CRITICAL THERAPEUTICS, INC. PLACEMENT AGENT AGREEMENT
Exhibit 1.1
7,455,731
CRITICAL THERAPEUTICS, INC.
October 26, 2006
LAZARD CAPITAL MARKETS LLC
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
1. Introduction. Critical Therapeutics, Inc., a Delaware corporation (the
“Company”), proposes to issue and sell to the purchasers, pursuant to the terms of this Placement
Agent Agreement (this “Agreement”) and the Subscription Agreements in the form of Exhibit A
attached hereto (the “Subscription Agreements”) entered into with the purchasers identified therein
(each a “Purchaser” and collectively, the
“Purchasers”), up to an aggregate of 7,455,731 units (the
“Units”) with each Unit consisting of (i) one share of common stock, $0.001 par value per share
(the “Common Stock”) of the Company and
(ii) one warrant to purchase 0.5 shares of Common Stock
(the “Warrants”). The terms and conditions of the Warrants are set forth in the form of
Exhibit B attached hereto. The Company hereby confirms its agreement with Lazard Capital
Markets LLC to act as Placement Agent (“LCM” or the “Placement Agent”) in accordance with the terms
and conditions hereof.
2. Agreement to Act as Placement Agent; Placement of Securities. On the
basis of the representations, warranties and agreements of the Company herein contained, and
subject to all the terms and conditions of this Agreement:
2.1 The Company hereby authorizes the Placement Agent to act as its exclusive
agent to solicit offers for the purchase of all or part of the Units from the Company in
connection with the proposed offering of the Units (the “Offering”). Until the Closing Date (as
defined in Section 4 hereof), the Company shall not, without the prior written consent
of the Placement Agent, solicit or accept offers to purchase Units otherwise than through the
Placement Agent.
2.2 The Placement Agent agrees, as agent of the Company, to use its best efforts
to solicit offers to purchase the Units from the Company on the terms and subject to the
conditions set forth in the Prospectus (as defined below). The Placement Agent shall use
commercially reasonable efforts to assist the Company in obtaining performance by each Purchaser
whose offer to purchase Units has been solicited by the Placement Agent and accepted by the
Company, but the Placement Agent shall not, except as otherwise provided
in this Agreement, be obligated to disclose the identity of any potential purchaser or have
any liability to the Company in the event any such purchase is not consummated for any reason.
Under no circumstances will the Placement Agent be obligated to underwrite or purchase any Units
for its own account and, in soliciting purchases of Units, the Placement Agent shall act solely
as the Company’s agent and not as principal. Notwithstanding the foregoing and except as
otherwise provided in Section 2.3, it is understood and agreed that the Placement Agent
(or its affiliates) may, solely at its discretion and without any obligation to do so, purchase
Units as principal.
2.3 Subject to the provisions of this Section 2, offers for the purchase
of Units may be solicited by the Placement Agent as agent for the Company at such times and in
such amounts as the Placement Agent deems advisable. The Placement Agent shall communicate to
the Company, orally or in writing, each reasonable offer to purchase Units received by it as
agent of the Company. The Company shall have the sole right to accept offers to purchase the
Units and may reject any such offer, in whole or in part. The Placement Agent shall have the
right, in its discretion reasonably exercised, without notice to the Company, to reject any
offer to purchase Units received by it, in whole or in part, and any such rejection shall not be
deemed a breach of its agreement contained herein.
2.4 The Units are being sold to the Purchasers at a price of $ per Unit. The
purchases of the Units by the Purchasers shall be evidenced by the execution of Subscription
Agreements by each of the Purchasers and the Company.
2.5 As compensation for services rendered, on the Closing Date (as defined in
Section 4 hereof), the Company shall pay to the Placement Agent by wire transfer of
immediately available funds to an account or accounts designated by the Placement Agent, an
aggregate amount equal to the sum of (i) six percent (6%) of the gross proceeds received by the
Company from the sale of the Units (other than the 3% Purchaser Units); and (ii) three percent
(3%) of up to $15,000,000 of the gross proceeds received by the Company from the sale of the
Units (the “3% Purchaser Units”) to any Purchasers listed on Schedule C on such Closing
Date. The Placement Agent shall not receive any compensation with respect to any proceeds from
the exercise of any Warrants.
2.6 No Units which the Company has agreed to sell pursuant to this Agreement
shall be deemed to have been purchased and paid for, or sold by the Company, until such Units
shall have been delivered to the Purchaser thereof against payment by such Purchaser. If the
Company shall default in its obligations to deliver Units to a Purchaser whose offer it has
accepted, the Company shall indemnify and hold the Placement Agent harmless against any loss,
claim, damage or expense arising from or as a result of such default by the Company in
accordance with the procedures set forth in Section 8(c) herein.
3. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Placement Agent and the Purchasers that:
(a) The Company has prepared and filed in conformity with the requirements of
the Securities Act of 1933, as amended (the “Securities Act”), and published rules and
regulations thereunder (the “Rules and Regulations”) adopted by the Securities and Exchange
Commission (the “Commission”) a “shelf” Registration Statement (as hereinafter defined) on
Form S-3 (File No. 333-136910), which became effective as of September 11, 2006 (the
“Effective Date”), including a base prospectus relating to the
securities registered pursuant to such Registration Statement (the “Base Prospectus”),
and such amendments and supplements thereto as may have been required to the date of this
Agreement. The term “Registration Statement” as used in this Agreement means the
registration statement (including all exhibits, financial schedules and all documents and
information deemed to be a part of the Registration Statement pursuant to Rule 430A under
the Securities Act), as amended and/or supplemented to the date of this Agreement,
including, the Base Prospectus. The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the Prospectus has been issued
by the Commission and no proceedings for that purpose have been instituted or, to the
knowledge of the Company, are threatened by the Commission. The Company, if required by the
Rules and Regulations of the Commission, will file the Prospectus (as defined below) with
the Commission pursuant to Rule 424(b) of the Rules and Regulations. The term “Prospectus”
as used in this Agreement means the final Prospectus, including the Base Prospectus and the
final prospectus supplement, in the form in which it is to be filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations. Any preliminary prospectus or
prospectus subject to completion included in the Registration Statement or filed with the
Commission pursuant to Rule 424 under the Securities Act is hereafter called a “Preliminary
Prospectus.” Any reference herein to the Registration Statement, any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 that were filed under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), on or before the last to occur of the
Effective Date, the date of the Preliminary Prospectus, or the date of the Prospectus, and
any reference herein to the terms “amend,” “amendment,” or “supplement” with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include (i) the filing of any document under the Exchange Act after the
Effective Date, the date of such Preliminary Prospectus or the date of the Prospectus, as
the case may be, that is incorporated by reference and (ii) any such document so filed.
(b) As of the Applicable Time (as defined below) and as of the Closing Date,
neither (i) the Pricing Prospectus (as defined below) and the information included on
Schedule A hereto, all considered together (collectively, the “General Disclosure
Package”), nor (ii) the individual Limited Use Free Writing Prospectuses (as defined below),
if any, issued at or prior to the Applicable Time when considered together with the General
Disclosure Package, included or will include, any untrue statement of a material fact or
omitted or as of the Closing Date will omit, to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no representations or warranties
as to information contained in or omitted from the General Disclosure Package or any Issuer
Free Writing Prospectus, in reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement Agent’s Information (as
defined in Section 17). As used in this paragraph (b) and elsewhere in this
Agreement:
“Applicable
Time” means 3:55 P.M., New York time, on the date of this Agreement.
“Pricing Prospectus” means the Preliminary Prospectus, if any, and the Base Prospectus, each
as amended and supplemented immediately prior to the Applicable Time, including any document
incorporated by reference therein and any prospectus supplement deemed to be a part thereof.
“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 under the Securities Act relating to the Units in the form filed or required to be
filed with the Commission or, if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g) under the Securities Act.
“Limited Use Free Writing Prospectuses” means any Issuer Free Writing Prospectus that is not
a General Use Free Writing Prospectus.
(c) No order preventing or suspending the use of any Preliminary Prospectus,
any Issuer Free Writing Prospectus or the Prospectus relating to the Offering has been
issued by the Commission, and no proceeding for that purpose or pursuant to Section 8A of
the Securities Act has been instituted or, to the best of the Company’s knowledge, is
threatened by the Commission, and each Preliminary Prospectus, if any, at the time of filing
thereof, conformed in all material respects to the requirements of the Securities Act and
the Rules and Regulations, and unless otherwise corrected, modified or supplemented did not
contain an 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, in the light of the
circumstances under which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to information contained in or omitted
from any Preliminary Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agent specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement Agent’s
Information (as defined in Section 17).
(d) At the time the Registration Statement became effective, at the date of
this Agreement and at the Closing Date, the Registration Statement conformed and will
conform in all material respects to the requirements of the Securities Act and the Rules and
Regulations and did not and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements
therein not misleading; the Prospectus, at the time the Prospectus was issued and at the
Closing Date, conformed and will conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and did not and will not contain an 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; provided, however, that the foregoing representations and warranties in this
paragraph (d) shall not apply to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agent specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement Agent’s
Information (as defined in Section 17).
(e) Each Issuer Free Writing Prospectus, if any, as of its issue date and at
all subsequent times through the completion of the Offering or until the occurrence of an
event or development with respect to which the Company notified or notifies the
Placement Agent as described in Section 5(e), did not, does not and will not include
any information that conflicted, conflicts or will conflict with the information contained
in the Registration Statement, Pricing Prospectus or the Prospectus, including any document
incorporated by reference therein and any prospectus supplement deemed to be a part thereof
that has not been superseded or modified, or include an untrue statement of a material fact
or omitted or would omit 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, at the subsequent time, not misleading. The foregoing sentence does not apply to
statements in or omissions from any Issuer Free Writing Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by the Placement Agent
specifically for inclusion therein, which information the parties hereto agree is limited to
the Placement Agent’s Information (as defined in Section 17).
(f) The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be, conformed in all
material respects to the requirements of the Securities Act or the Exchange Act, as then
applicable, and the rules and regulations of the Commission thereunder and none of such
documents contained any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and any further documents so
filed and incorporated by reference in the Prospectus, when such documents become effective
or are filed with the Commission, as the case may be, will conform in all material respects
to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein in light of the circumstances under which they were made not
misleading.
(g) The Company has not, directly or indirectly, distributed and will not
distribute any offering material in connection with the Offering other than any Preliminary
Prospectus, the Prospectus, the documents incorporated by reference therein and other
materials, if any, permitted under the Securities Act and consistent with Section
5(b) below. The Company will file with the Commission all Issuer Free Writing
Prospectuses, if any, in the time and manner required under Rules 163(b)(2) and 433(d) under
the Securities Act, as the case may be.
(h) The Company and the Subsidiary (as defined below) have been duly
incorporated or organized, as applicable, and are validly existing as corporations or other
legal entities in good standing (or the foreign equivalent thereof) under the laws of their
respective jurisdictions of incorporation or organization, as the case may be. The Company
and the Subsidiary are duly qualified to do business and are in good standing as foreign
corporations or other legal entities in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective businesses require such
qualification and have all corporate power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are engaged, except where
the failure to so qualify or have such power or authority (i) would not have,
singularly or in the aggregate, a material adverse effect on the condition (financial
or otherwise), results of operations, assets, business or prospects of the Company and the
Subsidiary, taken as a whole, or (ii) impair in any material respect the ability of the
Company to perform its obligations under this Agreement or to consummate any transactions
contemplated by the Agreement, the General Disclosure Package or the Prospectus (any such
effect as described in clauses (i) or (ii), a “Material Adverse Effect”). The Company owns
or controls, directly or indirectly, only the following corporations, partnerships, limited
liability partnerships, limited liability companies, associations or other entities: CTI
Securities Corp., a Massachusetts securities corporation and wholly-owned subsidiary of the
Company (the “Subsidiary”).
(i) The Company has the full right, power and authority to enter into this
Agreement, each of the Subscription Agreements and that certain Escrow Agreement (the
“Escrow Agreement”) dated as of the date hereof by and among the Company, the Placement
Agent and the escrow agent named therein, and to perform and to discharge its obligations
hereunder and thereunder; and each of this Agreement and each of the Subscription Agreements
has been duly authorized, executed and delivered by the Company, and constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms.
