EXHIBIT 1.01
Placement Agent Agreement dated as of January 8, 1997
by and between The Med-Design Corporation ("MDC")
and Fine Equities, Inc. ("Fine")
PLACEMENT AGENT AGREEMENT
Dated as of: January 8, 1997
Fine Equities, Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xx. X. Xxxxx Fine
Ladies and Gentlemen:
The undersigned, The Med-Design Corporation (the "Company"), hereby agrees
with Fine Equities, Inc. ("Fine") as follows:
1. Offering.
A. The Company hereby engages Fine to act as its exclusive placement agent
in connection with the issuance and sale by the Company (the "Offering") of up
to 1,000,000 shares (the "Shares") of the Company's common stock .$01 par value
(the "Common Stock") at a price equal to $5.00 per share. The Shares will be
offered pursuant to the Confidential Private Offering Memorandum dated the date
hereof, prepared by the Company (such memorandum together with all amendments
thereof and supplements and exhibits thereto is referred to herein as the
"Memorandum") and are subject to the terms and conditions set forth therein, and
in the Subscription Agreement and Investment Representation (collectively, the
"Subscription Agreements") in substantially the form of exhibits attached to the
Memorandum to be executed by each purchaser and the Company.
At the Closing (as defined in Section 1(B) hereof), the Company shall also
issue and sell to Fine and/or its designees common stock purchase warrants to
purchase ten percent (10%) of the number of Shares sold by the Company (the
"Placement Agent's Warrants"), each Placement Agent's Warrant entitling the
holder thereof to purchase one share of Common Stock (the "Placement Agent's
Shares") under terms and conditions set forth in the Placement Agent's Warrant
Agreement dated the date of the Closing (as hereinafter defined), by and between
the Company and Fine (the "Placement Agent's Warrant Agreement"). The Placement
Agent's Warrants and the Placement Agent's Shares are sometimes hereinafter
collectively referred to as the "Placement Agent's Securities." The Shares, the
Placement Agent's Warrants and the Placement Agent's Shares are hereinafter
sometimes collectively referred to as the "Securities." The Shares will be
offered without registration under the Securities Act of 1933, as amended (the
"Securities Act"). Purchasers of the Shares will be granted certain registration
rights with respect to the Shares as more fully set forth in the Subscription
Agreements and in the certificates representing the Shares. Fine will also be
granted certain registration rights as more fully set forth in the Placement
Agent's Warrant Agreement.
B. The Shares will be offered by Fine on a "best efforts" basis. The
Company will issue the Shares at the Closing after subscriptions have been
received and accepted by the Company and when funds from investors have cleared
the banking system in the normal course of business. The issuance of the Shares
and disbursement of the proceeds from the sale thereof (the "Closing") will
occur within seven business days after the earlier of (a) the date on which
$5,000,000 of subscription proceeds for Shares has cleared the banking system
and has been collected by the Escrow Agent (as defined in Section 2(C) hereof)
pursuant to the Escrow Agreement (as defined in Section 2(C)) or (b) fourteen
(14) days after the date hereof, unless such date is extended as provided in
Section 1(C).
C. The Offering shall commence on the date hereof and shall terminate
fourteen (14) days hereafter, unless extended for an additional seven (7) day
period by the mutual consent of the Company and Fine (such date, as the same may
be extended, is hereinafter referred to as the "Termination Date"; the period
commencing on the date hereof and ending on the Termination Date is sometimes
referred to herein as the "Offering Period").
2. Information.
A. The Shares will be offered by Fine on a "best efforts" basis during the
Offering Period.
B. The Shares shall have the terms set forth in and shall be offered by the
Company by means of the Memorandum. Payment for the Shares shall be made by
check or wire transfer as more fully described in the Subscription Agreements.
The minimum purchase by any purchaser shall be $50,000 unless subscriptions for
fewer Shares are accepted at the discretion of Fine. Fine and the Company agree
that the Shares will be offered and sold only to "accredited investors" within
the meaning of Rule 501 of Regulation D ("Accredited Investors") promulgated by
the Securities and Exchange Commission (the "Commission") under the Securities
Act and Rule 506 of Regulation D of the Securities Act.
C. All funds received from subscriptions will be promptly transmitted
pursuant to the terms of an escrow agreement (the "Escrow Agreement") to the
escrow account designated for the Offering at Continental Stock Transfer & Trust
Company (the "Escrow Agent"). In the event that the Closing occurs, the funds
received in respect of the Shares closed on will be forwarded to the Company net
of (i) the placement agent commission equal to five percent (5%) of the purchase
price of the Shares sold, (ii) reasonable legal fees and expenses due to Fine's
counsel, (iii) "Blue Sky" fees and expenses and reasonable legal fees (such fees
not to exceed $10,000) and expenses related thereto due to Fine's Counsel and
(iv) all other reasonable expenses related to the Offering, including, but not
limited to, all printing, duplication and mailing costs related to the Private
Placement Memorandum, registration and transfer agent fees, escrow agent fees,
accounting fees, and issue and transfer taxes and "tombstone" expenses.
D. At the Closing, the Company shall cause to be paid by, at the option of
Fine, certified or official bank check or wire transfer, to the extent not
previously paid by the Company or the Escrow Agent to Fine (i) the placement
agent commission equal to five percent (5%) of the purchase price of the Shares
sold, (ii) reasonable legal fees and expenses due to Fine's counsel, (iii) "Blue
Sky" fees and expenses and reasonable legal fees (such fees not to exceed
$10,000) and expenses related thereto due to Fine's Counsel and (iv) all other
reasonable expenses related to the Offering, including,
but not limited to, all printing, duplication and mailing costs related to
the Private Placement Memorandum, registration and transfer agent fees, escrow
agent fees, accounting fees, and issue and transfer taxes and "tombstone"
expenses. In addition to the foregoing, the Company shall be responsible for the
fees and expenses identified in Sections 6, 8, and 10 hereof, which expenses
shall not be deemed to be commissions.
E. Fine shall not be obligated to sell any Shares and shall only be
obligated to offer the Shares on a "best efforts" basis.
F. The Company reserves the right to reject any subscriber, in whole or in
part, in its sole discretion. Notwithstanding anything to the contrary contained
in this Section 2(F), the Company's right to reject a subscriber shall lapse
three (3) days after receipt by the Company of the fully completed and duly
executed subscription documents from Fine with respect to such subscriber. Funds
received by the Escrow Agent or the Company from any subscriber whose
subscription is rejected will be returned to such subscriber, without deduction
therefrom or interest thereon, but no sooner than such funds have cleared the
banking system in the normal course of business.
