CONFIDENTIAL Michael V. Novinski President and Chief Executive Officer Emisphere Technologies, Inc. 240 Cedar Knolls Rd. Cedar Knolls, NJ 07927 Dear Mr. Novinski:
Exhibit 10.1
August 19, 2009
CONFIDENTIAL
Xxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
Emisphere Technologies, Inc.
000 Xxxxx Xxxxxx Xx.
Cedar Knolls, NJ 07927
President and Chief Executive Officer
Emisphere Technologies, Inc.
000 Xxxxx Xxxxxx Xx.
Cedar Knolls, NJ 07927
Dear Xx. Xxxxxxxx:
This letter (the “Agreement”) constitutes the agreement between Xxxxxx & Xxxxxxx, LLC
(“Xxxxxx” or the “Placement Agent”) and Emisphere Technologies, Inc. (the
“Company”), that Xxxxxx shall serve as the exclusive placement agent for the Company, on a
“reasonable best efforts” basis, in connection with the proposed placement (the
“Placement”) of registered securities (the “Securities”) of the Company, including
shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the
“Common Stock”) and warrants to purchase shares of Common Stock. The terms of such
Placement and the Securities shall be mutually agreed upon by the Company and the purchasers (each,
a “Purchaser” and collectively, the “Purchasers”) and nothing herein constitutes
that Xxxxxx would have the power or authority to bind the Company or any Purchaser or an obligation
for the Company to issue any Securities or complete the Placement. This Agreement and the documents
executed and delivered by the Company and the Purchasers in connection with the Placement shall be
collectively referred to herein as the “Transaction Documents.” The date of the
closing of the Placement shall be referred to herein as the “Closing Date.” The Company
expressly acknowledges and agrees that Xxxxxx’x obligations hereunder are on a reasonable best
efforts basis only and that the execution of this Agreement does not constitute a commitment by
Xxxxxx to purchase the Securities and does not ensure the successful placement of the Securities or
any portion thereof or the success of Xxxxxx with respect to securing any other financing on behalf
of the Company. The Company also hereby appoints Xxxxxx as the exclusive advisor to the Company
with respect to its simultaneous private placement of Shares to MHR Fund Management LLC
(“MHR”).
SECTION 1. COMPENSATION AND OTHER FEES.
As compensation for the services provided by Xxxxxx xxxxxxxxx, the Company agrees to pay to
Xxxxxx:
(A) The fees set forth below with respect to the Placement:
1. A cash fee payable immediately upon the closing of the Placement and equal to
6% of the aggregate gross proceeds raised in the Placement.
2. Such number of warrants (the “Xxxxxx Warrants”) to Xxxxxx or its designees at
the Closing to purchase shares of Common Stock equal to 6% of the aggregate number of Shares
sold in the Placement, plus any Shares underlying any convertible Securities or units sold
in the Placement. The Xxxxxx Warrants shall have the same terms as the warrants (if any)
issued to the Purchasers in the Placement except that the exercise price shall be 125% of the public offering price
per
Xxxxxx & Xxxxxxx, LLC • 0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000
Tel: 000 000 0000 • Fax: 000 000 0000 • xxx.xxxx.xxx • Member: FINRA, SIPC
Tel: 000 000 0000 • Fax: 000 000 0000 • xxx.xxxx.xxx • Member: FINRA, SIPC
share, and the expiration date shall be five years from the effective date of the shelf
registration statement referred to in Section 2(A) below. The Xxxxxx Warrants shall not
have antidilution protections or be transferable for six months from the date of the
Offering except as permitted by the Financial Industry Regulatory Authority
(“FINRA”) Rule 5110, and further, the number of Shares underlying the Xxxxxx
Warrants shall be reduced if necessary to comply with FINRA rules or regulations.
(B) A cash advisory fee payable immediately upon the closing of the simultaneous private
placement to MHR equal to 3% of the aggregate gross proceeds raised from purchases by MHR.
(C) The Company also agrees to reimburse Xxxxxx’x expenses (with supporting invoices/receipts)
up to a maximum of 0.8% of the aggregate gross proceeds raised in the placement, but in no event
more than $35,000. Such reimbursement shall be payable immediately upon (but only in the event of)
the closing of the Placement.
