EXHIBIT 10.27
PLACEMENT AGENCY AGREEMENT
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January 29, 1998
Xxxxxxx Xxxxx Securities Incorporated
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Exigent Diagnostics, Inc., a Delaware corporation (the "Company"), hereby
confirms its agreement with Xxxxxxx Xxxxx Securities Incorporated, a Delaware
corporation (the "Placement Agent"), as follows:
1. Offering. (a) The Company will offer (the "Offering") for sale through
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the Placement Agent and its selected dealers, as exclusive agent for the
Company, up to 60 units (the "Units"), plus an additional 9 Units to cover
oversubscriptions, if any. Each Unit will consist of 76,923 shares (the
"Shares") of the Company's common stock, $.01 par value per share (the "Common
Stock").
(b) Placement of the Units will be made on a "best efforts--all or none"
basis with respect to the first 30 Units (the "Minimum Amount") and on a "best
efforts" basis as to the remaining Units. The minimum subscription for Units
shall be one Unit, however, the Placement Agent may, in its discretion, offer
fractional Units. The Units will be offered commencing on the date of the
Memorandum (as defined below) for a period of 90 days, unless extended by the
Placement Agent and the Company for an additional 90 days or terminated earlier
as provided herein (the "Offering Period"). The date on which the Offering shall
terminate shall be referred to as the "Termination Date."
(c) Subscriptions for the Units will be accepted by the Company at a price
of $100,000 per Unit (the "Offering Price"); provided, however, that the Company
shall not accept subscriptions for, or sell Units to, any persons or entities
who do not qualify as "accredited investors," as such term is defined in Rule
501 of Regulation D promulgated under the Securities Act of 1933 (the "Act").
(d) The offering of the Units will be made by the Placement Agent on
behalf of the Company solely pursuant to the Memorandum, which at all times will
be in form and substance acceptable to the Placement Agent and its counsel and
contain such legends and other information as the Placement Agent and its
counsel may, from time to time, deem necessary and desirable to be set forth
therein. "Memorandum" as used in this Agreement means the Company's Confidential
Private Placement Memorandum dated January 29, 1998, inclusive of all exhibits,
and all amendments, supplements and appendices thereto. Unless otherwise
defined, each term used in this Agreement will have the same meaning as set
forth in the Memorandum.
2. Representations and Warranties. The Company hereby represents and warrants
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to the Placement Agent that:
(a) The Memorandum has been diligently prepared by the Company, in
conjunction with its legal counsel and independent accountants, in conformity
with all applicable law, including the Act and the requirements of all other
applicable rules and regulations of the Securities and Exchange Commission (the
"SEC") relating to offerings of the type contemplated by the Offering (the
"Regulations"), and the applicable securities laws and the rules and regulations
of those jurisdictions wherein the Units are to be offered and sold. The Units
will be offered and sold pursuant to the registration exemption provided by
Regulation D as promulgated under Section 4(2) of the Act or otherwise under
Section 4(2) of the Act as a transaction not involving a public offering and the
requirements of any other applicable state securities laws and the respective
rules and regulations thereunder in those jurisdictions in which the Placement
Agent notifies the Company that the Units are being offered for sale. The
Company has not taken nor will it take any action which conflicts with the
conditions and requirements of, or which would make unavailable with respect to
the Offering, the exemption(s) from registration available pursuant to
Regulation D or Section 4(2) of the Act and knows of no reason why any such
exemption would be otherwise unavailable to it. None of the Company, its
affiliates or, to its knowledge, its predecessors has been subject to any order,
judgment or decree of any court of competent jurisdiction temporarily,
preliminarily or permanently enjoining such person for failing to comply with
Section 503 of Regulation D.
(b) The Memorandum does not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the statements, documents,
certificates or other items prepared or supplied by the Company with respect to
the transactions contemplated hereby contains an untrue statement of a material
fact or omits a material fact necessary to make the statements contained therein
not misleading. There is no fact which the Company has not disclosed to the
Placement Agent and its counsel and of which the Company is aware which
materially and adversely affects or could materially and adversely affect the
business prospects, financial condition, operations, property or affairs of the
Company or any of its subsidiaries.
(c) The Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Except as set forth in the Memorandum, the
Company has no subsidiaries and does not have an equity interest in any other
firm, partnership, association or other entity. The Company and each of its
subsidiaries is duly qualified to transact business as a foreign corporation and
is in good standing under the laws of each jurisdiction where the location of
its properties or the conduct of its business makes such qualification
necessary.
(d) The Company has all requisite power and authority (corporate and
other) to conduct its business as presently conducted and as proposed to be
conducted (as described in the Memorandum), to enter into and perform its
obligations under this Agreement and the other agreements contemplated hereby
and by the Memorandum (collectively, the "Transaction Documents") and to issue,
sell and deliver the Shares. Each of the Transaction Documents has been duly
authorized. This Agreement has been duly executed and delivered and constitutes,
and each of the other Transaction Documents, upon due execution and delivery,
will constitute, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms.
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(e) None of the execution and delivery of, or performance by the Company
under any of the Transaction Documents or the consummation of the transactions
herein or therein contemplated conflicts with or violates, or will result in the
creation or imposition of, any lien, charge or other encumbrance upon any of the
assets of the Company under any agreement or other instrument to which the
Company is a party or by which the Company or its assets may be bound, or any
term of the charter or by-laws of the Company, or any license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any of
its assets.