(j) The shares of Common Stock to be issued and sold by the Company to the
Purchasers under the Subscription Agreements and the shares of Common Stock issuable upon
exercise of the Warrants (the “Warrant Shares”) have been duly and validly authorized and
the Common Stock, when issued and delivered against payment therefor as provided in the
Subscription Agreements and the Warrant Shares, when issued and delivered against payment
therefor as provided in the Warrants, will be duly and validly issued, fully paid and
nonassessable and free of any preemptive or similar rights and will conform to the
description thereof contained in the General Disclosure Package and the Prospectus.
(k) The Company has an authorized capitalization as set forth in the Pricing
Prospectus, and all of the issued shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable, have been issued in
compliance with federal and state securities laws, and conform to the description thereof
contained in the General Disclosure Package and the Prospectus. As of October 24, 2006,
there were 34,474,799 shares of Common Stock issued and outstanding and zero shares of
Preferred Stock, par value $0.001 of the Company issued and outstanding and 10,374,276
shares of Common Stock were issuable upon the exercise of all options, warrants and
convertible securities outstanding as of such date. Since such date, the Company has not
issued any securities, other than Common Stock of the Company issued pursuant to the
exercise of stock options previously outstanding under the Company’s stock option plans or
the issuance of restricted Common Stock pursuant to employee stock purchase plans. None of
the outstanding shares of Common Stock was issued in violation of any preemptive rights,
rights of first refusal or other similar rights to subscribe for or purchase securities of
the Company. There are no authorized or outstanding shares of capital stock, options,
warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity
or debt securities convertible into or exchangeable or exercisable for, any capital stock of
the Company or the Subsidiary other
than those described above or accurately described in the General Disclosure Package.
The description of the Company’s stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder, as described in the
General Disclosure Package and the Prospectus, accurately and fairly present the information
required to be shown with respect to such plans, arrangements, options and rights.
(l) All the outstanding shares of capital stock of the Subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable and, except to the
extent set forth in the General Disclosure Package or the Prospectus, are owned by the
Company directly free and clear of any claim, lien, encumbrance, security interest,
restriction upon voting or transfer or any other claim of any third party.
(m) The execution and delivery of this Agreement, the Subscription Agreements
and the Escrow Agreement by the Company, the issue and sale of the Units by the Company and
the consummation of the transactions contemplated hereby and thereby will not (with or
without notice or lapse of time or both) (i) conflict with or result in a breach or
violation of any of the terms or provisions of, constitute a default under, give rise to any
right of termination or other right or the cancellation or acceleration of any right or
obligation or loss of a benefit under, or give rise to the creation or imposition of any
lien, encumbrance, security interest, claim or charge upon any property or assets of the
Company or the Subsidiary pursuant to any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or the Subsidiary is a party or by
which the Company or the Subsidiary is bound or to which any of the property or assets of
the Company or the Subsidiary is subject, (ii) result in any violation of the provisions of
the charter or by-laws (or analogous governing instruments, as applicable) of the Company or
the Subsidiary or (iii) any law, statute, rule, regulation, judgment, order or decree of any
court or governmental agency or body, domestic or foreign, having jurisdiction over the
Company or the Subsidiary or any of their properties or assets, except with respect to
clauses (i) and (iii) where, any such conflict, breach, violation, default or right would
not reasonably be expected to have a Material Adverse Effect.
(n) Except for the registration of the securities offered in the Offering
under the Securities Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state or foreign
securities laws, the National Association of Securities Dealers, Inc. and the Nasdaq Global
Market (the “Nasdaq GM”) in connection with the offering and sale of the Units by the
Company, no consent, approval, authorization or order of, or filing, qualification or
registration with, any court or governmental agency or body, foreign or domestic, which has
not been made, obtained or taken and is not in full force and effect, is required for the
execution, delivery and performance of this Agreement, the Subscription Agreements and the
Escrow Agreement by the Company, the offer or sale of the Units or the consummation of the
transactions contemplated hereby or thereby.
(o) To the Company’s knowledge, Deloitte & Touche LLP, who have certified
certain financial statements and related schedules included or incorporated by reference in
the Registration Statement, the General Disclosure Package and the Prospectus, and have
audited the Company’s internal control over financial reporting and
management’s assessment thereof, is an independent registered public accounting firm as
required by the Securities Act and the Rules and Regulations and the Public Company
Accounting Oversight Board (United States) (the “PCAOB”). Except as disclosed in the
Registration Statement and as pre-approved in accordance with the requirements set forth in
Section 10A of the Exchange Act, Deloitte & Touche LLP has not been engaged by the Company
to perform any “ prohibited activities” (as defined in Section 10A of the Exchange Act).
(p) The financial statements, together with the related notes and schedules,
included or incorporated by reference in the General Disclosure Package, the Prospectus and
in the Registration Statement fairly present the financial position and the results of
operations and changes in financial position of the Company and its consolidated subsidiary
at the respective dates or for the respective periods therein specified. Such statements
and related notes and schedules have been prepared in accordance with the generally accepted
accounting principles in the United States (“GAAP”) applied on a consistent basis throughout
the periods involved except as may be set forth in the related notes included or
incorporated by reference in the General Disclosure Package (provided that non-year-end
financial statements are subject to normal recurring year-end audit adjustments and do not
contain all footnotes required by GAAP). The financial statements, together with the
related notes and schedules, included or incorporated by reference in the General Disclosure
Package and the Prospectus comply in all material respects with the Securities Act, the
Exchange Act, and the Rules and Regulations and the rules and regulations under the Exchange
Act. No other financial statements or supporting schedules or exhibits are required by the
Securities Act or the Rules and Regulations to be described, or included or incorporated by
reference in the Registration Statement, the General Disclosure Package or the Prospectus.
There is no pro forma or as adjusted financial information that is required to be included
in the Registration Statement, the General Disclosure Package, or the Prospectus or a
document incorporated by reference therein in accordance with the Securities Act and the
Rules and Regulations which has not been included or incorporated as so required.
(q) Neither the Company nor the Subsidiary has sustained, since the date of
the latest unaudited financial statements included or incorporated by reference in the
General Disclosure Package, any material loss or interference with its business from fire,
explosion, flood 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 or
contemplated in the General Disclosure Package; and, since such date, there has not been any
change in the capital stock (other than as a result of the grant or exercise of stock
options or the offer to sell shares of Common Stock and award shares of restricted Common
Stock pursuant to the Company stock plans in the ordinary course) or long-term debt of the
Company or the Subsidiary, or any Material Adverse Effect.
(r) Except as set forth in the General Disclosure Package, there is no legal
or governmental action, suit, claim or proceeding pending to which the Company or the
Subsidiary is a party or of which any property or assets of the Company or the Subsidiary is
the subject, including any proceeding before the United States Food and Drug Administration
(“FDA”) or comparable federal, state, local or foreign governmental bodies (it being
understood that the interaction between the Company and the FDA and
such comparable governmental bodies relating to the clinical development and product
approval process shall not be deemed proceedings for purposes of this representation), which
is required to be described in the Registration Statement, the General Disclosure Package or
the Prospectus that is not described therein, and which, singularly or in the aggregate,
would reasonably be expected to have a Material Adverse Effect or prevent the consummation
of the transactions contemplated hereby; and to the best of the Company’s knowledge, no such
proceedings are threatened or contemplated by governmental authorities or threatened by
others. The Company is in compliance with all applicable federal, state, local and foreign
laws, regulations, orders and decrees governing its business as prescribed by the FDA, or
any other federal, state or foreign agencies or bodies engaged in the regulation of
pharmaceuticals or biohazardous substances or materials, except where noncompliance would
not, singly or in the aggregate, have a Material Adverse Effect. All preclinical and
clinical studies conducted by or on behalf of the Company to support approval for
commercialization of the Company’s products have been conducted by the Company, or to the
Company’s knowledge by third parties, in compliance with all applicable federal, state or
foreign laws, rules, orders and regulations, except for such failure or failures to be in
compliance as could not reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect.
(s) Neither the Company nor the Subsidiary is in (i) violation of its charter
or by-laws (or analogous governing instrument, as applicable), (ii) default in any respect,
and no event has occurred which, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement 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 or (iii) violation in any respect of any law, ordinance, governmental
rule, regulation or court order, decree or judgment to which it or its property or assets
may be subject except, in the case of clauses (ii) and (iii) of this paragraph (s), for any
violations or defaults which, singularly or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
(t) The Company and the Subsidiary possess all licenses, certificates,
authorizations and permits issued by, and have made all declarations and filings with, the
appropriate local, state, federal or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of their respective properties or the conduct of
their respective businesses as described in the General Disclosure Package and the
Prospectus (collectively, the “Governmental Permits”) except where any failures to possess
or make the same, singularly or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. The Company and the Subsidiary are in material compliance with all
such Governmental Permits; all such Governmental Permits are valid and in full force and
effect, except where the validity or failure to be in full force and effect would not,
singularly or in the aggregate, reasonably be expected to have a Material Adverse Effect.
All such Governmental Permits are free and clear of any restriction or condition that are in
addition to, or materially different from those normally applicable to similar licenses,
certificates, authorizations and permits. Neither the Company nor the Subsidiary has
received written notification of any revocation or modification (or proceedings related
thereto) of any such Governmental Permit. The
studies, tests and preclinical or clinical trials, if any, conducted by or on behalf of
the Company that are described in the General Disclosure Package and the Prospectus (the
“Company Studies and Trials”) were and, if still pending, are being, conducted in all
material respects in accordance with experimental protocols, procedures and controls
pursuant to, where applicable, accepted professional scientific standards; the descriptions
of the results of the Company Studies and Trials contained in the General Disclosure Package
and Prospectus are accurate in all material respects; and the Company has not received any
notices or correspondence with the FDA or any foreign, state or local governmental body
exercising comparable authority requiring the termination, suspension or material
modification of any Company Studies or Trials that termination, suspension or material
modification would reasonably be expected to have a Material Adverse Effect.
(u) Neither the Company nor the Subsidiary is or, after giving effect to the
offering of the Units and the application of the proceeds thereof as described in the
General Disclosure Package and the Prospectus, will become an “investment company” within
the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission thereunder.
(v) Neither the Company, the Subsidiary nor, to the Company’s knowledge, any
of the Company’s or the Subsidiary’s officers, directors or affiliates has taken or will
take, directly or indirectly, any action designed or intended to stabilize or manipulate the
price of any security of the Company, or that caused or resulted in, or that would in the
future reasonably be expected to cause or result in, stabilization or manipulation of the
price of any security of the Company.
(w) The Company and the Subsidiary own or possess the right to use all
patents, trademarks, trademark registrations, service marks, service ▇▇▇▇ registrations,
trade names, copyrights, licenses, inventions, software, databases, know-how, Internet
domain names, trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures, and other intellectual property
(collectively, “Intellectual Property”) necessary to carry on their respective businesses as
currently conducted, and as proposed to be conducted and described in the General Disclosure
Package and the Prospectus, and the Company is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company and the Subsidiary with respect
to the foregoing except for those that would not reasonably be expected to have a Material
Adverse Effect. The Intellectual Property licenses described in the General Disclosure
Package and the Prospectus are valid, binding upon, and enforceable by or against the
parties thereto in accordance to its terms. The Company and the Subsidiary have complied in
all material respects with, and are not in breach nor have received any asserted or
threatened claim of breach of, any such Intellectual Property license, and the Company has
no knowledge of any breach or anticipated breach by any other person to any material
Intellectual Property license. The Company’s and the Subsidiary’s businesses as now
conducted and as proposed to be conducted do not infringe or conflict with any patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses or other
Intellectual Property or franchise right of any person. The Company has not received any
written claim against the Company or the Subsidiary alleging the infringement by the Company
or the Subsidiary of any patent, trademark,
service ▇▇▇▇, trade name, copyright, trade secret, license in or other intellectual
property right or franchise right of any person which would reasonably be expected to have a
Material Adverse Effect. The Company and the Subsidiary have taken commercially reasonable
steps to protect, maintain and safeguard their rights in all Intellectual Property,
including the execution of appropriate nondisclosure and confidentiality agreements.