3. Representations, Warranties and Covenants of Fine.
A. Fine represents, warrants and covenants as follows:
(i) Fine has the necessary power to enter into this Agreement, the
Escrow Agreement and the Placement Agent's Warrant Agreement and to
consummate the transactions contemplated hereby and thereby.
(ii) Fine is a corporation duly formed and validly existing under the
laws of the State of New York; the execution and delivery by Fine of this
Agreement, the Escrow Agreement and the Placement Agent's Warrant Agreement
and the consummation of the transactions contemplated herein and therein
will not result in any violation of, or be in conflict with, or constitute
a default under, any agreement or instrument to which Fine is a party or by
which Fine or its properties are bound, or any judgment, decree, order or,
to Fine's knowledge, any statute, rule or regulation applicable to Fine.
This Agreement, the Escrow Agreement and the Placement Agent's Warrant
Agreement, when executed and delivered by Fine, will constitute the legal,
valid and binding obligations of Fine, enforceable in accordance with their
respective terms, except to the extent that (a) the enforceability hereof
or thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect and affecting the
rights of creditors generally, (b) the enforceability hereof or thereof is
subject to general principles of equity, or (c) the indemnification
provisions hereof or thereof may be held to be violative of public policy.
(iii) Fine will deliver to each purchaser, prior to any submission by
such person of a written offer relating to the purchase of the Shares, a
copy of the Memorandum, as it may have been most recently amended or
supplemented by the Company.
(iv) Upon receipt of an executed Subscription Agreement and the
payments representing subscriptions for Shares, Fine will promptly forward
copies of the subscription documents to the
Company or its counsel and shall forward all consideration received for
such Shares to the Escrow Agent to be held in escrow.
(v) Fine will not deliver the Memorandum to any person it does not
reasonably believe to be an Accredited Investor.
(vi) Fine will not take any action which it reasonably believes would
cause the Offering to violate the provisions of the Securities Act, the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), the
respective rules and regulations promulgated thereunder (the "Rules and
Regulations") or any applicable state "Blue Sky" laws.
(vii) Fine shall use all reasonable efforts to determine (a) whether
any prospective purchaser is an Accredited Investor and (b) that any
information furnished by a prospective investor is true and accurate. Fine
shall have no obligation to insure that (a) any check, note, draft or other
means of payment for the Shares will be honored, paid or enforceable
against the subscriber in accordance with its terms, or (b) subject to the
performance of Fine's obligations and the accuracy of Fine's
representations and warranties hereunder, (i) the Offering is exempt from
the registration requirements of the Securities Act or any applicable state
"Blue Sky" law or (ii) any prospective purchaser is an Accredited Investor.
(viii) Fine is a member of the National Association of Securities
Dealers, Inc., and is a broker-dealer registered as such under the Exchange
Act and under the securities laws of the states in which the Shares will be
offered or sold by Fine, unless an exemption for such state registration is
available to Fine. Fine is in compliance with all material rules and
regulations applicable to Fine generally and applicable to Fine's
participation in the Offering.
4. Representations and Warranties of the Company.
A. The Company represents and warrants as follows:
(i) The execution, delivery and performance of each of this Agreement,
the Subscription Agreements, the Placement Agent's Warrant Agreement and
the Escrow Agreement has been or will be duly and validly authorized by the
Company and is, or with respect to the Subscription Agreements and
Placement Agent's Warrant Agreement will be, a valid and binding agreement
of the Company, enforceable in accordance with their respective terms,
except to the extent that (a) the enforceability hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect and affecting the rights of creditors
generally, (b) the enforceability hereof or thereof is subject to general
principles of equity or (c) the indemnification provisions hereof or
thereof may be held to be violative of public policy. The Shares and
Placement Agent's Shares have been duly authorized and, the Securities and
the certificates representing such Securities when issued and paid for in
accordance with the Memorandum, this Agreement, the Escrow Agreement, the
Securities Placement Agent's Warrant Agreement and the Subscription
Agreements, will be valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except to the extent
that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect and affecting the rights of creditors generally, and (b) the
enforceability thereof is subject to general principles of equity. All
corporate action required to be taken for the authorization, issuance and
sale of the Securities has been duly and validly taken by the Company.
(ii) All issued and outstanding securities of the Company, have been
duly authorized and validly issued and are fully paid and non-assessable;
the holders thereof have no rights of rescission or preemptive rights with
respect thereto and are not subject to personal liability solely by reason
of being securityholders; and none of such securities was issued in
violation of the preemptive rights of any holders of any security of the
Company. The Company has 20,000,000 shares of authorized Common Stock,
6,899,570 of which will be issued and outstanding as of the date hereof and
5,000,000 shares of authorized Preferred Stock none of which will be issued
and outstanding as of the date hereof.
(iii) The Securities have been duly authorized and, each of the Shares
and the shares issuable upon exercise of the Placement Agent's Warrants in
accordance with the terms thereof, will be validly issued, fully-paid and
non-assessable; the holders thereof will not be subject to personal
liability solely by reason of being such holders; such securities are not
and will not be subject to the preemptive rights of any holder of any
security of the Company.
(iv) Each of the Company and the Subsidiaries (as defined herein) has
good and marketable title to, or valid and enforceable leasehold estates
in, all items of real and personal property necessary to conduct its
business (including, without limitation any real or personal property
stated in the Memorandum to be owned or leased by the Company), free and
clear of all liens, encumbrances, claims, security interests and defects of
any material nature whatsoever, other than those set forth in the
Memorandum and liens for taxes not yet due and payable.
(v) There is no litigation or governmental proceeding pending or, to
the best of the Company's knowledge, threatened against, or involving the
properties or business of the Company or any of the Subsidiaries, except as
set forth in the Memorandum.
(vi) The Company owns one hundred percent (100%) of the issued and
outstanding capital stock of MDC Investment Holdings, Inc. (a Delaware
corporation) ("MDC Holdings") and MDC Holdings owns one hundred percent
(100%) of the issued and outstanding capital stock of MDC Research Ltd. (a
California corporation) ("MDC Research") (MDC Holdings and MDC Research are
collectively referred to herein as the "Subsidiaries"). Each of the Company
and the Subsidiaries has been duly organized and is validly existing as a
corporation in good standing under the laws of its state of incorporation.
