Exhibit 1.1
HYBRIDON, INC.
PLACEMENT AGENCY AGREEMENT
April 15, 2004
PLACEMENT AGENCY AGREEMENT
April 15, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ Curham Ford & Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Hybridon, Inc., a Delaware corporation (the "Company"), proposes to issue
and sell to certain investors (collectively, the "Investors") a minimum of
160,000 Units consisting of an aggregate of 16,000,000 shares of Common Stock,
$.001 par value per share (the "Common Stock"), and warrants to purchase an
aggregate of 2,880,000 shares of Common Stock (the "Minimum Units") and a
maximum of 169,000 Units consisting of an aggregate of 16,900,000 shares of
Common Stock and warrants to purchase an aggregate of 3,042,000 shares of Common
Stock (the "Maximum Units"). The shares of Common Stock to be issued as part of
the Units are hereinafter referred to as the "Shares", the warrants to be issued
as part of the Units are hereinafter referred to as the "Warrants" and Units
referred to herein are hereinafter referred to as the "Units". The terms and
conditions of the Warrants are set forth in the form of the Warrants attached
hereto as Exhibit A, including the exercise price thereof. The Company desires
to engage ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC ("TWP") as its exclusive lead placement
agent and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Curham Ford & Co. as its exclusive
co-placement agents (together with TWC, each a "Placement Agent" and together,
the "Placement Agents") in connection with such issuance and sale. The Shares,
the Warrants and the shares of Common Stock issuable upon exercise of the
Warrants (the "Warrant Shares") are described in the Prospectus that is referred
to below.
The Company has prepared and filed, in accordance with the provisions of
the Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Act"), with the Securities and Exchange Commission (the
"Commission") a registration statement under the Act on Form S-3 (File No.
333-111903) dated January 14, 2004. Such registration statement has been
declared by the Commission to be effective under the Act. The Company will file
with the Commission pursuant to Rule 424(b) under the Act a final prospectus
supplement to the Basic Prospectus (as defined below), describing the Shares,
the Warrants and the Warrant Shares, and the offering thereof, in such form as
has been provided to the Placement Agents.
The term "Registration Statement" as used in this Agreement means the
registration statement identified above, at the time it became effective and as
supplemented or amended prior to the execution of this Agreement, including (i)
all financial schedules and exhibits thereto and (ii) all documents incorporated
by reference or deemed to be incorporated by reference therein prior to the
execution of this Agreement. The term "Basic Prospectus" as used in this
Agreement means the basic prospectus that was included as part of the
Registration Statement at the time it was declared effective. The term
"Prospectus Supplement" as used in this Agreement means any final prospectus
supplement specifically relating to the Shares, the Warrants and the Warrant
Shares, in the form filed with, or transmitted for filing to, the Commission
pursuant to Rule 424 under the Act. The term "Prospectus" as used in this
Agreement means the Basic Prospectus together with the Prospectus Supplement
except that if such Basic Prospectus is amended or supplemented on or prior to
the date on which the Prospectus Supplement was first filed pursuant to Rule
424, the term "Prospectus" shall refer to the Basic Prospectus as so amended or
supplemented and as supplemented by the Prospectus Supplement. Any reference
herein to the registration statement, the Registration Statement, the Basic
Prospectus, any Prospectus Supplement or the Prospectus shall be deemed to refer
to and include (i) the documents incorporated by reference therein pursuant to
Form S-3 that are filed prior to the execution of this Agreement (the
"Incorporated Documents") and (ii) the copy of the Registration Statement, the
Basic Prospectus, the Prospectus Supplement, the Prospectus or the Incorporated
Documents filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("▇▇▇▇▇"). Any reference herein to the terms
"amend," "amendment" or "supplement" with respect to the Registration Statement,
the Prospectus Supplement or the Prospectus shall be deemed to refer to and
include the filing of any document under the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (collectively, the "Exchange
Act") after the effective date of the Registration Statement, or the date of the
Prospectus, as the case may be, deemed to be incorporated therein by reference.
As used herein, "business day" shall mean a day on which the New York Stock
Exchange (the "NYSE") is open for trading.
The Company hereby confirms its agreement with each Placement Agent as
follows:
1. Agreement to Act as Placement Agent. Upon the basis of the
representations and warranties of the Company and subject to the terms and
conditions set forth in this Agreement, the Company engages each Placement Agent
to act, and each Placement Agent agrees to act, together with each other
Placement Agent, as the Company's exclusive placement agent, on a best efforts
basis, in connection with the offer and sale by the Company of Shares and
Warrants to the Investors. As compensation for services rendered, at the time of
purchase (as defined below) the Company shall pay to the Placement Agents, by
Federal Funds wire transfer to an account or accounts designated by the
Placement Agents, an aggregate amount equal to 7.0% of the gross proceeds
received by the Company in respect of the sale of the Units (the "Fee"), with
40% of the Fee payable to TWP, 40% of the Fee payable to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and
20% of the Fee payable to ▇▇▇▇▇▇▇▇, Curham Ford & Co. The purchase price for a
Unit consisting of one hundred (100) Shares and Warrants to purchase 18 shares
of Common Stock is $70.00.
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This Agreement shall not give rise to any commitment by the Placement
Agents or any of their affiliates to underwrite or purchase any of the Units or
otherwise provide any financing, and the Placement Agents shall have no
authority to bind the Company in respect of the sale of any Units. The sale of
the Units shall be made pursuant to purchase agreements in substantially the
form included as Exhibit B hereto (the "Purchase Agreements").
2. Payment and Delivery. Subject to the terms and conditions hereof,
payment of the purchase price for, and delivery of the Shares and the Warrants
shall be made at the office of ▇▇▇▇ and ▇▇▇▇, LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ (or at such other place as shall be agreed upon by the Placement Agents
and the Company), at 10:00 A.M., New York City time, on April 20, 2004 (unless
another time shall be agreed to by the Placement Agents and the Company).
Subject to the terms and conditions hereof, payment of the purchase price for
the Units shall be made to the Company by Federal Funds wire transfer, against
delivery of (i) the Shares (through the facilities of The Depository Trust
Company ("DTC")) and (ii) executed Warrants, to such persons, and the Shares and
the Warrants shall be registered in such name or names and shall be in such
denominations, as the Placement Agents may request at least one business day
before the time of purchase (as defined below). Payment of the purchase price
for the Units shall be made at the time of purchase by the purchasers thereof
directly to the Company. The time at which such payment and delivery are to be
made is hereinafter sometimes called "the time of purchase." With respect to
Warrant Shares, "the time of purchase" shall mean the time at which payment of
the exercise price of a Warrant is made against delivery of the underlying
Warrant Shares. Electronic transfer of the Shares shall be made at the time of
purchase in such names and in such denominations as is set forth in the Purchase
Agreements.