SECTION 2. REGISTRATION STATEMENT.
The Company represents and warrants to, and agrees with, the Placement Agent that:
(A) The Company has filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3 (Registration File No. 333-146212) under
the Securities Act of 1933, as amended (the “Securities Act”), which became effective on
October 1, 2007, for the registration under the Securities Act of the Shares. At the time of such
filing, the Company met the requirements of Form S-3 under the Securities Act. Such registration
statement meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act and
complies with said Rule. The Company will file with the Commission pursuant to Rule 424(b) under
the Securities Act, and the rules and regulations (the “Rules and Regulations”) of the
Commission promulgated thereunder, a supplement to the form of prospectus included in such
registration statement relating to the placement of the Shares and the plan of distribution thereof
and has advised the Placement Agent of all further information (financial and other) with respect
to the Company required to be set forth therein. Such registration statement, including the
exhibits thereto, as amended at the date of this Agreement, is hereinafter called the
“Registration Statement”; such prospectus in the form in which it appears in the
Registration Statement is hereinafter called the “Base Prospectus”; and the supplemented
form of prospectus, in the form in which it will be filed with the Commission pursuant to Rule
424(b) (including the Base Prospectus as so supplemented) is hereinafter called the “Prospectus
Supplement.” Any reference in this Agreement to the Registration Statement, the Base Prospectus
or the Prospectus Supplement shall be deemed to refer to and include the documents incorporated by
reference therein (the “Incorporated Documents”) pursuant to Item 12 of Form S-3 which were
filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or
before the date of this Agreement, or the issue date of the Base Prospectus or the Prospectus
Supplement, as the case may be; and any reference in this Agreement to the terms “amend,”
“amendment” or “supplement” with respect to the Registration Statement, the Base Prospectus or the
Prospectus Supplement shall be deemed to refer to and include the filing of any document under the
Exchange Act after the date of this Agreement, or the issue date of the Base Prospectus or the
Prospectus Supplement, as the case may be, deemed to be incorporated therein by reference. All
references in this Agreement to financial statements and schedules and other information that is
“contained,” “included,” “described,” “referenced,” “set forth” or “stated” in the Registration
Statement, the Base Prospectus or the Prospectus Supplement (and all other references of like
import) shall be deemed to mean and include all such financial statements and schedules and other
information that is or is deemed to be incorporated by reference in the Registration Statement, the
Base Prospectus or the Prospectus Supplement, as the case may be. No stop order suspending the effectiveness of
the Registration Statement or the use of the Base Prospectus or the Prospectus Supplement has been
issued, and no proceeding for any such purpose is
pending or has been initiated or, to the Company’s knowledge, is threatened by the Commission. For purposes of this Agreement, “free writing
prospectus” has the meaning set forth in Rule 405 under the Securities Act and the “Time of
Sale Prospectus” means the preliminary prospectus, if any, together with the free writing
prospectuses, if any, used in connection with the Placement, including any documents incorporated
by reference therein.
(B) The Registration Statement (and any further documents to be filed with the Commission)
contains all exhibits and schedules as required by the Securities Act. Each of the Registration
Statement and any post-effective amendment thereto, at the time it became effective, complied in
all material respects with the Securities Act and the Exchange Act and the applicable Rules and
Regulations and did not and, as amended or supplemented, if applicable, will not, contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. The Base Prospectus, the Time of Sale
Prospectus, if any, and the Prospectus Supplement, each as of its respective date, comply in all
material respects with the Securities Act and the Exchange Act and the applicable Rules and
Regulations. Each of the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, as amended or supplemented, did not and will not contain as of the date thereof any
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. The
Incorporated Documents, when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the applicable Rules and Regulations, and none
of such documents, when they were filed with the Commission, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the statements therein (with
respect to Incorporated Documents incorporated by reference in the Base Prospectus or Prospectus
Supplement), in light of the circumstances under which they were made not misleading; and any
further documents so filed and incorporated by reference in the Base Prospectus, the Time of Sale
Prospectus, if any, or Prospectus Supplement, when such documents are filed with the Commission,
will conform in all material respects to the requirements of the Exchange Act and the applicable
Rules and Regulations, as applicable, and will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. No post-effective amendment to the
Registration Statement reflecting any facts or events arising after the date thereof which
represent, individually or in the aggregate, a fundamental change in the information set forth
therein is required to be filed with the Commission. There are no documents required to be filed
with the Commission in connection with the transaction contemplated hereby that (x) have not been
filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time
period. There are no contracts or other documents required to be described in the Base Prospectus,
the Time of Sale Prospectus, if any, or Prospectus Supplement, or to be filed as exhibits or
schedules to the Registration Statement, that have not been described or filed as required.
