AGENCY AGREEMENT
September
30, 2009
200
Middlesex Essex Turnpike, Suite 000
Xxxxxx,
Xxx Xxxxxx 00000
Xxxxxx
Xxxxxx
Attention: Xx.
Xxxxxx X. Xxxxxx
President
and Chief Executive Officer
Dear
Sirs:
Re: Offering of
Units
Xxxxx
Capital Limited (the “Agent”), understands that SyntheMed, Inc. (the
“Corporation”), a Delaware corporation, proposes to issue to investors secured
by the Agent, up to 10,000,000 units (“Units”) each comprised of one common
share of the Corporation’s Common Stock, par value $0.001 per share (“Common
Stock”) and one purchase warrant to purchase one common share of Common Stock
(an “Investor Warrant”). The Units shall be issued and sold at a price of $0.20
per Unit (the “Issue Price”). The Units shall be sold pursuant to a subscription
agreement, as may be supplemented upon mutual agreement of the Corporation and
the Agent, the form of which is attached hereto as Appendix I (the “Subscription
Agreement”). The offering of the Units (the “Offering”) will be consummated in
one or more closings, the final closing to occur on or before October 30, 2009,
or such other date mutually agreed to by the Corporation and the Agent (the date
of each closing being referred to herein as a “Closing Date”). There is no
minimum number of Units being offered in the Offering.
1. Appointment
The
Corporation hereby appoints the Agent as its non-exclusive agent and the Agent
accepts the appointment and agrees to act on a “commercially reasonable efforts”
basis as a non-exclusive agent of the Corporation to secure investors for the
issuance of the Units by way of private placement to institutional and other
sophisticated investors or other eligible investors subject to the terms and
conditions and in reliance upon the representations, warranties and covenants of
the Corporation set out in this Agreement.
The Agent
shall be entitled to retain sub-agents selected by it to participate in the
soliciting of offers to purchase the Units, provided that the Agent receives
from each such sub-agent its agreement to be bound by the obligations of the
Agent hereunder prior to any such appointment. The fees payable to such
sub-agents shall be the responsibility and for the account of the
Agent.
The
Agent’s appointment shall be subject to, amongst other things as outlined below,
completion of its formal client take-on procedures, due diligence by or on
behalf of the Agent on the Corporation to its complete satisfaction and the
receipt of all necessary regulatory approvals which the Corporation agrees to
use its reasonable efforts to obtain.
The
Corporation will permit the Agent and its legal counsel to conduct such due
diligence as the Agent may deem appropriate.
The
Corporation will, on a timely basis, make available or cause to be made
available to the Agent or provide the Agent with access to all such information,
data, documents, advice and opinions respecting the Corporation as the Agent may
reasonably require in order to perform its services hereunder, and will provide
or cause to be provided access to management, lawyers, auditors and such other
professional advisers of the Corporation as the Agent considers necessary or
desirable, acting reasonably, in order to perform its services
hereunder. The Corporation shall also keep the Agent fully advised of
the material activities of the Corporation and in particular of any developments
in respect of its business that might reasonably be expected to have an effect
on the transactions contemplated hereunder.
The
Corporation undertakes that all such information provided and statements made by
it or on its behalf to the Agent will be accurate and complete in all material
respects and not misleading in a material particular. The Corporation
agrees that if anything occurs during the term of the Agent’s appointment after
the supply of any such information or statement to render that information or
statement materially untrue or misleading, it will (i) promptly notify the
Agent, and (ii) take all such steps as the Agent may require to correct that
information or statement.
2. Sales
Restrictions
The Agent
represents and agrees that it will comply with the restrictions on offers and
sales of the Units set forth in Schedule “A” hereto, as well as the other
provisions thereof, all of which are hereby incorporated by reference herein and
form a part hereof.
3. Commission
and Broker Warrant
In
consideration of the services rendered and to be rendered by the Agent in acting
as agent of the Corporation on a best efforts basis to secure investors for the
issuance of the Units, the Corporation agrees to pay to the Agent on the Closing
Date a commission (the “Commission”) equal to 7% of that portion of the
gross proceeds of the Units sold on the Closing Date to purchasers secured by
the Agent, payable at the election of the Agent in either cash or Units at the
Issue Price (“Commission Units”) or a combination of the two.
In
further consideration of the services rendered and to be rendered by the Agent
described above, the Corporation agrees to issue to the Agent for no additional
consideration, warrants (the “Broker Warrants”) to purchase an aggregate number
of Shares equal to 7% of the aggregate number of Units issued on the Closing
Date to purchasers secured by the Agent. The Broker Warrants shall have a term
ending on September 30, 2013 and shall be exercisable at a price of $0.20 per
Share. Any Commission payable or Broker Warrants issuable to the
Agent may, at the direction of the Agent, be issued to any subagents retained by
the Agent in accordance with this Agreement.
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If for
any reason the Offering does not close and within a three (3) year period after
termination of the Offering the Corporation raises funding through one or more
investors introduced to the Corporation for the first time by the Agent (“Agent
Investors”), the Agent shall be entitled to the Commission and Broker Warrants
in respect thereof as if the Offering had not been terminated and the gross
proceeds of sale raised in such financing(s) had been raised under the Offering.
The Agent will after the Closing Date promptly provide the Corporation with a
list of Agent Investors.
4. Closing
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(a)
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The
issuance of the Units shall be completed (the “Closing”) at the offices of
the Corporation, or such other place or places as the Corporation and the
Agent may agree, at 10:00 a.m. (Eastern Standard Time) (the “Closing
Time”) on the Closing Date.
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(b)
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On
or prior to each Closing Date, the Agent shall provide to the Corporation
a subscription agreement from each purchaser of Units (a “Purchaser”) who
is to acquire Units on such Closing Date. Purchasers shall be
required to complete and sign the form of Subscription Agreement attached
hereto as Appendix I.