(f) The Company has authorized and outstanding capital stock as set forth
under the heading "Capitalization" in the Memorandum. All outstanding shares of
capital stock of the Company are duly authorized, validly issued and
outstanding, fully paid and nonassessable. Except as set forth in the
Memorandum: (i) there are no outstanding options, stock subscription agreements,
warrants or other rights permitting or requiring the Company or others to
purchase or acquire any shares of capital stock or other equity securities of
the Company or to pay any dividend or make any other distribution in respect
thereof; (ii) there are no securities issued or outstanding which are
convertible into or exchangeable for any of the foregoing and there are no
contracts, commitments or understandings, whether or not in writing, to issue or
grant any such option, warrant, right or convertible or exchangeable security;
(iii) no shares of stock or other securities of the Company are reserved for
issuance for any purpose; (iv) there are no voting trusts or other contracts,
commitments, understandings, arrangements or restrictions of any kind with
respect to the ownership, voting or transfer of shares of stock or other
securities of the Company, including without limitation, any preemptive rights,
rights of first refusal, proxies or similar rights and (v) no person holds a
right to require the Company to register any securities of the Company under the
Act or to participate in any such registration. The issued and outstanding
shares of capital stock of the Company conform in all material respects to all
statements in relation thereto contained in the Memorandum and the Memorandum
describes all material terms and conditions thereof. All issuances by the
Company of its securities were exempt from registration under the Act and any
applicable state securities laws.
(g) The Shares and the Agent's Shares (as defined below) have been duly
authorized and, when issued and delivered against payment therefor as provided
in the Transaction Documents, will be validly issued, fully paid and
nonassessable, will be free and clear of all liens, charges, restrictions,
claims and encumbrances imposed by or through the Company other than as provided
in the Transaction Documents and no holder of any of the Shares or the Agent's
Securities (as defined below) will be subject to personal liability solely by
reason of being such a holder, and none of the Shares or the Agent's Securities
are subject to preemptive or similar rights of any stockholder or securityholder
of the Company or, other than as described in the Memorandum, an adjustment
under the antidilution or exercise rights of any holders of any outstanding
shares of capital stock, options, warrants or other rights to acquire any
securities of the Company. A sufficient number of authorized but unissued shares
of Common Stock have been reserved for issuance upon the exercise of the Agent's
Warrants (as defined below).
(h) No consent, authorization or filing of or with any court or
governmental authority is required in connection with the issuance or the
consummation of the transactions contemplated herein or in the other Transaction
Documents, except for required filings with the SEC and applicable "Blue Sky" or
state securities commissions relating specifically to the Offering (all of which
filings have been made by, or on behalf of, the Company, other than those which
are
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required to be made after the First Closing (as defined below), and which will
be duly made on a timely basis).
(i) The financial statements, together with the related notes, of the
Company included in the Memorandum present fairly in all material respects the
financial position of the Company as of the respective dates specified and the
results of its operations and changes in financial position for the respective
periods covered thereby. Such financial statements and related notes were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated. Except as set forth in such
financial statements or in the Memorandum, the Company has incurred no material
liabilities of any kind, whether accrued, absolute, contingent or otherwise or
entered into any material transactions. The other financial and statistical
information with respect to the Company and any pro forma information and
related notes included in the Memorandum or otherwise provided to the Placement
Agent present fairly the information shown therein on a basis consistent with
the audited and unaudited financial statements of the Company included in the
Memorandum.
(j) The conduct of business by the Company as presently and proposed to be
conducted (as described in the Memorandum) is not subject to continuing
oversight, supervision, regulation or examination by any governmental official
or body of the United States or any other jurisdiction wherein the Company
conducts or proposes to conduct such business, except as described in the
Memorandum and except such regulation as is applicable to commercial enterprises
generally. The Memorandum accurately describes, in all material respects, all
requisite licenses, permits and other governmental authorization to conduct its
business as presently, and as proposed to be, conducted (as described in the
Memorandum).
(k) No default by the Company or, to the best knowledge of the Company,
any other party exists in the due performance under any of the agreements
referred to in the Memorandum to which the Company is a party or to which any of
its assets is subject (collectively, the "Company Agreements") where such
default would have a material adverse effect upon the business, results of
operations or financial condition of the Company (a "Material Adverse Effect").
The Company Agreements are the only material agreements to which the Company is
bound or by which its assets are subject, are accurately and fairly described in
all material respects in the Memorandum and are in full force and effect in
accordance with their respective terms.
(l) Except as set forth in the Memorandum, there are no actions,
proceedings, claims or investigations, before or by any court or governmental
authority (or any state of facts which management of the Company has concluded
could give rise thereto) pending or, to the best knowledge of the Company,
threatened, against the Company, or involving its assets or any of its officers
or directors which, if determined adversely to the Company or such officer or
director, could result in any Material Adverse Effect or adversely affect the
transactions contemplated by this Agreement or the other Transaction Documents
or the enforceability thereof.
(m) The Company is not in violation of: (i) its charter or by-laws; (ii)
any indenture, mortgage, deed of trust, note or other agreement or instrument to
which the Company is a party or by which it is or may be bound or to which any
of its assets may be subject; (iii) any statute, rule or regulation; or (iv) any
judgment, decree or order applicable to the Company, which violation or
violations individually, or in the aggregate, might result in any Material
Adverse Effect.
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(n) The Company does not own any real property in fee simple except as
disclosed in the Memorandum, and the Company has good and marketable title to
all property (real and personal, tangible and intangible) owned by it, free and
clear of all security interests, liens and encumbrances, except such as are
described in the Memorandum.
(o) Except as otherwise described in the Memorandum (collectively, the
"Intangibles"), the Company owns all right, title and interest in, or possesses
adequate and enforceable rights to use, all patents, patent applications,
trademarks, trade names, service marks, copyrights, rights, licenses,
franchises, trade secrets, confidential information, processes and formulations
described as owned by it in the Memorandum. Except as set forth in the
Memorandum, to the best knowledge of the Company it has not infringed upon the
rights of others with respect to the Intangibles and the Company has not
received notice that it has or may have infringed or is infringing upon the
rights of others with respect to the Intangibles, or any notice of conflict with
the asserted rights of others with respect to the Intangibles which could,
individually or in the aggregate, have a Material Adverse Effect. Except as set
forth in the Memorandum, to the best knowledge of the Company, no others have
infringed upon the Intangibles.