To the knowledge of the Company, all patent applications filed by the Company and the
Subsidiary for all inventions owned by or licensed to the Company and the Subsidiary that
are material to the conduct of the businesses of the Company and the Subsidiary, each in the
manner in which it has been and is contemplated to be conducted as described in the
Prospectus, have been duly and properly filed or caused to be filed with the United States
Patent and Trademark Office (“PTO”) and, in some cases, applicable foreign and international
patent authorities. To the knowledge of the Company, assignments for all patents and patent
applications, including, without limitation any continuations, divisionals,
continuations-in-part, renewals, reissues and applications for registration, to the extent
such assignments are required for any such filing, of any of the foregoing owned by or
licensed to the Company and the Subsidiary (collectively, the “Patents”) that are material
to the conduct of the businesses of the Company and the Subsidiary each in the manner in
which it has been and is contemplated to be conducted as described in the Prospectus, have
been properly executed and recorded for each named inventor; except where such failure would
not be reasonably be expected to have a Material Adverse Effect. To the knowledge of the
Company, all printed publications and patent references material to the patentability of the
inventions claimed in the Patents have been disclosed to those patent offices so requiring.
To the knowledge of the Company, each of the Company, the Subsidiary, and their assignors or
licensors, as applicable, has met its duty of candor and good faith to the PTO for the
Patents. To the knowledge of the Company, no material misrepresentation has been made to
any patent office in connection with the Patents. The Company is not aware of any facts
material to a determination of patentability regarding the Patents of which it was aware
that was not disclosed to the PTO or other applicable patent office. The Company is not
aware of any facts not disclosed to the PTO or other applicable patent office that would
preclude the patentability, validity or enforceability of any patent or patent application
in the Patents. The Company has no knowledge of any facts that would preclude the Company
or any licensors, as applicable, from having clear title to the patents and patent
applications in the Patents.
(x) The Company and the Subsidiary have good and marketable title in fee
simple to, or have valid rights to lease or otherwise use, all items of real or personal
property that are material to the business of the Company and the Subsidiary, taken as a
whole, in each case free and clear of all liens, encumbrances, security interests, claims
and defects that do not, singularly or in the aggregate, 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 or the Subsidiary; and all of the leases and subleases material to
the business of the Company and the Subsidiary, and under which the Company or the
Subsidiary holds properties described in the General Disclosure Package and the Prospectus,
are in full force and effect, and neither the Company nor the Subsidiary has received any
written notice of any material claim of any sort that has been asserted by anyone adverse to
the rights of the Company or the Subsidiary under any of
the leases or subleases mentioned above, or affecting or questioning the rights of the
Company or the Subsidiary to the continued possession of the leased or subleased premises
under any such lease or sublease.
(y) No labor dispute with the employees of the Company or the Subsidiary
exists or, to the best of the Company’s knowledge, is imminent, and the Company has not
received written notice of any existing or imminent labor disturbance by the employees of
any of its or the Subsidiary’s principal suppliers, manufacturers, customers or contractors,
that would reasonably be expected, singularly or in the aggregate, to have a Material
Adverse Effect, except as described in the General Disclosure Package. The Company is not
aware that any key employee or significant group of employees of the Company or the
Subsidiary plans to terminate employment with the Company or any such Subsidiary, except as
disclosed in the General Disclosure Package.
(z) No “prohibited transaction” (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986,
as amended from time to time (the “Code”)) or “accumulated funding deficiency” (as defined
in Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other
than events with respect to which the thirty (30)-day notice requirement under Section 4043
of ERISA has been waived) has occurred or would reasonably be expected to occur with respect
to any employee benefit plan of the Company or the Subsidiary that would, singularly or in
the aggregate, have a Material Adverse Effect. Each employee benefit plan of the Company or
the Subsidiary is in compliance in all material respects with applicable law, including
ERISA and the Code. The Company and the Subsidiary have not incurred and would not
reasonably be expected to incur liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any pension plan (as defined in ERISA). Each pension
plan for which the Company or the Subsidiary would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified, and nothing has occurred,
whether by action or by failure to act, which could, singularly or in the aggregate, cause
the loss of such qualification.
(aa) The Company and the Subsidiary are in compliance with all foreign,
federal, state and local rules, laws and regulations relating to the use, treatment, storage
and disposal of hazardous or toxic substances or waste and protection of health and safety
or the environment which are applicable to their businesses (“Environmental Laws”), except
where the failure to comply would not, singularly or in the aggregate, reasonably be
expected to have a Material Adverse Effect. There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission, or other release of any
kind of toxic or other wastes or other hazardous substances by, due to, or caused by the
Company or the Subsidiary (or, to the Company’s knowledge, any other entity for whose acts
or omissions the Company or the Subsidiary is or may otherwise be liable) upon any of the
property now or previously leased by the Company or the Subsidiary in violation of any law,
statute, ordinance, rule, regulation, order, judgment, decree or permit or which would,
under any law, statute, ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability, except for any
violation or liability which would not have, singularly or in the aggregate with all
such violations and liabilities, a Material Adverse Effect.
(bb) The Company and the Subsidiary, each (i) has timely filed all necessary
federal, state, local and foreign tax returns, and all such returns were true, complete and
correct, (ii) has paid all federal, state, local and foreign taxes, assessments,
governmental or other charges due and payable for which it is liable, including, without
limitation, all sales and use taxes and all taxes which the Company or the Subsidiary is
obligated to withhold from amounts owing to employees, creditors and third parties, and
(iii) does not have any tax deficiency or claims outstanding or assessed or, to the best of
its knowledge, proposed against any of them, except those, in each of the cases described in
clauses (i), (ii) and (iii) of this paragraph (bb), that would not reasonably be
expected to, singularly or in the aggregate, have a Material Adverse Effect. The Company
and the Subsidiary, each has not engaged in any transaction which is a corporate tax shelter
or which to the Company’s knowledge could be characterized as such by the Internal Revenue
Service or any other taxing authority. The accruals and reserves on the books and records
of the Company and the Subsidiary in respect of tax liabilities for any taxable period not
yet finally determined are adequate to meet any assessments and related liabilities for any
such period, and since December 31, 2005 the Company and the Subsidiary each has not
incurred any liability for taxes other than in the ordinary course.
(cc) The Company and the Subsidiary carries, or is covered by, insurance
provided by recognized, financially sound and reputable institutions with policies in such
amounts and covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as is customary for companies
engaged in similar businesses in similar industries. The Company has no reason to believe
that it or the Subsidiary will not be able (i) to renew its existing insurance coverage as
and when such policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor the Subsidiary has been denied any insurance coverage that they have
sought or for which they have applied.
(dd) The Company maintains a system of internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that complies
with the requirements of the Exchange Act and has been designed by the Company’s principal
executive officer and principal financial officer, or under his supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles. Except as described in the General Disclosure Package, since the end of the
Company’s most recent audited fiscal year, there as been (A) no material weakness in the
Company’s internal control over financial reporting (whether or not remediated) and (B) no
change in the Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal control over
financial reporting.
(ee) The minute books of the Company and the Subsidiary have been made
available to the Placement Agent and counsel for the Placement Agent, and such books contain
in all material respects a complete summary of all meetings and actions of the
board of directors (including each board committee) and shareholders of the Company (or
analogous governing bodies and interest holders, as applicable), and the Subsidiary since
the time of its respective incorporation or organization through the date of the latest
meeting and action.
(ff) There is no franchise, lease, contract, agreement or document required
by the Securities Act or by the Rules and Regulations to be described in the General
Disclosure Package and in the Prospectus or a document incorporated by reference therein or
to be filed as an exhibit to the Registration Statement or a document incorporated by
reference therein that is not described or filed therein as required; and all descriptions
of any such franchises, leases, contracts, agreements or documents contained in the
Registration Statement or in a document incorporated by reference therein are accurate
descriptions of such documents in all material respects. Other than as described in the
General Disclosure Package, no such franchise, lease, contract or agreement has been
suspended or terminated for convenience or default by the Company or the Subsidiary or any
of the other parties thereto, and neither the Company nor the Subsidiary has received
written notice nor does the Company have any other knowledge of any such pending or
threatened suspension or termination, except for such pending or threatened suspensions or
terminations that would not reasonably be expected to, singularly or in the aggregate, have
a Material Adverse Effect.
(gg) No relationship, direct or indirect, exists between or among the Company
and the Subsidiary on the one hand, and the directors, officers, stockholders (or analogous
interest holders), customers or suppliers of the Company or the Subsidiary or any of their
affiliates on the other hand, that is required to be described in the General Disclosure
Package and the Prospectus or a document incorporated by reference therein and that is not
so described.
(hh) No person or entity has the right to require registration of shares of
Common Stock or other securities of the Company or the Subsidiary because of the filing or
effectiveness of the Registration Statement or otherwise, except for persons and entities
who have expressly waived such right in writing or who have been given timely and proper
written notice and have failed to exercise such right within the time or times required
under the terms and conditions of such right. Except as described in the General Disclosure
Package, there are no persons with registration rights or similar rights to have any
securities registered by the Company or the Subsidiary under the Securities Act.
(ii) Neither the Company nor the Subsidiary own any “margin securities” as
that term is defined in Regulation U of the Board of Governors of the Federal Reserve System
(the “Federal Reserve Board”), and none of the proceeds of the sale of the Units will be
used, directly or indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness which was originally incurred to
purchase or carry any margin security or for any other purpose which might cause any of the
Units to be considered a “purpose credit” within the meanings of Regulation T, U or X of the
Federal Reserve Board.
(jj) Except for payments contemplated by this Agreement, the Registration
Statement, the General Disclosure Package or the Prospectus, neither the Company nor the
Subsidiary is a party to any contract, agreement or understanding with any person that
would give rise to a valid claim against the Company or the Placement Agent for a
brokerage commission, finder’s fee or like payment in connection with the Offering.
(kk) No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in either the General
Disclosure Package or the Prospectus has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
(ll) The Company is subject to and in compliance in all material respects
with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act. The
Common Stock is registered pursuant to Section 12(g) of the Exchange Act and is listed on
the Nasdaq GM, and the Company has taken no action designed to, or reasonably likely to have
the effect of, terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the Nasdaq GM, nor has the Company received any notification
that the Commission or the National Association of Securities Dealers, Inc. (“NASD”) is
contemplating terminating such registration or listing. No consent, approval, authorization
or order of, or filing, notification or registration with, the Nasdaq GM is required for the
listing and trading of the Units on the Nasdaq GM.
(mm) The Company is in material compliance with all applicable provisions of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and all rules and regulations promulgated thereunder or
implementing the provisions thereof (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”) that are currently in effect.
(nn) The Company is in material compliance with all applicable corporate
governance requirements set forth in the Nasdaq Marketplace Rules that are currently in
effect and is actively taking steps to ensure that it will be in compliance with other
applicable corporate governance requirements set forth in the Nasdaq Marketplace Rules not
currently in effect.
(oo) Neither the Company nor the Subsidiary nor, to the best of the Company’s
knowledge, any employee or agent of the Company or the Subsidiary, has made any contribution
or other payment to any official of, or candidate for, any federal, state, local or foreign
office in violation of any law (including the Foreign Corrupt Practices Act of 1977, as
amended) or of the character required to be disclosed in the Registration Statement, the
General Disclosure Package or the Prospectus or a document incorporated by reference
therein.
(pp) There are no transactions, arrangements or other relationships between
and/or among the Company, any of its affiliates (as such term is defined in Rule 405 of the
Securities Act) and any unconsolidated entity, including, but not limited to, any structure
finance, special purpose or limited purpose entity that would reasonably be expected to
materially affect the Company’s or the Subsidiary’s liquidity or the availability of or
requirements for their capital resources required to be described in the General Disclosure
Package and the Prospectus or a document incorporated by reference therein which have not
been described as required.