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(c)
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At
the Closing Time on each Closing Date, upon satisfaction of the conditions
contained herein, the Agent shall pay or cause payment to be made of the
net purchase price of the Units sold by the Agent in United States funds
by wire transfer to such bank and account as may be designated by the
Corporation, or in such other manner as may be agreed with the
Corporation, such net purchase price to be equal to the aggregate Issue
Price of the Units sold by the Agent less the cash portion of the
Commission (if the Agent elects to receive all or a part thereof in cash)
and the amount in reimbursement of expenses referred to in section 8
hereof. Such payment and delivery shall be made
against:
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(i)
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delivery
by the Corporation to its transfer agent of instructions to issue
certificates representing (A) the Units (or the underlying securities) to
be issued on the Closing Date registered in such name or names as are
directed in the Subscription Agreements and (B) the Commission Units (and
the underlying securities);
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(ii)
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delivery
of the Commission and the Broker Warrants;
and
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(iii)
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delivery
to the Agent of copies of the certificates, opinions and other documents
contemplated hereby.
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5. Representations,
Warranties and Covenants of the Corporation
The
Corporation represents, warrants and covenants to the Agent as of the date
hereof and as of the Closing Date, which representations, warranties and
covenants shall survive the Closing for a period of two years and any
investigation made by the Agent, that:
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(a)
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the
Corporation is a validly existing corporation in good standing under the
laws of the jurisdiction in which it is incorporated, and the Corporation
has no subsidiaries;
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(b)
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the
Corporation is duly qualified and authorized to do business in the
jurisdiction(s) in which it carries on business or to own property where
required under the laws of the jurisdiction(s) in which any such property
is located;
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(c)
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the
Corporation is current with all material filings required to be made under
the laws of any jurisdiction in which it carries on any material business,
and the Corporation has all necessary licenses, leases, permits,
authorizations and other approvals necessary to permit it to conduct its
business as currently conducted, except where the failure to have any such
license, lease, permit, authorization or approval would not have a
material adverse effect on the Corporation and its
business;
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(d)
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the
audited financial statements of the Corporation as at and for the year
ended December 31, 2008 and the interim financial statements of the
Corporation as at and for the six-month period ended June 30, 2009 present
fairly, in all material respects, the financial position of the
Corporation as at the respective period-end dates, and the results of its
operations and the changes in its financial position for the 12-month
period ended December 31, 2008 in the case of the audited financial
statements and 6-month period ended June 30, 2009 in the case of the
interim financial statements, all in accordance with generally accepted
accounting principles, and, since June 30, 2009, there has been
no material adverse change in the business, affairs or financial or other
condition of the Corporation, except as disclosed in the notes to the
financial statements for the quarter then
ended;
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(e)
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the
Corporation has all requisite power and authority to carry out its
obligations under this Agreement, the Subscription Agreement, and the
Broker Warrants;
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(f)
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this
Agreement and the Subscription Agreement have been, and the Broker
Warrants will be on the Closing Date, duly authorized, executed and
delivered by the Corporation and constitute or on the Closing Date will
constitute, legal, valid and binding obligations of the Corporation
enforceable in accordance with their terms except that: (i) the
enforcement hereof or thereof may be limited by bankruptcy, insolvency,
reorganization and other laws affecting the enforcement of creditors’
rights generally, (ii) rights of indemnity thereunder may be limited
under applicable law, and (iii) equitable remedies, including without
limitation specific performance and injunctive relief, may be granted only
in the discretion of a court of competent
jurisdiction;
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(g)
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the
shares of Common Stock included in the Units are or on the Closing Date
will be duly and validly authorized and, when issued and delivered against
payment therefor, will be duly and validly issued, fully paid and
non-assessable shares in the capital stock of the
Corporation;
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(h)
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the
Corporation will reserve a sufficient number of shares of Common Stock
unissued as may be required to be issued pursuant to the exercise of the
Broker Warrants and Investor Warrants and, when issued and delivered upon
such exercise, such shares of Common Stock will be duly and validly issued
as fully paid and non-assessable shares in the capital stock of the
Corporation;
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(i)
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the
authorized capital of the Corporation consists of 150,000,000 shares of
Common Stock and 5,000,000 shares of preferred stock, par value of $0.01
per share. Of the preferred stock, 200,000 shares have been
designated as Series D Junior Participating Preferred Stock (underlying
outstanding rights applicable to each presently and future outstanding
share of Common Stock under a shareholder rights agreement adopted
effective May 20, 2008 (the “Rights Plan”) and no other series or class of
preferred stock is designated. As of June 30, 2009 there were
99,639,106 shares of Common Stock and no shares of preferred stock
outstanding. In addition, as of that date, the Corporation had
an aggregate of 26,074,666 shares of Common Stock reserved for issuance
upon exercise or conversion of the following outstanding securities: (i)
options which have been granted under the Corporation’s stock
option plans and other agreements, to purchase an aggregate
of 13,689,666 shares of Common
Stock and (ii) warrants issued to investors to
purchase an aggregate of 10,000,000 shares of Common Stock and warrants
issued to the Agent or its designees to purchase an aggregate of 2,385,000
shares of Common Stock;
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(j)
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the
Corporation is not, and at the Closing Date will not be: (i) in
breach or violation of any of the terms or provisions of, or in default
under, this Agreement, the Subscription Agreement, any other Subscription
Agreement for the purchase of Units, the Broker Warrants, the Investor
Warrants, any indenture, mortgage, deed of trust or loan agreement (except
as disclosed in the Corporation’s filings with the United States
Securities and Exchange Commission), other agreement (written or oral) or
instrument to which it is a party or by which it is bound or to which any
of its property or assets is subject, which breach or violation or the
consequences thereof would result in a material adverse change to it or
its business; or (ii) in violation of the provisions of its articles,
by-laws, resolutions or any statute or any other rule or regulation of any
court or governmental agency or body having jurisdiction over it or any of
its properties which violation or the consequences thereof would result in
