AGENCY AGREEMENT
March 21, 2002
Life Medical Sciences, Inc.
X.X. Xxx 000
Xxxxxx Xxxxxx, XX 00000
U.S.A
Attention: Xx. Xxxxxx X. Xxxxxx
Chairman, President and Chief Executive Officer
Dear Sirs:
Re: Offering of Units
Xxxxx BioCapital Limited (the "Agent"), understands that Life Medical Sciences,
Inc. (the "Corporation"), a Delaware corporation, proposes to issue to investors
secured by the Agent, up to 1,000,000 units ("Units"), each consisting of one
share of the Corporation's Series B Convertible Preferred Stock (a "Preferred
Share"), par value of $0.01 per share, one warrant (a "Series B Warrant") to
purchase up to ten shares of the Corporation's Common Stock, par value $0.001,
("Shares") at an exercise price of $0.24 per Share, exercisable at any time
until the later of the date which is two years after the date of the Warrant and
the date which is 18 months after the date upon which the Corporation implements
an increase to its authorized Shares to an amount sufficient to permit the
conversion or exercise of all presently outstanding securities of the
Corporation (including securities to be sold in the offering) convertible into
or exchangeable for Shares (the "Authorized Capital Increase"), and one
additional warrant (an "Additional Warrant") to purchase up to ten Shares at an
exercise price of $0.12 per Share, exercisable for a period commencing on the
date of issue and expiring on June 30, 2002, or in the event that the Authorized
Capital Increase has not been implemented by May 31, 2002, on the date which is
six months after the implementation of the Authorized Capital Increase. The
Units shall be issued and sold at a price of $1.20 per Unit or such other price
as may be agreed by the Agent and the Corporation (in either case the "Issue
Price") and in substantially the form set forth in Appendices I through III to
the form of subscription agreement attached hereto as Schedule "C" (the
"Subscription Agreement"). The offering of the Units (the "Offering") will close
no later than March 29, 2002, or such other date mutually agreed to by the
Corporation and the Agent (the "Closing Date").
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 "best efforts" basis as the
non-exclusive agent of the Corporation to secure investors for the issuance of
the Units by way of private placement to
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institutional and other sophisticated investors in Europe 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.
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 10% of the gross proceeds
of sale of the Units issued on the Closing Date, payable at the election of the
Agent in either cash or Units at the Issue Price ("Commission Units") or a
combination of the two. The Agent acknowledges and agrees that no Commission
shall be payable on any Units issued to any of the investors listed on Schedule
"B" attached hereto (the "Excluded Parties") or on the Commission Units.
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, a warrant (the "Broker Warrant") to purchase an
aggregate number of Shares equal to 10% of the aggregate number of Shares
issuable upon conversion of the Preferred Shares comprising the Units issued on
the Closing Date, excluding Units issued to Excluded Parties. The Broker Warrant
shall have a term of two (2) years after the date of issue and shall be
exercisable to acquire Shares at a price of $0.24 per Share.
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.
4. Closing
(a) 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.
(b) On or prior to the Closing Date, the Agent shall provide to the
Corporation a subscription agreement from each purchaser of Units (a
"Purchaser") who is to
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acquire Units on such Closing Date. Purchasers shall be required to
complete and sign the form of Subscription Agreement attached hereto as
Schedule "C".
(c) At the Closing Time on the 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 9
hereof. Such payment and delivery shall be made against:
(i) delivery of certificates representing the Preferred Shares, the
Series B Warrants and the Additional Warrants issued on the Closing
Date registered in such name or names as are directed in the
Subscription Agreements;
(ii) delivery of the Commission and the Broker Warrants; and
(iii) delivery to the Agent of copies of the certificates, opinions and
other documents contemplated hereby.
5. Withheld Amount Pending Authorized Capital Increase
Pending the implementation of the Authorized Capital Increase, the Agent, on
behalf of the Purchasers, will cause US$300,000 (the "Withheld Amount") to be
withheld from the Corporation. The Withheld Amount shall be held in a trust
account of Blake, Xxxxxxx & Xxxxxxx LLP. The Agent shall direct that the
Withheld Amount be promptly released to the Corporation upon receipt by the
Agent of written notice from the Corporation, in form satisfactory to the Agent
acting reasonably, that the Authorized Capital Increase has been implemented. If
the Authorized Capital Increase has not been implemented within one year from
the date of issuance of the Purchased Units, then the Agent shall direct that
the Withheld Amount be released to the Purchasers, pro rata in accordance with
the number of Purchased Units issued to each Purchaser in connection with the
Offering.