(C) The Company is eligible to use free writing prospectuses in connection with the Placement
pursuant to Rules 164 and 433 under the Securities Act. Any free writing prospectus that the
Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be,
filed with the Commission in accordance with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder. Each free writing prospectus that
the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or
that was prepared by or behalf of or used by the Company complies or will comply in all material
respects with the requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder. The Company will not, without the prior consent of the Placement Agent, prepare, use or refer to, any free
writing prospectus.
(D) The Company has delivered, or will as promptly as practicable deliver, to the Placement
Agent complete conformed copies of the Registration Statement and of each consent and certificate
of experts, as applicable, filed as a part thereof, and conformed copies of the Registration
Statement (without exhibits), the Base Prospectus, the Time of Sale Prospectus, if any, and the
Prospectus Supplement, as amended or supplemented, in such quantities and at such places as the
Placement Agent reasonably requests. Neither the Company nor any of its directors and officers has
distributed and none of them will distribute, prior to the Closing Date, any offering material in
connection with the offering and sale of the Shares other than the Base Prospectus, the Time of
Sale Prospectus, if any, the Prospectus Supplement, the Registration Statement, copies of the
documents incorporated by reference therein and any other materials permitted by the Securities
Act.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Except (a) as set forth under the
corresponding section of the Disclosure Schedules which Disclosure Schedules shall be deemed a part
hereof, or (b) as set forth in the SEC Reports (as defined below) filed after January 1, 2009 and
prior to the date of this Agreement (excluding all disclosures in any “risk factor” section and any
other prospective or forward-looking information) the Company hereby makes the representations and
warranties set forth below to the Placement Agent.
(A) Organization and Qualification. The Company has no significant subsidiaries (as
such term is defined in Rule 1-02(w) of Regulation S-X promulgated by the Commission) and does not
own any beneficial interest, directly or indirectly, in any corporation, partnership, joint venture
or other business entity. The Company is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own and use its properties
and assets and to carry on its business as currently conducted. The Company is not in violation or
default of any of the provisions of its certificate of incorporation, bylaws or other
organizational documents. The Company is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not have or reasonably be
expected to result in (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of operations, assets,
business, prospects or condition (financial or otherwise) of the Company, or (iii) a material
adverse effect on the Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no “Proceeding” (which for purposes of this Agreement shall mean any
action, claim, suit, investigation or proceeding (including, without limitation, an investigation
or partial proceeding, such as a deposition), whether commenced or threatened) has been instituted
in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail
such power and authority or qualification.
(B) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary action on the part of
the Company and no further action is required by the Company, its board of directors or its
stockholders in connection therewith other than in connection with the “Required Approvals”
(as defined in subsection 3(D) below). Each Transaction Document has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its terms except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies.
(C) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company, the issuance and sale of the Securities and the consummation by the
Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s certificate of incorporation, bylaws or other
organizational documents, or (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any
material agreement, credit facility, debt or other instrument (evidencing a Company debt or
otherwise) or other understanding to which the Company is a party or by which any property or asset
of the Company is bound or affected, or (iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or asset of the
Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Material Adverse Effect.
(D) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority or other
“Person” (defined as an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind, including, without
limitation, any Trading Market) in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than such filings as are required to be made under
applicable Federal and state securities laws (collectively, the “Required Approvals”).