a material adverse change to it or its
business;
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(k)
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the
issue and sale of the Units (and the underlying securities), Broker
Warrants, Investor Warrants, any shares of Common Stock on the exercise of
the Broker Warrants or Investor Warrants and the performance and
consummation of the transactions contemplated herein will not conflict
with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement (written or oral) or instrument to which
the Corporation is bound or to which any of the property or assets of the
Corporation is subject, which breach or violation or the consequences
thereof would result in a material adverse change to the Corporation or
its business, nor will any such action conflict with or result in any
violation of the provisions of the articles, by-laws or resolutions of the
Corporation or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Corporation or
any of its properties which violation or the consequences thereof would
result in a material adverse change to the Corporation or its
business;
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(l)
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the
Corporation has established on its books reserves which are adequate for
the payment of all taxes not yet due and payable; there are no liens or
other liabilities for taxes on the assets of the Corporation except for
taxes not yet due; there are no audits of any of the tax returns of the
Corporation which are known by the Corporation’s management to be pending
and there are no claims which have been or may be asserted relating to any
such tax returns which, if determined adversely, would result in the
assertion by any government or agency of any deficiency having a material
adverse effect on the properties, business or assets of the
Corporation;
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(m)
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the
Corporation has good and valid title to its properties, leaseholds and
assets, including without limitation the properties, leaseholds and assets
reflected in the balance sheet as of June 30, 2009 referred to in clause
5(d) above, except properties, leaseholds and assets disposed of since
such date at fair market value in the ordinary course of business, and has
good title to all its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance, charge, rights of first
refusal or options to purchase, whether or not relating to extensions of
credit or the borrowing of money, other than as disclosed in such balance
sheet except as incurred in the ordinary course of business since the date
of such balance sheet, and except in any event where the failure to hold
good title or the existence of a mortgage, pledge, lien, lease,
encumbrance, charge, right of first refusal or option to purchase would
not have a material adverse effect on the Corporation or its business;
there exists no condition which interferes with the economic value or use
of such properties and assets and all tangible assets are in good working
condition and repair (subject to ordinary wear and tear) except where the
existence of any such condition would not have a material adverse effect
on the Corporation or its business;
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(n)
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the
Corporation owns, is licensed or has applied for registration of, all
patents, trade-marks, service marks, trade names, and copyrights necessary
for the conduct of its business, except where the failure to so own or
apply for registration would not have a material adverse effect on the
Corporation or its business; to the best of the knowledge, information and
belief of the Corporation none of the past or present activities of the
Corporation or the products, services or assets of the Corporation
infringe or constitute an unauthorized use of any proprietary rights of
others, and the Corporation has not received any notice of infringement
of, or conflict with, asserted rights of others with respect to any
patent, trade-xxxx, service xxxx, trade name, or copyright that,
individually or in the aggregate, if the subject of an unfavorable
decision, ruling, or finding, would result in a material adverse change to
the Corporation or its business;
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(o)
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the
Corporation has taken reasonable measures to protect and preserve the
confidentiality of all trade secrets and other non-patented proprietary
information of the Corporation, including without limitation the
procurement of proprietary invention assignments and non-disclosure and
non-competition agreements from employees, consultants, subcontractors,
customers and other persons who have access to such
information;
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(p)
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the
Corporation has filed all necessary federal, state and municipal property,
income and franchise tax returns and has paid all taxes shown as due
thereon or otherwise owed by it to any taxing authority except those
contested in good faith and for which appropriate amounts have been
reserved in accordance with generally accepted accounting principles;
there is no tax deficiency which has been, or to the best of the
knowledge, information and belief of the Corporation might be, asserted
against the Corporation which would materially affect the business or
operations of the Corporation; the Corporation has paid all applicable
federal and state payroll and withholding
taxes;
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(q)
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there
is no collective bargaining or other union agreement to which the
Corporation is a party or by which it is bound, or which is currently
being negotiated; except for a defined contribution plan under Section
401(k) of the US Internal Revenue Code, the Corporation does not sponsor,
maintain or contribute to any pension, retirement, profit sharing,
incentive compensation, bonus or other employee benefit plan, including
without limitation any employee benefit plan covered by Title 4 of the
Employee Retirement Income Security Act of 1974 (“ERISA”) or any
“multi-employer plan” as defined in Section 4001(a)(3) of ERISA, or any
other employee benefit plan; to the best of the knowledge, information and
belief of the Corporation, (i) no employee of the Corporation is a
party to or bound by any agreement, contract or commitment, or subject to
any restrictions, particularly but without limitation in connection with
any previous employment of any such person, which would result in a
material adverse change to the Corporation or its business, and
(ii) no senior officer has any present intention of terminating his
employment with the Corporation, and the Corporation has no present
intention of terminating any such
employment;
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(r)
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there
is no adverse claim, action, proceeding or investigation pending or, to
the knowledge, information and belief of the Corporation, threatened,
which questions the validity of the issue or sale of the Units (or the
underlying securities), Broker Warrants, or any shares of Common Stock on
exercise of the Broker Warrants or Investor Warrants or the validity of
any action taken or to be taken by the Corporation in connection with this
Agreement or the Subscription Agreement or which would result in any
material adverse change in the financial condition, results of operations,
business or prospects of the
Corporation;
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(s)
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the
Corporation will permit the Agent and its legal counsel to conduct all due
diligence which the Agent may reasonably require;
and
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(t)
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during
the period commencing with the engagement of the Agent on the date of this
Agreement and ending on the date on which the full amount of the Offering
is sold or the earlier date of termination of the Offering period (the
“Final Closing Date”), the Corporation will inform the Agent in writing of
the full particulars of any material change (actual, anticipated or
threatened) in the assets, liabilities, business or the financial
condition of the Corporation.