(p) Subsequent to the respective dates as of which information is given in
the Memorandum, the Company has operated its business diligently and only in the
ordinary course as theretofore conducted and, except as may otherwise be set
forth in the Memorandum, there has been no: (i) Material Adverse Effect; (ii)
transaction otherwise than in the ordinary course of business; (iii) issuance of
any securities (debt or equity) or any rights to acquire any such securities;
(iv) damage, loss or destruction, whether or not covered by insurance, with
respect to any asset or property of the Company; or (v) agreement to permit any
of the foregoing.
(q) The Company has filed, on a timely basis, each Federal, state, local
and foreign tax return which is required to be filed, or has requested an
extension therefor and has paid all taxes and all related assessments, penalties
and interest to the extent that the same have become due.
(r) The Company is not obligated to pay, and has not obligated the
Placement Agent to pay, a finder's or origination fee in connection with the
Offering and agrees to indemnify the Placement Agent from any such claim made by
any other person. The Company has not offered for sale or solicited offers to
purchase the Units except for negotiations with the Placement Agent. No other
person has any right, based upon acts of the Company, its officers, directors or
representatives, to participate in any offer, sale or distribution of the
Company's securities to which the Placement Agent's rights, described herein,
shall apply.
(s) The Company has and will maintain appropriate casualty and liability
insurance coverage, in scope and amounts reasonable and customary for similar
businesses.
3. Placement Agent Appointment and Compensation. (a) The Company hereby
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appoints the Placement Agent and its selected dealers as its exclusive agent in
connection with the Offering. The Company has not and will not make, or permit
to be made, any offers or sales of the Units other than through the Placement
Agent without its prior written consent. The Placement Agent has no obligation
to purchase any of the Units. The agency of the Placement Agent hereunder shall
continue until the later of the Termination Date or the Final Closing (as
defined below).
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(b) The Company has caused to be delivered to the Placement Agent copies
of the Memorandum and has consented, and hereby consents, to the use of such
copies for the purposes permitted by the Act and applicable securities laws, and
hereby authorizes the Placement Agent and its agents, employees and selected
dealers to use the Memorandum in connection with the sale of the Units until the
Termination Date, and no other person or entity is or will be authorized to give
any information or make any representations other than those contained in the
Memorandum or to use any offering materials other than those contained in the
Memorandum in connection with the sale of the Units.
(c) The Company will cooperate with the Placement Agent by making
available to its representatives such information as may be requested in making
a reasonable investigation of the Company and its affairs and shall provide
access to such employees as shall be reasonably requested. Prior to the First
Closing, the Company shall provide, at its own expense, credit or similar
reports on such key management persons as the Placement Agent shall reasonably
request.
(d) The Company shall pay to the Placement Agent at each closing a
placement fee equal to ten percent (10%) of the Offering Price of all the Units
sold at such Closing, which shall be distributed from escrow (the "Placement
Agent's Fee"), and all reasonable out-of-pocket expenses incurred by the
Placement Agent on the Company's behalf including mailing, telephone, travel
costs and legal fees ("Expenses"), to be paid from the gross proceeds of the
Units sold at each Closing up to a maximum of $65,000 for the Offering (the
"Expense Allowance"), a non-refundable $35,000 portion of which has been paid to
the Placement Agent. Payment of the proportional amount of the Placement Agent's
Fee and payment of Expenses will be made out of the proceeds of subscriptions
for the Units sold at each Closing.
(e) As additional compensation hereunder, at each Closing (as defined
below), the Company shall sell to the Placement Agent or its designees for an
aggregate purchase price of $1, warrants (the "Agent's Warrants") to purchase,
at an exercise price of $1.30 per share, a number of Shares equal to twenty
percent (20%) of the aggregate number of Shares contained in the Units sold in
the Offering (the "Agent's Shares"; and, collectively with the Agent's Warrants,
the "Agent's Securities"). The Agent's Warrants shall be exercisable until the
later of the date seven (7) years after the date of the Final Closing or the
date which is three (3) years after the closing date of the initial public
offering of the Company's securities within such seven year period, whichever is
later (the "Warrant Exercise Term"). If the Company at any time has any
securities registered under the Act or the Securities Exchange Act of 1934 (the
"1934 Act"), the Company agrees to register the Agent's Securities promptly on
two (2) separate occasions, at the request of the holders of a majority of the
Agent's Securities made at any time during the Warrant Exercise Term. The
Company shall pay all expenses, other than underwriters' discounts and
commissions, relating to registering the Agent's Securities covered by the first
request, and the holder(s) of such Agent's Securities shall pay all expenses
arising from the second registration. Prior to the First Closing, the Company
and Placement Agent shall enter into a warrant agreement (the "Warrant
Agreement") which shall contain such terms and other customary provisions
including piggyback registration rights for a period of nine (9) years from the
Final Closing, or for the Warrant Exercise Term, whichever is longer, and anti-
dilution protections (including, but not limited to, stock splits,
reclassifications, mergers or acquisitions, or the sale of substantially all of
the Company's stock) applicable to the issuance of additional securities at a
price below the exercise or market price of the Agent's Warrants, other than the
shares existing on the date
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hereof issued to SmithKline Xxxxxxx Corporation, and the Placement Agent and the
Shares underlying the Consulting Agreement with Cedar Capital and the 1996
Incentive and Non-Qualified Stock Option Plan and the 1996 Key Executive Stock
Option Plan.
(f) The Company shall also pay to the Placement Agent the Placement
Agent's Fee and Agent's Warrants with respect to, and based on, any investment
by any party ("Post Closing Investor") with which the Placement Agent has had
substantive discussions in connection with their investing in the Offering which
invests in the Company at any time on or before the first anniversary of the
later of the Termination Date or Final Closing.
(g) [Intentionally Omitted].