6. 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:
(a) 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;
(b) 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;
(c) 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
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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;
(d) the audited financial statements of the Corporation as at and for the year
ended December 31, 2000 present fairly, in all material respects, the
financial position of the Corporation as at that date, and the results of
its operations and the changes in its financial position for the 12-month
period then ended in accordance with generally accepted accounting
principles, and the unaudited financial statements of the Corporation as
at and for the nine months ended September 30, 2001 present fairly, in all
material respects, the financial position of the Corporation as at that
date, and the results of its operations and the changes in its financial
position for the nine-month period then ended; since September 30, 2001,
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 nine-month period then
ended;
(e) the Corporation has all requisite power and authority to carry out its
obligations under this Agreement, the Preferred Shares, the Series B
Warrants and the Additional Warrants (the Series B Warrants and the
Additional Warrants collectively referred to as the "Warrants") including
any Preferred Shares, Series B Warrants and Additional Warrants issued to
the Agent in satisfaction or partial satisfaction of the Commission,
(hereinafter referred to as the "Commission Preferred Shares" and the
Series B Warrants and Additional Warrants as the "Commission Warrants",
respectively) and any Broker Warrants;
(f) this Agreement has been, and the Preferred Shares, Warrants, the
Commission Preferred Shares, the Commission Warrants 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;
(g) the Preferred Shares comprising part of the Units and the Commission
Preferred Shares comprising part of any Commission 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;
(h) the Corporation will, as soon as reasonably practicable, convene a meeting
of shareholders of the Corporation at which the Corporation will place
before shareholders a proposal for the Authorized Capital Increase;
(i) the Corporation will use its reasonable best efforts to secure the
commitment of those persons who receive shares in the capital stock of the
Corporation, in connection with
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the Corporation's proposed acquisition of certain assets of Phairson Ltd.,
to vote in favour of the Authorized Capital Increase;
(j) immediately following the Authorized Capital Increase, the Corporation
will reserve a sufficient number of Shares unissued as may be required to
be issued pursuant to the conversion of the Preferred Shares and the
Commission Preferred Shares and the exercise of the Warrants comprising
the Purchased Units, the Commission Warrants comprising the Commission
Units and the Broker Warrants and, assuming the implementation of the
Authorized Capital Increase, when issued and delivered upon such
conversion or exercise, such Shares will be duly and validly issued as
fully paid and non-assessable shares in the capital stock of the
Corporation;
(k) the authorized capital of the Corporation consists of 43,750,000 Shares
and 5,000,000 shares of preferred stock, $.01 par value per share. Of the
preferred stock, 500,000 shares have been designated as Series A
Convertible Preferred Stock and, on or prior to the Closing Date, not more
than 1,124,833 shares will be designated as Preferred Shares. There are
15,343,342 Shares outstanding, no shares of Series A Convertible Preferred
Stock or Preferred Shares outstanding (other than Preferred Shares issued
or to be issued in the Offering or to Dimotech Limited ("Dimotech"). In
addition, the Corporation has (i) outstanding a convertible note held by
Dimotech (the "Convertible Note") in the principal amount of $40,000 which
is convertible, at the holder's option, into Shares at a price of $1.00
per share or into any class of preferred shares at the price paid by the
purchasers thereof; provided, however, that if any such preferred shares
are convertible into Shares (as is the case with the Preferred Shares),
the holder would be entitled to receive no more than the number of
preferred shares which, at the then existing conversion rate, would
convert into 40,000 Shares, and (ii) available for issuance pursuant to
options which may be granted under its 1992 Stock Option Plan, 2000 Stock
Option Plan and 2001 Stock Option Plan, an aggregate of approximately
6,000,000 Shares and outstanding options and warrants to purchase an
aggregate of approximately 9,000,000 Shares, of which all outstanding
Class A and Class B warrants (to purchase 4,768,000 Shares) are scheduled
to expire in March 2002. The Corporation has agreed to grant options to
purchase an additional 5,200,000 Shares upon the closing of the Offering,
at an exercise price equal to the initial conversion price of the
Preferred Shares. The Corporation has agreed to settle a debt of
approximately $320,000 owing to a creditor, Polymer Technology Group. The
settlement involves a cash payment, issuance of Shares at the market price
on the date of the agreement and issuance of a note in principal amount
equal to a portion of the debt. The note is convertible into Shares at a
price in excess of the current market price;
(l) 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, any other Subscription Agreement for the purchase of
Units, the Preferred Shares, the Commission Preferred Shares, the
Warrants, the Commission Warrants, the Broker Warrants, any indenture,
mortgage, deed of trust or loan agreement, (except as disclosed in the
Corporation's SEC filings), 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 an adverse material 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
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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;
(m) the issue and sale of the Units and the issue of Preferred Shares,
Commission Preferred Shares, Warrants, Commission Warrants, Broker