(E) Issuance of the Securities; Registration. The Securities are duly authorized and,
when issued and paid for in accordance with the applicable Transaction Documents, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction Documents. The Company has
reserved from its duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to the Transaction Documents. The issuance by the Company of the Securities has
been registered under the Securities Act and all of the Securities are freely transferable and
tradable by the Purchasers without restriction (other than any restrictions arising solely from an
act or omission of a Purchaser). The Securities are being issued pursuant to the Registration
Statement and the issuance of the Securities has been registered by the Company under the
Securities Act. The Registration Statement is effective and available for the issuance of the
Securities thereunder and the Company has not received any notice that the Commission has issued or
intends to issue a stop-order with respect to the Registration Statement or that the Commission
otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened in writing to do so. The “Plan of
Distribution” section under the Registration Statement permits the issuance and sale of the
Securities hereunder. Upon receipt of the Securities, the Purchasers will have good and marketable
title to such Securities and the Securities will be freely tradable on the “Trading Market”
(which, for purposes of this Agreement shall mean the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the NYSE Alternext US, the New York Stock
Exchange, the Nasdaq National Market or the OTC Bulletin Board).
(F) Capitalization. The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than pursuant to the exercise of
employee stock options under the Company’s stock option plans, the issuance of shares of Common
Stock to employees pursuant to the
Company’s employee stock purchase plan and pursuant to the
conversion or exercise of securities exercisable, exchangeable or convertible into Common Stock
(“Common Stock Equivalents”). Except as set forth on Schedule 3(F)(i), no Person has any
right of first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents. Except as set forth on
Schedule 3(F)(i), except as a result of the purchase and sale of the Securities, there are no
outstanding options, warrants, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock
Equivalents. Except as set forth on Schedule 3(F)(i), the issuance and sale of the Securities will
not obligate the Company to issue shares of Common Stock or other securities to any Person (other
than the Purchasers) and will not result in a right of any holder of Company securities to adjust
the exercise, conversion, exchange or reset price under such securities. All of the outstanding
shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to subscribe for or
purchase securities. No further approval or authorization of any stockholder, the Board of
Directors of the Company or others is required for the issuance and sale of the Securities. There
are no stockholders agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.
(G) SEC Reports; Financial Statements. The Company has complied in all material
respects with requirements to file all reports, schedules, forms, statements and other documents
required to be filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period
as the Company was required by law to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration of any such extension.
As of their respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments.
(H) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date
of the latest audited financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or development that has had
or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has
not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission, (iii) the Company has not altered its
method of accounting, (iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity
securities to any officer, director or “Affiliate” (defined as any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 144 under the Securities
Act), except pursuant to existing Company stock option plans. The Company does not have pending
before the Commission any request for confidential treatment of information. Except for the
issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3(H), no
event, liability or development has occurred or exists with respect to the Company or its
respective business, properties, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this representation is made
that has not been publicly disclosed 1 Trading Day prior to the date that this representation is
made.
(I) Litigation. Except as set forth on Schedule 3(I), there is no action, suit,
inquiry, notice of violation, Proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its respective properties before or
by any court, arbitrator, governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect. Except as otherwise disclosed to Xxxxxx in writing, neither
the Company nor any officer or director thereof is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any current director or
officer of the Company. The Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company under the Exchange Act or the
Securities Act. None of the Company’s employees is a member of a union that relates to such
employee’s relationship with the Company, and the Company is not a party to a collective bargaining
agreement, and the Company believes that their relationships with their employees are good. No
executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of
any material term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive officer does not subject
the Company or any of its Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local
and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(J) Labor Relations. No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company which could reasonably be
expected to result in a Material Adverse Effect.
(K) Compliance. The Company is not (i) in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time or both, would
result in a default by the Company under), nor has the Company received notice of a claim that it
is in default under or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) in violation of any order of
any court, arbitrator or governmental body, or (iii) or has not been in violation of any statute,
rule or regulation of any governmental authority, including without limitation all foreign,
federal, state and local laws applicable to its business and all such laws that affect the
environment, except in each case as could not have a Material Adverse Effect.