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6. Closing
Conditions for the Benefit of the Agent
The
obligations of the Agent hereunder are subject to the satisfaction, on or before
the Closing Time, of the following conditions:
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(a)
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the
Corporation shall have complied with all of its obligations hereunder; the
representations and warranties of the Corporation contained herein shall
be true and correct in all material respects on and as of each Closing
Date as if made on and as of such Closing Date; and the Agent shall have
received on each Closing Date a certificate, dated as of such Closing Date
and signed by one or more executive officers or directors of the
Corporation on behalf of the Corporation and not in his or their personal
capacity, to the foregoing effect;
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(b)
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the
Agent shall have received on and as of each Closing Date the favourable
opinion of the Corporation’s legal counsel on such matters as the Agent
may reasonably request, including:
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(i)
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the
Corporation is incorporated and validly existing under the laws of the
jurisdiction in which it is incorporated and has the corporate power and
authority to conduct its business as currently conducted by it and to
issue and sell the Units (and the underlying securities including the
shares of Common Stock to be issued under the Investor Warrants) and
Broker Warrants (including the shares at Common Stock to be issued under
the Broker Warrants) (collectively referred to as the “Securities”) and to
enter into and carry out its obligations under this Agreement, the
Subscription Agreement, the Broker Warrants and the Investor
Warrants;
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(ii)
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as
to the Corporation's authorized and issued and outstanding
capital;
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(iii)
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each
of this Agreement, the Subscription Agreement and the Securities has been
duly authorized, executed and delivered by the Corporation and, as
applicable, is a legal, valid and binding obligation of the Corporation
enforceable against it in accordance with its
terms;
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(iv)
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all
necessary action has been taken by the Corporation to authorize the issue
of up to 10,000,000 Units (and all underlying securities) and the issue to
the Agent of up to 700,000 Commission Units (and all underlying
securities) and Broker Warrants exercisable for up to 700,000 shares of
Common Stock and the Corporation has sufficient authorized but unissued
shares of Common Stock as may be required to be issued upon the exercise
of the Broker Warrants and the Investor
Warrants;
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(v)
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the
execution and delivery of this Agreement and the Subscription Agreement
and the completion of the transactions contemplated hereby and thereby,
the issue of the Units (and the underlying securities), the Commission
Units (and the underlying securities), the Broker Warrants, and the issue
of the shares of Common Stock issuable upon exercise of the Broker
Warrants and Investor Warrants do not violate or constitute a breach of
any provisions of the articles of incorporation or by-laws of the
Corporation, any material contract or other material agreement to which it
is a party or by which it is bound and of which such counsel is aware, or
any New York, Delaware corporate or United States law or regulation (other
than federal and state Securities or “blue sky” laws, as to which such
counsel expresses no opinion in this
paragraph);
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(vi)
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the
Units (and underlying securities) issued to the investors and the
Commission Units (and underlying securities) issued to the Agent, if any,
have been duly and validly issued by the Corporation and the shares of
Common Stock underlying same are outstanding as fully paid and
non-assessable shares in the capital of the Corporation and the shares of
Common Stock issuable upon exercise of the Broker Warrants and Investor
Warrants will, when issued in accordance with the respective terms and
conditions of the Broker Warrants or Investor Warrants, as applicable, be
validly issued as fully paid and non-assessable shares in the capital of
the Corporation;
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(vii)
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the
certificates representing the Units (and the underlying securities),
Commission Units (and the underlying securities) and Broker Warrants
comply with the requirements of the state laws and any federal laws of the
United States applicable to the Corporation and such certificates have
been duly and properly approved by the directors of the
Corporation;
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(viii)
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the
exemption from any consent, approval, authorization, order, registration,
filing or qualification of or with any governmental authority of the
United States (or New York or Delaware corporate authority) (other than
federal and state securities or “blue sky” laws, as to which such counsel
expresses no opinion in this paragraph) for the valid authorization,
issue, sale and delivery of the Units, and Commission Units (and the
underlying securities) and the shares of Common Stock issuable upon
exercise of the Broker Warrants and Investor Warrants and the issue and
delivery of the Broker Warrants;
and
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(ix)
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the
exemption from registration of the issuance of the Units (and the
underlying securities), Commission Units (and the underlying securities),
Broker Warrants including the shares of Common Stock underlying the Broker
Warrants and Investor Warrants under the terms contemplated by the
Subscription Agreement and the Agency
Agreement.
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In giving
the opinions contemplated above, legal counsel to the Corporation shall be
entitled to rely, where appropriate, upon opinions of local counsel and, as to
matters of fact, to rely upon the representations and warranties of Purchasers
contained in the executed Subscription Agreements, a certificate of fact of the
Corporation signed by those officers in a position to have knowledge of such
facts and their accuracy, and certificates of such public officials and other
persons as are necessary or desirable, and may qualify its opinion described in
(iii) above with respect to (1) bankruptcy, insolvency, reorganization and other
laws affecting the enforcement of creditors' rights generally and (2)
limitations on the availability of equitable remedies such as specific
performance, and its opinion may include other reasonable and standard opinion
qualifications;
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(c)
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the
Agent shall have received copies of the Subscription Agreements executed
by the Corporation;
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(d)
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the
Agent shall have received such other agreements, certificates, opinions or
documents as the Agent may reasonably request;
and
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(e)
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the
fulfilment, to the reasonable satisfaction of counsel for the Agent, of
all legal requirements to permit the offer and sale of the Units (and the
underlying securities) and the issue of the Broker Warrants to the
Agent.
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The
foregoing conditions are included for the benefit of the Agent and may be waived
in writing by the Agent, in whole or in part.
Notwithstanding
anything contained in this Agreement, the Agent may by written notice to the
Corporation terminate this Agreement at any time before the Closing Time if, in
the opinion of the Agent, there shall have been such a change in national or
international financial, political or economic conditions or currency exchange
rates or exchange controls as would in its reasonable view be likely to
prejudice materially the success of the Offering or distribution of the Units or
if the Agent is not reasonably satisfied with the results of its due diligence
review of the Corporation and, upon notice being given, the parties to this
Agreement shall (except for the liability of the Corporation in relation to
expenses as provided in section 8 and except for any liability arising before or
in relation to such termination) be released and discharged from their
respective obligations under this Agreement.