(h) If the Company completes an initial public offering of its Common
Stock with Xxxxxxxxxx & Co. Inc., the Company will pay the Placement Agent, as
full payment under the current Investment Banking Agreement between the Company
and the Placement Agent, a fee equal to $100,000.
4. Subscription and Closing Procedures. (a) Each prospective purchaser will
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be required to complete and execute one original signature page of each of the
Subscription Agreement and Registration Rights Agreement and Shareholder's
Agreement in the forms annexed to the Memorandum ("Subscription Documents"),
which will be forwarded or delivered to the Placement Agent at the Placement
Agent's offices at the address set forth in Section 11 hereof, together with the
subscriber's check or good funds in the full amount of the Offering Price for
the number of Units desired to be purchased.
(b) All funds for subscriptions received from the offering of the Units
will be promptly forwarded by the Placement Agent or the Company, if received by
it, to and deposited into the escrow account (the "Escrow Account") established
for such purpose with United States Trust Company of New York (the "Escrow
Agent"). All such funds for subscriptions will be held in the Escrow Account
pursuant to the terms of the Escrow Agreement among the Company, the Placement
Agent and the Escrow Agent. The Company will pay all fees related to the
establishment and maintenance of the Escrow Account. Any interest accruing on
funds in the Escrow Account shall be utilized first to reimburse the Company for
such fees and the balance shall be distributed one-half to the Company and one-
half to the Placement Agent. Subject to the receipt of such subscriptions for
the Minimum Amount, the Company will either accept or reject the Subscription
Documents in a timely fashion and at each Closing will countersign the
Subscription Documents and provide duplicate copies of such Agreements to the
Placement Agent for distribution to the subscribers. The Company will give
notice to the Placement Agent of its acceptance of each subscription. The
Company will promptly return to subscribers incomplete, improperly completed,
improperly executed and rejected subscriptions and give written notice thereof
to the Placement Agent upon such return.
(c) If subscriptions for at least the Minimum Amount have been accepted
prior to the Termination Date, the funds therefor have been collected by the
Escrow Agent and all of the conditions set forth elsewhere in this Agreement are
fulfilled, a closing shall be held promptly with respect to the Units sold (the
"First Closing"). Thereafter, the remaining Units will continue to be offered
and sold until the Termination Date. Additional closings ("Closings") may from
time to time be conducted at times mutually agreeable with respect to additional
Units sold with
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the final closing ("Final Closing") to occur approximately 10 days from the
earlier of the Termination Date or the sale of all Units offered. Delivery of
payment for the accepted subscriptions for Units from the funds held in the
Escrow Account will be made at each Closing at the Placement Agent's offices
against delivery of the Units by the Company at the address set forth in Section
11 hereof (or at such other place as may be mutually agreed upon between the
Company and the Placement Agent). Executed certificates for the Shares
constituting the Units and the Agent's Warrants will be in such authorized
denominations and registered in such names as the Placement Agent may reasonably
request on or before the second (2nd) full business day prior to the date of
each Closing ("Closing Date"), and will be made available to the Placement Agent
for checking and packaging at the Placement Agent's office at least one (1) full
business day prior thereto.
(d) If Subscription Documents for the Minimum Amount have not been
received and accepted by the Company on or before the Termination Date for any
reason, the Offering will be terminated, no Units will be sold, and the Escrow
Agent will, at the request of the Placement Agent, cause all monies received
from subscribers for the Units to be promptly returned to such subscribers
without interest, penalty, expense or deduction.
5A. Further Covenants. The Company hereby covenants and agrees that:
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(a) Except with the prior written consent of the Placement Agent, the
Company shall not, at any time prior to the Final Closing, take any action which
would cause any of the representations and warranties made by it in this
Agreement not to be complete and correct on and as of each Closing Date with the
same force and effect as if such representations and warranties had been made on
and as of each such date, including, without limitation, incurring any material
indebtedness, disposing of any material assets or making any material
acquisition or change in its business or operations.
(b) If, at any time prior to the Final Closing, any event shall occur
which does or may materially affect the Company or as a result of which it might
become necessary to amend or supplement the Memorandum so that the
representations and warranties herein remain true, or in case it shall, in the
opinion of counsel to the Placement Agent, be necessary to amend or supplement
the Memorandum to comply with Regulation D or any other applicable securities
laws or regulations, the Company will promptly notify the Placement Agent and
shall, at its sole cost, prepare and furnish to the Placement Agent copies of
appropriate amendments and/or supplements in such quantities as the Placement
Agent may reasonably request. The Company will not at any time, whether before
or after the Final Closing, prepare or use any amendment or supplement to the
Memorandum of which the Placement Agent will not previously have been advised
and furnished with a copy, or to which the Placement Agent or its counsel will
have objected in writing or orally (confirmed in writing within 24 hours), or
which is not in compliance with the Act, the Regulations and other applicable
securities laws. As soon as the Company is advised thereof, the Company will
advise the Placement Agent and its counsel, and confirm the advice in writing,
of any order preventing or suspending the use of the Memorandum, or the
suspension of the qualification or registration of the Shares for offering or
the suspension of any exemption for such qualification or registration of the
Shares for offering in any jurisdiction, or of the institution or threatened
institution of any proceedings for any of such purposes, and the Company will
use commercially reasonably efforts (i) to prevent the
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issuance of any such order and, (ii) if issued, to obtain as soon as reasonably
possible the lifting thereof.
(c) The Company shall comply with the Act and the Regulations so as to
permit the continuance of the sales of the Units, and will file with the SEC,
and shall promptly thereafter forward to the Placement Agent, any and all
reports on Form D as are required.