(L) Regulatory Permits. The Company possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary
to conduct their respective businesses as described in the SEC Reports, except where the failure to
possess such permits could not have or reasonably be expected to result in a Material Adverse
Effect (“Material Permits”), and the Company has not received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(M) Title to Assets. Except as set further on Schedule 3(M), the Company has good and
marketable title in fee simple to all real property owned by them that is material to the business
of the Company and good and marketable title in all personal property owned by them that is
material to the business of the Company, in each case free and clear of all Liens (which for
purposes of this Agreement shall mean a lien, charge, security interest, encumbrance, right of
first refusal, preemptive right or other restriction), except for Liens as do not materially affect
the value of such property and do not materially interfere with the use made and proposed to be
made of such property by the Company and Liens for the payment of federal, state or other taxes,
the payment of which is neither delinquent nor subject to penalties. Any real property and
facilities held under lease by the Company are held by it under valid, subsisting and enforceable
leases of which the Company is in compliance.
(N) Patents and Trademarks. The Company has, or has rights to use, all patents,
patent applications, trademarks, trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other similar intellectual property rights necessary or
material for use in connection with their respective businesses as described in the SEC Reports and
which the failure to so have could have a Material Adverse Effect (collectively, the
“Intellectual Property Rights”). Except as set forth on Schedule 3(N), the Company has not
received a notice (written or otherwise) that the Intellectual Property Rights used by the Company
violates or infringes upon the rights of any Person. To the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights of others. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of all of their intellectual
properties, except where failure to do so could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(O) Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent and customary in
the business in which the Company is engaged, including, but not limited to, directors and officers
insurance coverage at least equal to the aggregate subscription amount under the Transaction
Documents. To the best knowledge of the Company, such insurance contracts and policies are
accurate and complete. The Company does not have any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.
(P) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports or Schedule 3(P), none of the officers or directors of the Company and, to the knowledge of
the Company, none
of the employees of the Company is presently a party to any transaction with the
Company (other than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an officer, director,
trustee or partner, other than (i) for payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii) for other employee
benefits, including stock option agreements under any stock option plan of the Company.
(Q) Xxxxxxxx-Xxxxx. The Company is in material compliance with all provisions of the
Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it as of the date hereof and of the closing date
of the Placement.
(R) Certain Fees. Except as otherwise provided in this Agreement, no brokerage or
finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section that may be due in connection with the transactions
contemplated by the Transaction Documents.
(S) Trading Market Rules. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market.
(T) Investment Company. The Company is not and immediately after receipt of payment
for the Securities, will not be, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it
will not become subject to the Investment Company Act.
(U) Registration Rights. Except as set forth on Schedule 3(U), no Person has any
right to cause the Company to effect the registration under the Securities Act of any securities of
the Company.
(V) Listing and Maintenance Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration. The Company has
not, in the 12 months preceding the date hereof, received notice from any Trading Market on which
the Common Stock is listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.
(W) Solvency. The Company does not intend to incur debts beyond its ability to pay
such debts as they mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of
any jurisdiction within one year from the Closing Date. The SEC Reports set forth as of the dates
thereof all outstanding secured and unsecured Indebtedness of the Company, or for which the Company
has commitments. For the purposes of this Agreement, “Indebtedness” shall mean (a) any
liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts
payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of Indebtedness of others, whether or not the same
are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (c) the present value of any lease payments in excess of $50,000
due under leases required to be capitalized in accordance with GAAP. The Company is not in default
with respect to any Indebtedness.
(X) Tax Status. Except for matters that would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, the Company has filed all
necessary federal, state and foreign income and franchise tax returns and has paid or accrued all
taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been
asserted or threatened against the Company.
(Y) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly,
used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by
any person acting on its behalf of which the Company is aware) which is in violation of law, or
(iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.
(Z) Accountants. The Company’s accountants are named in the Prospectus Supplement.
To the knowledge of the Company, such accountants, who the Company expects will express their
opinion with respect to the financial statements to be included in the Company’s next Annual Report
on Form 10-K, are a registered public accounting firm as required by the Securities Act.
(AA) Regulation M Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in
the stabilization or manipulation of the price of any security of the Company to facilitate the
sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities (other than for the placement agent’s placement
of the Securities), or (iii) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(BB) Approvals. The issuance and listing on the OTC Bulletin Board (the “Trading
Market”) of the Shares requires no further approvals, including but not limited to, the
approval of shareholders.