(qq) There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees or indebtedness by
the Company or the Subsidiary to or for the benefit of any of the officers or directors
of the Company, the Subsidiary or any of their respective family members, that are required
to be disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus.
(rr) The statistical and market related data included in the Registration
Statement, the General Disclosure Package and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate, and such data agree with the
sources from which they are derived.
(ss) The operations of the Company and the Subsidiary are conducted at all
times in compliance with applicable financial recordkeeping and reporting requirements of
the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder (collectively, the
“Money Laundering Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company or the
Subsidiary with respect to the Money Laundering Laws is pending, or to the best knowledge of
the Company, threatened.
(tt) Neither the Company nor the Subsidiary nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or the
Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly
or indirectly use the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to the Subsidiary, joint venture partner or other person or entity,
for the purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
(uu) To the Company’s knowledge, neither the Company nor the Subsidiary nor
any of their affiliates (within the meaning of NASD Conduct Rule 2720(b)(1)(a)) directly or
indirectly controls, is controlled by, or is under common control with, or is an associated
person (within the meaning of Article I, Section 1(ee) of the By-laws of the NASD) of, any
member firm of the NASD.
(vv) No approval of the shareholders of the Company under the rules and
regulations of Nasdaq (including Rule 4350 of the Nasdaq National Marketplace Rules), and no
approval of the shareholders of the Company thereunder is required for the Company to issue
and deliver to the Purchasers the Units.
Any certificate signed by or on behalf of the Company and delivered to the Placement Agent or to
counsel for the Placement Agent pursuant to this Agreement shall be deemed to be a representation
and warranty by the Company to the Placement Agent and the Purchasers as to the matters covered
thereby.
4. The Closing. The time and date of closing (the “Closing”) and delivery
of the documents required to be delivered to the Placement Agent pursuant to Sections 5 and
7 hereof shall be at 10:00 A.M., New York time, on
October 31, 2006 (the “Closing Date”)
at the office of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ LLP.
5. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the
Placement Agent and the Purchasers:
(a) To prepare the Rule 462(b) Registration Statement, if necessary, in a
form reasonably acceptable to the Placement Agent and file such Rule 462(b) Registration
Statement with the Commission on the date hereof; to prepare the Prospectus in a form
reasonably acceptable to the Placement Agent containing information previously omitted at
the time of effectiveness of the Registration Statement in reliance on rules 430A, 430B and
430C and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the second business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A of the Rules and Regulations;
to notify the Placement Agent promptly of the Company’s intention to file or prepare any
supplement or amendment to any Registration Statement or to the Prospectus and to provide a
draft of any such amendment or supplement to the Registration Statement, the General
Disclosure Package or to the Prospectus to the Placement Agent for review prior to filing;
to advise the Placement Agent, promptly after it receives notice thereof, of the time when
any amendment to any Registration Statement has been filed or becomes effective or any
supplement to the General Disclosure Package or the Prospectus or any amended Prospectus has
been filed and to furnish the Placement Agent copies thereof; to file promptly all material
required to be filed by the Company with the Commission pursuant to Rule 433(d) or
163(b)(2), as the case may be; to file within the time periods prescribed by the Exchange
Act, including any extension thereof all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus (or in lieu thereof, the notice referred to in
Rule 173(a) under the Securities Act) is required in connection with the offering or sale of
the Units; to advise the Placement Agent, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, of
the suspension of the qualification of the Units for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such purpose, or of any request
by the Commission for the amending or supplementing of the Registration Statement, the
General Disclosure Package or the Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus or
suspending any such qualification, and promptly to use its best efforts to obtain the
withdrawal of such order.
(b) The Company represents and agrees that, unless it obtains the prior
consent of the Placement Agent, and the Placement Agent represents and agrees that, unless
it obtains the prior consent of the Company, it has not made and will not, make any offer
relating to the Units that would constitute a “free writing prospectus” as defined in Rule
405 under the Securities Act (each, a “Permitted Free Writing Prospectus”); provided that
the prior written consent of the Company and the Placement Agent hereto shall be deemed to
have been given in respect of the Issuer Free Writing Prospectuses, if any, included in
Schedule A hereto. The Company represents that it has treated and agrees that it
will treat each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus,
comply with the requirements of Rules 164 and 433 under the Securities Act applicable to any
Issuer Free Writing Prospectus, including the requirements relating to
timely filing with the Commission, legending and record keeping and will not take any
action that would result in the Placement Agent or the Company being required to file with
the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus
prepared by or on behalf of such Placement Agent that such Placement Agent otherwise would
not have been required to file thereunder.
(c) If at any time when a Prospectus relating to the Units is required to be
delivered under the Securities Act, any event occurs or condition exists as a result of
which the Prospectus, as then amended or supplemented, would include 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, or the
Registration Statement, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary to make the statements therein
not misleading, or if for any other reason it is necessary at any time to amend or
supplement any Registration Statement or the Prospectus to comply with the Securities Act or
the Exchange Act, the Company will promptly notify the Placement Agent, and upon the
Placement Agent’s request, the Company will promptly prepare and file with the Commission,
at the Company’s expense, an amendment to the Registration Statement or an amendment or
supplement to the Prospectus that corrects such statement or omission or effects such
compliance and will deliver to the Placement Agent, without charge, such number of copies
thereof as the Placement Agent may reasonably request. The Company consents to the use of
the Prospectus or any amendment or supplement thereto by the Placement Agent.
(d) If the General Disclosure Package is being used to solicit offers to buy
the Units at a time when the Prospectus is not yet available to prospective purchasers and
any event shall occur as a result of which it becomes necessary to amend or supplement the
General Disclosure Package in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or to make the statements therein
not conflict with the information contained or incorporated by reference in the Registration
Statement then on file and not superseded or modified, or if it is necessary at any time to
amend or supplement the General Disclosure Package to comply with any law, the Company
promptly will either (i) prepare, file with the Commission (if required) and furnish to the
Placement Agent and any dealers an appropriate amendment or supplement to the General
Disclosure Package or (ii) prepare and file with the Commission an appropriate filing under
the Exchange Act that shall be incorporated by reference in the General Disclosure Package
so that the General Disclosure Package as so amended or supplemented will not, in the light
of the circumstances under which they were made, be misleading or conflict with the
Registration Statement then on file, or so that the General Disclosure Package will comply
with law.
(e) If at any time following issuance of an Issuer Free Writing Prospectus
there occurred or occurs an event or development as a result of which such Issuer Free
Writing Prospectus conflicted or will conflict with the information contained in the
Registration Statement, Pricing Prospectus or Prospectus, including any document
incorporated by reference therein and any prospectus supplement deemed to be a part thereof
and not superseded or modified or included or would include an untrue statement of a
material fact or omitted or would omit 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 Company has promptly notified
or will promptly notify the Placement Agent so that any use of the Issuer Free Writing
Prospectus may cease (and the Placement Agent agrees to cease any such use promptly upon
such notification) until it is amended or supplemented and will promptly amend or
supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct
such conflict, untrue statement or omission. The foregoing sentence does not apply to
statements in or omissions from any Issuer Free Writing Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by the Placement Agent
specifically for inclusion therein, which information the parties hereto agree is limited to
the Placement Agent’s Information (as defined in Section 17).
(f) To furnish promptly to the Placement Agent and to counsel for the
Placement Agent a signed copy of the Registration Statement as originally filed with the
Commission, and of each amendment thereto filed with the Commission, including all consents
and exhibits filed therewith.
(g) To the extent not available on the Commission’s ▇▇▇▇▇ system, to deliver
promptly to the Placement Agent in New York City such number of the following documents as
the Placement Agent shall reasonably request: (i) conformed copies of the Registration
Statement as originally filed with the Commission (in each case excluding exhibits), (ii)
each Preliminary Prospectus, (iii) any Issuer Free Writing Prospectus, (iv) the Prospectus
(the delivery of the documents referred to in clauses (i), (ii), (iii) and (iv) of this
paragraph (g) to be made not later than 10:00 A.M., New York time, on the business
day following the execution and delivery of this Agreement), (v) conformed copies of any
amendment to the Registration Statement (excluding exhibits), (vi) any amendment or
supplement to the General Disclosure Package or the Prospectus (the delivery of the
documents referred to in clauses (v) and (vi) of this paragraph (g) to be made not
later than 10:00 A.M., New York City time, on the business day following the date of such
amendment or supplement) and (vii) any document incorporated by reference in the General
Disclosure Package or the Prospectus (excluding exhibits thereto) (the delivery of the
documents referred to in clause (vi) of this paragraph (g) to be made not later than
10:00 A.M., New York City time, on the business day following the date of such document).
(h) To make generally available to its shareholders as soon as practicable,
but in any event not later than 18 months after the effective date of each Registration
Statement (as defined in Rule 158(c) under the Securities Act), an earnings statement of the
Company and the Subsidiary (which need not be audited) complying with Section 11(a) of the
Securities Act and the Rules and Regulations (including, at the option of the Company, Rule
158); and to furnish to its shareholders after the end of each fiscal year an annual report
(including a balance sheet and statements of income, shareholders’ equity and cash flows of
the Company and its consolidated subsidiary certified by independent public accountants) and
after each of the first three fiscal quarters of each fiscal year (beginning with the first
fiscal quarter after the effective date of this Agreement), consolidated summary financial
information of the Company and the Subsidiary for such quarter in reasonable detail.
(i) To take promptly from time to time such actions as the Placement Agent
may reasonably request to qualify the Units for offering and sale under the securities or
Blue Sky laws of such jurisdictions (domestic or foreign) as the Placement Agent may
designate and to continue such qualifications in effect, and to comply with such laws, for
so long as required to permit the offer and sale of Units in such jurisdictions; provided
that the Company and the Subsidiary shall not be obligated to qualify as foreign
corporations in any jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction.
(j) To the extent not available on the Commission’s ▇▇▇▇▇ system, upon
request, during the period of five years from the date hereof, to deliver to the Placement
Agent, (i) as soon as they are available, copies of all reports or other communications
furnished to shareholders, and (ii) as soon as they are available, copies of any reports and
financial statements furnished or filed with the Commission or any national securities
exchange or automatic quotation system on which the Common Stock is listed or quoted.
(k) That the Company will not, for a period of ninety (90) days from the date
of the Prospectus, (the “Lock-Up Period”) without the prior written consent of LCM, directly
or indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose
of, any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, other than the Company’s sale of the Stock hereunder and the
issuance of (i) restricted Common Stock or options to acquire Common Stock pursuant to the
Company’s employee benefit plans, qualified stock option plans or other employee
compensation plans as such plans are in existence on the date hereof and described in the
Prospectus, (ii) the issuance of Common Stock pursuant to the valid exercises of options,
warrants or rights outstanding on the date hereof and (iii) Common Stock or securities
convertible into or exercisable or exchangeable for shares of Common Stock pursuant to a
strategic partnership, joint venture, merger, collaboration, lending or similar arrangement,
or in connection with the acquisition or license by the Company of any business, products or
technologies, provided that the transferee shall furnish to LCM, prior to any such transfer,
a letter, substantially in the form of Exhibit C attached hereto. The Company will
cause each executive officer, director and shareholder, listed in Schedule B to
furnish to the Placement Agent, prior to the Closing Date, a letter, substantially in the
form of Exhibit C attached hereto. The Company also agrees that during such period,
the Company will not file any registration statement, preliminary prospectus or prospectus,
or any amendment or supplement thereto, under the Securities Act for any such transaction or
which registers, or offers for sale, Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, except for a registration statement on Form
S-8 relating to employee benefit plans.
(l) To supply the Placement Agent with copies of all correspondence to and
from, and all documents issued to and by, the Commission in connection with the registration
of the Units under the Securities Act or the Registration Statement, any Preliminary
Prospectus or the Prospectus, or any amendment or supplement thereto or document
incorporated by reference therein in connection with the Offering.
(m) Prior to the Closing Date, not to issue any press release with respect to
the Company, its condition, financial or otherwise, or earnings, business affairs or
business
prospects (except for press releases announcing the Offering and the proposed
restructuring of the Company that is described in the final prospectus supplement, and of
which the Placement Agent is notified), without providing the Placement Agent such press
release for prior review, which shall be reasonably acceptable to the Placement Agent.