Deliveries of the documents described in Section 6 hereof with respect to
the purchase of the Units shall be made at the offices of ▇▇▇▇ and ▇▇▇▇, LLP, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, at 9:00 A.M., New York City time, on the date of
the closing of the purchase of the Shares and the Warrants.
3. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each Placement Agent that:
(a) the Registration Statement has been declared effective under the
Act; no stop order of the Commission preventing or suspending the use of the
Basic Prospectus, the Prospectus Supplement or the Prospectus or the
effectiveness of the Registration Statement has been issued and no proceedings
for such purpose have been instituted and are pending or, to the Company's
knowledge, are threatened by the Commission; at the time the Registration
Statement was declared effective, the Company was eligible to use Form S-3 in
connection with the offering contemplated by the Registration Statement; and
such Registration Statement at the date of this Agreement meets, and the
offering of the Shares, the Warrants and the Warrant Shares complies with, the
requirements of Rule 415 under the Act. The Registration Statement complied when
it became effective, complies and will comply, at the time of purchase, and the
Basic Prospectus and the Prospectus Supplement conformed as of its date, conform
and will conform at the time of purchase in all material respects with the
requirements of the Act (including said Rule 415); any statutes,
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regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been and will be so described or filed; the
conditions to the use of Form S-3 have been satisfied, to the extent required,
in connection with the offering of the Units; and the Registration Statement did
not at the time of effectiveness, does not and will not at the time of purchase
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 not
misleading, and the Basic Prospectus and the Prospectus Supplement did not as of
its date, does not and will not at the time of purchase 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 light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no warranty or representation with respect to any
statement contained in the Registration Statement or the Prospectus in reliance
upon and in conformity with information concerning a Placement Agent and
furnished in writing by or on behalf of such Placement Agent to the Company
expressly for use in the Registration Statement or the Prospectus, including
without limitation the information referenced in Section 9 of this Agreement;
the documents incorporated by reference in the Basic Prospectus, the Prospectus
Supplement, the Registration Statement and the Prospectus, at the time such
documents were filed with the Commission, complied in all material respects with
the requirements of the Exchange Act and 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 light of the circumstances under
which they were made, not misleading; and the Company has not distributed and
will not distribute any offering material in connection with the offering or
sale of the Units other than the Registration Statement and the Prospectus;
(b) as of the date of this Agreement, the Company has an authorized
and outstanding capitalization as set forth in the Registration Statement and
the Prospectus and, as of the time of purchase, the Company shall have an
authorized and outstanding capitalization as set forth in the Registration
Statement and the Prospectus (subject, in each case, to the issuance of shares
of Common Stock upon exercise of stock options and warrants disclosed as
outstanding in the Registration Statement and the Prospectus and grant of
options under existing stock option plans described in the Registration
Statement and the Prospectus); all of the issued and outstanding shares of
capital stock, including the Common Stock, of the Company have been duly
authorized and validly issued and are fully paid and non-assessable, have been
issued in compliance in all material respects with all federal and state
securities laws and were not issued by the Company in violation of any
preemptive right, right of first refusal or similar right to which the Company
was then subject;
(c) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware, with
full corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement and the
Prospectus, to execute and deliver this Agreement and to issue, sell and deliver
the Shares and the Warrants as contemplated herein;
(d) the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of
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its business requires such qualification, except where the failure to be so
qualified and in good standing would not, individually or in the aggregate, have
a material adverse effect on the business, properties, financial condition,
results of operation or prospects of the Company taken as a whole (a "Material
Adverse Effect");
(e) the Company has no subsidiaries (as defined in the Act); the
Company does not own, directly or indirectly, any shares of stock or any other
equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other entity;
and complete and correct copies of the certificate of incorporation and the
bylaws of the Company and all amendments thereto have been delivered to the
Placement Agents, and no changes therein will be made subsequent to the date
hereof and prior to the time of purchase;
(f) the Shares and the Warrants have been duly and validly
authorized and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued, fully paid and non-assessable; the
Warrant Shares have been duly and validly authorized and, when issued and
delivered against payment of the exercise price as provided in the Warrants,
will be duly and validly issued and fully paid; and the issuance by the Company
of the Shares, the Warrants and the Warrant Shares will not be subject to any
statutory or contractual preemptive rights, rights of first refusal or similar
rights to which the Company is then subject;
(g) the capital stock of the Company, including the Shares, the
Warrants and the Warrant Shares, conforms in all material respects to the
description thereof contained in the Registration Statement and the Prospectus,
and the certificates for the Shares are in due and proper form;
(h) this Agreement has been duly authorized, executed and delivered
by the Company;
(i) the Company is not in breach or violation of or in default under
(nor has any event occurred which with notice, lapse of time or both would
result in any breach or violation of, constitute a default under or create or
accelerate the right of the holder of any indebtedness (or a person acting on
such holder's behalf) to require the repurchase, redemption or repayment by the
Company of all or a part of such indebtedness under) the Company's certificate
of incorporation or bylaws, or any indenture, mortgage, deed of trust, bank loan
or credit agreement or other evidence of indebtedness, or any license, lease,
contract or other agreement or instrument to which the Company is a party or by
which the Company or any of its properties may be bound, except for any breach,
violation, default, creation or acceleration that would not have a Material
Adverse Effect, and the execution, delivery and performance of this Agreement,
the issuance and sale of the Shares and the consummation of the transactions
contemplated hereby will not conflict with, result in any breach or violation of
or constitute a default under (nor constitute any event which with notice, lapse
of time or both would result in any breach or violation of or constitute a
default under or create or accelerate the right of the holder of any
indebtedness (or a person acting on such holder's behalf) to require the
repurchase, redemption or repayment of all or a part of such indebtedness under)
the certificate of incorporation or bylaws of the Company, or any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement
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or instrument to which the Company is a party or by which the Company or any of
its properties may be bound, or any federal, state, local or foreign law,
regulation or rule or any decree, judgment or order applicable to the Company,
except for any conflict, breach, violation, default, creation or acceleration
that would not have a Material Adverse Effect;
(j) no approval, authorization, consent or order of or filing with
any federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency or of or with the American Stock Exchange, or
approval of the shareholders of the Company, is required in connection with the
issuance and sale of the Shares or the Warrants or the consummation by the
Company of the transactions contemplated hereby other than registration under
the Act of the offer and sale of the Shares, the Warrants and the Warrant
Shares, which has been effected, and any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the Shares are
being offered, under the terms of this Agreement, under the rules and
regulations of the NASD, or under the rules and regulations of the American
Stock Exchange;
(k) (i) no person has the right, contractual or otherwise, to cause
the Company to issue or sell to it any shares of Common Stock or shares of any