None of the Company or the Subsidiaries owns or controls, directly or
indirectly, an interest in any other corporation, partnership, trust, joint
venture or other business entity disclosed except as disclosed in this
subsection 4.A.(vi). Each of the Company and the Subsidiaries is duly
qualified or licensed and in good standing as a foreign corporation in each
jurisdiction in which the character of its operations requires such
qualification or licensing and where failure to so qualify would have a
material adverse effect on the Company. Each of the Company and the
Subsidiaries has all requisite corporate power and authority, and all
material and necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory officials
and bodies (domestic and foreign) to conduct its businesses (and proposed
business) as described in the Memorandum, and each
of the Company and the Subsidiaries is doing business in material
compliance with all such authorizations, approvals, orders, licenses,
certificates and permits and all foreign, federal, state and local laws,
rules and regulations concerning the business in which it is engaged. Any
disclosures in the Memorandum concerning the effects of foreign, federal,
state and local regulation on the each of the Company's and the
Subsidiaries' businesses as currently conducted and as contemplated are
correct in all material respects and do not omit to state a material fact.
The Company has all corporate power and authority to enter into this
Agreement, the Escrow Agreement, the Placement Agent's Warrant Agreement
and the Subscription Agreements and to carry out the provisions and
conditions hereof and thereof, and all consents, authorizations, approvals
and orders required in connection herewith and therewith have been obtained
or will have been obtained prior to the Closing. No consent, authorization
or order of, and no filing with, any court, government agency or other body
is required by the Company for the issuance of the Securities pursuant to
the Memorandum, the Placement Agent's Warrant Agreement or the Subscription
Agreements, except pursuant to applicable federal and state securities
laws. The Company, since its inception, has not incurred any liability
arising from a violation by the Company of any of the provisions of the
Securities Act, the Exchange Act or the Rules and Regulations.
(vii) There has been no material adverse change in the condition or
prospects of the Company or any of the Subsidiaries, financial or
otherwise, from that on the latest dates as of which such condition or
prospects, respectively, are set forth in the Memorandum, and the
outstanding debt, the property and the business of each of the Company and
the Subsidiaries conforms in all material respects to the descriptions
thereof contained in the Memorandum.
(viii) Neither the Company nor any of the Subsidiaries is in breach
of, or in default under, any term or provision of any material indenture,
mortgage, deed of trust, lease, note, loan or credit agreement or any other
material agreement or instrument evidencing an obligation for borrowed
money, or any other material agreement or instrument to which it is a party
or by which it or any of its properties may be bound or affected. Neither
the Company nor any of the Subsidiaries is in violation of any provision of
its charter or Bylaws or in violation of any franchise, license, permit,
judgment, decree or order, or in violation of any statute, rule or
regulation. Neither the execution and delivery of this Agreement, the
Escrow Agreement, the Subscription Agreements or the Placement Agent's
Warrant Agreement nor the issuance and sale or delivery of the Securities
nor the consummation of any of the transactions contemplated herein or in
the Subscription Agreements, the Escrow Agreement or the Placement Agent's
Warrant Agreement, nor the compliance by the Company with the terms and
provisions hereof or thereof, has conflicted with or will conflict with, or
has resulted in or will result in a breach of, any of the terms and
provisions of, or has constituted or will constitute a default under, or
has resulted in or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
pursuant to the terms of any material indenture, mortgage, deed of trust,
note, loan or credit agreement or any other material agreement or
instrument evidencing an obligation for borrowed money, or any other
material agreement or instrument to which the Company or any of the
Subsidiaries may be bound or to which any of the property or assets of the
Company or any of the Subsidiaries is subject except (a) where such
default, lien, charge or encumbrance would not have a material adverse
effect on the Company or any of the Subsidiaries, and (b) as described in
the Memorandum; nor will such action result in any violation
of the provisions of the charter or the Bylaws of the Company or any of the
Subsidiaries or, assuming the due performance by Fine of its obligations
hereunder, any statute or any order, rule or regulation applicable to the
Company or any of the Subsidiaries of any court or of any foreign, federal,
state or other regulatory authority or other government body having
jurisdiction over the Company or any of the Subsidiaries.
(ix) The Securities, the Escrow Agreement, the Placement Agent's
Warrant Agreement and the Subscription Agreements conform in all material
respects to all statements in relation thereto contained in the Memorandum.
(x) Subsequent to the dates as of which information is given in the
Memorandum, and except as may otherwise be indicated or contemplated herein
or therein, neither the Company nor any of the Subsidiaries has (a) issued
any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, or (b) entered into any transaction other
than in the ordinary course of business, or (c) declared or paid any
dividend or made any other distribution on or in respect of its capital
stock.
(xi) Except for reimbursement of expenses of Xxxxxxx Xxxxx & Co.
pursuant to an engagement letter dated October 1, 1996, which the Company
presently expects shall not exceed $25,000, there are no claims against the
Company for services in the nature of a finder's or origination fee with
respect to the sale of the Shares arising from any agreement made by the
Company.
(xii) Except as disclosed in Memorandum, each of the Company and the
Subsidiaries owns or possesses, free and clear of all liens or encumbrances
and rights thereto or therein by third parties, the trademarks, patents and
patent applications necessary to conduct its business (including, without
limitation, any such rights described in the Memorandum as being owned or
possessed by the Company or any of the Subsidiaries) and there is no claim
or action by any person pertaining to, or proceeding, pending or to the
Company's knowledge threatened, which challenges the exclusive rights of
the Company or any of the Subsidiaries with respect to the trademarks,
patents and patent applications used in the conduct of the Company's or any
of the Subsidiaries businesses (including, without limitation, any such
rights described in the Memorandum as being owned or possessed by the
Company or any of the Subsidiaries) except any claim or action that would
not have a material adverse effect on the Company or any of the
Subsidiaries; and except as disclosed in the Memorandum, none of the
Company's or any of the Subsidiaries' current products, services or
processes create infringement liability or will infringe on United States
patents currently held by any third party.
(xiii) Except as described in the Memorandum, neither the Company nor
any of the Subsidiaries is currently under any obligation to pay royalties
or fees of any kind whatsoever to any third party with respect to any
trademarks or patents, or technology it uses, employs or intends to use or
employ.
(xiv) Subject to the performance by Fine of its obligations hereunder,
the Memorandum and the offer and sale of the Securities comply, and will
continue to comply up to the Termination Date, in all material respects
with the requirements of Rule 506 of Regulation D promulgated
by the Commission pursuant to the Securities Act and any other applicable
federal and state laws, rules, regulations and executive orders. Neither
the Memorandum nor any amendment or supplement thereto nor any documents
prepared by the Company in connection with the Offering will contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
All statements of material facts in the Memorandum are true and correct as
of the date of the Memorandum and will be true and correct on the date of
the Closing.
(xv) All taxes which are due and payable from the Company have been
paid in full and neither the Company nor any of the Subsidiaries has any
tax deficiency or claim outstanding assessed or to the Company's knowledge
proposed against it.