Warrants, any Shares on the conversion of Preferred Shares or Commission
Preferred Shares or the exercise of Warrants, Commission Warrants or
Broker 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 or any
subsidiary is bound or to which any of the property or assets of the
Corporation or any subsidiary is subject, which breach or violation or the
consequences thereof would result in a material adverse change to the
Corporation and its business, nor will any such action conflict with or,
assuming implementation of the Authorized Capital Increase, 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 subsidiary or any of its properties which violation or the
consequences thereof would result in a material adverse change to the
Corporation and its business;
(n) 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;
(o) 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 September 30, 2001 referred to in
clause 6(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 (i) for a security interest
in the Corporation's tangible assets to secure payment of the Convertible
Note, and (ii) 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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(p) the Corporation owns, 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 unfavourable decision, ruling, or
finding, would result in a material adverse change to the Corporation or
its business;
(q) 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;
(r) 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;
(s) 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; 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 and 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;
(t) 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
issue of any Preferred Shares, Commission Preferred Shares, Warrants,
Commission Warrants, Broker Warrants or any Shares on conversion of the
Preferred Shares or the Commission Preferred Shares
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or exercise of the Warrants, Commission Warrants or Broker Warrants or the
validity of any action taken or to be taken by the Corporation in
connection with this Agreement or which would result in any material
adverse change in the financial condition, results of operations, business
or prospects of the Corporation;
(u) the Corporation will permit the Agent and its legal counsel to conduct all
due diligence which the Agent may reasonably require; and
(v) during the period commencing with the engagement of the Agent on June 18,
2001 and ending on the Closing Date, the Corporation has informed 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.
7. 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:
(a) 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 the
Closing Date as if made on and as of the Closing Date; and the Agent shall
have received on the Closing Date a certificate, dated as of the 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;
(b) the Agent shall have received on and as of the Closing Date the favourable
opinion of the Corporation's legal counsel on such matters as the Agent
may reasonably request, including:
(i) 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 Preferred Shares and
Warrants comprising the Units, any Commission Preferred Shares and
Commission Warrants comprising the Commission Units and the Broker
Warrants (the Preferred Shares, any Commission Preferred Shares,
Warrants, any Commission Warrants and the Broker Warrants
collectively referred to as the "Securities") and to enter into and
carry out its obligations under this Agreement, the Subscription
Agreement and the Securities;
(ii) as to the Corporation's authorized and issued and outstanding
capital;
(iii) each of this Agreement, the Subscription Agreement and the
Securities has been duly authorized, executed and delivered by the
Corporation and is a legal, valid and binding obligation of the
Corporation enforceable against it in accordance with its terms;
(iv) all necessary action has been taken by the Corporation to authorize
the issue of up to 1,000,000 Units and the issue to the Agent of up
to 100,000 Commission Units and a Broker Warrant exercisable for up
to 1,000,000 Shares, and upon
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the implementation of the Authorized Capital Increase, the
Corporation will have sufficient authorized but unissued Shares as
may be required to be issued upon the exercise of the Securities;
(v) 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 of any Commission Units and
Broker Warrants, and the issue of the Shares issuable upon exercise
of the Securities 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);
(vi) the Preferred Shares comprising part of the Units and any Commission
Preferred Shares comprising part of any Commission Units have been
duly and validly issued by the Corporation and are outstanding as
fully paid and non-assessable shares in the capital of the
Corporation and assuming the implementation of the Authorized
Capital Increase, the Shares issuable upon exercise of the Warrants,
Commission Warrants and Broker Warrants or upon conversion of the
Preferred Shares and Commission Preferred Shares will, when issued
in accordance with the respective terms and conditions of the
Warrants, Commission Warrants, Broker Warrants, Preferred Shares and
Commission Preferred Shares, be validly issued as fully paid and
non-assessable shares in the capital of the Corporation;
(vii) the certificates representing the Preferred Shares and Warrants
comprising part of the Units and any Commission Preferred Shares and
Commission Warrants comprising part of the Commission Units 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;
(viii) 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 Shares issuable upon exercise of Warrants, Commission
Warrants and Broker Warrants and upon the conversion of Preferred
Shares and Commission Preferred Shares and the issue and delivery of
any Commission Units and Broker Warrants; and
(ix) the exemption from registration of the issuance of the Securities
(including the underlying securities) under the terms contemplated
by the Subscription Agreement and the Agency Agreement.