(CC) FINRA Affiliations. There are no affiliations with any FINRA member firm among
the Company’s officers, directors or, to the knowledge of the Company, any five percent (5%) or
greater stockholder of the Company, except as set forth in the Base Prospectus.
SECTION 4. [Intentionally Omitted]
SECTION 5. ENGAGEMENT TERM. Xxxxxx’x engagement hereunder will be for the period
of 45 days. The engagement may be terminated by either the Company or Xxxxxx at any time upon 10
days’ written notice. Notwithstanding anything to the contrary contained herein, the provisions
concerning confidentiality, indemnification and contribution contained herein and the Company’s
obligations contained in the Indemnification Provisions will survive any expiration or termination
of this Agreement, and the Company’s obligation to pay fees actually earned and payable and to
reimburse expenses actually incurred and reimbursable pursuant to Section 1 hereof, will survive
any expiration or termination of this Agreement. Xxxxxx agrees not to use any
confidential information concerning the Company provided to them by the Company for any purposes other than
those contemplated under this Agreement.
SECTION 6. XXXXXX INFORMATION. The Company agrees that any information or advice
rendered by Xxxxxx in connection with this engagement is for the confidential use of the Company
only in their evaluation of the Placement and, except as otherwise required by law, the Company
will not disclose or otherwise refer to the advice or information in any manner without Xxxxxx’x
prior written consent.
SECTION 7. NO FIDUCIARY RELATIONSHIP. This Agreement does not create, and shall
not be construed as creating rights enforceable by any person or entity not a party hereto, except
those entitled hereto by virtue of the indemnification provisions hereof. The Company acknowledges
and agrees that Xxxxxx is not and shall not be construed as a fiduciary of the Company and shall
have no duties or liabilities to the equity holders or the creditors of the Company or any other
person by virtue of this Agreement or the retention of Xxxxxx hereunder, all of which are hereby
expressly waived.
SECTION 8. CLOSING. The obligations of the Placement Agent and the Purchasers,
and the closing of the sale of the Securities hereunder are subject to the accuracy, when made and
on the Closing Date, of the representations and warranties on the part of the Company contained
herein, to the accuracy of the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of their obligations hereunder, and to each of
the following additional terms and conditions:
(A) No stop order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or threatened by the
Commission, and any request for additional information on the part of the Commission (to be
included in the Registration Statement, the Base Prospectus or the Prospectus Supplement or
otherwise) shall have been complied with to the reasonable satisfaction of the Placement Agent.
(B) The Placement Agent shall not have discovered and disclosed to the Company on or prior to
the Closing Date that the Registration Statement, the Base Prospectus or the Prospectus Supplement
or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion
of counsel for the Placement Agent, is material or omits to state any fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary to make the
statements therein not misleading.
(C) All corporate proceedings and other legal matters incident to the authorization, form,
execution, delivery and validity of each of this Agreement, the Securities, the Registration
Statement, the Base Prospectus and the Prospectus Supplement and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agent, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to pass upon such
matters.
(D) The Placement Agent shall have received from outside counsel to the Company such counsel’s
written opinion, addressed to the Placement Agent and the Purchasers dated as of the Closing Date,
in form and substance reasonably satisfactory to the Placement Agent, which opinion shall include a
“10b-5” representation from such counsel.
(E) The Company shall not have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Base Prospectus, any loss or interference
with its business from fire, explosion, flood, terrorist act or other calamity, whether or not
covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth in or contemplated by the Base Prospectus and (ii) since such date
there shall not have been any change in the capital stock or long-term debt of the Company or any
change, or any development involving a prospective change, in or affecting the business, general
affairs, management, financial position, stockholders’ equity or results of operations of the
Company, otherwise than as set forth in or contemplated by the Base Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is, in the judgment of the Placement
Agent, so material and adverse as to make it impracticable or inadvisable to proceed with the sale
or delivery of the Securities on the terms and in the manner contemplated by the Base Prospectus,
the Time of Sale Prospectus, if any, and the Prospectus Supplement.