(xvi) The financial statements of the Company included in the
Memorandum fairly present the financial position of the Company at
September 30, 1996; and such financial statements have been prepared in
conformity with generally accepted accounting principles, consistently
applied throughout the periods involved.
(xvii) None of the Company or any of the Subsidiaries nor any of their
officers, directors, employees or agents, nor any other person acting on
behalf of the Company or any of the Subsidiaries, has, directly or
indirectly, given or agreed to give any money, gift or similar benefit
(other than legal price concessions to customers in the ordinary course of
business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or
instrumentality of any government (domestic or foreign) or any political
party or candidate for office (domestic or foreign) or other person who is
or may be in a position to help or hinder the business of the Company or
any of the Subsidiaries (or assist it in connection with any actual or
proposed transaction) which (A) might subject the Company or any of the
Subsidiaries to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, or (B) if not given in the past,
might have had a materially adverse effect on the assets, business or
operations of the Company or any of the Subsidiaries as reflected in any of
the financial statements contained in the Memorandum, or (C) if not
continued in the future, might adversely affect the assets, business,
operations or prospects of the Company or any of the Subsidiaries in the
future.
5. Certain Covenants and Agreements of the Company.
The Company covenants and agrees at its expense and without any expense to
Fine as follows:
A. To advise Fine of any adverse change in the Company's financial
condition, prospects or business or of any development materially affecting
the Company or rendering untrue or misleading any material statement in the
Memorandum occurring at any time prior to the Closing as soon as the
Company is either informed or becomes aware thereof.
B. To use its best efforts to cause the Shares to be qualified or
registered for sale, or to obtain exemptions from such qualification or
registration requirements, on terms consistent with those stated in the
Memorandum under the securities laws of such jurisdictions as Fine shall
reasonably request,
provided that such states and jurisdictions do not require the Company to
qualify as a foreign corporation. Qualification, registration and exemption
charges and fees shall be at the sole cost and expense of the Company.
Fine's counsel shall perform the required "Blue Sky" services and all
reasonable fees (such fees not to exceed $10,000) or expenses and
disbursements of Fine's counsel relating to such "Blue Sky" matters and
relating to the Offering shall be paid by the Company.
C. To provide and to continue to provide to each holder of securities
participating in the Offering, so long as such holder shall remain a
security holder of the Company, for a period ending on the earlier of (i)
the registration of the Securities under the Securities Act and (ii) five
(5) years from the Termination Date, copies of all quarterly and audited
annual financial statements prepared by or on behalf of the Company for
public disclosure, other reports prepared by or on behalf of the Company
for public disclosure and all documents delivered to the Company's
stockholders.
D. To deliver, for a period of five (5) years following the
Termination Date, to Fine, in the manner provided in Section 11(B) of this
Agreement: (i) within forty five (45) days after the end of each of the
first three quarters of each fiscal year of the Company, commencing with
the first quarter ending after the Termination Date, a statement of its
income for each such quarterly period, and its balance sheet and a
statement of changes in stockholders' equity as of the end of such
quarterly period, all in reasonable detail, certified by its principal
financial or accounting officer; (ii) within ninety (90) days after the
close of each fiscal year, its balance sheet as of the close of such fiscal
year, together with a statement of income, a statement of changes in
stockholders' equity and a statement of cash flow for such fiscal year,
such balance sheet, statement of income, statement of changes in
stockholders' equity and statement of cash flow to be in reasonable detail
and accompanied by a copy of the certificate or report thereon of
independent auditors; and (iii) a copy of all documents, reports and
information furnished to its stockholders at the time that such documents,
reports and information are furnished to its stockholders.
E. To apply the proceeds of the Offering in accordance with "Use of
Proceeds" in the Memorandum and not to apply any proceeds from the Offering
(i) to pay any deferred compensation of any current or former officer or
employee of the Company, or (ii) to pay any principal amount payable under
the line of credit with CoreStates Bank or under the line of credit with
Eagle National Bank, unless collateral of cash and/or marketable securities
in an amount equal to the repayment of principal is released by the lender
to the Company for its unrestricted use, in connection with each repayment
of principal.
F. To provide Fine with as many copies of the Memorandum as Fine may
reasonably request.
G. The Company grants to Fine the right, for a period of five (5)
years commencing on the date of the Closing, to cause one person designated
by Fine to be elected to the Company's Board of Directors (the "Board"). In
the event Fine elects not to nominate a member to the Company's Board, Fine
may designate a person, who may be a director, officer, employee or
affiliate of Fine, to receive all notices of meetings of the Company's
Board and other correspondence and communications sent by the Company to
members of the Board, and to attend all such meetings of the Board. Such
individual shall be reimbursed for all out-of-pocket expenses incurred in
connection with his service on, or attendance of, as the case may be,
meetings of the Board. On or before the Closing, the Company shall provide
Fine with a certificate signed by each of Xxxxx X. Xxxxxxx, Xxxxxxx X.
Xxxxx, Xxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxxx and Xxxx X.
Xxxxxxx whereby each agrees to vote their shares of Common Stock
beneficially owned in favor of Fine's designee, if Fine exercises its right
under this subsection 5.G.
H. On or before the Closing, the Company shall provide Fine with true
copies of duly executed, legally binding and enforceable agreements
pursuant to which Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx, Xxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxxx and Xxxx X. Xxxxxxx (collectively the
"Lockup Holders") agree that each will not directly or indirectly, issue,
offer to sell, sell, grant an option for the sale of, assign, transfer,
pledge, hypothecate, distribute or otherwise encumber or dispose of shares
of Common Stock or securities convertible into, exercisable or exchangeable
for or evidencing any right to purchase or subscribe for any shares of
Common Stock (either pursuant to Rule 144 of the Rules and Regulations or
otherwise) or dispose of any beneficial interest therein, without the prior
written consent of Fine (collectively, the "Lock-up Agreements"), except
for unrestricted and freely tradeable shares of the Company's Common Stock
purchased in the public market and the securities listed in the fourth
column on Schedule 5.H attached hereto, for a period commencing on the
Closing date and continuing until the Company has entered into no fewer
than three (3) material corporate alliances ("Material Corporate Alliance")
relating to the Company's products that, provide reasonable assurance of
financial success and funding of the Company (the "Lockup Period"),
provided, however, that (i) the Lock-up Agreements shall not apply to gifts
or private transactions, wherein, as a precondition to transfer, the
transferee shall agree in writing to be bound by the same contractual
undertakings as the transferor and (ii) regarding all of the Lockup
Holders, except for Xx. Xxxxxxx, the Lockup Agreements shall terminate
after the execution of a second Material Corporate Alliance, upon the
written consent of Xx. Xxxxxxx. On or before the Closing, the Company shall
deliver instructions to the Transfer Agent authorizing it to place
appropriate legends on the certificates representing the securities subject
to the Lock-up Agreements and to place appropriate stop transfer orders on
the Company's ledgers. Material Corporate Alliances are defined for
purposes of this Subsection 5.H as binding, written and duly executed
contract(s) between the Company and another entity pursuant to which the
Company assigns, licenses or sells outright the right(s) to some or all of
its technology and/or products for the purpose of manufacturing, marketing
or distributing same in consideration of actual monetary revenue or a
service (or the promise of either) the value of which can be determined,
which will be approved by the Company's Board of Directors as materially
beneficial to the financial health and future of the Company.