(n) Until the Placement Agent shall have notified the Company of the
completion of the offering of the Units, that the Company will not, and will cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act) not to, either
alone or with one or more other persons, bid for or purchase, for any account in which it or
any of its affiliated purchasers has a beneficial interest, any Units, or attempt to induce
any person to purchase any Units; and not to, and to cause its affiliated purchasers not to,
make bids or purchase for the purpose of creating actual, or apparent, active trading in or
of raising the price of the Units.
(o) To apply the net proceeds from the sale of the Units as set forth in the
Registration Statement, the General Disclosure Package and the Prospectus under the heading
“Use of Proceeds.”
(p) To use its best efforts to effect and maintain the quotation of the
Common Stock on the Nasdaq GM.
(q) To use its best efforts to assist the Placement Agent with any filings
with the NASD and obtaining clearance from the NASD as to the amount of compensation
allowable or payable to the Placement Agent.
(r) To use its best efforts to do and perform all things required to be done
or performed under this Agreement by the Company prior to the Closing Date and to satisfy
all conditions precedent to the delivery of the Units.
6. Payment of Expenses. The Company agrees to pay, or reimburse if paid by
the Placement Agent, whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated: (a) the costs incident to the authorization, issuance, sale, preparation
and delivery of the Units to the Purchasers and any taxes payable in that connection; (b) the costs
incident to the Registration of the Units under the Securities Act; (c) the costs incident to the
preparation, printing and distribution of the Registration Statement, the Base Prospectus, any
Preliminary Prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package, the
Prospectus, any amendments, supplements and exhibits thereto or any document incorporated by
reference therein and the costs of printing, reproducing and distributing any transaction document
by mail, telex or other means of communications; (d) the reasonable fees and expenses (including
reasonable related fees and expenses of counsel for the Placement Agent (subject to clause i
below)) incurred in connection with securing any required review by the NASD of the terms of the
sale of the Units and any filings made with the NASD; (e) any applicable listing, quotation or
other fees; (f) the fees and expenses (including related reasonable fees and expenses of counsel to
the Placement Agent (subject to clause i below)) of qualifying the Units under the securities laws
of the several jurisdictions as provided in Section 5(i) and of preparing, printing and
distributing wrappers, Blue Sky Memoranda; (g) the cost of preparing and printing stock
certificates; (h) all fees and expenses of the registrar and transfer agent of the Units (i) the
reasonable fees, disbursements and expenses of counsel to the Placement Agent not to exceed $50,000
and (j) all other costs and expenses incident to the offering of the Units or the
performance of the obligations of the Company under this Agreement (including, without
limitation, the fees and expenses of the Company’s counsel and the Company’s independent
accountants; provided that, except to the extent otherwise provided in this Section 6 and
in Sections 8 and 10, the Placement Agent shall pay its own costs and expenses.
7. Conditions to the Obligations of the Placement Agent and the Purchasers, and
the Sale of the Units. The respective obligations of the Placement Agent hereunder and the
Purchasers under the Subscription Agreements, and the Closing of the sale of the Units, are subject
to the accuracy, when made and on the Applicable Time and on the Closing Date, of the
representations and warranties 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 its obligations hereunder, and to each of the following additional terms and
conditions:
(a) No stop order suspending the effectiveness of the Registration Statement
or any part thereof, preventing or suspending the use of any Base Prospectus, any
Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus or any part
thereof shall have been issued and no proceedings for that purpose or pursuant to Section 8A
under the Securities Act shall have been initiated or threatened by the Commission, and all
requests for additional information on the part of the Commission (to be included or
incorporated by reference in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the Placement Agent; the
Rule 462(b) Registration Statement, if any, each Issuer Free Writing Prospectus, if any, and
the Prospectus shall have been filed with the Commission within the applicable time period
prescribed for such filing by, and in compliance with, the Rules and Regulations and in
accordance with Section 5(a), and the Rule 462(b) Registration Statement, if any,
shall have become effective immediately upon its filing with the Commission.
(b) The Placement Agent shall not have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement 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, or that the General Disclosure Package, any Issuer Free
Writing Prospectus or the Prospectus or any amendment or supplement thereto contains an
untrue statement of fact which, in the opinion of such counsel, is material or omits to
state any fact which, in the opinion of such counsel, is material and is necessary in order
to make the statements, in the light of the circumstances in which they were made, not
misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Subscription Agreements, the
Escrow Agreement, the Units, the Registration Statement, the General Disclosure Package,
each Issuer Free Writing Prospectus, if any, and the Prospectus 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) ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ LLP shall have furnished to the
Placement Agent a letter in the form attached hereto as Exhibit D, addressed to the
Placement Agent and dated the Closing Date.
(e) The Placement Agent shall have received from ▇▇▇▇▇ Raysman ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Placement Agent, such opinion or opinions, dated the
Closing Date, with respect to such matters as the Placement Agent may reasonably require,
and the Company shall have furnished to such counsel such documents as they request for
enabling them to pass upon such matters.
(f) At the time of the execution of this Agreement, the Placement Agent and
the Board of Directors of the Company shall have received from Deloitte & Touche LLP a
letter, addressed to the Placement Agent, executed and dated such date, in form and
substance satisfactory to the Placement Agent (i) confirming that they are an independent
registered accounting firm with respect to the Company and the Subsidiary within the meaning
of the Securities Act and the Rules and Regulations and PCAOB and (ii) stating the
conclusions and findings of such firm, of the type ordinarily included in accountants’
“comfort letters” to underwriters, with respect to the financial statements and certain
financial information contained or incorporated by reference in the Registration Statement,
the General Disclosure Package and the Prospectus.
(g) On the Closing Date, the Placement Agent and the Board of Directors of
the Company shall have received a letter (the “Bring-Down Letter”) from Deloitte & Touche
LLP addressed to the Placement Agent and dated the Closing Date confirming, as of the date
of the Bring-Down Letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given in the
General Disclosure Package and the Prospectus, as the case may be, as of a date not more
than three (3) business days prior to the date of the Bring-Down Letter), the conclusions
and findings of such firm, of the type ordinarily included in accountants’ “comfort letters”
to underwriters, with respect to the financial information and other matters covered by its
letter delivered to the Placement Agent concurrently with the execution of this Agreement
pursuant to paragraph (f) of this Section 7.
(h) The Company shall have furnished to the Placement Agent and the
Purchasers a certificate, dated the Closing Date, of its President or a Vice President and
its Vice President of Finance, each in their capacity as an officer of the Company, stating
that (i) since the date of the final prospectus supplement, no event has occurred which
should have been set forth in a supplement or amendment to the Registration Statement, the
General Disclosure Package or the Prospectus, (ii) as of the Closing Date, the
representations and warranties of the Company in this Agreement are true and correct in all
material respects and the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the Closing
Date, and (iii) there has not been, subsequent to the date of the most recent unaudited
financial statements included or incorporated by reference in the General Disclosure
Package, any Material Adverse Effect, except as set forth in the Prospectus.
(i) Since the date of the latest financial statements included in the General
Disclosure Package or incorporated by reference in the General Disclosure Package as of the
date hereof, (i) neither the Company nor the Subsidiary shall have sustained any loss
or interference with its business from fire, explosion, flood 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 the General Disclosure Package, and
(ii) there shall not have been any change in the capital stock (other than as a result of
the grant or exercise of stock options or warrants or the offer to sell shares of Common
Stock and award shares of restricted Common Stock pursuant to the Company stock plans in the
ordinary course) or long-term debt of the Company nor the Subsidiary, or any change, or any
Material Adverse Effect, the effect of which, in any such case described in clause (i) or
(ii) of this paragraph (i), 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 Units on the terms and in the manner contemplated in the General Disclosure Package.
(j) No action shall have been taken and no law, statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or body which
would prevent the issuance or sale of the Units or materially and adversely affect the
business or operations of the Company and the Subsidiary taken as a whole; and no
injunction, restraining order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued which would prevent the issuance or sale of
the Units or materially and adversely affect the business or operations of the Company or
the Subsidiary.
(k) 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
Units Exchange, Nasdaq GM or the American Units Exchange 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 materially limited, or minimum or maximum prices or
maximum range for prices shall have been established on any such exchange or such market by
the Commission, by such exchange or market 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, or the subject of an act of terrorism, or there
shall have been an outbreak of or 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 such a material adverse change in general economic, political
or financial conditions (or the effect of international conditions on the financial markets
in the United States shall be such) as to make it, in the judgment of the Placement Agent,
impracticable or inadvisable to proceed with the sale or delivery of the Units on the terms
and in the manner contemplated in the General Disclosure Package and the Prospectus.
(l) The Nasdaq GM shall have approved the Common Stock for inclusion therein,
subject only to official notice of issuance.
(m) The Placement Agent shall have received the written agreements,
substantially in the form of Exhibit C attached hereto, of the executive officers,
directors and shareholders of the Company listed in Schedule B to this Agreement.
(n) The Company shall have entered into Subscription Agreements with each of
the Purchasers and such agreements shall be in full force and effect.
(o) The Company shall have entered into the Escrow Agreement and such
agreement shall be in full force and effect.
(p) The Placement Agent shall have received clearance from the NASD as to the
amount of compensation allowable or payable to the Placement Agent as described in the
Pricing Prospectus.
(q) Prior to the Closing Date, the Company shall have furnished to the
Placement Agent such further information, opinions, certificates, letters or documents as
the Placement Agent shall have reasonably requested.
(r) The Company shall have furnished to the Placement Agent a certificate, of
its President or a Vice President and its Vice President of Finance, each in their capacity
as an officer of the Company, relating to certain financial information contained in the
Preliminary Prospectus and the Pricing Prospectus, substantially in the form of Exhibit
E attached hereto.
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.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless the Placement Agent, its
affiliates and each of its and their respective directors, officers, members, employees,
representatives and agents (including, without limitation, Lazard Frères & Co. LLC (which
will provide services to the Placement Agent) and its affiliates and each of its and their
respective directors, officers, members, employees, representatives and agents and each
person, if any, who controls Lazard Frères & Co. LLC within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and each person, if any, who controls the
Placement Agent within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively the “Placement Agent Indemnified Parties,” and each a “Placement
Agent Indemnified Party”) against any loss, claim, damage, expense or liability whatsoever
(or any action, investigation or proceeding in respect thereof), joint or several, to which
such Placement Agent Indemnified Party may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, expense, liability, action, investigation or
proceeding arises out of or is based upon (A) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, any Issuer Free
Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule
433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any
amendment or supplement thereto or document incorporated by reference therein, (B) the
omission or alleged omission to state in any Preliminary Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d)
of the Rules and Regulations, any Registration Statement or the Prospectus, or in any
amendment or supplement thereto or document incorporated by reference therein, a material
fact required to be stated therein or necessary to make the statements therein not
misleading or (C) any breach of the representations and warranties of the Company
contained herein or failure of the Company to perform its obligations hereunder or pursuant
to any law, any act or failure to act, or any alleged act or failure to act, by the
Placement Agent in connection with, or relating in any manner to, the Units, the Escrow
Agreement or the offering contemplated hereby, and which is included as part of or referred
to in any loss, claim, damage, expense, liability, action, investigation or proceeding
arising out of or based upon matters covered by subclause (A), (B) or (C) above of this
Section 8(a) (provided that the Company shall not be liable in the case of any
matter covered by this subclause (C) to the extent that it is determined in a final judgment
by a court of competent jurisdiction that such loss, claim, damage, expense or liability
resulted directly from any such act or failure to act undertaken or omitted to be taken by
such Placement Agent through its gross negligence or willful misconduct), and shall
reimburse the Placement Agent Indemnified Party promptly upon demand for any legal fees or
other expenses reasonably incurred by that Placement Agent Indemnified Party in connection
with investigating, or preparing to defend, or defending against, or appearing as a third
party witness in respect of, or otherwise incurred in connection with, any such loss, claim,
damage, expense, liability, action, investigation or proceeding, as such fees and expenses
are incurred; provided, however, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, expense or liability arises out of or is based
upon an untrue statement or alleged untrue statement in, or omission or alleged omission
from any Preliminary Prospectus, any Registration Statement or the Prospectus, or any such
amendment or supplement thereto, or any Issuer Free Writing Prospectus made in reliance upon
and in conformity with written information furnished to the Company by the Placement Agent
specifically for use therein, which information the parties hereto agree is limited to the
Placement Agent’s Information (as defined in Section 17). This indemnity agreement
is not exclusive and will be in addition to any liability, which the Company might otherwise
have and shall not limit any rights or remedies which may otherwise be available at law or
in equity to each Placement Agent Indemnified Party.