(F) The Common Stock is registered under the Exchange Act and, as of the Closing Date, the
Shares shall be listed and admitted and authorized for trading on the Trading Market, and
satisfactory evidence of such actions shall have been provided to the Placement Agent. The Company
shall have taken no action designed to, or likely to have the effect of terminating the
registration of the Common Stock under the Exchange Act or delisting or suspending from trading the
Common Stock from the Trading Market, nor has the Company received any information suggesting that
the Commission or the Trading Market is contemplating terminating such registration or listing.
(G) Subsequent to the execution and delivery of this Agreement, there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock Exchange, the
Nasdaq National Market or the NYSE Alternext US or in the over-the-counter market, or trading in
any securities of the Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum or maximum prices or maximum ranges for prices shall have been established on
any such exchange or such market by the Commission, by such exchange or by any other regulatory
body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been
declared by federal or state authorities or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, (iii) the United
States shall have become engaged in hostilities in which it is not currently engaged, the subject
of an act of terrorism, there shall have been an escalation in hostilities involving the United
States, or there shall have been a declaration of a national emergency or war by the United States,
or (iv) there shall have occurred any other calamity or crisis or any change in general economic,
political or financial conditions in the United States or elsewhere, if the effect of any such
event in clause (iii) or (iv) makes it, in the sole judgment of the Placement Agent, impracticable
or inadvisable to proceed with the sale or delivery of the Securities on the terms and in the
manner contemplated by the Base Prospectus and the Prospectus Supplement.
(H) No action shall have been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities or materially and adversely affect or potentially
and adversely affect the business or operations of the Company; and no injunction, restraining
order or order of any other nature by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance or sale of the Securities
or materially and adversely affect or potentially and adversely affect the business or operations
of the Company.
(I) The Company shall have prepared and filed with the Commission a Current Report on Form 8-K
with respect to the Placement, including as an exhibit thereto this Agreement.
(J) The Company shall have entered into a subscription agreement with each of the Purchasers
and such agreements shall be in full force and effect and shall contain representations and
warranties of the Company as agreed between the Company and the Purchasers.
(K) FINRA shall have raised no objection to the fairness and reasonableness of the terms and
arrangements of this Agreement. In addition, the Company shall, if requested by the Placement
Agent, make or authorize Placement Agent’s counsel to make on the Company’s behalf, an Issuer
Filing with FINRA pursuant to FINRA Rule 5110 with respect to the Registration Statement and pay
all filing fees required in connection therewith.
(L) Prior to the Closing Date, the Company shall have furnished to the Placement Agent such
further information, certificates and documents as the Placement Agent may reasonably request.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Placement Agent.
SECTION 9. INDEMNIFICATION PROVISIONS. (A) To the extent permitted by law, the
Company will indemnify Xxxxxx and its affiliates, stockholders, directors, officers, employees and
controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) against all losses, claims, damages, expenses and liabilities, as the same are
incurred (including the reasonable fees and expenses of counsel), relating to or arising out of its
activities hereunder or pursuant to this engagement letter, except to the extent that any losses,
claims, damages, expenses or liabilities (or actions in respect thereof) are found in a final
judgment (not subject to appeal) by a court of law to have resulted primarily and directly from
Xxxxxx’x willful misconduct or gross negligence in performing the services described herein.
(B) Promptly after receipt by Xxxxxx of notice of any claim or the commencement of any action
or proceeding with respect to which Xxxxxx is entitled to indemnity hereunder, Xxxxxx will notify
the Company in writing of such claim or of the commencement of such action or proceeding, and the
Company will assume the defense of such action or proceeding and will employ counsel reasonably
satisfactory to Xxxxxx and will pay the fees and expenses of such counsel. Notwithstanding the
preceding sentence, Xxxxxx will be entitled to employ counsel separate from counsel for the Company
and from any other party in such action if counsel for Xxxxxx reasonably determines that it would
be inappropriate under the applicable rules of professional responsibility for the same counsel to
represent both the Company and Xxxxxx. In such event, the reasonable fees and disbursements of no
more than one such separate counsel will be paid by the Company. The Company will have the
exclusive right to settle the claim or proceeding provided that the Company will not settle any
such claim, action or proceeding without the prior written consent of Xxxxxx, which will not be
unreasonably withheld.