6. Registration Rights.
As soon as practicable after the Closing and in any event not later than 30
days thereafter, the Company shall prepare and file with the Commission, a
registration statement and such other documents, including a prospectus, as may
be necessary in the opinion of both counsel for the Company and counsel for the
Placement Agent and the holders of the Shares, in order to comply with the
provisions of the Securities Act, so as to permit a public offering and sale of
the Shares for a consecutive period ending twenty-four (24) months after the
Closing. The costs and expenses associated with the preparation, filing and
prosecution of such registration statement(s) shall be borne by the Company.
7. Indemnification.
A. The Company hereby agrees that it will indemnify and hold Fine and each
officer, director, shareholder, employee or representative of Fine, and each
person controlling, controlled by or under common control of Fine within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or
the Rules and Regulations, harmless from and against any and all loss, claim,
damage, liability, cost or expense whatsoever (including, but not limited to,
any and all reasonable legal fees and other expenses and disbursements incurred
in connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for appearance
as a witness in any action, suit or proceeding, including any inquiry,
investigation or pretrial proceeding such as a deposition) to which Fine or such
indemnified person of Fine may become subject under the Securities Act, the
Exchange Act, the Rules and Regulations, or any other federal or state law or
regulation, common law or otherwise, arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in (A)
Section 4 of this Agreement, (B) the Memorandum (except those written statements
relating to Fine given by an indemnified person for inclusion therein), (C) any
application or other document or written communication executed by the Company
or based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Shares under the securities laws thereof,
or any state securities commission or agency; (ii) the omission or alleged
omission from documents described in clauses (A), (B) or (C) above of a material
fact required to be stated therein or necessary to make the statements therein
not misleading; or (iii) the breach of any representation, warranty, covenant or
agreement made by the Company in this Agreement. The Company further agrees that
upon demand by an indemnified person, at any time or from time to time, it will
promptly reimburse such indemnified person for any loss, claim, damage,
liability, cost or expense actually and reasonably paid by the indemnified
person as to which the Company has indemnified such person pursuant hereto.
Notwithstanding the foregoing provisions of this Paragraph 7(A), any such
payment or reimbursement by the Company of fees, expenses or disbursements
incurred by an indemnified person in any proceeding in which a final judgment by
a court of competent jurisdiction (after all appeals or the expiration of time
to appeal) is entered against Fine or such indemnified person as a direct result
of Fine or such person's gross negligence or willful misfeasance will be
promptly repaid to the Company.
B. Fine hereby agrees that it will indemnify and hold the Company and each
officer, director, shareholder, employee or representative of the Company, and
each person controlling, controlled by or under common control with the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act or the Rules and Regulations, harmless from and against any and all
loss, claim, damage, liability, cost or expense whatsoever (including, but not
limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to defend or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in appearing
or preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Company or such indemnified person of the Company may
become subject under the Securities Act, the Exchange Act, the Rules and
Regulations, or any other federal or state law or regulation, common law or
otherwise, arising out of or based upon (i) the conduct of Fine or its officers,
employees or representatives in its acting as
placement agent for the Offering or (ii) the breach of any representation,
warranty, covenant or agreement made by Fine in this Agreement.
C. Promptly after receipt by an indemnified party of notice of commencement
of any action covered by Section 7(A) or 7(B), the party to be indemnified
shall, within five (5) business days, notify the indemnifying party of the
commencement thereof; the omission by one indemnified party to so notify the
indemnifying party shall not relieve the indemnifying party of its obligation to
indemnify any other indemnified party that has given such notice and shall not
relieve the indemnifying party of any liability outside of this indemnification
if not materially prejudiced thereby. In the event that any action is brought
against the indemnified party, the indemnifying party will be entitled to
participate therein and, to the extent it may desire, to assume and control the
defense thereof with counsel chosen by it which is reasonably acceptable to the
indemnified party. After notice from the indemnifying party to such indemnified
party of its election to so assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under such Section 7(A) or 7(B) for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, but the indemnified party may, at its own
expense, participate in such defense by counsel chosen by it, without, however,
impairing the indemnifying party's control of the defense. Subject to the
proviso of this sentence and notwithstanding any other statement to the contrary
contained herein, the indemnified party or parties shall have the right to
choose its or their own counsel and control the defense of any action, all at
the expense of the indemnifying party if, (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action at the expense of the indemnifying party, or
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel shall be borne by
the indemnifying party; provided, however, that the indemnifying party shall
not, in connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstance, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties. No settlement of any action or proceeding against an indemnified party
shall be made without the consent of the indemnifying party.
D. In order to provide for just and equitable contribution in circumstances
in which the indemnification provided for in Section 7(A) or 7(B) is due in
accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Company and Fine shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with the investigation
or defense of same) which the other may incur in such proportion so that Fine
shall be responsible for five percent (5%) of the aggregate of such losses,
claims, damages and liabilities and the Company shall be responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the Securities Act
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7(D), any person
controlling, controlled by or under common control with Fine, or any partner,
director, officer,
employee, representative or any agent of any thereof, shall have the same
rights to contribution as Fine and each person controlling, controlled by or
under common control with the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each officer of the Company
and each director of the Company shall have the same rights to contribution as
the Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against the other party
under this Section 7(D), notify such party from whom contribution may be sought,
but the omission to so notify such party shall not relieve the party from whom
contribution may be sought from any obligation they may have hereunder or
otherwise if the party from whom contribution may be sought is not materially
prejudiced thereby. The indemnity and contribution agreements contained in this
Section 7 shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified person or any termination
of this Agreement.