7. Confidentiality
The Agent
agrees that it will not disclose the terms of the Offering or any information it
may have acquired from the Corporation in the course of executing this Agency
Agreement which the Corporation has identified as material non-public
information, except to the extent (i) that such terms or other information
becomes generally available to the public other than by disclosure in violation
of this Agency Agreement, (ii) that such information was properly within
the Agent’s possession prior to being furnished by the Corporation,
(iii) that such information becomes available to the Agent on a
non-confidential basis, such as through disclosure by third parties who have the
right to disclose the information, and (iv) compelled by judicial process,
provided that in the event of compulsion by judicial process the Agent will
inform the Corporation promptly upon its receipt of notice of judicial process
compelling such disclosure.
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8. Expenses
In
further consideration of the agreement with the Agent herein contained, the
Corporation covenants and agrees to reimburse the Agent, regardless of whether
the Offering is completed, for the Agent’s reasonable costs, fees and expenses
including (without limitation) reasonable fees and expenses of Agent’s legal
counsel, due diligence expenses, travel expenses and expenses incurred in
connection with the holding of roadshows, investor meetings and presentations
and printing and preparation of any offering documents and marketing materials
(collectively the “Expenses”). The Corporation shall not be responsible for
Agent’s legal expenses in excess of US$20,000 (the “Cap”). The
Corporation acknowledges and agrees that the Cap has been set based on the
parties’ joint expectation of the amount of work involved to complete the
Offering (based on, for example, an existing set of negotiated documents for an
earlier financing for the Corporation in which the Agent participated), and the
Corporation further acknowledges and agrees that in the event of unforeseen
circumstances or delay in closing the Offering resulting in a greater than
anticipated workload for the Agent’s legal counsel, such counsel’s reasonable
fees and expenses in excess of the Cap shall also be paid by the Corporation.
Expenses incurred up to each Closing Date shall be reimbursed, upon submission
to the Corporation of invoices, receipts or similar proof of expenditure, at the
Closing Time for such Closing Date and may be deducted by the Agent from the
proceeds of sale of the Units at such Closing. Expenses incurred after the Final
Closing Date shall be reimbursed, upon submission to the Corporation of
invoices, receipts or similar proof of expenditure, forthwith following the
delivery to the Corporation of accounts in respect thereof.
All fees
and expenses are subject to all applicable taxes.
9. Documents
and Announcements
|
(a)
|
As
is standard in the UK, the Corporation shall consult with the Agent on the
making of any public announcements and in particular shall not make any
announcement concerning the subject matter of the Agent’s appointment,
whether formal or informal, without the Agent’s prior written consent
unless the Corporation is required to do so by any applicable laws or
stock exchange rules, in which case the Corporation shall notify the Agent
in writing prior to the making of such announcement. The Corporation and
its directors will accept full responsibility for the contents of any
document or announcement published by the Corporation in connection with
the Agent’s duties hereunder.
|
|
(b)
|
The
Agent will be entitled to rely on any information supplied or published by
the Corporation or its agents or advisers and contained in any such
document or announcement and will not be responsible for verifying the
accuracy or completeness of any
information.
|
|
(c)
|
If
the Agent is asked by the Corporation to approve any document or
announcement which will or might constitute a non real-time financial
promotion within the meaning of section 21(1) of the Financial Services
and Markets Xxx 0000 (a “Financial Promotion”), then in addition to the
foregoing provisions of this Section
8:
|
|
|
(i)
|
the
Corporation shall make such amendments to the Financial Promotion as the
Agent considers necessary or desirable prior to any such
approval; and
|
- 11
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|
|
(ii)
|
the
Agent shall be free to qualify such approval in such manner as it
considers necessary or appropriate to ensure compliance with the rules and
regulations made by the Financial Services Authority (“FSA”) and if the
Agent does so the Corporation will ensure that the Financial Promotion is
published and distributed only in accordance with the terms of such rules
and such approval.
|
|
(d)
|
The
Corporation agrees that the Agent shall not be obliged to approve any
Financial Promotion.
|
10. Money-laundering
regulations
The
Corporation agrees to provide such evidence of its identity and that of its
directors, partners, trustees and controllers and of all connected shareholders
and other parties as the Agent may reasonably require in order to comply with
its obligations under applicable legislation and regulations against money
laundering and drug trafficking. The Agent may cease to act for the Corporation
if it fails to comply and may at any time make such disclosures to the competent
authorities as are reasonable as a result of such failure or otherwise upon
suspecting that the Corporation or any such connected party is involved in money
laundering and/or drug trafficking.
11. Data
Protection Act
The
Corporation hereby consents to the Agent using all information it maintains
about the Corporation in order to send details of other services offered by the
Agent that it considers may be of interest to the Corporation.