other capital stock or other equity interests of the Company, (ii) no person has
any preemptive rights, resale rights, rights of first refusal or other rights to
purchase any shares of Common Stock or shares of any other capital stock or
other securities of the Company, and (iii) except as provided herein, no person
has the right to act as an underwriter, placement agent or financial advisor to
the Company in connection with and as a result of the offer and sale of the
Shares and the Warrants, in the case of each of the foregoing clauses (i), (ii)
and (iii), whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares or the Warrants as contemplated
thereby or otherwise; no person has the right, contractual or otherwise, to
cause the Company to register under the Act any shares of Common Stock or shares
of any other capital stock or other securities of the Company, or to include any
such shares or interests in the Registration Statement or the offering
contemplated thereby, whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares or the Warrants as contemplated
thereby or otherwise;
(l) the Company has all necessary licenses, authorizations, consents
and approvals and has made all necessary filings required under any federal,
state, local or foreign law, regulation or rule, and has obtained all necessary
authorizations, consents and approvals from other persons, in order to conduct
its business as described in the Registration Statement or the Prospectus,
except where the failure to have such licenses, authorizations, consents or
approvals or to make such filings would not, individually or in the aggregate,
have a Material Adverse Effect; the Company is not in violation of, or in
default under, and has not received notice of any proceedings relating to
revocation or modification of, any such license, authorization, consent or
approval or any federal, state, local or foreign law, regulation or rule or any
decree, order or judgment applicable to the Company, except where such
violation, default, revocation or modification would not, individually or in the
aggregate, have a Material Adverse Effect;
(m) all legal or governmental proceedings, affiliate transactions,
off-balance sheet transactions, contracts, licenses, agreements, leases or
documents of a character required to be
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described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement have been so described or filed as
required;
(n) there are no actions, suits, claims, investigations or
proceedings pending or, to the Company's knowledge, threatened to which the
Company or, to the Company's knowledge, any of the Company's directors or
officers is or would be a party, or of which any of the Company's properties is
or would be subject at law or in equity, before or by any federal, state, local
or foreign governmental or regulatory commission, board, body, authority or
agency, except any such action, suit, claim, investigation or proceeding which
would not result in a judgment, decree or order having, individually or in the
aggregate, a Material Adverse Effect or prevent consummation of the transactions
contemplated hereby;
(o) To the knowledge of the Company, Ernst & Young LLP, whose report
on the consolidated financial statements of the Company is filed with the
Commission as part of the Registration Statement and the Prospectus, are
independent public accountants with respect to the Company as required by the
Act;
(p) the audited financial statements included or incorporated by
reference in the Registration Statement and the Prospectus, together with the
related notes and schedules, present fairly in all material respects the
consolidated financial position of the Company as of the dates indicated and the
consolidated results of operations and cash flows of the Company for the periods
specified and comply in all material respects with the requirements of the Act
and have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved except as
otherwise stated therein; the other financial and statistical data set forth in
the Registration Statement and the Prospectus are fairly presented and prepared
on a basis consistent with the financial statements and books and records of the
Company; there are no financial statements (historical or pro forma) that are
required to be included in the Registration Statement and the Prospectus that
are not included as required; and the Company does not have any material
liabilities or obligations, direct or contingent (including any off-balance
sheet obligations), required to be disclosed in the Registration Statement and
the Prospectus that are not so disclosed;
(q) except as set forth in or as otherwise contemplated by the
Registration Statement or the Prospectus, subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus,
there has not been (i) any material adverse change, or any development that
would reasonably be expected to result in a material adverse change, in the
business, properties, management, financial condition or results of operations
of the Company taken as a whole, (ii) any transaction which is material to the
Company taken as a whole, (iii) any obligation, direct or contingent (including
any off-balance sheet obligations), incurred by the Company outside the ordinary
course of business, which is material to the Company taken as a whole, (iv) any
change in the capital stock (other than the issuance of shares of Common Stock
upon exercise of stock options and warrants disclosed as outstanding in the
Registration Statement and the Prospectus and the grant of options under
existing stock option plans described in the Registration Statement and the
Prospectus) or outstanding indebtedness of the Company other than the repayment
of the amounts due under certain 9% Convertible Subordinated Notes Payable or
(v) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company other than dividends accruing on the Series A
Convertible Preferred Stock of the Company;
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(r) the Company is not, and after giving effect to the offering and
sale of the Shares, the Warrants and the Warrant Shares will not be an
"investment company" or an entity "controlled" by an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(s) the Company has good and marketable title to all property (real
and personal) described in the Registration Statement and in the Prospectus as
being owned by the Company, free and clear of all liens, claims, security
interests or other encumbrances, except for those liens, claims, security
interests and other encumbrances that do not materially interfere with the use
made or proposed to be made of such property by the Company or that would not
have a Material Adverse Effect; all the property described in the Registration
Statement and the Prospectus as being held under lease by the Company or a
Subsidiary is held thereby under valid, subsisting and enforceable leases except
where the failure to be valid, subsisting or enforceable would not have a
Material Adverse Effect;
(t) the Company owns or has the right to use the inventions, patent
applications, patents, trademarks (both registered and unregistered), trade
names, copyrights, trade secrets and other proprietary information described in
the Registration Statement and the Prospectus as being owned or licensed by them
or which are necessary for the conduct of their respective businesses, except
where the failure to own, license or have such rights would not, individually or
in the aggregate, have a Material Adverse Effect (collectively, "Intellectual
Property"); to the Company's knowledge there are no third parties who have
rights to any Intellectual Property that would materially impair the Company's
rights in any Intellectual Property, except for the ownership rights of the
owners of the Intellectual Property which is licensed to the Company; to the
Company's knowledge, there is no infringement by third parties of any
Intellectual Property; there is no pending action, suit, proceeding or, to the
Company's knowledge, threatened claim by others challenging the Company's rights
in or to any Intellectual Property that would, individually or in the aggregate,
have a Material Adverse Effect; there is no pending action, suit, proceeding or,
to the Company's knowledge, threatened claim by others challenging the validity
or scope of any Intellectual Property that would, individually or in the
aggregate, have a Material Adverse Effect; there is no pending action, suit,
proceeding or, to the Company's knowledge, threatened claim by others that the
Company infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary rights of others; to the Company's knowledge, except
as described in the Registration Statement or the Prospectus, there is no patent
or patent application that contains claims that interfere with the issued or
pending claims of any of the Intellectual Property that would, individually or
in the aggregate, have a Material Adverse Effect; and to the Company's
knowledge, there is no prior art that may render any patent application owned by
the Company of the Intellectual Property unpatentable that the Company is
required to disclose to the U.S. Patent and Trademark Office that has not been
disclosed that would, individually or in the aggregate, have a Material Adverse
Effect;