8. Payment of Expenses.
Whether or not the Offering is successfully completed, the Company hereby
agrees to bear all of the expenses in connection with the Offering, including,
but not limited to the following: filing fees, printing and duplicating costs,
advertisements, postage and mailing expenses with respect to the transmission of
offering material, registrar and transfer agent fees, escrow agent fees and
expenses, fees of the Company's counsel and accountants, reasonable fees and
expenses of Fine's counsel, issue and transfer taxes, if any, and reasonable
"Blue Sky" counsel fees (such fees not to exceed $10,000) and expenses. It is
agreed that Fine's counsel shall perform the required Blue Sky legal services.
In this connection, Blue Sky applications for registration of the Shares or
exemption therefrom shall be made in such states and jurisdictions as shall be
reasonably requested by Fine, provided that such states and jurisdictions do not
require the Company to qualify as a foreign corporation.
9. Conditions of the Closing
The Closing shall be held at the offices of Fine or its counsel. The
obligations of Fine hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing with respect to the Company as if it had been made on and as
of the Closing; the accuracy on and as of the Closing of the statements of the
officers of the Company made pursuant to the provisions hereof; and the
performance by the Company on and as of the Closing of its covenants and
obligations hereunder and to the following further conditions:
A. At the Closing, Fine shall receive the opinion of Stradley, Ronon,
Xxxxxxx & Xxxxx, LLP, special counsel to the Company, dated as of the date of
the Closing, which opinion shall be in form and substance reasonably
satisfactory to counsel for Fine, to the effect that:
(i) The execution, delivery and performance of each of this Agreement,
the Placement Agent's Warrant Agreement, the Subscription Agreements and
the Escrow Agreement has been duly and validly authorized by the Company
and, assuming due authorization, execution and delivery by each other party
thereto, each such agreement is a valid and binding agreement of the
Company, enforceable in accordance with its respective terms. The Placement
Agent's Warrants constitute valid and binding obligations of the Company to
issue and sell, upon exercise
thereof and payment therefor in accordance with their respective terms, the
number and type of securities of the Company called for thereby. The
Securities to be issued and sold by the Company pursuant to the Memorandum,
the Placement Agent's Warrant Agreement, this Agreement and the
Subscription Agreements have been duly authorized and, when issued and paid
for in accordance with the Memorandum, the Placement Agent's Warrant
Agreement, this Agreement and the Subscription Agreements, will be validly
issued, fully paid and non-assessable; the holders thereof are not and will
not be subject to personal liability to third parties solely by reason of
being such holders; such securities are not and will not be subject to the
preemptive rights of any stockholder of the Company pursuant to the
Company's Certificate of Incorporation or, to such counsel's actual
knowledge, any agreement of the Company with any stockholder; and all
corporate action required to be taken for the authorization, issuance and
sale of such securities has been duly and validly taken by the Company. The
Securities conform with respect to legal matters in all material respects
to the description thereof contained in the Memorandum.
(ii) Each of the Company and the Subsidiaries is validly existing as a
corporation in good standing under the laws of its state of incorporation.
Each of the Company and the Subsidiaries is qualified to do business and in
good standing as a foreign corporation in each jurisdiction in which its
ownership or leasing of any properties or the character of its operations
(as described in the Memorandum) requires such qualification, except where
the failure to so qualify would not have a material adverse effect on the
business, properties or operations of the Company and the Subsidiaries (as
described in the Memorandum) taken as a whole. Except as described in the
Memorandum, each of the Company and the Subsidiaries has all requisite
corporate power and authority to own or lease its properties and conduct
its business (or proposed business) as described in the Memorandum.
(iii) All issued and outstanding securities of the Company have been
duly authorized and validly issued and are fully paid and non-assessable;
to such counsel's actual knowledge, the holders thereof have no rights of
rescission and the holders thereof have no preemptive rights with respect
thereto pursuant to the Company's Certificate of Incorporation or, to such
counsel's actual knowledge, any agreement of the Company with any
stockholder, and are not subject to personal liability solely by reason of
being securityholders; and none of such securities was issued in violation
of the preemptive rights of any holders of any security of the Company
pursuant to the Company's Certificate of Incorporation or, to such
counsel's actual knowledge, any agreement of the Company with any
stockholder. The Company has 20,000,000 shares of authorized Common Stock,
6,899,570 of which will be issued and outstanding as of the date hereof and
5,000,000 shares of authorized Preferred Stock, none of which will be
issued and outstanding as of the date hereof.
(iv) To such counsel's actual knowledge, there is no litigation or
governmental proceeding, pending or threatened against, the Company or any
of the Subsidiaries or any of their assets, except as set forth in the
Memorandum.
(v)(a) To such counsel's actual knowledge (without regard to the
transactions contemplated by this Agreement), neither the Company nor any
of the Subsidiaries is in breach of, or in default under, any term or
provision of any material indenture, mortgage, deed of trust,
lease, note, loan or credit agreement or any other material agreement or
instrument evidencing an obligation for borrowed money, or any other
material agreement or instrument to which it is a party or by which it or
any of its properties may be bound or affected. (b) To such counsel's
actual knowledge (without regard to the transactions contemplated by this
Agreement), neither the Company nor any of the Subsidiaries is in violation
of any provision of its charter or Bylaws or in violation of any franchise,
license, permit, judgment, decree or order, or in violation of any statute,
rule or regulation. (c) To such counsel's actual knowledge, neither the
execution and delivery of this Agreement, the Escrow Agreement, the
Placement Agent's Warrant Agreement or the Subscription Agreements nor the
issuance and sale or delivery of the Securities nor the consummation of any
of the transactions contemplated herein or in the Subscription Agreements
or the Placement Agent's Warrant Agreement, nor the compliance by the
Company with the terms and provisions hereof or thereof, has conflicted
with or will conflict with, or has resulted in or will result in a breach
of, any of the terms and provisions of, or has constituted or will
constitute a default under, or has resulted in or will result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of the Subsidiaries pursuant to, the terms
of any material indenture, mortgage, deed of trust, note, loan or credit
agreement or any other material agreement or instrument evidencing an
obligation for borrowed money, or any other material agreement or
instrument to which the Company or any of the Subsidiaries may be bound or
to which any of the property or assets of the Company or any of the
Subsidiaries is subject except (i) where such default, lien, charge or
encumbrance would not have a material adverse effect on the Company or any
of the Subsidiaries and (ii) as described in the Memorandum; nor will such
action result in any violation of the provisions of the charter or the
Bylaws of the Company or any of the Subsidiaries or, assuming the due
performance by Fine of its obligations hereunder, any statute, rule or
regulation that is applicable to the Company or any of the Subsidiaries and
that is in such counsel's experience normally applicable to transactions of
the type contemplated by this Agreement (other than Blue Sky laws), or, to
such counsel's actual knowledge, any order of any court or of any foreign,
federal, state or other regulatory authority or other government body
having jurisdiction over the Company or any of the Subsidiaries.