(b) The Placement Agent shall indemnify and hold harmless the Company and its
directors, its officers who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act (collectively the “Company Indemnified Parties” and each a “Company
Indemnified Party”) against any loss, claim, damage, expense or liability whatsoever (or any
action, investigation or proceeding in respect thereof), joint or several, to which such
Company Indemnified Party may become subject, under the Securities Act or otherwise, insofar
as such loss, claim, damage, expense, liability, action, investigation or proceeding arises
out of or is based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any
“issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and
Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or (ii) the omission or alleged omission to state in any Preliminary Prospectus,
any Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the
Prospectus, or in any amendment or supplement thereto, a material fact required to be stated
therein or necessary to make the
statements therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by the Placement
Agent specifically for use therein, which information the parties hereto agree is limited to
the Placement Agent’s Information as defined in Section 17, and shall reimburse the
Company promptly upon demand for any legal or other expenses reasonably incurred by such
party in connection with investigating or preparing to defend or defending against or
appearing as third party witness in connection with any such loss, claim, damage, liability,
action, investigation or proceeding, as such fees and expenses are incurred. This indemnity
agreement is not exclusive and will be in addition to any liability, which the Placement
Agent might otherwise have and shall not limit any rights or remedies which may otherwise be
available at law or in equity to each Company Indemnified Party. Notwithstanding the
provisions of this Section 8(b), in no event shall any indemnity by the Placement Agent
under this Section 8(b) exceed the total compensation received by such Placement Agent in
accordance with Section 2.5.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, the indemnified party shall, if a claim
in respect thereof is to be made against an indemnifying party under this Section 8,
notify such indemnifying party in writing of the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has been
materially prejudiced by such failure; and, provided, further, that the failure to notify an
indemnifying party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 8. If any such action shall be
brought against an indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume the defense
of such action with counsel reasonably satisfactory to the indemnified party (which counsel
shall not, except with the written consent of the indemnified party, be counsel to the
indemnifying party). After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such action, except as provided herein, the
indemnifying party shall not be liable to the indemnified party under Section 8 for
any legal or other expenses subsequently incurred by the indemnified party in connection
with the defense of such action other than reasonable costs of investigation; provided,
however, that any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense of such action but the fees and expenses of
such counsel (other than reasonable costs of investigation) shall be at the expense of such
indemnified party unless (i) the employment thereof has been specifically authorized in
writing by the Company in the case of a claim for indemnification under Section 8(a)
or Section 2.6 or LCM in the case of a claim for indemnification under Section
8(b), (ii) representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them, or (iii) the indemnifying party has
failed to assume the defense of such action and employ counsel reasonably satisfactory to
the indemnified party within a reasonable period of time after notice of the commencement of
the action or the indemnifying party does not diligently defend the action after assumption
of the defense, in which case, if
such indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of (or, in the case of a failure to
diligently defend the action after assumption of the defense, to continue to defend) such
action on behalf of such indemnified party and the indemnifying party shall be responsible
for legal or other expenses subsequently incurred by such indemnified party in connection
with the defense of such action; provided, however, that the indemnifying party shall not,
in connection with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one separate firm
of attorneys at any time for all such indemnified parties (in addition to any local
counsel), which firm shall be designated in writing by LCM if the indemnified parties under
this Section 8 consist of any Placement Agent Indemnified Party or by the Company if
the indemnified parties under this Section 8 consist of any Company Indemnified
Parties. Subject to this Section 8(c), the amount payable by an indemnifying party
under Section 8 shall include, but not be limited to, (x) reasonable legal fees and
expenses of counsel to the indemnified party and any other expenses in investigating, or
preparing to defend or defending against, or appearing as a third party witness in respect
of, or otherwise incurred in connection with, any action, investigation, proceeding or
claim, and (y) all amounts paid in settlement of any of the foregoing. No indemnifying
party shall, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of judgment with respect to any pending or threatened
action or any claim whatsoever, in respect of which indemnification or contribution could be
sought under this Section 8 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party in form and substance reasonably
satisfactory to such indemnified party from all liability arising out of such action or
claim and (ii) does not include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any indemnified party. Subject to the provisions of the
following sentence, no indemnifying party shall be liable for settlement of any pending or
threatened action or any claim whatsoever that is effected without its written consent
(which consent shall not be unreasonably withheld or delayed), but if settled with its
written consent, if its consent has been unreasonably withheld or delayed or if there be a
judgment for the plaintiff in any such matter, the indemnifying party agrees to indemnify
and hold harmless any indemnified party from and against any loss or liability by reason of
such settlement or judgment. In addition, if at any time an indemnified party shall have
requested that an indemnifying party reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated herein effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the request for
reimbursement, (ii) such indemnifying party shall have received notice of the terms of such
settlement at least thirty (30) days prior to such settlement being entered into and (iii)
such indemnifying party shall not have reimbursed such indemnified party in accordance with
such request prior to the date of such settlement.
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section 8(a)
or Section 8(b),
then each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid, payable or otherwise incurred by such indemnified party as a
result of such loss, claim, damage, expense or liability (or any action, investigation or
proceeding in respect thereof), as incurred, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one hand and the Placement
Agent on the other hand from the offering of the Units, or (ii) if the allocation provided
by clause (i) of this Section 8(d) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred to in clause
(i) of this Section 8(d) but also the relative fault of the Company on the one hand
and the Placement Agent on the other with respect to the statements, omissions, acts or
failures to act which resulted in such loss, claim, damage, expense or liability (or any
action, investigation or proceeding in respect thereof) as well as any other relevant
equitable considerations. The relative benefits received by the Company on the one hand and
the Placement Agent on the other with respect to such offering shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Units purchased under
this Agreement (before deducting expenses) received by the Company bear to the total
compensation received by the Placement Agreement in accordance with Section 2.5 received by
the Placement Agent in connection with the Offering, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company on the one hand and
the Placement Agent on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company on the one
hand or the Placement Agent on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such untrue
statement, omission, act or failure to act; provided that the parties hereto agree that the
written information furnished to the Company by the Placement Agent for use in the
Preliminary Prospectus, any Registration Statement or the Prospectus, or in any amendment or
supplement thereto, consists solely of the Placement Agent’s Information as defined in
Section 18. The Company and the Placement Agent agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined by
pro rata allocation or by any other method of allocation that does not take into account the
equitable considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage, expense, liability, action, investigation or
proceeding referred to above in this Section 8(d) shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating, preparing to defend or defending
against or appearing as a third party witness in respect of, or otherwise incurred in
connection with, any such loss, claim, damage, expense, liability, action, investigation or
proceeding. Notwithstanding the provisions of this Section 8(d), the Placement
Agent shall not be required to contribute any amount in excess of the total compensation
received by the Placement Agent in accordance with Section 2.5 less the amount of
any damages which the Placement Agent has otherwise paid or become liable to pay by reason
of any untrue or alleged untrue statement, omission or alleged omission, act or alleged act
or failure to act or alleged failure to act. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
9. Termination. The obligations of the Placement Agent and the Purchasers
hereunder and under the Subscription Agreements may be terminated by the Placement Agent, in its
absolute discretion by notice given to the Company prior to delivery of and payment for the Stock
if, prior to that time, any of the events described in Sections 7(i) or 7(k) have
occurred or if the Purchasers shall decline to purchase the Units for any reason permitted under
this Agreement or the Subscription Agreements.
10. Reimbursement of Placement Agent’s Expenses. Notwithstanding anything
to the contrary in this Agreement, if (a) this Agreement shall have been terminated pursuant to
Section 9, (b) the Company shall fail to tender the Units for delivery to the Purchasers
for any reason not permitted under the Subscription Agreement or herein, (c) the Purchasers shall
decline to purchase the Units for any reason permitted under the Subscription Agreement or herein
or (d) the sale of the Units is not consummated because any condition to the obligations of the
Purchasers or the Placement Agent set forth in the Subscription Agreement or herein is not
satisfied or because of the refusal, inability or failure on the part of the Company to perform any
agreement herein or to satisfy any condition or to comply with the provisions hereof, then in
addition to the payment of amounts in accordance with Section 6, the Company shall
reimburse the Placement Agent for the reasonable fees and expenses of the Placement Agent’s counsel
and for such other out-of-pocket expenses as shall have been reasonably incurred by them in
connection with this Agreement and the proposed purchase of the Units, and upon demand the Company
shall pay the full amount thereof to the Placement Agent.
11. Absence of Fiduciary Relationship. The Company acknowledges and agrees
that:
(a) the Placement Agent’s responsibility to the Company is solely contractual
in nature, the Placement Agent has been retained solely to act as Placement Agent in
connection with the Offering and no fiduciary, advisory or agency relationship between the
Company and the Placement Agent has been created in respect of any of the transactions
contemplated by this Agreement, irrespective of whether the Placement Agent or Lazard Frères
& Co. LLC has advised or is advising the Company on other matters;
(b) the price of the Units set forth in this Agreement was established by the
Company following discussions and arms-length negotiations with the Purchasers, and the
Company is capable of evaluating and understanding, and understands and accepts, the terms,
risks and conditions of the transactions contemplated by this Agreement;
(c) it has been advised that the Placement Agent and Lazard Frères & Co. LLC
and their affiliates are engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the Placement Agent has no
obligation to disclose such interests and transactions to the Company by virtue of any
fiduciary, advisory or agency relationship; and
(d) it waives, to the fullest extent permitted by law, any claims it may have
against the Placement Agent for breach of fiduciary duty and agrees that the Placement Agent
shall have no liability (whether direct or indirect) to the Company in respect of
such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf
of or in right of the Company, including stockholders, employees or creditors of the
Company.
12. Successors; Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Placement Agent, the Company, and their
respective successors and assigns. This Agreement shall also inure to the benefit of Lazard Frères
& Co. LLC, the Purchasers (with respect solely to Section 3 hereof), and each of their respective
successors and assigns, which shall be third party beneficiaries of this Agreement or Section 3 of
this Agreement, as applicable. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, other than the persons mentioned in the preceding sentences,
any legal or equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions hereof being intended
to be and being for the sole and exclusive benefit of such persons and for the benefit of no other
person; except that the representations, warranties, covenants, agreements and indemnities of the
Company contained in this Agreement shall also be for the benefit of the Placement Agent
Indemnified Parties and the indemnities of the Placement Agent shall be for the benefit of the
Company Indemnified Parties. It is understood that the Placement Agent’s responsibility to the
Company is solely contractual in nature and the Placement Agent does not owe the Company, or any
other party, any fiduciary duty as a result of this Agreement.
13. Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations, warranties and other statements of
the Company and the Placement Agent, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Placement Agent, the Company, the Purchasers or any person controlling
any of them and shall survive delivery of and payment for the Units. Notwithstanding any
termination of this Agreement, including without limitation any termination pursuant to
Sections 9 or 10, the indemnity and contribution agreements contained in
Section 8 and the covenants, representations, warranties set forth in this Agreement shall
not terminate and shall remain in full force and effect at all times.
14. Notices. All statements, requests, notices and agreements hereunder
shall be in writing, and:
(a) if to the Placement Agent, shall be delivered or sent by mail, telex,
facsimile transmission or email to LAZARD CAPITAL MARKETS LLC, Attention: General Counsel,
Fax: ▇▇▇-▇▇▇-▇▇▇▇; and
(b) if to the Company, shall be delivered or sent by mail, telex, facsimile
transmission or email to CRITICAL THERAPEUTICS, INC., Attention: General Counsel, Fax: (▇▇▇)
▇▇▇-▇▇▇▇.
provided, however, that any notice to the Placement Agent pursuant to Section 8 shall be
delivered or sent by mail, telex or facsimile transmission to the Placement Agent at its address
set forth in its acceptance telex to the Placement Agent, which address will be supplied to any
other party hereto by the Placement Agent upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof, except that any such statement,
request, notice or agreement delivered or sent by email shall take effect at the time of
confirmation of receipt thereof by the recipient thereof.