12. Compliance
|
(a)
|
The
Corporation confirms to the Agent that it will not breach any contractual,
legal, regulatory or other obligation by entering into this Agreement and
that the Corporation knows of no matter as a result of which it would not
be able to give this confirmation were it required to repeat it at any
time during the term of the Agent’s appointment. The Corporation confirms
that it will at all times comply with all such
obligations.
|
|
(b)
|
All
services provided by the Agent are subject to the rules and regulations
for the time being in force of the
FSA.
|
|
(c)
|
The
Corporation shall comply with, and shall assist the Agent in complying,
with all applicable legal and regulatory requirements relating to the
transactions contemplated herein.
|
13. Confidentiality
and the Agent’s Advice
|
(a)
|
The
Corporation will not publish or disclose to any third party (other than to
its other advisers for the purposes of the transaction contemplated
hereunder) any documents generated by the Agent without the prior written
consent of the Agent unless such publication is required by applicable
law, regulation, legal process or regulatory
authority.
|
- 12
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|
(b)
|
The
Corporation agrees that any advice given by the Agent pursuant to this
Agreement is provided solely for the purpose of the Agent’s appointment
and for the use and benefit of the Corporation and may not be used or
relied on for any other purpose without the prior written consent of the
Agent.
|
14. Client
Classification
|
(a)
|
The
Corporation has been classified as an “elective professional client” (as
defined by the FSA Rules) in respect of all investment services and
activities and ancillary services which the Agent may conduct with or for
the Corporation, whether in relation to the Agent’s appointment or
otherwise, because the Corporation satisfies at least two of the following
criteria:
|
|
|
(i)
|
the
Corporation carried out transactions, in significant size, on the relevant
market at an average frequency of 10 per quarter over the previous four
quarters;
|
|
|
(ii)
|
the
size of the Corporation’s financial instrument portfolio, defined as
including cash deposits and financial instruments, exceeds EUR
500,000;
|
|
|
(iii)
|
the
Corporation works or has worked in the financial sector for at least one
year in a professional position, which requires knowledge of the
transactions or services envisaged.
|
|
(b)
|
As
a consequence, the Corporation will lose the following protections
afforded to retail clients (apart from those which are also provided to
elective professional clients) under the FSA
Rules:
|
|
|
(i)
|
Direct
offer financial promotions –the Agent will not be obliged to comply with
the FSA Rules relating to restrictions on and the required contents of
direct offer financial promotions. The Agent does not need to
provide the Corporation in a direct offer financial promotion, with
sufficient information for the Corporation to make an informed assessment
of the investment to which it
relates;
|
|
|
(ii)
|
Understanding
of risk – the Agent will not be required to provide the Corporation with
the written risk warnings and notice required for retail clients in
relation to transactions in complex financial instruments, in particular
derivatives and warrants, and stock
lending;
|
|
|
(iii)
|
Disclosure
of charges, remuneration and commission – the Agent will not be required
to disclose in writing before conducting any designated business on the
Corporation’s behalf the basis or amount of their charges for conducting
that business, or the amount of remuneration or other income payable to
the Agent or its affiliates for conducting the regulated
business;
|
- 13
-
|
|
(iv)
|
Financial
Ombudsman Service - access to the Financial Ombudsman will not extend to
the Corporation as an elective professional
client.
|
|
(c)
|
The
Corporation’s attention is also drawn to the following rules, which are
limited in their application to elective professional clients with the
following possible consequences for
clients:
|
|
|
(i)
|
Financial
promotion - certain FSA Rules relating to the form, content and checking
and otherwise concerning financial promotions generally will not
apply;
|
|
|
(ii)
|
Appropriateness
– the Agent may have regard to the Corporation’s expertise as an elective
professional client when complying with the requirements that transactions
are appropriate;
|
|
|
(iii)
|
Confirmation
of transactions to customers - the FSA Rules relating to the confirmation
of transactions will apply in a modified form. Provisions regarding extra
reporting requirements for dealings with retail clients and provision of
hard copies of confirmations not accessed electronically will not
apply.
|
|
|
(iv)
|
Communication
– the Agent may have regard to the Corporation’s expertise as an elective
professional client when complying with the requirements under the
regulatory system that communications be clear, fair and not misleading.
Additionally, the Agent may have regard to the Corporation’s expertise as
an elective professional client when complying with the requirements to
provide the Corporation with a general description of the nature and risks
of particular transactions. If the Corporation has any queries on this
warning or requires any further information, the Corporation shall contact
the Agent’s Compliance Officer.
|
The
Corporation shall keep the Agent informed of any change which could affect its
categorisation as an elective professional client. The Corporation is however
aware that the Agent may in any event take appropriate action where the Agent
becomes aware that the Corporation no longer fulfils the criteria set out
above.
As the
Corporation will not receive the protections afforded to retail clients under
the FSA Rules the Corporation shall contact the Agent immediately if the
Corporation does not agree with this categorisation or if there is any change in
the Corporation’s corporate, regulatory or financial status. The
Corporation has the right under the FSA Rules to request to be treated as a
retail client on a general basis or in respect of one or more particular
transactions. However, the Agent does not undertake any transactions on behalf
of retail clients. Therefore, if the Corporation wishes to be treated as a
retail client this may require the Corporation ceasing to be a customer of the
Agent either generally or in respect of particular transactions.
The FSA
Rules provide a mechanism for clients to elect a different categorisation,
namely as an eligible counterparty or retail client. If the
Corporation seeks to elect eligible counterparty categorisation, it will not
receive all the protections afforded to professional clients, such as those
relating to conduct of business, client information and communication and
financial promotion, non-advised services and order execution and
handling.
- 14
-
If the
Corporation is acting as an agent for another person, the Agent will treat the
Corporation as its client for the purposes of the FSA Rules.
The
Agent’s Allocation Policy is set out in Appendix II to this
Agreement.
15. Material
Interests and Conflicts of Interest
The Agent
and certain of its Associates are involved in investment business for their own
account and for clients. In certain circumstances their interests may
be regarded or perceived to be, material from the perspective of a client in
relation to a particular transaction. The Agent is authorised for the purposes
of the Financial Services and Markets Xxx 0000, and has procedures in place to
ensure independence of advice. The Corporation acknowledges and accepts, so as
to override any duty or restriction which would otherwise be implied by law,
that the Agent and its Associates may have a material interest and that
employees or Associates responsible for providing the services under the
Engagement may be doing so despite the existence of a potential material
interest.
The
Corporation acknowledges and accepts (a) that, by reason of contractual, legal,
regulatory or other obligations, the Agent and its Associates may be prohibited
from disclosing, or it may be inappropriate for them to disclose, information to
the Corporation, in particular in connection with a potential material interest;
and (b) that the Agent may provide its services under the Engagement and earn
(and retain) all fees payable under Section 7 notwithstanding the potential
existence of material interests within the Agent and its
Associates.