(d) The Company shall use its reasonable best efforts to qualify the Units
for sale under the securities laws of such jurisdictions as may be mutually
agreed to by the Company and the Placement Agent, and the Company will make such
applications and furnish information as may be required for such purposes,
provided that the Company will not be required to qualify as a foreign
corporation in any jurisdiction. The Company will, from time to time, prepare
and file such statements and reports as are or may be required to continue such
qualifications in effect for so long a period as the Placement Agent may
reasonably request.
(e) The Company shall place a legend on the certificates representing the
Shares issued to subscribers stating that the securities evidenced thereby have
not been registered under the Act or applicable state securities laws, setting
forth or referring to the applicable restrictions on transferability and sale of
such securities under the Act and applicable state laws.
(f) The Company shall apply the net proceeds from the sale of the Units to
fund its working capital requirements and for such other purposes as
specifically described under "Use of Proceeds" in the Memorandum. Except as
specifically set forth in the Memorandum, the net proceeds of the Offering shall
not be used to repay indebtedness to officers, directors or stockholders of the
Company without the prior written consent of the Placement Agent.
(g) During the Offering Period, the Company shall make available for
review by prospective purchasers of the Units during normal business hours at
the Company's offices, upon their request, copies of the Company Agreements to
the extent that such shall not violate any obligation on the part of the Company
to maintain the confidentiality thereof and shall afford each prospective
purchaser of Units the opportunity to ask questions of and receive answers from
an officer of the Company concerning the terms and conditions of the Offering
and the opportunity to obtain such other additional information necessary to
verify the accuracy of the Memorandum to the extent it possesses such
information or can acquire it without unreasonable expense.
(h) Except with the prior written consent of the Placement Agent, the
Company shall not, at any time prior to the Final Closing, engage in or commits
to engage in any transaction outside the scope of its business as described in
the Memorandum, agree to issue or set aside for issuance any securities (debt or
equity) or any rights to acquire any such securities except as contemplated by
the Memorandum.
(i) For a period of five years from the Final Closing, the Company shall
deliver (i) to the Placement Agent and the Company's stockholders annual audited
financial statements setting forth fairly the financial position of the Company,
(ii) to the Placement Agent quarterly unaudited financial statements including
both a balance sheet and statement of income, (iii) to the Company's
stockholders a quarterly report, reviewed by the Placement Agent, of the
progress and status of the Company and an annual report setting forth fairly the
financial position of the
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Company, (iv) to the Placement Agent a copy of a list of its stockholders as and
when so requested and (v) to the Placement Agent such additional information and
documents concerning the business and financial condition of the Company as the
Placement Agent may from time to time reasonably request, subject to such
confidentiality agreements as the Company may reasonably request.
(j) The Company shall pay all reasonable expenses incurred in connection with
the preparation and printing of all necessary offering documents and instruments
related to the Offering and the issuance of the Shares, the Agent's Shares and
the Agent's Warrants and will also pay the Company's own expenses for accounting
fees, legal fees and other costs involved with the Offering. The Company will
provide at its own expense such quantities of the Memorandum and other documents
and instruments relating to the Offering as the Placement Agent may reasonably
request. In addition, the Company will pay all reasonable filing fees, costs and
legal fees for Blue Sky services and related filings and expenses of counsel
with respect to Blue Sky qualifications. The Blue Sky filings shall be prepared
by the Placement Agent's counsel on behalf of the Company and all Blue Sky
filing fees shall be paid by the Company prior to any filing. At each Closing,
the Placement Agent may deduct from the proceeds of subscriptions for Units sold
at such Closing, all other fees and expenses of Blue Sky counsel outstanding as
of such date, and pay such amount directly to such counsel.
(k) Except as permitted by the Stockholder Agreement attached as Annex C to the
Memorandum, (i) until the Termination Date, neither the Company nor any person
or entity acting on its behalf will negotiate with any other placement agent or
underwriter with respect to a private or public offering of the Company's or any
subsidiary's debt or equity securities, (ii) until the Termination Date, neither
the Company nor anyone acting on its behalf will, without the prior written
consent of the Placement Agent, offer for sale to, or solicit offers to
subscribe for Units or other securities of the Company from, or otherwise
approach or negotiate in respect thereof with, any other person and (iii) prior
to the second anniversary of the Final Closing, the Company will not, without
the Placement Agent's prior written consent sell any securities, or any rights
to acquire any securities, of the Company or create any additional classes or
series of capital stock; provided, however, this agreement and the provisions of
section 5A(k) of the placement agreement for the Prior Offering shall terminate
upon the Company's completion of an initial public offering.
(l) The following officers of the Company will continue in their current
positions following the Offering: X. Xxxxxxx Stoughton and Xxxxxx X. Xxxxx.
(m) [Intentionally Omitted].
(n) In accordance with Section 8 of the Stockholders Agreement attached as
Annex C to the Memorandum (the "Stockholders Agreement"), the Company shall
cause its Board of Directors to have at least three "independent" members who
are reasonably acceptable to the Placement Agent and who are unaffiliated with
the Placement Agent or the Company. In addition, the Placement Agent shall have
the right, as more particularly set forth in the Stockholders Agreement, for a
period ending on the earlier of the effective date or five (5) years from the
Final Closing, to designate up to two (2) persons reasonably acceptable to the
Company to be, at the Placement Agent's sole discretion, either nominees for
director of the Company or advisors to the Board of Directors of the Company. X.
Xxxxxxx Stoughton shall be entitled to designate such
10
nominees for election to the board of directors as provided in Section 8 of the
Stockholders Agreement. All such nominees for director shall be elected in
accordance with Section 8 of the Stockholders Agreement and the Company shall
use its best efforts (which shall include, without limitation, the solicitation
of proxies on behalf of such nominees) to cause the election of such nominees.