15. Definition of Certain Terms. For purposes of this Agreement, “business
day” means any day on which the New York Stock Exchange, Inc. is open for trading.
16. Governing Law, Agent For Service and Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of New York, including
without limitation Section 5-1401 of the New York General Obligations Law. No legal proceeding may
be commenced, prosecuted or continued in any court other than the courts of the State of New York
located in the City and County of New York or in the United States District Court for the Southern
District of New York, which courts shall have jurisdiction over the adjudication of such matters,
and the Company and the Placement Agent each hereby consent to the jurisdiction of such courts and
personal service with respect thereto. The Company and the Placement Agent each hereby consent to
personal jurisdiction, service and venue in any court in which any legal proceeding arising out of
or in any way relating to this Agreement is brought by any third party against the Company or the
Placement Agent. The Company and the Placement Agent each hereby waive all right to trial by jury
in any legal proceeding (whether based upon contract, tort or otherwise) in any way arising out of
or relating to this Agreement. The Company agrees that a final judgment in any such legal
proceeding brought in any such court shall be conclusive and binding upon the Company and the
Placement Agent and may be enforced in any other courts in the jurisdiction of which the Company is
or may be subject, by suit upon such judgment.
17. Placement Agent’s Information. The parties hereto acknowledge and
agree that, for all purposes of this Agreement, the Placement Agent’s Information consists solely
of the following information in the Prospectus: (i) the last paragraph on the front cover page
concerning the terms of the offering by the Placement Agent; and (ii) the statements concerning the
Placement Agent contained in the first paragraph and concerning the Placement Agent and Lazard
Freres & Co LLC in the seventh paragraph, in each case under the heading “Plan of Distribution.”
18. Partial Unenforceability. The invalidity or unenforceability of any
section, paragraph, clause or provision of this Agreement shall not affect the validity or
enforceability of any other section, paragraph, clause or provision hereof. If any section,
paragraph, clause or provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as
are necessary to make it valid and enforceable.
19. General. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter hereof. In this
Agreement, the masculine, feminine and neuter genders and the singular and the plural include one
another. The section headings in this Agreement are for the convenience of the parties only and
will not affect the construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be waived, only by a
writing signed by the Company and the Placement Agent.
20. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument and such signatures may be delivered by facsimile.
If the foregoing is in accordance with your understanding of the agreement between the Company
and the Placement Agent, kindly indicate your acceptance in the space provided for that purpose
below.
| Very truly yours, | ||||||
| CRITICAL THERAPEUTICS, INC. | ||||||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||
| Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||||
| Title: President | ||||||
| Accepted as of the date first above written: |
||||||
| LAZARD CAPITAL MARKETS LLC | ||||||
By: |
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||||
| Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | ||||||
| Title: Managing Director | ||||||
EXHIBIT A
Form of Subscription Agreement
Exhibit A
SUBSCRIPTION AGREEMENT
Critical Therapeutics, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
The undersigned (the “Investor”) hereby confirms its agreement with you as follows:
1. This Subscription Agreement (this “Agreement”) is made as of the date set forth below
between Critical Therapeutics, Inc., a Delaware corporation (the “Company”), and the Investor.
2. The Company has authorized the sale and issuance to certain investors of up to an aggregate
of [___] units (the “Units”), each consisting of (i) one share (the “Share,” collectively,
the “Shares”) of its Common Stock, par value $0.001 per share (the “Common Stock”), and (ii) one
warrant (the “Warrant,” collectively, the “Warrants”) to purchase [___] Shares of Common Stock (and
the fraction amount being the “Warrant Ratio”), in substantially the form attached hereto as
Exhibit B, subject to adjustment by the Company’s Board of Directors, or a committee
thereof, for a purchase price of $[___] per Unit (the “Purchase Price”). The Shares issuable upon
exercise of the Warrants are referred to herein as the “Warrant Shares” and, together with the
Units, the Shares and the Warrants, are referred to herein as the “Securities”).
3. The offering and sale of the Units (the “Offering”) are being made pursuant to (1) an
effective Registration Statement on Form S-3 (including the Prospectus contained therein (the “Base
Prospectus”), the “Registration Statement”) filed by the Company with the Securities and Exchange
Commission (the “Commission”), (2) if applicable, certain “free writing prospectuses” (as that term
is defined in Rule 405 under the Securities Act of 1933, as amended), that have or will be filed
with the Commission and delivered to the Investor on or prior to the date hereof, (3) a Preliminary
Prospectus Supplement (the “Preliminary Prospectus Supplement”), containing certain supplemental
information regarding the Company that has been delivered to the Investor and that will be filed
with the Commission, and (4) a Final Prospectus Supplement (the “Final Prospectus Supplement,” and
together the Base Prospectus, the “Final Prospectus”) containing the final terms of the Offering
that has been delivered to the Investor and that will be filed with the Commission.
4. The Company and the Investor agree that the Investor will purchase from the Company and the
Company will issue and sell to the Investor the Units set forth below for the aggregate purchase
price set forth below. The Units shall be purchased pursuant to the Terms and Conditions for
Purchase of Units attached hereto as Annex I and incorporated herein by this reference as
if fully set forth herein. The Investor acknowledges that the Offering is not being underwritten
by the placement agent (the “Placement Agent”) named in the Final Prospectus and that there is no
minimum offering amount.
5. The manner of settlement of the Shares included in the Units purchased by the Investor
shall be determined by such Investor as follows (check one):
| [____] | A. | Delivery by electronic book-entry at The Depository Trust Company (“DTC”), registered in the Investor’s name and address as set forth below, and released by Mellon Investor Services LLC, the Company’s transfer agent (the “Transfer Agent”), to the Investor at the Closing. NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL: | ||||||
| (I) | DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH THE SHARES ARE MAINTAINED TO SET UP A DEPOSIT/WITHDRAWAL AT CUSTODIAN (“DWAC”) INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND |
|||||||
| (II) | REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE UNITS BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING ACCOUNT: |
|||||||
| THE CITIBANK PRIVATE BANK | ||||||||
| ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ | ||||||||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||||||
| ABA # ▇▇▇-▇▇▇-▇▇▇ | ||||||||
| Account Name: Critical Therapeutics, Inc. | ||||||||
| Account Number: 009967564480 | ||||||||
| — OR — | ||||||||
| [____] | B. | Delivery versus payment (“DVP”) through DTC (i.e., the Company shall deliver Shares registered in the Investor’s name and address as set forth below and released by the Transfer Agent to the Investor at the Closing directly to the account(s) at Lazard Capital Markets LLC (“LCM”) identified by the Investor and simultaneously therewith payment shall be made from such account(s) to the Company through DTC). NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL: | ||||||
| (I) | NOTIFY LCM OF THE ACCOUNT OR ACCOUNTS AT LCM TO BE CREDITED WITH THE SHARES BEING PURCHASED BY SUCH INVESTOR, AND |
|||||||
| (II) | CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT LCM TO BE CREDITED WITH THE SHARES BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE UNITS BEING PURCHASED BY THE INVESTOR. | |||||||
IT IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR CONFIRM THE
PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR SETTLEMENT BY WAY OF DWAC OR DVP IN A
TIMELY
MANNER. IF THE INVESTOR DOES NOT DELIVER THE AGGREGATE PURCHASE PRICE FOR THE SHARES OR DOES
NOT MAKE PROPER ARRANGEMENTS FOR SETTLEMENT IN A TIMELY MANNER, THE UNITS MAY NOT BE DELIVERED AT
CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING ALTOGETHER, AT THE
COMPANY’S DISCRETION.
6. The executed Warrant shall be delivered in accordance with the terms thereof.
7. The Investor represents that, except as set forth below, (a) it has had no position, office or
other material relationship within the past three years with the Company or persons known to it to
be affiliates of the Company, (b) it is not a NASD member or an Associated Person (as such term is
defined under the NASD Membership and Registration Rules Section 1011) as of the Closing, and (c)
it, after giving effect to the transactions contemplated hereby, will not, either individually or
with a group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)), be the beneficial owner of 20% or more of the Company’s outstanding Common
Stock. For purposes of this Section 6, beneficial ownership shall be determined pursuant to a Rule
13d-3 under the Exchange Act. Exceptions:
(If no exceptions, write “none.” If left blank, response will be deemed to be “none.”)
7. The Investor represents that it has received (i) the final Base Prospectus, dated September 11,
2006, which is a part of the Company’s Registration Statement, (ii) the documents incorporated by
reference therein (or otherwise made available to it by the filing by the Company of an electronic
version thereof with the Commission), (iii) any free writing prospectus and (iv) the Preliminary
Prospectus Supplement (collectively, the “Disclosure Package”) prior to the execution by the
Investor of this Agreement. The Investor understands that prior to delivery of this Agreement to
the Company the Investor will receive the Final Prospectus.
8. No offer by the Investor to buy Units will be accepted and no part of the Purchase Price will be
delivered to the Company until the Investor has received the Final Prospectus and the Company has
accepted such offer by countersigning a copy of this Agreement, and any such offer may be withdrawn
or revoked by the Investor, without obligation or commitment of any kind, at any time prior to the
Company (or a Placement Agent on behalf of the Company) sending (orally, in writing, or by
electronic mail) notice of its acceptance of such offer. An indication of interest will involve no
obligation or commitment of any kind until this Agreement is accepted and countersigned by or on
behalf of the Company. The Investor understands and agrees that the Company, in its sole
discretion, reserves the right to accept or reject this subscription for Units, in whole or in
part.
Number of Units:
|
||
Purchase Price Per Unit: $ |
||
Aggregate Purchase Price: $ |
||
Please confirm that the foregoing correctly sets forth the agreement between us by signing in
the space provided below for that purpose.
| Dated as of: October 26, 2006 | ||||
| INVESTOR | ||||
| By: | ||||
| Print Name: | ||||
| Title: | ||||
| Address: | ||||
Agreed and Accepted
this 26th day of October, 2006:
this 26th day of October, 2006:
CRITICAL THERAPEUTICS, INC.
By:
|
||||
| Title: President | ||||
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF UNITS
1. Authorization and Sale of the Units. Subject to the terms and conditions of this
Agreement, the Company has authorized the sale of the Units.
2. Agreement to Sell and Purchase the Units; Placement Agent.
2.1 At the Closing (as defined in Section 3.1), the Company will sell to the Investor,
and the Investor will purchase from the Company, upon the terms and conditions set forth herein,
the number of Units set forth on the last page of the Agreement to which these Terms and Conditions
for Purchase of Units are attached as Annex I (the “Signature Page”) for the aggregate
purchase price therefor set forth on the Signature Page.
2.2 The Company proposes to enter into substantially this same form of Subscription Agreement
with certain other investors (the “Other Investors”) and expects to complete sales of Units to
them. The Investor and the Other Investors are hereinafter sometimes collectively referred to as
the “Investors,” and this Agreement and the Subscription Agreements executed by the Other Investors
are hereinafter sometimes collectively referred to as the “Agreements.”
2.3 Investor acknowledges that the Company has agreed to pay Lazard Capital Markets LLC (the
“Placement Agent”) a fee (the “Placement Fee”) in respect of the sale of Units to the Investor.
2.4 The Company has entered into a Placement Agent Agreement, dated October 26, 2006 (the
“Placement Agreement”), with the Placement Agent. Under Section 3 of the Placement Agreement, the
Company has made representations and warranties to the Placement Agent and the Investors, which the
Investors shall be entitled to rely upon as third party beneficiaries thereof.