(vi) Assuming that each purchaser of the Securities is an Accredited
Investor, that the representations made by the Company and Fine in this
Agreement are true and correct at all times during the Offering Period and
at the time of the Closing, that Fine has complied with the provisions of
this Agreement and of Section 502(c) of Regulation D and that a Form D will
be filed in accordance with the provisions of Section 503 of Regulation D,
no registration under the Securities Act is required in connection with the
sale and issuance of any of the Securities by the Company. The offering and
sale of the Securities in the manner contemplated by this Agreement, the
Placement Agent's Warrant Agreement and the Memorandum will not be
integrated with any offering made before the offer and sale of the
Securities in a manner that would render unavailable any exemption from
registration under the Securities Act.
Such opinion shall be rendered and interpreted in accordance with the
assumptions, qualifications, exceptions, definitions, limitations on
coverage and other limitations provided for and specified in Sections 4,
6-A, 7, 9, 11-14, 18 and 19 (except subsection 19(a) as to federal
securities laws and, without respect to the opinion described in paragraph
(v)(b) above and the confirmations described in paragraph (iv) above and
the final paragraph of this subsection A,
subsections 19(c), 19(e), 19(j), 19(l), 19(o) and 19(p)) of the Legal
Opinion Accord (the "Accord") of the ABA Section of Business Law (1991),
included in the Third Party Legal Opinion Report, 47 Bus. Law 167 (1991).
Furthermore, the law covered by such opinion shall be limited to (a) the
Federal statutes, judicial decisions and rules and regulations of the
governmental agencies of the United States, (b) the statutes, judicial and
administrative decisions and rules and regulations of the governmental
agencies of the Commonwealth of Pennsylvania, (c) the Delaware General
Corporation Law (the "DGCL") and (d) with respect to the existence and good
standing of MDC Research, the California General Corporation Law (the
"CGL"). With respect to the DGCL, such counsel may rely exclusively on
their review of such law as compiled in Prentice Hall, Inc. CORPORATION,
including the cases reported therein. With respect to the CGCL, such
counsel may rely exclusively on their review of such law as compiled in
Prentice Hall, Inc. CORPORATION, without regard to the cases decided
thereunder. Except with respect to opinions as to which the DGCL applies
and the opinion with respect to the existence and good standing of MDC
Research, to which the CGCL applies, such counsel may assume in each
instance that the substantive law of any jurisdiction other than the
Commonwealth of Pennsylvania is identical in all respects to the
substantive law of the Commonwealth of Pennsylvania. Such opinion need not
address the remedies conferred by the Agreement, the Placement Agent's
Warrant Agreement, the Subscription Agreements, the Escrow Agreement or any
other agreement made by the Company in connection with the Offering or the
remedy which any court, other government body, agency or arbitrator may
grant, impose or render. The term "primary lawyer group" as used in Section
6-A of the Accord shall be defined in the opinion to mean Xxxxx X. Xxxx,
Xxxx X. Xxxxxxx, Xxx Xxxxx Xxxxx and Xxxxx X. Xxxxx, who are the lawyers in
such firm who have had active involvement in negotiating the transactions
contemplated by the opinion or who have given substantive legal attention
to the affairs of the Company since June 12, 1995.
In rendering such opinion, such counsel may rely, as to matters of
fact, to the extent they deem proper, on certificates and written
statements of responsible officers of the Company and certificates or other
written statements of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good
standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Fine's counsel.
Such counsel shall state that it has participated in conferences with
officers and other representatives of the Company during which the contents
of the Memorandum were discussed. Although such counsel is not passing
upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of any statements contained in the Memorandum,
such counsel shall state that, on the basis of the foregoing, nothing has
come to such counsel's attention to lead them to believe that the
Memorandum, as of the date thereof and the date of such opinion, contained
or contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (except for the financial statements, notes thereto
and other statistical and financial information included therein or omitted
therefrom, as to which such counsel need express no opinion).
B. At the Closing, Fine shall receive the opinion of Xxxx Xxxxxxx Xxxxxxx
and Xxxxxxxx, special intellectual property counsel to the Company, dated as of
the date of the Closing, which opinion shall be in form and substance reasonably
satisfactory to counsel for Fine, to the effect that:
(i) The Company owns, free and clear of all liens, encumbrances,
pledges or security interests, whatsoever,
(a) all patents and patent applications and provisional patent
applications listed in Schedule A, and
(b) all trademarks listed in Schedule B
and referenced in the Memorandum under Patents and Proprietary Rights,
(ii) As to the Company's core products, the Safety Syringe, Safety
Phlebotomy Set and Safety Catheter (as defined in the Memorandum), the
Company has performed right to use searches and such counsel shall state
the rights of the Company to market such products,
(iii) There is no claim or action, pending or threatened, which
affects the rights of the Company with respect to any trademarks or patents
used in the conduct of the Company's business,
(iv) As far as aware, all patents and trademarks owned by the Company
are valid and all pending U.S. patent applications were filed in accordance
with the rules and regulations of the United States Patent and Trademark
Office,
(v) The statements in the Memorandum in the heading, "Risk Factors"
Dependence on Patents and Proprietary Rights" are accurate in all material
respects and do not omit to state any fact necessary to make the statements
made therein complete and accurate,
(vi) The statements in the Memorandum do not contain any untrue
statement of a material fact with respect to the intellectual property
position of the Company, or omit to state any material fact relating to the
intellectual property position of the Company which is required to be
stated in the Memorandum or is necessary to make the statements therein not
misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon
an opinion or opinions (in form and substance satisfactory to Fine's
counsel) of other counsel acceptable to Fine's counsel, familiar with the
applicable laws; (B) as to matters of fact, to the extent they deem proper,
on certificates and written statements of responsible officers of the
Company and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents respecting
the corporate existence or good standing of the Company, provided that
copies of any such statements or certificates shall be delivered to Fine's
counsel. The opinion of such counsel for the Company shall state that the
opinion of any such other counsel is in form satisfactory to such counsel
and that Fine and they are justified
in relying thereon. The opinion shall also state that Fine's counsel is
entitled to rely on the opinion of counsel to the Company addressed
to Fine.