In the event such persons nominated by the Placement Agent are designated by the
Placement Agent to be advisors, such persons shall receive notice of and have
the right to attend all regular and special meetings of the Board of Directors
and shall be advised of all actions which the Board intends to adopt by written
consent, reasonably prior to the adoption thereof. Such advisors will receive
reimbursement of reasonable expenses and such compensation for attending
meetings equal to the compensation received by any outside director, but will
have no power to vote. The Company further agrees that it shall hold "in person"
directors' meetings no less frequently than quarterly. Thirty (30) days' advance
notice of regular meetings and such notice of special meetings as may be
required to be given to directors by statute or the Company's bylaws shall be
given to the Placement Agent. The Company agrees to indemnify and hold the
Placement Agent harmless against any and all claims, actions, awards and
judgments arising solely out of the attendance and participation of the
Placement Agent and its designated nominees or advisors at any such meeting
described herein. In the event the Company maintains a liability insurance
policy affording coverage for the acts of its officers and directors, it agrees,
if possible, to include the Placement Agent's designated advisors as insured
under such policy.
5B. Covenants of the Placement Agent. The Placement Agent hereby covenants
--------------------------------
and agrees that in connection with the making of offers to sell the Units:
(a) It will use only the Memorandum and such other written information as is
approved or supplied by the Company;
(b) It will not make any representation or warranty to any respective purchaser
of Units which is inconsistent with the Memorandum;
(c) It will not take any action which would constitute a general solicitation
or general advertising within the meaning of Rule 502 of Regulation D; and
(d) It will make offers only to those potential purchasers which it reasonably
believes are "accredited investors" under Regulation D.
6. Conditions of Placement Agent's Obligations. The obligations of the
-------------------------------------------
Placement Agent hereunder are subject to the fulfillment, at or before each
Closing, of the following additional conditions:
(a) Each of the representations and warranties of the Company shall be true and
correct in all material respects when made on the date hereof and on and as of
each Closing Date as though made on and as of each Closing Date.
(b) The Company shall have performed and complied with all agreements,
covenants and conditions required to be performed and complied with by it under
the Transaction Documents at or before each Closing.
11
(c) No order suspending the use of the Memorandum or enjoining the offering or
sale of the Units shall have been issued, and no proceedings for that purpose or
a similar purpose shall have been initiated or pending, or, to the best of the
Company's knowledge, are contemplated or threatened.
(d) As of the First Closing, the Company will have an authorized capitalization
as described in the Memorandum, of which not more than 17,500,000 shares of
Common Stock shall be issued and outstanding, not including any options,
warrants or similar rights outstanding or reserved for issuance as described in
the Memorandum.
(e) The Placement Agent shall have received a certificate of the Chief
Executive Officer of the Company, dated as of each Closing Date, certifying, in
such detail as Placement Agent may reasonably request, as to the fulfillment of
the conditions set forth in subparagraphs (a), (b), (c) and (d) above.
(f) The Company shall have delivered to the Placement Agent (i) a currently
dated good standing certificate from the secretary of state of its jurisdiction
of incorporation and each jurisdiction in which the Company is qualified to do
business as a foreign corporation, and (ii) certified resolutions of the
Company's Board of Directors approving this Agreement and the other Transaction
Documents, and the transactions and agreements contemplated by this Agreement
and the other Transaction Documents.
(g) Intentionally Omitted.
(h) At each Closing, the Company shall have (i) paid to the Placement Agent,
the Placement Agent's Fee and its Expenses actually incurred as set forth in
Section 3(d) hereof and (iii) executed and delivered to the Placement Agent the
Agent's Warrants in an amount proportional to the Units sold.
(i) On or prior to the First Closing the Company shall have received a term
sheet from Xxxxxxxxxx & Co. Inc. relating to an initial public offering of the
Company's Common Stock acceptable to the Company.
(j) [Intentionally Omitted].
(k) There shall have been delivered to the Placement Agent a signed opinion of
counsel to the Company ("Company Counsel"), dated as of each Closing Date,
substantially in the form of Exhibit A hereto and otherwise in form and
substance reasonably satisfactory to counsel to the Placement Agent.
(l) All proceedings taken at or prior to each Closing in connection with the
authorization, issuance and sale of the Units and the Agent's Warrants will be
reasonably satisfactory in form and substance to the Placement Agent and its
counsel, and such counsel shall have been furnished with all such documents,
certificates and opinions as they may reasonably request upon reasonable prior
notice in connection with the transactions contemplated hereby.
7. Indemnification. (a) The Company will (i) indemnify and hold harmless the
---------------
Placement Agent, its selected dealers and their respective officers, directors,
employees and each person, if
12
any, who controls the Placement Agent within the meaning of the Act and such
selected dealers (each an "Indemnitee") against, and pay or reimburse each
Indemnitee for, any and all losses, claims, damages, liabilities or expenses
whatsoever (or actions or proceedings or investigations in respect thereof),
joint or several (which will, for all purposes of this Agreement, include, but
not be limited to, all costs of defense and investigation and all reasonable
attorneys' fees, including appeals), to which any Indemnitee may become subject,
under the Act or otherwise, in connection with the offer and sale of the Units,
whether such losses, claims, damages, liabilities or expenses shall result from
any claim of any Indemnitee or any third party; and (ii) reimburse each
Indemnitee for any legal or other expenses reasonably incurred in connection
with investigating or defending against any such loss, claim, action, proceeding
or investigation; provided, however, that the Company will not be liable in any
such case to the extent that any such claim, damage or liability results from
(A) an untrue statement or alleged untrue statement of a material fact made in
the Memorandum, or an omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in reliance upon and in conformity with written information
furnished to the Company by the Placement Agent or any such controlling persons
specifically for use in the preparation thereof, or (B) any violations by the
Placement Agent of the Act or state securities laws which does not result from a
violation thereof by the Company or any of its affiliates. In addition to the
foregoing agreement to indemnify and reimburse, the Company will indemnify and
hold harmless each Indemnitee against any and all losses, claims, damages,
liabilities or expenses whatsoever (or actions or proceedings or investigations
in respect thereof), joint or several (which shall for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all reasonable attorneys' fees, including appeals) to which
any Indemnitee may become subject insofar as such costs, expenses, losses,
claims, damages or liabilities arise out of or are based upon the claim of any
person or entity that he or it is entitled to broker's or finder's fees from any
Indemnitee in connection with the Offering. The foregoing indemnity agreements
will be in addition to any liability which the Company may otherwise have.