(u) the Company is not engaged in any unfair labor practice; except
for matters which would not, individually or in the aggregate, have a Material
Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or,
to the Company's knowledge, threatened against the
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Company before the National Labor Relations Board, and no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending or threatened, (B) no strike, labor dispute, slowdown or stoppage
pending or, to the Company's knowledge, threatened against the Company and (C)
no union representation dispute currently existing concerning the employees of
the Company, and (ii) to the Company's knowledge, (A) no union organizing
activities are currently taking place concerning the employees of the Company
and (B) the Company has not violated any federal, state, local or foreign law
relating to discrimination in the hiring, promotion or pay of employees, any
applicable wage or hour laws or any provision of the Employee Retirement Income
Security Act of 1974 ("ERISA") or the rules and regulations promulgated
thereunder concerning the employees of the Company;
(v) the Company and its properties, assets and operations are in
compliance with, and the Company holds all permits, authorizations and approvals
required under, Environmental Laws (as defined below), except to the extent that
failure to so comply or to hold such permits, authorizations or approvals would
not, individually or in the aggregate, have a Material Adverse Effect; to the
Company's knowledge, there are no past or present events, conditions,
circumstances, activities, practices, actions, omissions or plans that would
reasonably be expected to give rise to any costs or liabilities to the Company
under, or to interfere with or prevent compliance by the Company with,
Environmental Laws that would have a Material Adverse Effect; the Company (i) is
not, to the Company's knowledge, the subject of any investigation, (ii) has not
received any notice or claim, (iii) is not a party to any pending or, to the
Company's knowledge, threatened action, suit or proceeding, (iv) is not bound by
any judgment, decree or order and (v) has not entered into any agreement, in
each case relating to any alleged violation of any Environmental Law or any
actual or alleged release or threatened release or cleanup at any location of
any Hazardous Materials (as defined below) (as used herein, "Environmental Law"
means any federal, state, local or foreign law, statute, ordinance, rule,
regulation, order, decree, judgment, injunction, permit, license, authorization
or other binding requirement, or common law, relating to health, safety or the
protection, cleanup or restoration of the environment or natural resources,
including those relating to the distribution, processing, generation, treatment,
storage, disposal, transportation, other handling or release or threatened
release of Hazardous Materials, and "Hazardous Materials" means any material
(including, without limitation, pollutants, contaminants, hazardous or toxic
substances or wastes) that is regulated by or may give rise to liability under
any Environmental Law), except as would not, individually or in the aggregate,
have a Material Adverse Effect;
(w) in the ordinary course of its business, the Company conducts a
periodic review of the effect of the Environmental Laws on its business,
operations and properties, in the course of which it seeks to identify and
evaluate associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for cleanup, closure of properties or
compliance with the Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties);
(x) all material tax returns required to be filed by the Company
have been filed, and all taxes and other assessments of a similar nature
(whether imposed directly or through withholding) including any interest,
additions to tax or penalties applicable thereto due or claimed to
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be due from such entities have been paid, other than those being contested in
good faith and for which adequate reserves have been provided;
(y) the Company maintains insurance covering its properties,
operations, personnel and businesses as the Company deems adequate; such
insurance insures against such losses and risks to an extent which is customary
for companies of similar size and of similar stages of product development in
similar industries; all such insurance is fully in force on the date hereof and
will be fully in force at the time of purchase;
(z) the Company has not sustained since the date of the last audited
financial statements included in the Registration Statement and the Prospectus
any material loss or interference with its respective 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;
(aa) except as described in the Registration Statement or the
Prospectus, the Company has not sent or received any communication regarding
termination of, or intent not to renew, any of the contracts or agreements
referred to or described in, or filed as an exhibit to, the Registration
Statement, and no such termination or non-renewal has been threatened by the
Company or, to the Company's knowledge, any other party to any such contract or
agreement;
(bb) the Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
(cc) the Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under
the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company is made known to the
Company's Chief Executive Officer and its Chief Financial Officer by others
within those entities, and such disclosure controls and procedures are effective
to perform the functions for which they were established; the Company's auditors
and the Audit Committee of the Board of Directors have been advised of: (i) any
significant deficiencies in the design or operation of internal controls which
are reasonably likely to adversely affect the Company's ability to record,
process, summarize, and report financial data; and (ii) any fraud, whether or
not material, that involves management or other employees who have a role in the
Company's internal controls; there have been no significant changes in internal
controls over financial reporting that has materially affected the Company's
internal controls over financial reporting; the principal executive officers (or
their equivalents) and principal financial officers (or their equivalents) of
the Company have made all certifications required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act") and any related rules and regulations
promulgated by the Commission, and the statements contained in any such
certification when made were complete and correct; and the Company is otherwise
in
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compliance in all material respects with all applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act that are effective;
(dd) the Company has provided the Placement Agents true, correct,
and complete copies of all documentation pertaining to any extension of credit
in the form of a personal loan made, directly or indirectly, by the Company to
any director or executive officer of the Company, or to any family member or
affiliate of any director or executive officer of the Company that is currently
outstanding; and since December 31, 2003,the Company has not, directly or
indirectly, including through any subsidiary: (i) extended credit, arranged to
extend credit, or renewed any extension of credit, in the form of a personal
loan, to or for any director or executive officer of the Company, or to or for
any family member or affiliate of any director or executive officer of the
Company; or (ii) made any material modification, including any renewal thereof,
to any term of any personal loan to any director or executive officer of the
Company, or any family member or affiliate of any director or executive officer,
which loan was outstanding on December 31, 2003;
(ee) any statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from sources
that the Company believes to be reliable and accurate, and the Company has
obtained the written consent to the use of such data from such sources to the
extent required;
(ff) neither the Company nor, to the Company's knowledge, any
employee or agent of the Company has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or regulation,
which payment, receipt or retention of funds is of a character required to be
disclosed in the Registration Statement or the Prospectus;
(gg) neither the Company nor, to the Company's knowledge, any of its
directors or officers, has taken, directly or indirectly, any action designed,
or which has constituted or might reasonably be expected to cause or result in,
under the Exchange Act or otherwise, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares;
(hh) to the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
directors or 5% or greater securityholders, except as set forth in the
Registration Statement and the Prospectus; and
(ii) the Company has not offered, or caused any Placement Agent to
offer Units to any person with the intent to influence unlawfully (i) a customer
or supplier of the Company to alter the customer's or supplier's level or type
of business with the Company, or (ii) a trade journalist or publication to write
or publish favorable information about the Company or any of their respective
products or services.
