AMERICAN EQUITIES OVERSEAS, INC.
Acting Through American Equities Overseas (UK), Ltd.
00 Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0XX
October ---, 1997
Agritope, Inc.
0000 X.X. Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention:
Xxxxxx X. Xxxxx, Ph.D.
President and Chief Executive Officer
Re: Placement Agent Agreement for 1997
Private Placement of Common Stock
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Gentlemen:
This will confirm the terms on which American Equities Overseas,
Inc. acting through American Equities Overseas (UK) Ltd. ("American Equities"),
will serve as placement agent in connection with a proposed offering of common
stock, no par value, together with associated preferred stock purchase rights
(collectively, the "Common Stock"), of Agritope, Inc. ("Agritope"). The Common
Stock will be issued pursuant to Stock Purchase Agreements substantially in the
form you have provided to us (the "Stock Purchase Agreements").
American Equities will place with financial investors ("Financial
Investors") a minimum of U.S. $9,000,000 of Common Stock and will use its best
efforts to place up to a maximum of U.S. $10,000,000 of Common Stock (or such
greater amount as Agritope may approve) with Financial Investors. In addition to
the required minimum placement with Financial Investors, American Equities will
use its best efforts to place additional shares of Common Stock with parties
that have a product development relationship with Agritope ("Strategic
Partners"). The Financial Investors, including American Equities, if it
purchases shares in this offering, and the Strategic Partners are referred to
herein, collectively, as the "Regulation S Investors." All sales to Regulation S
Investors will be made substantially on the terms set forth in this letter and
pursuant to the Stock Purchase Agreements.
All proceeds of this offering will be placed in an account with
Republic New York Securities Corp. ("Republic"), which American Equities will
open for the benefit of Agritope (the "Proceeds Account"). To satisfy the
required minimum placement, American Equities will purchase, on or before
October 15, 1997, any of such shares of Common Stock that it does not place with
other Financial Investors and will deposit the
purchase price of the shares it purchases in the Proceeds Account. If the
purchase price paid for any Common Stock purchased by any other Financial
Investor is returned to such Financial Investor prior to the closing of this
offering ("Closing") and such return results in the balance of the Proceeds
Account attributable to Financial Investors falling below U.S. $9,000,000, then
American Equities will purchase additional shares of Common Stock to satisfy the
required minimum placement.
American Equities will purchase any shares it purchases hereunder
pursuant to a Stock Purchase Agreement, which will be substantially the same as
the Stock Purchase Agreements that the other Regulation S Investors sign, except
that: (i) American Equities will not be required to hold the shares for
investment, but will be permitted to resell the shares to other Regulation S
Investors and the applicable provisions of the Stock Purchase Agreement will be
revised accordingly; (ii) American Equities will have the right to assign its
registration rights under Article 5 of the Stock Purchase Agreement to
Regulation S Investors to whom it sells the Common Stock that American Equities
has purchased; (iii) Section 7.3 of the Stock Purchase Agreement will be
deleted; (iv) Section 10.3 of the Stock Purchase Agreement will be revised to
reflect the payment by Agritope of certain American Equities' expenses, as
specified below.
If American Equities purchases any shares from Agritope hereunder,
American Equities may sell such shares to Regulation S Investors pursuant to a
Stock Purchase Agreement that contains representations from each such investor
establishing that the investor is a Regulation S Investor and that contains such
other terms as shall be mutually agreeable to American Equities and Agritope.
American Equities and Agritope agree to draft such resale agreement, if it is
needed, prior to the Closing Date (as defined below).
Compensation and Expenses
-------------------------
American Equities will act as placement agent in connection with the
proposed offering and in consideration therefor will receive a fee equal to 5
percent of the gross proceeds from the sale of Common Stock to the Regulation S
Investors. In addition, Agritope will pay the out-of-pocket expenses incurred by
American Equities in connection with the "road show" for this offering and will
pay American Equities' reasonable attorney fees related to this offering.