(b) The Placement Agent will indemnify and hold harmless the Company, its
officers, directors, employees and each person, if any, who controls the Company
within the meaning of the Act against, and pay or reimburse any such person for,
any and all losses, claims, damages or liabilities or expenses whatsoever (or
actions, proceedings or investigations in respect thereof) to which the Company
or any such person may become subject under the Act or otherwise, whether such
losses, claims, damages, liabilities or expenses shall result from (A) any claim
of the Company, any of its officers, directors, employees, any person who
controls the Company within the meaning of the Act or any third party, insofar
as such losses, claims, damages or liabilities are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Memorandum but only with reference to information contained in the Memorandum
relating to the Placement Agent furnished in writing to the Company by the
Placement Agent, specifically for use in the preparation thereof or (B) any
violations by the Placement Agent of the Act or state securities laws. The
Placement Agent will reimburse the Company or any such person for any legal or
other expenses reasonably incurred in connection with investigating or defending
against any such loss, claim, damage, liability or action, proceeding or
investigation to which such indemnity obligation applies. The foregoing
indemnity agreements will be in addition to any liability which the Placement
Agent may otherwise have.
13
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, claim, proceeding or investigation
("Action"), such indemnified party, if a claim in respect thereof is to be made
against the indemnifying party under this Section 7, will notify the
indemnifying party of the commencement thereof, but the omission to so notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party under this Section 7 unless the indemnifying party has
been substantially prejudiced by such omission. The indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party, to assume the defense thereof subject to the
provisions herein stated, with counsel reasonably satisfactory to such
indemnified party. The indemnified party will have the right to employ separate
counsel in any such Action and to participate in the defense thereof, but the
fees and expenses of such counsel will not be at the expense of the indemnifying
party if the indemnifying party has assumed the defense of the Action with
counsel reasonably satisfactory to the indemnified party, provided, however,
that if the indemnified party shall be requested by the indemnifying party to
participate in the defense thereof or shall have concluded in good faith and
specifically notified the indemnifying party either that there may be an actual
or potential conflict of interest for one counsel to represent both the
indemnified and the indemnifying party, then the counsel representing it, to the
extent made necessary by such defenses, shall have the right to direct such
defenses of such Action on its behalf but not on behalf of the indemnifying
party and in such case the fees and expenses of such counsel in connection with
any such participation or defenses shall be paid by the indemnifying party. No
settlement of any Action against an indemnified party will be made without the
consent of the indemnifying party and the indemnified party, which consent shall
not be unreasonably withheld or delayed in light of all factors of importance to
such party and no indemnifying party shall be liable to indemnify any person for
any settlement of any such claim effected without such indemnifying party's
consent.
8. Contribution. To provide for just and equitable contribution, if (i) an
------------
indemnified party makes a claim for indemnification pursuant to Section 7 hereof
and it is finally determined, by a judgment, order or decree not subject to
further appeal that such claims for indemnification may not be enforced, even
though this Agreement expressly provides for indemnification in such case; or
(ii) any indemnified or indemnifying party seeks contribution under the Act, the
1934 Act, or otherwise, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Placement Agent on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Placement Agent on the other
shall be deemed to be in the same proportion as the total net proceeds from the
Offering (before deducting expenses) received by the Company bear to the total
commissions and fees received by the Placement Agent. The relative fault, in
the case of an untrue statement, alleged untrue statement, omission or alleged
omission will be determined by, among other things, whether such statement,
alleged statement, omission or alleged omission relates to information supplied
by the Company or by the Placement Agent, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, alleged statement, omission or alleged omission. The Company and the
Placement Agent agree that it would be unjust and inequitable if the respective
obligations of the Company and the Placement Agent for contribution were
determined by pro rata allocation of the aggregate losses, liabilities, claims,
--- ----
damages and expenses or by any other method or allocation
14
that does not reflect the equitable considerations referred to in this Section
8. No person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) will be entitled to contribution from any person who
is not guilty of such fraudulent misrepresentation. For purposes of this Section
8, each person, if any, who controls the Placement Agent within the meaning of
the Act will have the same rights to contribution as the Placement Agent, and
each person, if any, who controls the Company within the meaning of the Act will
have the same rights to contribution as the Company, subject in each case to the
provisions of this Section 8. Anything in this Section 8 to the contrary
notwithstanding, no party will be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section 8 is intended to supersede, to the extent permitted by law, any right to
contribution under the Act, the 1934 Act or otherwise available.
9. Termination. (a) The Offering may be terminated by the Placement Agent at
-----------
any time prior to the expiration of the Offering Period as contemplated in
Section 1(b) hereof ("Expiration Date") in the event that (i) any of the
representations or warranties of the Company contained herein, in the Memorandum
or in any other Transaction Document shall prove to have been false or
misleading in any material respect when made or deemed made, (ii) the Company
shall have failed to perform any of its material obligations hereunder, or (iii)
the Placement Agent shall determine that it is reasonably likely that any of the
conditions to Closing set forth herein will not, or cannot, be satisfied. In
the event of any such termination occasioned by or arising out of or in
connection with any breach or failure hereunder on the part of the Company, the
Placement Agent shall be entitled to receive, in addition to other rights and
remedies it may have hereunder, at law or otherwise, an amount equal to the sum
of: (A) all Placement Agent's Fees earned through the Termination Date, (B)
reimbursement of all Expenses actually incurred through the Termination Date
(without regard to any limitation on the amount of Expenses set forth in Section
3(d) hereof), including any non-refundable amounts referred to in Section 3(d)
hereof, (C) all amounts which may become payable in respect of Post-Closing
Investors pursuant to Section 3(f) hereof and (D) in the event that the Company
is sold, merged or otherwise acquired, or the Company enters into a letter of
intent or completes a public or private offering of its securities within one
(1) year from the Termination Date, an investment banking fee equal to five
percent (5%) of the total consideration received by the Company and/or its
stockholders in connection with such sale, merger, acquisition or sale of
securities. In the event of any such termination by the Placement Agent as a
result of any event described in clause (iii) or (iv) above, or pursuant to
Section 4(d) hereof, not occasioned by or arising out of or in connection with
any breach or failure hereunder by the Company, the Placement Agent will be
entitled to receive the sum of all Placement Agent's Fees earned through the
Termination Date, reimbursement for the amount of all Expenses actually incurred
through the Termination Date up to the maximum amount set forth herein.