The
Agent’s duty in respect of the Agent’s appointment is owed to the Corporation,
but its responsibilities to provide services to its investment clients are
unchanged. The Agent has in place systems, controls and procedures for
identifying and managing such conflicts as may exist in connection with the
allocation of the issuer’s securities to its investment clients.
16. Indemnification
|
(a)
|
The
Corporation agrees to ensure that no claim is made by the Corporation or
any of its Associates against any Indemnified Person to recover any Loss
which the Corporation or any of its Associates may suffer or incur
directly or indirectly as a result of the Agent and its Associates’
performance of its services under the
Engagement.
|
|
(b)
|
Section
16(a) shall not apply to the extent that the relevant Loss is finally
determined by a Court or binding arbitration to be the result of the
fraud, gross negligence or wilful default of an Indemnified
Person.
|
|
(c)
|
The
Corporation will indemnify each of the Indemnified Persons
against:
|
|
|
(i)
|
any
Loss; or
|
- 15
-
|
|
(ii)
|
any
action, proceedings, demand or judgment in respect of any Loss (including
the cost of defending such
proceedings),
|
which any
of the Indemnified Persons may suffer or incur directly or indirectly in
relation to the Engagement.
|
(d)
|
Section
16(c) shall not apply to the extent that the relevant Loss is finally
determined by a Court or binding arbitration to be the result of the
fraud, gross negligence or wilful default of an Indemnified
Person.
|
|
(e)
|
Neither
of Sections 16(a) or (c) shall apply in relation to any particular Loss to
the extent that the application of that Section in relation to the Loss
would have the effect of excluding or restricting any duty or liability
which the Agent may have to the Corporation or any of its Associates under
the regulatory system (as defined in the FSA
Handbook).
|
|
(f)
|
the
Agent will promptly, upon becoming aware of it, notify the Corporation of
any claim against an Indemnified Person which is relevant under this
Section 16. The Agent will consult the Corporation on its
conduct of the claim and will supply the Corporation with copies of all
information and documents relating to the claim that it reasonably
requests, subject to:
|
|
|
(i)
|
the
Indemnified Persons being indemnified against any increased Loss that may
result from consultation with the Corporation or from the Agent supplying
the Corporation with such copies;
and
|
|
|
(ii)
|
any
requirements of the Agent’s
insurers.
|
|
(g)
|
Where
the Agent or any Indemnified Person is or would be indemnified by the
Corporation under Section 16(c), the Corporation shall not, without the
Agent’s prior written consent (such consent not to be unreasonably
withheld or delayed), settle, admit liability for, or compromise any
actual, pending or threatened claim, action, proceeding or investigation
(“Claim”) against or in respect of the Corporation, whether or not any
Indemnified Person is also an actual or potential party to such
Claim.
|
|
(h)
|
All
sums payable to an Indemnified Person under this Agreement shall be paid
free of any deduction or withholding tax. If the Corporation is
required by law to make any deduction or withhold any tax it shall pay
such additional amount as is necessary to ensure that the net amount
received by the Indemnified Person remains unaffected by such deduction or
withholding.
|
|
(i)
|
Where
any accountants or other advisers are engaged by the Corporation or any of
its Associates and/or the Agent in connection with the Engagement and a
limitation on the liability of those accountants or other advisers is
agreed by the Corporation or any of its Associates and/or the Agent, the
liability of the Agent for any Loss will not be increased as a
result. Without prejudice to the generality of the preceding
sentence, any Loss for which the Agent and those accountants or other
advisers would otherwise be jointly and severally liable will only be
recoverable from the Agent to the extent of the Agent’s responsibility for
such Loss, as if the liability of the accountants or other advisers were
not limited.
|
- 16
-
|
(j)
|
For
the purposes of this Agreement:
|
“Associates”
shall mean, in relation to any person, (i) the officers, directors and employees
from time to time of that person, (ii) the subsidiaries and holding companies
(if any) from time to time of such person, (iii) each of the subsidiaries of any
such holding company from time to time, and (iv) the officers, directors and
employees from time to time of any subsidiary or holding company which is itself
an Associate; and
“Indemnified
Persons” shall mean the Agent and its Associates; and
“Loss”
shall mean any claim, damage, loss, cost, charge, liability or expense
(including professional and legal fees which have been properly
incurred).
17. Notices,
etc.
All
notices hereunder may be hand delivered or given by facsimile or any other means
of instantaneous written communication to such respective party hereto as
follows (or at such other address as may hereafter be communicated by either
party hereto to the other party):
If to the
Agent:
Xxxxx
Capital Limited
00
Xxxxxxxxxx
Xxxxxx
X0X 0XX
Xxxxxxx
Attention:
Xxxxxx Xxxxxx
Telephone: 00-00-0000-0000
Facsimile: 00-00-0000-0000
With a
copy to:
Blake,
Xxxxxxx & Xxxxxxx LLP
000 Xxxx
Xxxxxxx Xxxxxx
Xxxxxxx,
XX 00000-0000
U.S.A
Attention: Xxxx
X. Xxxxxx
Telephone: (000)
000-0000
Facsimile: (000)
000 0000
- 17
-
If to the
Corporation:
200
Middlesex Essex Turnpike, Suite 000
Xxxxxx,
Xxx Xxxxxx 00000
Xxxxxx
Xxxxxx
Attention:
Xxxxxx X.
Xxxxxx
President and Chief Executive Officer
Telephone: 732-404-1117
Facsimile: 000-000-0000
With a
copy to:
Xxxxxxxxx,
Xxxxxx & Xxxx LLP
00Xxxx
00xx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Attention: Xxxxx
Xxxxxxxxx
Telephone: 212-986-9700
Facsimile: 000-000-0000
18. Counterparts
This
Agreement may be signed and delivered in counterparts, and by facsimile, with
the same effect as if the signatures thereto and hereto were upon the same
instrument and delivered in person.
