if
made on and as of the Closing Date, and each of the Companies has performed all
covenants and agreements and has satisfied all conditions in the Subscription
Agreements to be performed or satisfied on its part before the Closing Date in
all respects.
2. The Term Sheet does not contain any untrue statement of a fact
or omit to state any fact required to be stated in order to make the statements
therein not misleading as of the Closing Date. Since the date of the Term
Sheet, no event has occurred concerning which information is required to be
contained in an amended or supplemented Term Sheet concerning which such
information is not contained therein.
3. All of the representations and warranties of each of the
Companies contained in the Placement Agency Agreement are true and correct in
all respects on the Closing Date, and
A-i
each of the Companies has performed all covenants and agreements and has
satisfied all conditions contained in the Agency Agreement to be performed and
satisfied on its part at or prior to the Closing Date in all respects.
4. All of the representations and warranties of each of the
Companies contained in each of the other Offering Documents are true and correct
in all respects on the Closing Date, and each of the Companies has performed all
covenants and agreements and has satisfied all conditions contained in such
Offering Documents to be performed and satisfied on its part at or prior to the
Closing Date in all respects.
5. Since the date of the Term Sheet, there has been no material
adverse change in the condition (financial or other), earnings, business,
prospects or properties of either of the Companies and their subsidiaries, if
any, taken as a whole, whether or not arising from transactions in the ordinary
course of business, nor has there occurred any event required to be set forth in
the Term Sheet, including, without limitation, in accordance with Section 1(b)
of the Placement Agency Agreement.
6. There is no litigation pending or threatened by or against either
of the Companies, except as disclosed in the Term Sheet.
7. Since [MONTH] __, 1997, Pacific has not offered to sell to, or
solicited any offers to buy from any person, shares of capital stock of Pacific,
except in connection with the Offering contemplated by the Term Sheet. Since
its inception, BGDC has not offered to sell to, or solicited any offers to buy
from any person other than Pacific, shares of capital stock of BGDC, except in
connection with the Offering contemplated by the Term Sheet.
8. Attached hereto as Exhibit A is a true, correct and complete copy
of the each of the Companies' Certificates of Incorporation, as amended (the
"Certificates"), which are in full force and effect and, except as otherwise
provided herein, no amendment to such certificate has been approved by the Board
of Directors or stockholders of either of the Companies or filed with the
Delaware Secretary of State since [DATE]. As of the Closing Date, both of the
Companies are duly incorporated and in good standing in the State of Delaware
and have paid all fees and taxes due and payable on or prior to the Closing Date
necessary for the maintenance or continuation of its corporate existence. As of
the Closing Date, there are no proceedings or actions contemplated by either of
the Companies, relating to the merger, liquidation, consolidation, or sale of
all or substantially all of the assets or business of either of the Companies or
which would otherwise threaten or impair either of the Companies' corporate
existence.
A-ii
9. Attached hereto as Exhibit B is a true, correct and complete copy
of the Bylaws of each of the Companies, as in full force and effect on the
Closing Date and at all times from [__] through the Closing Date.
10. As of the Closing Date, each of the Offering Documents is in the
form authorized by the respective board of directors of the Companies pursuant
to the resolutions set forth in Exhibit C.
11. Attached hereto as Exhibit D is a true, correct and complete copy
of the resolutions duly adopted by the unanimous approval of all of the members
of the Board of Directors, including the independent members of each of the
Companies' respective board of directors, which resolutions authorize the
issuance and sale of the Units, the Preferred Stock underlying the Units, the
Placement Warrants and Advisory Warrants and the Preferred Stock underlying the
Placement Warrants and Advisory Warrants in accordance with the requirements of
Delaware law, the Certificate and Bylaws of each of the Companies, which are the
only resolutions adopted by the respective board of directors of each of the
Companies or any committee thereof with respect to the offering and sale of the
Units and the transactions relating thereto, and which have not been revoked,
modified and amended or rescinded and are in full force and effect on the
Closing Date.
12. Attached hereto as Exhibit E are true, correct and complete
specimens of the certificates representing the Preferred Stock heretofore
approved and adopted by the board of directors of BGDC. Each of the
certificates representing Preferred Stock delivered on the Closing Date to each
of the Purchasers pursuant to the Subscription Agreements has been executed by
the genuine or facsimile signature of officers of BGDC who have been duly
elected or appointed, qualified and acting as such officers on the date such
certificates were executed and delivered, all in accordance with the Certificate
and Bylaws of BGDC and the requirements of applicable law.
13. Attached hereto as Exhibit F is a true, correct and complete copy
of the form of Placement Warrant and Advisory Warrant heretofore approved and
adopted by the Board of Directors of BGDC. Each Placement Warrant and Advisory
Warrant delivered on the date hereof to each of the holders pursuant to the
Placement Agency Agreement, respectively, has been executed by the genuine or
facsimile signature of officers of BGDC who have been duly elected or appointed,
qualified and acting as such officers on the date such certificates were
executed and delivered, all in accordance with the Certificate and Bylaws of
BGDC and the requirements of applicable law.
A-iii
14. The minute books and records of each of the Companies, relating
to all proceedings of the stockholders, the Board of Directors of each of the
Companies and the Compensation Committee, the Audit Committee and the Nominating
Committee of such Boards have been made available to Kramer, Levin, Naftalis &
Xxxxxxx, counsel to Paramount, and, in such form, are the original minute books
and records of each of the Companies. There have been no changes, alterations
or additions in such minutes or records since their examination by counsel on
behalf of Paramount.
15. Each person who, as an officer or director of either of the
Companies, signed any of the Offering Documents or any other document in
connection with the offering and sale of the Preferred Stock, the Placement
Warrants, the Advisory Warrants and the closing relating thereto was duly
elected or appointed, qualified and acting as such officer or director at the
respective times of the signing and delivery thereof and was duly authorized to
sign such document on behalf of the Companies, and the signature of each such
person appearing on each such document is the genuine signature of such officer,
director or person duly appointed for the purpose of executing such documents
under valid powers of attorney, and each individual who signed such signature
pages, personally or by an attorney-in-fact, was then duly elected, qualified
and acting as an officer or director of the Companies as stated therein.
16. The following persons are, and have been at all times since
[DATE], duly qualified and acting officers of either of the Companies, duly
elected or appointed to the offices set forth opposite their respective names,
and the signature opposite the name of each such officer is his or her, or a
facsimile of his or her, authentic signature, and the seal affixed hereto is the
duly adopted seal of the Companies:
NAME OFFICE SIGNATURE
[ ] Interim CEO ___________________
[ ] Secretary ___________________
[__] [__] ___________________
A-iv
This certificate is made for the benefit of, and may be relied upon
by, Paramount, Kramer, Levin, Naftalis & Xxxxxxx, as counsel to Paramount, and
each of the Purchasers.
IN WITNESS WHEREOF, I have hereunto set forth my hand this __ day of
[MONTH], 1998.
[SEAL]
By /s/ H. XXXXXXXX XXXX, M.D.
------------------------------------
Name: Dr. H. Xxxxxxxx Xxxx
Title: Chief Executive Officer
B-G Development Corporation
Pacific Pharmaceuticals, Inc.
EX10-41.WPD
B-i