(b) This Offering may be terminated by the Company at any time prior to the
Expiration Date in the event that the Placement Agent shall have failed to
perform any of its material obligations hereunder. In the event of any such
termination by the Company, the Placement Agent shall be entitled to
reimbursement for the amount of the Expenses actually incurred through the
Termination Date, and may retain any non-refundable portions thereof, but shall
be entitled to no other amounts whatsoever except as may be due under any
indemnity or contribution obligation provided herein or any other Transaction
Document, at law or otherwise.
15
(c) Upon any such termination, the Escrow Agent will, at the request of the
Placement Agent, cause all monies received in respect of subscriptions for Units
not accepted by the Company to be promptly returned to such subscribers without
interest, penalty, expense or deduction. Any interest earned thereon shall be
applied first to the payment of amounts, if any, due to the Escrow Agent and
next to the payment of Expenses incurred by the Placement Agent hereunder which
remain unpaid.
10. Survival. (a) The obligations of the parties to pay any costs and
--------
expenses hereunder and to provide indemnification and contribution as provided
herein shall survive any termination hereunder.
(b) The respective indemnities, agreements, representations, warranties and
other statements of the Company set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of, and regardless of any access to information by, the Company or the
Placement Agent, or any of their officers or directors or any controlling person
thereof, and will survive the sale of the Units.
11. Notices. All communications hereunder will be in writing and, except as
-------
otherwise expressly provided herein or after notice by one party to the other of
a change of address, if sent to the Placement Agent, will be mailed, delivered
or telefaxed and confirmed to Xxxxxxx Xxxxx Securities Incorporated, 000 Xxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: A. Xxxxxxx Xxxxxx, XX,
Telefax number (000) 000-0000, with a copy to Xxxxxxx, Calamari & Xxxxxxx, 000
Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attn: Xxxx X. Xxxxxxx, Esq., Telefax number
(000) 000-0000 and if sent to the Company, will be mailed, delivered or
telefaxed and confirmed to Exigent Diagnostics, Inc., 0000 Xxxxxxx Xxxxxxx,
Xxxxxx Xxxx, XX 00000, Attn: X. Xxxxxxx Stoughton, Telefax number (610) 971-
9814, with a copy to Xxxxxx Xxxxxxxx LLP, 0000 Xxx Xxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000-0000, Attn: Xxxxx X. Xxxxxxx, Esq., Telefax number (215) 981-
4750.
12. APPLICABLE LAW, COSTS, ETC. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED
---------------------------
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES
FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY AGREEMENT CONTEMPLATED HEREBY, AND
THE COMPANY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL
COURT. THE COMPANY FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY
OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF A NON-
CONVENIENT FORUM. THE COMPANY FURTHER AGREES THAT ANY ACTION OR PROCEEDING
BROUGHT AGAINST THE PLACEMENT AGENT SHALL BE BROUGHT ONLY IN NEW YORK STATE OR
UNITED STATES FEDERAL COURTS SITTING IN NEW YORK COUNTY. SERVICE OF PROCESS MAY
BE MADE UPON THE COMPANY BY MAILING A COPY THEREOF TO IT, BY CERTIFIED OR
REGISTERED MAIL, AT ITS ADDRESS TO BE USED FOR THE GIVING OF NOTICES UNDER THIS
AGREEMENT. THE COMPANY AND THE PLACEMENT AGENT EACH HEREBY WAIVES ITS RIGHT TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.
16
THE PLACEMENT AGENT OR THE COMPANY, AS THE CASE MAY BE, SHALL BE ENTITLED TO
COSTS AND REASONABLE ATTORNEY'S FEES IN THE EVENT IT PREVAILS IN ANY CLAIMS,
ACTIONS, AWARDS OR JUDGMENT UNDER THIS AGREEMENT.
13. Miscellaneous. No provision of this Agreement may be changed or
-------------
terminated except by a writing signed by the party or parties to be charged
therewith. Unless expressly so provided, no party to this Agreement will be
liable for the performance of any other party's obligations hereunder. Any
party hereto may waive compliance by the other with any of the terms, provisions
and conditions set forth herein; provided, however that any such waiver shall be
in writing specifically setting forth those provisions waived thereby. No such
waiver shall be deemed to constitute or imply waiver of any other term,
provision or condition of this Agreement. This Agreement contains the entire
agreement between the parties hereto and is intended to supersede any and all
prior agreements between the parties relating to the same subject matter. This
Agreement may be executed in counterparts, each of which shall be deemed an
original and all of which shall constitute a single agreement.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return this Agreement, whereupon it will become a binding
agreement between the Company and the Placement Agent in accordance with its
terms.
Very truly yours,
EXIGENT DIAGNOSTICS, INC.
By: /s/ X. Xxxxxxx Stoughton
--------------------------------------
X. Xxxxxxx Stoughton
Chairman and CEO
Accepted and agreed to this
____ day of _______________, 199__.
XXXXXXX XXXXX SECURITIES INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Its: President
----------------------------------
17