As consideration for American Equities' firm commitment to place a
minimum of U.S. $9,000,000 of Common Stock with Financial Investors, Agritope
agrees to issue at the Closing: (i) to American Equities, a warrant to purchase
50,000 shares of Common Stock at a price of U.S. $7 per share, which will be
exercisable for a period of three years from the date of the Closing; and (ii)
to American Equities or its designees, warrants on the foregoing terms to
purchase an aggregate of 450,000 shares of Common Stock. The warrants will be
substantially in the form attached hereto as Exhibit A.
Regulation S
------------
American Equities understands that Common Stock is being offered
outside the United States in reliance on Regulation S promulgated under the
United States Securities Act of 1933, as amended ("1933 Act"). This will confirm
American Equities' agreement that all offers and sales of Common Stock prior to
the expiration of the restricted period specified in Regulation S shall be made
only: (i) in accordance with the provisions of Rule 903 or Rule 904 of
Regulation S; (ii) pursuant to registration of the Common Stock under the 1933
Act; or (iii) pursuant to an available exemption from the registration
requirements of the 1933 Act. It is American Equities' understanding that the
restricted period will begin to run no earlier than the date of Closing.
American Equities agrees that under Rule 903 of Regulation S: Common
Stock may be offered and sold only in offshore transactions, as defined in
Regulation S; no directed selling efforts, as defined in Regulation S, may be
made in the United States; prior to the expiration of the restricted period
specified in Regulation S, Common Stock may not be offered or sold to or for the
account or benefit of a U.S. person, as defined in Regulation S; each Common
Stock purchaser must certify that it is not a U.S. person and is not acquiring
the Common Stock for the account or benefit of a U.S. person; each Common Stock
purchaser must agree to resell the Common Stock only in accordance with the
provisions of Regulation S, pursuant to registration under the 1933 Act, or
pursuant to an available exemption from registration; certificates representing
the Common Stock must contain a legend to the effect that transfer is prohibited
except in accordance with the provisions of Regulation S; and, if Common Stock
is sold to a distributor, dealer, or person receiving compensation for selling
the Common Stock, a confirmation must be sent to the purchaser stating that
the purchaser is subject to the foregoing restrictions and others stated in
Regulation S.
This will also confirm that no Common Stock will be sold to a
distributor, dealer, or person receiving compensation for selling the Common
Stock, other than American Equities. American Equities confirms and agrees that,
if it is a Common Stock purchaser, it will be subject to the restrictions
contained in the preceding two paragraphs and others contained in Regulation S
in connection with any offer or sale by it of any Common Stock it has purchased.
United Kingdom Legal Matters
----------------------------
American Equities represents and agrees that:
1. It has not offered or sold and will not offer to sell in the
United Kingdom, by means of any document, any Common Stock other than 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;
2. It has complied and will comply with all applicable provisions of
the Financial Services Xxx 0000 ("FSA") with respect to anything done by it in
relation to the Common Stock in, from or otherwise involving the United Kingdom;
3. It has only issued or passed on and will only issue or pass on to
any person in the United Kingdom any document received by it in connection with
the issue of the Common Stock if that person is of a kind described in Article
11(3) of the Financial Services Xxx 0000 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on; and
4. American Equities Overseas (UK) Ltd. is an authorized person
("Authorized Person") under the FSA and is not an overseas person ("Overseas
Person") under the FSA, but is a person of a kind described in Article 11(3) of
the Financial Services Xxx 0000 (Investment Advertisements) (Exemptions) Order
1996. American Equities Overseas Inc. is not an Authorized Person, but is an
Overseas Person.
French Legal Matters
--------------------
American Equities hereby represents and warrants that it has not
offered or sold, and will not offer or sell, to any person in France, by means
of any document, oral presentation or other medium, any Common Stock otherwise
than (i) in strict compliance with the following laws and regulations of the
French Republic, namely Article 72 of Law No. 66-537 of 24 July 1966, Law No.