In addition, any certificate signed by any officer of the Company and
delivered to a Placement Agent or counsel for a Placement Agent in connection
with the offering of the Units shall be deemed to be a representation and
warranty by the Company, as to matters covered thereby, to each Placement Agent.
-11-
4. Certain Covenants of the Company. The Company hereby agrees:
(a) to furnish such information as may be required and otherwise to
reasonably cooperate in qualifying the Shares, the Warrants and the Warrant
Shares for offering and sale under the securities or blue sky laws of such
states or other jurisdictions as the Placement Agents may reasonably designate;
provided that the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws of any such
jurisdiction; and to promptly advise the Placement Agents of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Shares, the Warrants and the Warrant Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose;
(b) to furnish from time to time to the Placement Agents as many
copies of the Prospectus (or of the Prospectus as amended or supplemented if the
Company shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) as each Placement Agent may
reasonably request for the purposes contemplated by the Act;
(c) if, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or any post-effective amendment thereto
to be declared effective before the Units or the Warrant Shares may be sold, the
Company will endeavor to cause the Registration Statement or such post-effective
amendment to become effective as soon as possible and the Company will advise
the Placement Agents promptly and, if requested by the Placement Agents, will
confirm such advice in writing, (i) when the Registration Statement and any such
post-effective amendment thereto has become effective, and (ii) if Rule 430A
under the Act is used, when the Prospectus is filed with the Commission pursuant
to Rule 424(b) under the Act (which the Company agrees to file in a timely
manner under such Rule);
(d) for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Units to advise the Placement Agents
promptly, confirming such advice in writing, of any request by the Commission
for amendments or supplements to the Registration Statement or the Prospectus or
for additional information with respect thereto, or of notice of institution of
proceedings for, or the entry of a stop order, suspending the effectiveness of
the Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to use its
reasonable efforts to obtain the lifting or removal of such order as soon as
possible; to advise the Placement Agents promptly of any proposal to amend or
supplement the Registration Statement or the Prospectus, including by filing any
documents that would be incorporated therein by reference, to provide the
Placement Agents copies of any such documents for review and comment a
reasonable amount of time prior to any proposed filing and, except as required
by law, to file no such amendment or supplement to which any Placement Agent
shall not unreasonably object in writing;
(e) subject to Section 4(d) hereof, to file promptly all reports and
any definitive proxy or information statement required to be filed by the
Company with the Commission in order to comply with the Exchange Act subsequent
to the date of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Units or Warrant Shares,
and to provide the Placement Agents, during the period subsequent to the date of
the Prospectus and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Units, with a copy of such reports
and statements and other
-12-
documents to be filed by the Company pursuant to Section 13, 14 or 15(d) of the
Exchange Act, a reasonable amount of time prior to any
proposed filing, and to promptly notify the Placement Agents of such filing;
(f) to advise the Placement Agents promptly of the happening of any
event within the time during which a prospectus relating to the Units or Warrant
Shares is required to be delivered under the Act which could require the making
of any change in the Prospectus then being used so that the Prospectus would not
include an untrue statement of material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading, and, during such time, subject to
Section 4(d) hereof, to prepare and furnish, at the Company's expense, to the
Placement Agents promptly such amendments or supplements to such Prospectus as
may be necessary to reflect any such change;
(g) to make generally available to its security holders, and to
deliver to the Placement Agents, an earnings statement of the Company (which
will satisfy the provisions of Section 11(a) of the Act) covering a period of
twelve months beginning at a point after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Act) as soon as is reasonably
practicable, but in no event later than 18 months after the effective date of
the Registration Statement;
(h) to comply with all the undertakings contained in the
Registration Statement;
(i) to furnish, upon reasonable request, to each Placement Agent
promptly and to each of the Investors for a period of five years from the date
of this Agreement (i) copies of any reports, proxy statements, or other
communications which the Company shall send to its shareholders and (ii) copies
of all annual, quarterly and current reports filed with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar forms as may be designated by the
Commission;
(j) to furnish to each Placement Agent as early as practicable prior
to the time of purchase, but not later than two business days prior thereto, a
copy of the latest available unaudited interim consolidated financial
statements, if any, of the Company and the Subsidiaries which have been read by
the Company's independent certified public accountants, as stated in their
letter to be furnished pursuant to Section 6(b) hereof;
(k) to apply the net proceeds from the sale of the Units in the
manner set forth under the caption "Use of Proceeds" in the Prospectus;
(l) to pay all costs, expenses, fees and taxes incurred in
connection with (i) the preparation and filing of the Registration Statement,
the Basic Prospectus, each Prospectus Supplement, the Prospectus, and any
amendments or supplements thereto, and the printing and furnishing of copies of
each thereof to the Placement Agents (including costs of mailing and shipment),
(ii) the registration, issue, sale and delivery of the Shares, the Warrants and
the Warrant Shares, including any stock or transfer taxes and stamp or similar
duties payable upon the sale, issuance or delivery of the Shares and the
Warrants, (iii) the producing and/or printing of this Agreement, any Purchase
Agreements and any closing documents (including
-13-
compilations thereof) and the reproduction and/or printing and furnishing of
copies of each thereof to the Placement Agents and the Investors, (iv) the
qualification of the Shares, the Warrants and the Warrant Shares for offering
and sale under state or foreign laws and the determination of their eligibility
for investment under state or foreign law as aforesaid (including the reasonable
legal fees and filing fees and other disbursements of one counsel for the
Placement Agents in connection therewith) and the printing and furnishing of
copies of any blue sky surveys or legal investment surveys to the Placement
Agents, (v) any listing of the Shares on the American Stock Exchange or any
other securities exchange or qualification of the Shares for quotation on Nasdaq
and any registration thereof under the Exchange Act, (vi) any filing for review
of the public offering of the Shares, the Warrants or the Warrant Shares by the
NASD, including the reasonable legal fees and filing fees and other
disbursements of one counsel to the Placement Agents in connection therewith,
(vii) the fees and disbursements of any transfer agent or registrar for the
Shares, Warrants and Warrant Shares, (viii) the costs and expenses of the
Company relating to any presentations or meetings undertaken in connection with
the marketing of the offering and sale of the Shares and the Warrants to
prospective investors and each Placement Agent's sales forces, including,
without limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged by the Company in
connection with the road show presentations, travel, lodging and other expenses
incurred by the officers of the Company and any such consultants and (ix) the
performance of the Company's other obligations hereunder;
(m) to use its best efforts to cause the Common Stock to be listed
on the American Stock Exchange;
(n) not to sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of or
agree to dispose of, directly or indirectly, any Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock or warrants or
other rights to purchase Common Stock or any other securities of the Company
that are substantially similar to Common Stock, or file or cause to be declared
effective a registration statement under the Act relating to the offer and sale
of any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock or other rights to purchase Common Stock or any
other securities of the Company that are substantially similar to Common Stock
for a period of 90 days after the date hereof (the "Lock-Up Period"), without
the prior written consent of TWP, except for (i) the registration of the Shares,
the Warrants and the Warrant Shares and the sales of the Shares and the Warrants
pursuant to this Agreement, (ii) securities issued pursuant to stock option
plans, deferred compensation plans, restricted stock plans and employee stock
purchase plans existing on, or upon the conversion, exchange or exercise of
convertible or exchangeable securities or warrants outstanding as of, the date
of this Agreement; and (iii) the issuance by the Company of any shares of Common
Stock as consideration for mergers, acquisitions, other business combinations,
licenses or strategic alliances, occurring after the date of this Agreement,
provided that each recipient of shares pursuant to this clause (iii) agrees that
all such shares remain subject to restrictions substantially similar to those
contained in this subsection; and
(o) to maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar for the Common Stock;
and
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5. Reimbursement of Placement Agents' Expenses. If this Agreement is
terminated by the Placement Agents pursuant to Section 6 or Section 7, or if the
sale to the Investors of the Units at the time of purchase is not consummated
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or to comply with any provision hereof, the Company
shall, in addition to paying the amounts described in Section 4(m) hereof,
reimburse each Placement Agent for all of its reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of one counsel for the Placement
Agents; provided however that the Company shall not be obligated to reimburse
the Placement Agents for any expenses and fees in excess of $60,000.