19. Survival
All
representations, covenants, undertakings and indemnities herein will survive for
a period of two years following each and every Closing Date, notwithstanding the
completion of the transactions contemplated hereby and shall apply regardless of
any investigation made by or on behalf of any indemnified party.
20. Governing
Law
This
Agreement shall be governed by and construed in accordance with the laws of
England and Wales and the parties submit to the exclusive jurisdiction of the
English Courts.
21. Time
Time is
of the essence in this Agreement.
- 18
-
22. Entire
Agreement
This
Agreement constitutes the entire agreement between the parties pertaining to the
subject matter of this Agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or
written. There are no conditions, warranties, representations or
other agreements between the parties in connection with the subject matter of
this Agreement (whether oral or written, express or implied, statutory or
otherwise) except as specifically set out in this Agreement.
23. Miscellaneous
This
Agreement shall enure to the benefit of, and be binding upon, the successors of
the Corporation and the Agent.
| Yours sincerely, | ||
|
XXXXX
CAPITAL LIMITED
|
||
|
By:
|
/s/ Xxxxx Xxxxxx
|
|
|
Xxxxx
Xxxxxx
|
||
|
Managing
Director
|
||
Accepted
and agreed as of the 30th day of September, 2009.
|
By:
|
By: /s/ Xxxxxx X. Xxxxxx
|
|
|
Xxxxxx
X. Xxxxxx
|
||
|
President
and Chief Executive Officer
|
||
- 19
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Schedule
“A”
Restrictions
on Offers and Sales of the Units
1. The
Agent represents and agrees that: (i) it has not offered or sold and, prior to
the expiry of the period of six months after the Closing Date, will not offer or
sell any Units to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied and will comply with
all applicable provisions of the Financial Services Xxx 0000 with respect to
anything done by it in relation to the Units in, from or otherwise involving the
United Kingdom, and (iii) it has only issued or passed on and will only issue or
pass on in the United Kingdom any document received by it in connection with the
issue of the Units to a person who is of a kind described in Article 11(3) of
the Financial Services Xxx 0000 (Investment Advertisements) (Exemptions) Order
1995 or is a person to whom such document may otherwise lawfully be issued or
passed on; and (iv) it has complied and will comply with all applicable
securities laws in the United Kingdom and elsewhere in Europe in connection with
the Offering.
2. The
Agent acknowledges that the Units (and the underlying securities) including the
shares of Common Stock issuable upon exercise of the Broker Warrants and
Investor Warrants (collectively the “Securities”) have not been registered under
the 1933 Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. Persons (as defined in Rule 902(o) of
Regulation S promulgated under the Securities Act) except under an effective
registration statement under the Securities Act, in accordance with Regulation S
under the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act. Offers and sales will be made in reliance on
the exemption from registration provided by Section 4(2) of the Securities Act
of 1933 and Rule 506 of Regulation D promulgated hereunder and/or in
reliance on Regulation S under the Securities Act of 1933, and the Agent will
comply with the provisions thereof in connection with the Offering.
3. Terms
with initial capital letters used but not defined in this Schedule shall have
the meanings given to them in the Agency Agreement to which this Schedule is
attached.
Appendix
I
SUBSCRIPTION
AGREEMENT
Appendix
II
ALLOCATION
POLICY
The
information in this Appendix II is provided in accordance with the requirements
of the FSA. Under FSA rules, The Agent is obliged to inform an issuer
of securities of the points set out below in relation to the allocation of
securities of the issuer and the potential conflicts of interest that may
exist. The Agent has in place systems, controls and procedures for
identifying and managing such conflicts.
In
identifying the target group of investors for the issue, the Agent will take
into account the holdings and participation of investors in European equity
markets, including their shareholdings in other companies in the sector or the
peer group, and the participation of those investors in other offerings of
securities. This universe of target investors may be further refined
in the course of the investor education programme undertaken by a research
analyst following the publication of an independent research report prepared by
the analyst.
Decisions
about pricing and allocation will be made in consultation with the
Corporation. When recommending the pricing of the issue to the
Corporation, the Agent will draw upon the book of demand generated through the
bookbuilding period and take into account feedback provided by investors during
the course of the marketing period and the investor education
meetings. Updates as to the state of the book of demand will be
provided throughout the marketing period, according to the Corporation’s
requirements.
When
recommending allocations to the Corporation, the Agent will judge each investor
against a list of key criteria which have been pre-agreed with the
Corporation. These criteria will include:
|
|
·
|
The
perceived quality of the investor.
|
|
|
·
|
The
size of investor demand, particularly in relation to the investor’s funds
under management and likely order
size.
|
|
|
·
|
The
propensity of the investor to hold the shares for the medium to long
term.
|
|
|
·
|
The
probability that the investor will use their allocation as a starting
point for building a larger shareholding (this may include indications of
after market demand).
|
|
|
·
|
The
extent of the investor’s participation in management
marketing.
|
|
|
·
|
The
extent of the investor’s participation in investor education meetings with
syndicate research analysts.
|
|
|
·
|
The
price leadership and timeliness of order (particularly in relation to a
management meeting).
|
|
|
·
|
The
extent to which the order is consistent with the investor’s existing
portfolio strategy and/or existing
shareholdings.
|
|
|
·
|
The
type and location of the investor – to ensure targeting of suitable
investor types (eg specialist funds) and geographical
spread.
|
In
assessing the above criteria, account will be taken of the investor’s behaviour
in other primary issues.
Whilst
the Agent will intend to allocate shares to investors who are likely to act as
long term, supportive shareholders to the Corporation, provision of liquidity to
the aftermarket is an important aspect of any primary issue and some allocations
will be made to liquidity providers. This may include allocating shares to the
proprietary/market making book of the Agent and/or its Associates.
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-