72-6 of 3 January 1972, Regulations No. 88-04 and 92-02 of the Commission des
Operations de Bourse and Decree No. 89-938 of 29 December 1989 (collectively,
the "Regulations"), and (ii) in circumstances which do not constitute an offer
to the public ("xxxxx public a l'epargne") or financial canvassing ("demarchage
financier") within the meaning of the Regulations.
Other Countries
---------------
American Equities hereby represents and warrants that it has not
offered or sold, and will not offer or sell, Common Stock to any person in any
other country other than in compliance with applicable law regulating the offer
or sale of securities.
Indemnification
---------------
American Equities will indemnify Agritope against all losses,
liabilities, costs, or demands which it may incur or which may be made against
it in relation to any breach or alleged breach of the obligations of American
Equities described above.
Purchase Price Disbursement; Stock Certificates
-----------------------------------------------
American Equities agrees to deposit in the Proceeds Account the
purchase price of all shares of Common Stock purchased by the Regulation S
Investors. American Equities will obtain from Republic a letter stating that
Republic will permit withdrawals from the Proceeds Account only upon joint
written instructions of Agritope and American Equities.
Subject to the last sentence in this paragraph, on or before
Closing, Agritope will deliver to American Equities a single omnibus stock
certificate issued in the name of Republic New York Securities Corporation f/b/o
Non-U.S. Investors representing all shares sold by Agritope in this offering.
Following the expiration of the restricted period specified in Regulation S,
Agritope will replace the omnibus certificate with separate certificates
representing each purchaser's shares, which American Equities will then deliver
to the applicable purchaser
of Common Stock. Notwithstanding the foregoing, at American Equities' request,
Agritope will issue separate stock certificates for the shares purchased by
specified purchasers and deliver such certificates as directed by American
Equities at Closing, for delivery to such purchasers after Closing.
At Closing, American Equities and Agritope will notify Republic to
distribute the entire balance of the Proceeds Account as follows: (i) to
American Equities, the American Equities' fee stated above and all interest paid
on the Proceeds Account (with American Equities to disburse the interest to the
appropriate Regulation S Investors); and (ii) to Agritope, the remaining balance
of the Proceeds Account. American Equities understands that Agritope will
specify the date of Closing by notice to American Equities and Republic.
If Closing does not occur by December 31, 1997, Agritope and
American Equities will instruct Republic to distribute the entire balance of the
Proceeds Account to the appropriate subscribers, together with interest. If
American Equities receives a request from a purchaser prior to Closing for the
return of all or part of the purchase price, American Equities will promptly
notify Agritope. Any determination to disburse the purchase price from the
Proceeds Account will be made jointly by Agritope and American Equities.
American Equities' obligations and duties in connection with this
Agreement are confined to those specifically enumerated in this agreement.
American Equities shall not be in any manner liable or responsible for the
sufficiency, correctness, genuineness or validity of any instruments deposited
with or notices provided to American Equities. American Equities shall not be
liable for any loss that may occur by reason of forgeries or false
representations by others, due to the exercise of American Equities' discretion,
or for any other reason except American Equities' gross negligence or willful
misconduct. If American Equities at any time has any doubt as to its duties
hereunder, it may refrain from any action pending receipt of an order from a
court of competent jurisdiction directing American Equities to act.
If American Equities renders any requested service not provided for
in this agreement with respect to holding or disbursing the Common Stock
purchase price, if any controversy arises under this agreement, or if American
Equities is made a party to or intervenes in any litigation pertaining to this
agreement, American Equities shall be reasonably compensated for
the additional services and reimbursed for all costs and expenses arising from
such controversy or litigation.
Please confirm our understanding and agreement by signing and
returning the enclosed copy of this letter.
Very truly yours,
AMERICAN EQUITIES OVERSEAS, INC.
By /s/ illegible
Title---------------------------------------
Acknowledged and agreed.
AGRITOPE, INC.
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, Ph.D.
President and Chief
Executive Officer