6. Conditions of Placement Agent's Obligations. The obligations of each
Placement Agent hereunder are subject to the accuracy of the representations and
warranties on the part of the Company in all material respects on the date
hereof and in all material respects at the time of purchase as if made on such
date, to the performance by the Company of its obligations hereunder and to the
following additional conditions precedent:
(a) The Placement Agents shall have received from Ernst & Young, LLP
letters dated, respectively, the date of this Agreement and the time of
purchase, and addressed to the Placement Agents in the forms heretofore approved
by the Placement Agents.
(b) The Placement Agents shall have received at the time of purchase
the favorable opinion of Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional
Corporation, counsel for the Placement Agents, dated the time of purchase, in a
form heretofore approved by the Placement Agents.
(c) The Placement Agents shall have received at the time of purchase
the favorable opinions of ▇▇▇▇ and ▇▇▇▇, LLP, counsel for the Company, and ▇▇▇▇▇
& Associates, patent counsel to the Company, dated the time of purchase, in
forms heretofore approved by the Placement Agents.
(d) No Prospectus or amendment or supplement to the Registration
Statement or the Prospectus, including documents deemed to be incorporated by
reference therein, shall have been filed to which you reasonably object in
writing.
(e) The Prospectus Supplement shall have been filed with the
Commission pursuant to Rule 424(b) under the Act before 5:30 P.M. New York City
time on the second full business day after the date of this Agreement.
-15-
(f) (i) Prior to the time of purchase, no stop order with respect to
the effectiveness of the Registration Statement shall have been issued and be in
effect under the Act or proceedings initiated under Section 8(d) or 8(e) of the
Act; (ii) at the time of purchase the Registration Statement shall 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 not misleading;
and (iii) at the time of purchase the Prospectus shall 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 are made, not misleading.
(g) Between the time of execution of this Agreement and the time of
purchase, no material adverse change or any development that would reasonably be
expected to result in a material adverse change in the business, properties,
management, financial condition or results of operations of the Company and the
Subsidiaries taken as a whole shall occur or become known, in each case other
than as set forth in or contemplated by the Registration Statement (exclusive of
any amendment thereof) or the Prospectus (exclusive of any supplement thereto).
(h) The Company will, at the time of purchase, deliver to the
Placement Agent a certificate of its Chief Executive Officer and its Chief
Financial Officer in the form attached as Exhibit C hereto.
(i) The Company shall have furnished to you such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus as of the time of purchase, as a
Placement Agent may reasonably request.
(j) The Shares shall have been approved for listing on the American
Stock Exchange, subject only to notice of issuance at or prior to the time of
purchase.
(k) All requests for additional information on the part of the
Commission shall have been complied with; and the NASD shall have raised no
objection to the fairness and reasonableness of the placement agency terms and
arrangements.
(l) The Company shall have received investor funds for the purchase
of at least the Minimum Units.
7. Effective Date of Agreement; Termination. This Agreement shall become
effective when the parties hereto have executed and delivered this Agreement.
The obligations of each Placement Agent hereunder shall be subject to
termination in the absolute discretion of such Placement Agent if (x) since the
time of execution of this Agreement or the earlier respective dates as of which
information is given in the Registration Statement and the Prospectus, and
except as set forth in or contemplated by the Registration Statement there has
been any material adverse change or any development that would reasonably be
expected to have a material adverse change in the business, properties,
management, financial condition or results of operations of the Company and the
Subsidiaries taken as a whole, which would, in such Placement Agent's judgment,
make it impracticable or inadvisable to proceed with the public offering or the
-16-
delivery of the Shares on the terms and in the manner contemplated in the
Registration Statement and the Prospectus, or (y) since the time of execution of
this Agreement, there shall have occurred: (i) a suspension or material
limitation in trading in securities generally on the NYSE, the American Stock
Exchange or the Nasdaq; (ii) a suspension or material limitation in trading in
the Company's securities on the American Stock Exchange; (iii) a general
moratorium on commercial banking activities declared by either federal or New
York State authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States; (iv) an
outbreak or escalation of hostilities or acts of terrorism involving the United
States or a declaration by the United States of a national emergency or war; or
(v) any other calamity or crisis or any change in financial, political or
economic conditions in the United States or elsewhere, if the effect of any such
event specified in clause (iv) or (v) in such Placement Agent's judgment makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Units on the terms and in the manner contemplated in the
Registration Statement and the Prospectus, or (z) since the time of execution of
this Agreement, there shall have occurred any downgrading, or any notice or
announcement shall have been given or made of (i) any intended or potential
downgrading or (ii) any watch, review or possible change that does not indicate
an affirmation or improvement in the rating accorded any securities of or
guaranteed by the Company by any "nationally recognized statistical rating
organization," as that term is defined in Rule 436(g)(2) under the Act.
If a Placement Agent elects to terminate this Agreement with respect to
such Placement Agent as provided in this Section 7, the Company shall be
notified promptly in writing.