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
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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;
(c) the Agent shall have received copies of the Subscription Agreement
executed by the Corporation;
(d) the Agent shall have received such other agreements, certificates,
opinions or documents as the Agent may reasonably request; and
(e) 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 issue of any Commission Units and Broker Warrants to the Agent.
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 9 and except for any liability
arising before or in relation to such termination) be released and discharged
from their respective obligations under this Agreement.
8. 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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9. 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 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"). Other than Agent's legal expenses, the Expenses
shall not exceed $1,500, in the aggregate, without the prior written approval of
the Corporation, provided that Agent's legal expenses shall be subject to a cap
of $50,000. Expenses incurred up to the Closing Date shall be reimbursed, upon
submission to the Corporation of receipts or similar proof of expenditure, at
the Closing Time and, with the Corporation's approval, may be deducted by the
Agent from the proceeds of sale at the Closing. Expenses incurred after the
Closing Date shall be reimbursed, upon submission to the Corporation of receipts
or similar proof of expenditure, forthwith following the delivery to the
Corporation of accounts in respect thereof and may, with the Corporation's
approval, be deducted by the Agent from the Withheld Amount.
10. Indemnification
(a) The Corporation agrees to indemnify and hold harmless the Agent and Xxxxx
Capital Ltd. and their respective directors, officers, employees and
agents from and against any and all losses, claims, damages and
liabilities arising out of or in relation to or in connection with any
breach or non-compliance by the Corporation of or with any of its
covenants or representations and warranties herein, provided that the
Corporation shall not be liable under this section to the extent that any
such loss, claim, liability or damage arises out of or is based upon a
breach by the Agent of the obligations and agreements set forth in section
2 hereof or Schedule "A" attached hereto.
(b) In case any proceeding (including any governmental investigation) shall be
instituted involving any indemnified party in respect of which indemnity
may be sought pursuant to the preceding paragraph, such party shall
promptly notify the Corporation in writing, and the Corporation, upon the
request of such party, shall retain counsel reasonably satisfactory to
such party to represent such party and any others the Corporation may
designate in such proceeding and shall pay the fees and expenses of such
counsel related to such proceeding.
(c) In any such proceeding, such indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such party unless (i) the Corporation and such party
shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties)
include the Corporation and such party and representation of both parties
by the same counsel is not appropriate as a result of differing interests
between them. The Corporation shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment or determination in respect
of which the indemnity referred to in this section 9 is claimed, the
Corporation agrees to indemnify such party from and against any loss or
liability by reason of such settlement, judgment or determination.
12
11. 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 BioCapital Limited
000/000 Xxx Xxxxxxxx
Xxxxxxx Xxxxxxx
Xxxxxx XX00 0XX
Xxxxxxx
Attention: Xxxxx Xxxxxx
Telephone: 00-00-0000-0000
Facsimile: 00-00-0000-0000
With a copy to:
Blake, Xxxxxxx & Xxxxxxx LLP
000 Xxx Xxxxxx, Xxxxxxxx Court West
Toronto, ON X0X 0X0
Xxxxxx
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Corporation:
Life Medical Sciences, Inc.