3. Closings and Delivery of the Units and Funds.
3.1 Closing. The completion of the purchase and sale of the Units (the “Closing”)
shall occur at a place and time (the “Closing Date”) to be specified by the Company and the
Placement Agent, and of which the Investors will be notified in advance by the Placement Agent, in
accordance with Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). At the Closing, (a) the Company shall cause the Transfer Agent to deliver to the
Investor the number of Shares set forth on the Signature Page registered in the name of the
Investor or, if so indicated on the Investor Questionnaire attached hereto as Exhibit A, in
the name of a nominee designated by the Investor and (b) the Company shall cause to be delivered to
the Investor a Warrant to purchase a number of whole Warrant Shares determined by multiplying the
Number of Shares (and Units) set forth on the signature page by the Warrant Ratio and rounding down
to the nearest whole number, and (c) the aggregate purchase price for the Units being purchased by
the Investor will be delivered by or on behalf of the Investor to the Company.
3.2 Conditions to the Company’s Obligations. The Company’s obligation to issue and
sell the Units to the Investor shall be subject to: (i) the receipt by the Company of the purchase
price for the Units being purchased hereunder as set forth on the Signature Page and (ii) the
accuracy of the representations and warranties made by the Investor pursuant to this Agreement,
including the Terms and Conditions for Purchase of Units, and the fulfillment of those undertakings
of
the Investor to be fulfilled prior to the Closing Date pursuant to this Agreement, including
the Terms and Conditions for Purchase of Units.
3.3 Conditions to the Investor’s Obligations. The Investor’s obligation to purchase
the Units will be subject to the accuracy of the representations and warranties made by the Company
and the fulfillment of those undertakings of the Company to be fulfilled prior to the Closing Date
pursuant to this Agreement and Section 7 of the Placement Agreement, and to the condition that the
Placement Agent shall not have: (i) terminated the Placement Agreement pursuant to the terms
thereof or (ii) determined that the conditions to the closing in the Placement Agreement have not
been satisfied. The Investor’s obligations are expressly not conditioned on the purchase by any or
all of the Other Investors of the Units that they have agreed to purchase from the Company.
3.4 Delivery of Funds.
(a) Delivery by Electronic Book-Entry at The Depository Trust Company. If the
Investor elects to settle the Shares purchased by such Investor through delivery by electronic
book-entry at DTC, no later than one (1) business day after the execution of this Agreement by
the Investor and the Company, the Investor shall remit by wire transfer the amount of funds
equal to the aggregate purchase price for the Units being purchased by the Investor to the
following account designated by the Company and the Placement Agent pursuant to the terms of that
certain Escrow Agreement (the “Escrow Agreement”) dated as of October 26, 2006, by and among the
Company, the Placement Agent and ▇▇▇▇▇ Raysman ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP (the “Escrow Agent”):
| THE CITIBANK PRIVATE BANK | ||
| ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| ABA # ▇▇▇-▇▇▇-▇▇▇ | ||
| Account Name: Critical Therapeutics, Inc. | ||
| Account Number: 009967564480 |
Such funds shall be held in escrow until the Closing and delivered by the Escrow Agent on
behalf of each Investor to the Company upon the satisfaction, in the sole judgment of the Placement
Agent, of the conditions set forth in Section 3.3 hereof. The Placement Agent shall have no rights
in or to any of the escrowed funds, unless the Placement Agent and the Escrow Agent are notified in
writing by the Company in connection with the Closing that a portion of the escrowed funds shall be
applied to the Placement Fee. The Company and the Investor agree to indemnify and hold the Escrow
Agent harmless from and against any and all losses, costs, damages, expenses and claims (including,
without limitation, court costs and reasonable attorneys fees) (“Losses”) arising under this
Section 3.4 or otherwise with respect to the funds held in escrow pursuant hereto or
arising under the Escrow Agreement, unless it is finally determined that such Losses resulted
directly from the willful misconduct or gross negligence of the Escrow Agent. Anything in this
Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for any
special, indirect or consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or
damage and regardless of the form of action.
Investor shall also furnish to the Placement Agent a completed W-9 form (or, in the case of an
Investor who is not a United States citizen or resident, a W-8 form).
Investor acknowledges that the Escrow Agent acts as counsel to the Placement Agent, and shall
have the right to continue to represent the Placement Agent, in any action, proceeding, claim,
litigation, dispute, arbitration or negotiation in connection with the Offering, and Investor
hereby consents thereto and waives any objection to the continued representation of the Placement
Agent by the Escrow Agent in connection therewith based upon the services of the Escrow Agent under
the Escrow Agreement, without waiving any duty or obligation the Escrow Agent may have to any other
person.
(b) Delivery Versus Payment through The Depository Trust Company. If the Investor
elects to settle the Shares purchased by such Investor by delivery versus payment through DTC,
no later than one (1) business day after the execution of this Agreement by the Investor and
the Company, the Investor shall confirm that the account or accounts at Lazard Capital Markets
LLC (“LCM”) to be credited with the Shares being purchased by the Investor have a minimum balance
equal to the aggregate purchase price for the Units being purchased by the Investor.
3.5 Delivery of Shares.
(a) Delivery by Electronic Book-Entry at The Depository Trust Company. If the
Investor elects to settle the Shares purchased by such Investor through delivery by electronic
book-entry at DTC, no later than one (1) business day after the execution of this Agreement by
the Investor and the Company, the Investor shall direct the broker-dealer at which the account
or accounts to be credited with the Shares being purchased by such Investor are maintained, which
broker/dealer shall be a DTC participant, to set up a Deposit/Withdrawal at Custodian (“DWAC”)
instructing Mellon Investor Services LLC, the Company’s transfer agent, to credit such account or
accounts with the Shares by means of an electronic book-entry delivery. Such DWAC shall indicate
the settlement date for the deposit of the Shares, which date shall be provided to the Investor by
the Placement Agent. Simultaneously with the delivery to the Company by the Escrow Agent of the
funds held in escrow pursuant to Section 3.4 above, the Company shall direct its transfer
agent to credit the Investor’s account or accounts with the Shares pursuant to the information
contained in the DWAC.
(b) Delivery Versus Payment through The Depository Trust Company. If the Investor
elects to settle the Shares purchased by such Investor by delivery versus payment through DTC,
no later than one (1) business day after the execution of this Agreement by the Investor and
the Company, the Investor shall notify LCM of the account or accounts at LCM to be credited
with the Shares being purchased by such Investor. On the Closing Date, the Company shall deliver
the Shares to the Investor directly to the account(s) at LCM identified by Investor and
simultaneously therewith payment shall be made from such account(s) to the Company through DTC.
4. Representations, Warranties and Covenants of the Investor.
The Investor represents and warrants to, and agrees with, the Company and the Placement Agent
that:
4.1 The Investor (a) is knowledgeable, sophisticated and experienced in making, and is
qualified to make decisions with respect to, investments in shares presenting an investment
decision like that involved in the purchase of the Units, including investments in securities
issued by the Company and investments in comparable companies, (b) has answered all questions on
the Signature Page and the Investor Questionnaire and the answers thereto are true and correct as
of the date hereof
and will be true and correct as of the Closing Date and (c) in connection with its decision to
purchase the number of Units set forth on the Signature Page, has received and is relying only upon
the Disclosure Package and the Final Prospectus and the documents incorporated by reference
therein.
4.2 (a) No action has been or will be taken in any jurisdiction outside the United States by
the Company or the Placement Agent that would permit an offering of the Units, or possession or
distribution of offering materials in connection with the issue of the Securities in any
jurisdiction outside the United States where action for that purpose is required, (b) if the
Investor is outside the United States, it will comply with all applicable laws and regulations in
each foreign jurisdiction in which it purchases, offers, sells or delivers the Securities or has in
its possession or distributes any offering material, in all cases at its own expense and (c) the
Placement Agent is not authorized to make and has not made any representation, disclosure or use of
any information in connection with the issue, placement, purchase and sale of the Units, except as
set forth or incorporated by reference in the Base Prospectus or the Final Prospectus.
4.3 (a) The Investor has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken all necessary action
to authorize the execution, delivery and performance of this Agreement, and (b) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law) and except as to the enforceability of any rights to indemnification or contribution that may
be violative of the public policy underlying any law, rule or regulation (including any federal or
state securities law, rule or regulation).
4.4 The Investor understands that nothing in this Agreement, the Disclosure Package, the Final
Prospectus or any other materials presented to the Investor in connection with the purchase and
sale of the Units constitutes legal, tax or investment advice. The Investor has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of Units.
4.5 Since the earlier to occur of (i) the date on which the Placement Agent first contacted
such Investor about the Offering and (ii) the date that is the tenth (10th) trading day
prior to the date of this Agreement, it has not engaged in any transactions in the securities of
the Company (including, without limitation, any Short Sales involving the Company’s securities).
Each Investor covenants that it will not engage in any transactions in the securities of the
Company (including Short Sales) prior to the time that the transactions contemplated by this
Agreement are publicly disclosed. Each Investor agrees that it will not use any of the Units
acquired pursuant to this Agreement to cover any short position in the Common Stock if doing so
would be in violation of applicable securities laws. For purposes hereof, “Short Sales” include,
without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under
the Exchange Act, whether or not against the box, and all types of direct and indirect stock
pledges, forward sales contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements (including
on a total return basis), and sales and other transactions through non-US broker dealers or foreign
regulated brokers.
5. Survival of Representations, Warranties and Agreements; Third Party Beneficiary.
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made by the Company
and the Investor herein will survive the execution of the Agreement, the delivery to the Investor
of the Units being purchased and the payment therefor. The Placement Agent and Lazard Fréres & Co.
shall be third party beneficiaries with respect to the representations, warranties and agreements
of the Investor in Section 4 hereof.
6. Notices. All notices, requests, consents and other communications hereunder will be in
writing, will be mailed (a) if within the domestic United States by first-class registered or
certified airmail, or nationally recognized overnight express courier, postage prepaid, or by
facsimile or (b) if delivered from outside the United States, by International Federal Express or
facsimile, and will be deemed given (i) if delivered by first-class registered or certified mail
domestic, three business days after so mailed, (ii) if delivered by nationally recognized overnight
carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two
business days after so mailed and (iv) if delivered by facsimile, upon electric confirmation of
receipt and will be delivered and addressed as follows:
(a) if to the Company, to:
| Critical Therapeutics, Inc. | ||
| ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Attention: General Counsel | ||
| Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ | ||
| with copies to: | ||
| ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ LLP | ||
| ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ |
(b) if to the Investor, at its address on the Signature Page hereto, or at such
other address or addresses as may have been furnished to the Company in writing.
7. Changes. This Agreement may not be modified or amended except pursuant to an instrument
in writing signed by the Company and the Investor.
8. Headings. The headings of the various sections of this Agreement have been inserted for
convenience of reference only and will not be deemed to be part of this Agreement.
9. Severability. In case any provision contained in this Agreement should be invalid,
illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein will not in any way be affected or impaired thereby.
10. Governing Law. This Agreement will be governed by, and construed in accordance with,
the internal laws of the State of New York, without giving effect to the principles of
conflicts of law that would require the application of the laws of any other jurisdiction.
11. Counterparts. This Agreement may be executed in two or more counterparts, each of which
will constitute an original, but all of which, when taken together, will constitute but one
instrument, and will become effective when one or more counterparts have been signed by each
party hereto and delivered to the other parties.
12. Confirmation of Sale. The Investor acknowledges and agrees that such Investor’s receipt
of the Company’s counterpart to this Agreement shall constitute written confirmation of the
Company’s sale of Units to such Investor and an acceptance of such Investor’s offer to
purchase such Units.
13. Press Release. The Company and the Investor agree that the Company shall issue one or
more press releases (a) announcing the Offering and (b) disclosing any material, non-public
information regarding the proposed restructuring of the Company that was described in the
Final Prospectus prior to the opening of the financial markets in New York City on the
business day immediately after the date hereof.
14. Termination. In the event that the Placement Agreement is terminated by the Placement
Agent pursuant to the terms thereof, the Agreement shall terminate without any further
action on the part of the parties hereto.
15. Assignability of Agreement. The Agreement and the Investor’s rights, obligations and
interest under the Agreement, including the Terms and Conditions for Purchase of Units, are
not transferable or assignable by the Investor.