If the sale of the Shares, as contemplated by this Agreement, is not
carried out by the Placement Agents for any reason permitted under this
Agreement or if such sale is not carried out because the Company shall be unable
to comply with any of the terms of this Agreement, the Company shall not be
under any obligation or liability under this Agreement (except to the extent
provided in Sections 4(m), 5 and 8 hereof), and the Placement Agents shall be
under no obligation or liability to the Company under this Agreement (except to
the extent provided in Section 8 hereof).
8. Indemnity and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless each
Placement Agent, its partners, directors and officers, and any person who
controls each Placement Agent within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation) which such
Placement Agent or any such person may incur under the Act, the Exchange Act,
the common law or otherwise, insofar as such loss, damage, expense, liability or
claim (or actions in respect thereof as contemplated below) arises out of or is
based (i) upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or in the Registration Statement
as amended by any post-effective amendment thereof by the Company) or in the
Prospectus, or arises out of or is based upon any omission or alleged omission
to state therein a material fact required to be stated in such Registration
Statement or such Prospectus or 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 indemnity agreement shall not
apply to any loss, claim,
-17-
damage, liability or expense to the extent, but only to the extent, arising out
of or based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Placement Agents expressly for use
in the Registration Statement or in a Prospectus, including without limitation
the information referenced in Section 9. The indemnity in this Section 8(a)
shall be in addition to any liability that the Company may otherwise have.
If any action, suit or proceeding (each, a "Proceeding") is brought
against any Placement Agent or any such person in respect of which indemnity may
be sought against the Company pursuant to the foregoing paragraph, such
Placement Agent or such person shall promptly notify the Company in writing of
the institution of such Proceeding and the Company shall assume the defense of
such Proceeding, including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all fees and expenses; provided, however,
that the omission to so notify the Company shall not relieve the Company from
any liability which the Company may have to such Placement Agent or any such
person or otherwise except to the extent it is prejudiced thereby. The Placement
Agent or such person shall have the right to employ its or their own counsel in
any such case, but the fees and expenses of such counsel shall be at the expense
of such Placement Agent or of such person unless the employment of such counsel
shall have been authorized in writing by the Company in connection with the
defense of such Proceeding or the Company shall not have, within a reasonable
period of time in light of the circumstances, employed counsel to have charge of
the defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from, additional to or in conflict with those available to the
Company (in which case the Company shall not have the right to direct the
defense of such Proceeding on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by the Company and
paid as incurred (it being understood, however, that the Company shall not be
liable for the expenses of more than one separate counsel (in addition to any
local counsel) in any one Proceeding or series of related Proceedings in the
same jurisdiction representing the indemnified parties who are parties to such
Proceeding). The Company shall not be liable for any settlement of any
Proceeding effected without its written consent but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless such
Placement Agent and any such person from and against any loss or liability by
reason of such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second sentence of this paragraph, then the indemnifying party agrees
that it shall be liable for any settlement of any Proceeding effected without
its written consent if (i) such settlement is entered into more than 60 business
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall not have fully reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at least 30 days'
prior notice of its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such Proceeding and
-18-
does not include an admission of fault, culpability or a failure to act, by or
on behalf of such indemnified party.
(b) Each Placement Agent agrees severally, and not jointly, to indemnify,
defend and hold harmless the Company, its directors and officers, and any person
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any loss, damage, expense, liability or
claim (including the reasonable cost of investigation) which the Company or any
such person may incur under the Act, the Exchange Act, the common law or
otherwise, insofar as such loss, damage, expense, liability or claim arises out
of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information concerning such
Placement Agent furnished in writing by or on behalf of such Placement Agent to
the Company expressly for use in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof by the
Company) or in a Prospectus, or arises out of or is based upon any omission or
alleged omission to state therein a material fact required to be stated in such
Registration Statement or such Prospectus or necessary in order to make the
statements therein, in light of the circumstances under which they were made not
misleading, including, without limitation the information referenced in Section
9.
If any Proceeding is brought against the Company or any such person in
respect of which indemnity may be sought against a Placement Agent pursuant to
the foregoing paragraph, the Company or such person shall promptly notify such
Placement Agent in writing of the institution of such Proceeding and such
Placement Agent shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify such Placement Agent shall not relieve such Placement Agent from any
liability which the Placement Agent may have to the Company or any such person
or otherwise except to the extent that it is prejudiced thereby. The Company or
such person shall have the right to employ its own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of the Company or
such person unless the employment of such counsel shall have been authorized in
writing by such Placement Agent in connection with the defense of such
Proceeding or the Placement Agent shall not have, within a reasonable period of
time in light of the circumstances, employed counsel to defend such Proceeding
or such indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from or additional
to or in conflict with those available to such Placement Agent (in which case
such Placement Agent shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties, but the Placement
Agent may employ counsel and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of the Placement Agent), in any
of which events such fees and expenses shall be borne by the Placement Agent and
paid as incurred (it being understood, however, that the Placement Agent shall
not be liable for the expenses of more than one separate counsel (in addition to
any local counsel) in any one Proceeding or series of related Proceedings in the
same jurisdiction representing the indemnified parties who are parties to such
Proceeding). Any such separate firm for the Placement Agents, their partners,
directors and officers, and any control persons of the Placement Agents shall be
designated in writing by TWP and any such separate firm for the Company, its
directors, its officers and any control persons of the Company shall be
designated in
-19-
writing by the Company. A Placement Agent shall not be liable for any settlement
of any such Proceeding effected without the written consent of such Placement
Agent but if settled with the written consent of such Placement Agent, the
Placement Agent agrees to indemnify and hold harmless the Company and any such
person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of this
paragraph, then the indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 business days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such request prior
to the date of such settlement and (iii) such indemnified party shall have given
the indemnifying party at least 30 days' prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened Proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such Proceeding.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under subsection (a) or (b) of this Section
8 or insufficient to hold harmless any such indemnified party in respect of any
losses, damages, expenses, liabilities or claims referred to therein, then the
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages, expenses, liabilities or
claims (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Placement Agents on the other
hand from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Placement Agents on the other in connection with the statements or omissions
which resulted in such losses, damages, expenses, liabilities or claims, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Placement Agents on the other shall be
deemed to be in the same respective proportions as the total proceeds from the
offering (net of placement fees but before deducting expenses) received by the
Company and the total placement fees received by the Placement Agents, bear to
the aggregate public offering price of the Shares. The relative fault of the
Company on the one hand and of the Placement Agent on the other shall be
determined by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
relates to information supplied by the Company or by the Placement Agents and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, damages, expenses, liabilities and claims
referred to in this subsection shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating, preparing to defend or defending any Proceeding.
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(d) The Company and the Placement Agents agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in subsection (c) above.