X.X. Xxx 000
Xxxxxx Xxxxxx, XX 00000
U.S.A
Attention: Xxxxxx X. Xxxxxx
- Chairman, President and Chief Executive Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
13
With a copy to: Xxxxxxxxxx, Xxxxxxxxx & Xxxxxx LLP
00Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
12. 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.
13. 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.
14. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York and the federal laws of the United States applicable
therein. The courts of the State of New York shall have exclusive jurisdiction
to entertain any action in respect of this Agreement.
15. Time
Time is of the essence of this Agreement.
16. 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, including
without limitation, the engagement letter between the Corporation and the Agent
dated June 18, 2001. 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.
14
17. Miscellaneous
This Agreement shall enure to the benefit of, and be binding upon, the
successors of the Corporation and the Agent.
Yours sincerely,
XXXXX BIOCAPITAL LIMITED
By:_____________________________
Accepted and agreed as of the __________ day of _________________, 2002.
LIFE MEDICAL SCIENCES, INC.
By: _______________________________________________
Xxxxxx X. Xxxxxx
Chairman, President and Chief Executive Officer
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 Shares issuable upon exercise
of the Warrants (collectively the "Securities") have not been and will not be
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 in
accordance with Regulation S under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act.
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.
Schedule "B"
List of Excluded Investors
As of May 21, 2001
1. Existing shareholders of the Company
2. Existing shareholders of Phairson plc, except MVI Partners, affiliates and
contacts
3. Xxxx Xxxxxxx
4. New Enterprise Associates
5. SAE
6. emedsecurities
7. Xxxxx Xxxxx & Co.
8. Xxxxxxxx & Xxxxxxxx
9. Dechert Price & Xxxxxx and Xxxxx Xxxxx
10. Xxxxx Xxxxxxxx
11. Xxxxx Xxxxx
12. Xxxx-Xxxxx Pourny
13. Xxxxx Xxxxxx and Elan
14. Xxxxxxxx Ventures
15. Xxx Xxxxx
16. Sage Group
17. AIG Investors, NY, NY
18. Aura Investments, Xxx Xxxx, Xxxxxx
00. Axiom Partner, Xxxxxxxx, XX
00. XxxXxxxxxx, Xxxxxxxx, Xxxxxx
21. CB Health Ventures, Boston, MA
22. Clarion Capital, Cleveland, OH
23. CPRUS (LibertyView Capital), Jersey City, NJ
24. DCF Capital, Boston, MA
25. EGS Partners, NY, NY
26. Emerald Ventures, Lancaster, PA
27. Xxxxxx Partners, NY, NY
28. Innovative Technology Partner, LA, CA
29. MedCapital, Xxxxxxxxxx, XX
0
30. Medica Venture Partners, NY, NY
31. Micro Capital, Darien, CT
32. Palladin Investors, Maplewood, NJ
33. Xxxxxx Xxxx Partners, Princeton, NJ
34. Persues - Xxxxx, NY, NY
35. Radius Ventures, NY, NY
36. Trillium Medical Ventures, NY, NY
37. Versant Ventures, Newport Beach, CA
38. Warburg Pincus, NY, NY
39. TL Ventures, Philadelphia, PA
40. AMT Ventures, Gulf Breeze, FL
41. Dorado Fund LP-1, Coconut Grove, FL
42. A.M. Xxxxxx & Co, Research Triangle Park, NC
43. Key Capital Corp, Cleveland, OH
44. Israel Infinity Fund, NY, NY
45. Cardinal Health Ventures, Princeton, NJ
46. Foresight Ventures (A. Patrickoff), NY, NY
47. Essex Woodlands, Irvine, Ca
48. KBL Health Venture, NY, NY
49. Xxxxxxxx & Associates, Princeton, NJ
50. Vertical Group, Summit, NJ
51. Javlin Partners, Mobil AL
52. Rosse Enterprises. Boston, MA
53. Connexus Financial Partners, Bridgewater Township, NJ
54. Early Stage Enterprises, Princeton, NJ
55. Dimotech Limited
56. Schweizerische Gesellschaft fur Aktienhandel und Research AG
Schedule "C"
SUBSCRIPTION AGREEMENT
(European Subscribers)