(C) The Company agrees to notify Xxxxxx promptly of the assertion against it or any other
person of any claim or the commencement of any action or proceeding relating to a transaction
contemplated by this engagement letter.
(D) If for any reason the foregoing indemnity is unavailable to Xxxxxx or insufficient to hold
Xxxxxx harmless, then the Company shall contribute to the amount paid or payable by Xxxxxx as a
result of such losses, claims, damages or liabilities in such proportion as is appropriate to
reflect not only the relative benefits received by the Company on the one hand and Xxxxxx on the
other, but also the relative fault of the Company on the one hand and Xxxxxx on the other that
resulted in such losses, claims, damages or liabilities, as well as any relevant equitable
considerations. The amounts paid or payable by a party in respect of losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other fees and expenses
incurred in defending any litigation, proceeding or other action or claim. Notwithstanding the
provisions hereof, Xxxxxx’x share of the liability hereunder shall
not be in excess of the amount of fees actually received, or to be received, by Xxxxxx under this engagement letter (excluding any
amounts received as reimbursement of expenses incurred by Xxxxxx).
(E) These indemnification provisions shall remain in full force and effect whether or not the
transaction contemplated by this engagement letter is completed and shall survive the termination
of this engagement letter, and shall be in addition to any liability that the Company might
otherwise have to any indemnified party under this engagement letter or otherwise.
SECTION 10. GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made and to be
performed entirely in such State. This Agreement may not be assigned by either party without the
prior written consent of the other party. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and permitted assigns. Any right to
trial by jury with respect to any dispute arising under this Agreement or any transaction or
conduct in connection herewith is waived. Any dispute arising under this Agreement may be brought
into the courts of the State of New York or into the Federal Court located in New York, New York
and, by execution and delivery of this Agreement, the Company hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of aforesaid courts. Each
party hereto hereby irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by delivering a copy thereof via overnight delivery
(with evidence of delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. If either party shall commence an action or proceeding to
enforce any provisions of a Transaction Document, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
SECTION 11. ENTIRE AGREEMENT/MISC. This Agreement (including the attached
Indemnification Provisions) embodies the entire agreement and understanding between the parties
hereto, and supersedes all prior agreements and understandings, relating to the subject matter
hereof. If any provision of this Agreement is determined to be invalid or unenforceable in any
respect, such determination will not affect such provision in any other respect or any other
provision of this Agreement, which will remain in full force and effect. This Agreement may not be
amended or otherwise modified or waived except by an instrument in writing signed by both Xxxxxx
and the Company. The representations, warranties, agreements and covenants contained herein shall
survive the closing of the Placement and delivery and/or exercise of the Securities, as applicable.
This Agreement may be executed in two or more counterparts, all of which when taken together shall
be considered one and the same agreement and shall become effective when counterparts have been signed by each party
and delivered to the other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile transmission or a .pdf
format file, such signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if such facsimile or
..pdf signature page were an original thereof.
SECTION 12. NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified on the signature pages attached hereto
prior to 6:30 p.m. (New York City time) on a business day, (b) the next business day after the date
of transmission, if such notice or communication is delivered via facsimile at the facsimile number
on the signature pages attached hereto on a day that is not a business day or later than 6:30 p.m.
(New York City time) on any business day, (c)
the business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages hereto.
* * *
Please confirm that the foregoing correctly sets forth our agreement by signing and returning
to Xxxxxx a copy of this Agreement.
| Very truly yours, XXXXXX & XXXXXXX, LLC |
||||
| By: | /s/ Xxxx Xxxxx | |||
| Name: | Xxxx Xxxxx | |||
| Title: | Senior Managing Director | |||
| Address for notice:
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx Xxx Xxxx, XX, 00000 Fax (000) 000-0000 Attention: General Counsel |
||||
Accepted and Agreed to as of
the date first written above:
the date first written above:
EMISPHERE TECHNOLOGIES, INC.
| By: | /s/ X. X. Xxxxxx
Title: Chief Financial Officer |
Address for notice: |
||
Cedar Knolls, NJ 07927 |
||
Fax (000) 000-0000 |
||
Attention: CFO |