Notwithstanding the provisions of this Section 8, a Placement Agent shall not be
required to contribute any amount in excess of the fee received by it with
respect to the offering of the Shares and the Warrants. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in this
Section 8 and the covenants, warranties and representations of the Company
contained in this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of a Placement Agent, its partners,
directors or officers or any person (including each partner, officer or director
of such person) who controls the Placement Agent within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, or by or on behalf of the
Company, its directors or officers or any person who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and
shall survive any termination of this Agreement or the issuance and delivery of
the Shares.
9. Information Furnished by the Placement Agent. The statements set forth
in the [_____] paragraph relating to stabilization under the caption "Plan of
Distribution" in the Prospectus Supplement constitutes the only information
furnished by or on behalf of the Placement Agent as such information is referred
to in Sections 3 and 8 hereof.
10. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Placement Agents, shall be sufficient in all respects if delivered or sent
to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel:
Fax:
Attn: _______________
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel:
Fax:
Attn: _______________
▇▇▇▇▇▇▇▇ Curham Ford & Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Tel:
Fax:
Attn: _______________
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
and, if to the Company, shall be sufficient in all respects if delivered or sent
to the Company at the offices of the Company at Hybridon, Inc., ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: CEO, with a copy to ▇▇▇▇ and ▇▇▇▇ LLP,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Tel: ▇▇▇-▇▇▇-▇▇▇▇, Fax: ▇▇▇-▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
11. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
12. Submission to Jurisdiction. Except as set forth below, no Claim 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
consents to the jurisdiction of such courts and personal service with respect
thereto. Each of the Placement Agents and the Company (on its behalf and, to the
extent permitted by applicable law, on behalf of its shareholders and
affiliates) waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) in any way arising
out of or relating to this Agreement. The parties hereto agree that a final
judgment in any such action, proceeding or counterclaim brought in any such
court shall be conclusive and binding upon the parties and may be enforced in
any other courts to the jurisdiction of which the parties are or may be subject,
by suit upon such judgment.
13. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Placement Agents and the Company and to the
extent provided in Section 8 hereof the controlling persons, partners, directors
and officers referred to in such section, and their respective successors,
assigns, heirs, personal representatives and executors and administrators. No
other person, partnership, association or corporation (including a purchaser, as
such purchaser, from the Placement Agents) shall acquire or have any right under
or by virtue of this Agreement.
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14. Counterparts. This Agreement may be signed by the parties in one or
more counterparts, which together shall constitute one and the same agreement
among the parties.
15. Successors and Assigns. This Agreement shall be binding upon the
Placement Agents and the Company and their successors and assigns and any
successor or assign of any substantial portion of the Company's and each
Placement Agent's respective businesses and/or assets.
If the foregoing correctly sets forth the understanding between the
Company and the Placement Agents, please so indicate in the space provided below
for that purpose, whereupon this agreement and your acceptance shall constitute
a binding agreement between the Company and the Placement Agent.
Very truly yours,
HYBRIDON, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
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Accepted and agreed to as of the
date first above written
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS LLP
By: __________________________
Name:
Title:
▇▇▇▇▇▇▇▇ CURHAM FORD & CO.
By: __________________________
Name:
Title:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
By: __________________________
Name:
Title:
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Exhibit A
FORM OF WARRANT
[Intentionally Omitted]
Exhibit B
Hybridon, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, ______________ (the "Investor"), hereby confirms its
agreement with you as follows:
1. This Purchase Agreement (the "Agreement") is made as of ________, 2004
between Hybridon, Inc., a Delaware corporation (the "Company"), and the
Investor.
2. The Company and the Investor agree that at the time of purchase (as
defined below) the Investor will purchase from the Company and the Company will
issue and sell to the Investor ______units (the "Units"), each Unit consisting
of ______________ shares of Common Stock, $.001 par value per share of the
Company (the "Common Stock") and warrants to purchase ________ shares of Common
Stock, at a per-Unit purchase price of $_____, for an aggregate purchase price
of $_____________. The shares of Common Stock to be issued as part of the Units
are hereinafter referred to as the "Shares", the Warrants to be issued as part
of the Units are hereinafter referred to as the "Warrants" and Units referred to
herein are hereinafter referred to as the "Units." A form of Warrant is attached
hereto as EXHIBIT A. The Investor acknowledges that the offering of the Units is
not a firm commitment underwriting.
3. The completion of the purchase and sale of the Units (the "Closing")
shall occur on ____________, 2004 or such other time as shall be agreed to by
the Company and the Placement Agents (the "time of purchase"). Notwithstanding
the foregoing, it shall be a condition to the obligation of each of the Company
and the Investor to complete the purchase and sale of the Units hereunder that
(i) the Shares and the shares of Common Stock of the Company issuable upon
exercise of the Warrants shall have been approved for listing on the American
Stock Exchange, subject only to notice of issuance at the time of purchase; (ii)
no stop order with respect to the effectiveness of the Company's Registration
Statement on Form S-3 (File No. 333-111903) shall have been issued and be in
effect under the Securities Act of 1933, as amended, or proceedings initiated
under Section 8(d) or 8(e) of the Securities Act; and (iii) the Company shall
have received investor funds for the purchase of at least a minimum of 160,000
Units in the aggregate, including the funds received from the Investor with
respect to the Units being purchased by the Investor hereunder. At the Closing,
the Company shall deliver to the Investor the number of Shares as set forth
above in Section 2, electronically via DWAC, as well as executed Warrants, and
the Investor shall deliver, or cause to be delivered, to the Company Federal
Funds wire transfer in the full amount of the purchase price for the Units being
purchased. The Company agrees that if the Closing does not occur as scheduled,
it shall return to the Investor any funds received from the Investor as payment
of the purchase price of the Units.
4. The Investor hereby consents to receipt of Hybridon, Inc.'s Prospectus
Supplement, dated April __, 2004, and the accompanying Prospectus, dated January
30, 2004, in portable document format, or PDF, via electronic mail. As of the
date of this Agreement, the Investor received the Prospectus Supplement and
Prospectus in PDF via electronic mail and was able to, and did in fact, access,
download, and print the Prospectus Supplement and Prospectus in such format.
5. This Agreement shall 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.
6. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party hereto and delivered to the other
parties.
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
[SIGNATURE BLOCK]
Exhibit C
Officers' Certificate
1. I have reviewed the Registration Statement and the Prospectus.
2. The representations and warranties of the Company as set forth in the
Placement Agency Agreement were true and correct in all material respects when
made and are true and correct in all material respects as of the time of
purchase as if such representations and warranties had been made as of such
date.
3. The Company has performed all of its obligations under the Placement
Agency Agreement as are to be performed at or before the time of purchase.
4. The conditions set forth in paragraphs (g) and (h) of Section 6 of the
Placement Agency Agreement have been met.