Such counsel shall state that it has participated in conferences with
officers and other representatives of the Company during which the contents
of the Memorandum were discussed. Although such counsel is not passing
upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of any statements contained in the Memorandum,
such counsel shall state that, on the basis of the foregoing, nothing has
come to such counsel's attention to lead them to believe that the
Memorandum, as of the date thereof and the date of such opinion, contained
or contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (except for the financial statements, notes thereto
and other statistical and financial information included therein or omitted
therefrom, as to which such counsel need express no opinion).
C. At the Closing, Fine shall receive the opinion of Buc & Xxxxxxxxx,
special FDA counsel to the Company, dated as of the date of the Closing, which
opinion shall be in form and substance reasonably satisfactory to counsel for
Fine, to the effect that:
(i) The statements in the Memorandum under "Risk Factors Government
Regulation" have been reviewed by such counsel, and insofar as they
summarize applicable provisions of the Federal Food, Drug, and Cosmetic Act
("FDCA") and implementating regulations are correct in all material
respects and do not omit to state applicable provisions of the FDCA and
implementing regulations necessary to make the statements contained therein
not misleading;
(ii) Nothing has come to such counsel's attention that would lead such
counsel to believe that there have been or that there are lawsuits or
regulatory or enforcement proceedings brought by or before the U.S. Food
and Drug Administration (the "FDA") pending or threatened, against the
Company or any of its existing or proposed products;
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent they deem proper, on certificates and written
statements of responsible officers of the Company provided that copies of
any such statements or certificates shall be delivered to Fine's counsel.
The opinion shall also state that Fine's counsel is entitled to rely on the
opinion of counsel to the Company addressed to Fine.
Such counsel shall state that it has participated in conferences with
officers and other representatives of the Company during which the contents
of the Memorandum relating to the FDA and the FDCA were discussed, and that
it has obtained a certificate from responsible officers of the Company.
Although such counsel is not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of any
statements contained in the Memorandum, such counsel shall state that, on
the basis of the foregoing, nothing has come to such counsel's attention to
lead them to believe that the statements in the Memorandum under "Risk
Factors -- Government Regulation", as they relate to FDA regulatory
matters, as of the date thereof and the date of such opinion, contained or
contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
D. At or prior to the Closing, counsel for Fine shall have been furnished
such documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in this
Agreement and the Memorandum, or in order to evidence the accuracy, completeness
or satisfaction of any of the representations, warranties or conditions herein
contained.
E. At and prior to the Closing, (i) there shall have been no material
adverse change nor development involving a prospective change in the condition
or prospects or the business activities, financial or otherwise, of the Company
or any of the Subsidiaries, from the latest dates as of which such condition is
set forth in the Memorandum; (ii) there shall have been no transaction, not in
the ordinary course of business, entered into by the Company or any of the
Subsidiaries which has not been disclosed in the Memorandum or to Fine in
writing; (iii) neither the Company nor any of the Subsidiaries shall be in
default under any provision of any instrument relating to any outstanding
indebtedness for which a waiver or extension has not been otherwise received;
(iv) except as set forth in the Memorandum, the Company shall not have issued
any securities (other than those set forth in the Memorandum) or declared or
paid any dividend or made any distribution of its capital stock of any class and
there shall not have been any change in the indebtedness (long or short term) or
liabilities or obligations of the Company (contingent or otherwise); (v) no
material amount of the assets of the Company or any of the Subsidiaries shall
have been pledged or mortgaged, except as indicated in the Memorandum; and (v)
no action, suit or proceeding, at law or in equity, against the Company or any
of the Subsidiaries or affecting any of its properties or businesses shall be
pending or threatened before or by any court or federal or state commission,
board or other administrative agency, domestic or foreign, wherein an
unfavorable decision, ruling or finding could materially adversely affect the
businesses, prospects or financial condition or income of the Company or any of
the Subsidiaries, except as set forth in the Memorandum.
F. At the Closing, Fine shall have received a certificate of the Company
signed by its chief executive officer, dated as of the date of the Closing, to
the effect that the conditions set forth in subparagraph (E) above have been
satisfied and that, as of the date of the Closing, the representations and
warranties of the Company set forth herein are true and correct.
G. At the Closing, the Company shall have duly executed and delivered the
appropriate amount and designation of Shares to Fine as agent for the respective
holders thereof.
H. At or prior to the Closing, the Company shall deliver a duly executed,
legally binding Placement Agent's Warrant Agreement and at the Closing the
Company shall duly and validly issue Placement Agent's Warrants to purchase ten
percent (10%) of the number of Shares sold by the Company.
10. Termination.
This Agreement shall terminate if the Closing specified in Section 1(B)
does not take place on or before the seven (7) business day following the
Termination Date or as soon thereafter as the funds
received from subscriptions have cleared the banking system in the normal
course of business. Either Fine or the Company may terminate the Offering in its
sole discretion prior to the Closing. In the event that the Company determines
to terminate the Offering from and after the date hereof through the end of the
Offering Period for any reason other than Fine's breach of the terms of this
Agreement, and Fine is willing to proceed, then the Company shall immediately
pay to Fine the amount of its out-of-pocket expenses. Upon such termination, all
Subscription Documents and payments for the Shares not previously delivered to
the purchasers thereof, without interest thereon or deduction therefrom, shall
be returned to the respective subscribers, Fine shall have no further obligation
to the Company, and the Company shall have no obligation to Fine.
11. Miscellaneous.
A. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all which shall be deemed to be one
and the same instrument.
B. Any notice required or permitted to be given hereunder shall be given in
writing and shall be deemed effective when deposited in the United States mail,
postage prepaid, or when received if delivered personally or by facsimile
confirmed transmission, addressed as follows:
To Fine:
Fine Equities, Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xx. X. Xxxxx Fine
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxxxxx, Esq.
To the Company:
The Med-Design Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxxxx, Chairman
with a copy to:
Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
or to such other address of which written notice is given to the others.
C. This Agreement shall be governed by and construed in all respects under
the laws of the State of New York, without reference to its conflict of laws
rules or principles. Any suit, action, proceeding or litigation arising out of
or relating to this Agreement shall be brought and prosecuted in such federal or
state court or courts located within the State of New York as provided by law.
The parties hereby irrevocably and unconditionally consent to the jurisdiction
of each such court or courts located within the State of New York and to service
of process by registered or certified mail, return receipt requested, or by any
other manner provided by applicable law, and hereby irrevocably and
unconditionally waive any right to claim that any suit, action, proceeding or
litigation so commenced has been commenced in an inconvenient forum.
D. This Agreement and the other agreements referenced herein contain the
entire understanding between the parties hereto and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.
E. If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
THE MED-DESIGN CORPORATION
By:
---------------------------------
Name:
Title:
FINE EQUITIES, INC.
By:
-----------------------------
Name:
Title:
