ACCESS PHARMACEUTICALS, INC.
A minimum of 1,000,000 and
a maximum of 4,800,000 Shares of Common Stock
SALES AGENCY AGREEMENT
Sunrise Securities Corp.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
February 29, 2000
Dear Sirs:
Access Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), proposes to offer for sale in a private offering
(the "Offering") pursuant to Rule 506 of Regulation D
("Regulation D") under the Securities Act of 1933, as amended
(the "Act"), a minimum of 1,000,000 (including "Affiliate
Shares", as hereinafter defined, if any) and a maximum of
4,800,000 shares of common stock, par value $.01 per share (the
"Shares"). This Offering is being made solely to "accredited
investors" as defined in Regulation D. This is to confirm our
agreement concerning your acting as our exclusive placement
agent (the "Placement Agent") in connection with the Offering.
The Company prepared and delivered to the Placement Agent
copies of a confidential private placement memorandum relating
to, among other things, the Company, the Shares and the terms
of the sale of the Shares. Such confidential private placement
memorandum, including all exhibits thereto and all documents
delivered therewith and incorporated by reference therein, is
referred to herein as the "Memorandum" unless such confidential
private placement memoranda or any such exhibits or documents
shall be supplemented or amended in accordance with this
Agreement, in which event the term "Memorandum" shall refer to
such confidential private offering memorandum and such exhibits
and documents as so supplemented or amended from and after the
time of delivery to the Placement Agent of such supplement or
amendment.
1. Appointment of Placement Agent.
On the basis of the representations and warranties contained
herein, and subject to the terms and conditions set forth
herein, the Company hereby appoints you as its Placement Agent and
grants to you the exclusive right to offer, as its agent,
the Shares pursuant to the terms of this Agreement. On the
basis of such representations and warranties, and subject to
such conditions, you hereby accept such appointment and agree
to use your best efforts to secure subscriptions to purchase a
minimum of 1,000,000 and a maximum of 4,800,000 Shares pursuant
to the terms of this Agreement. The agency created hereby is
not terminable by the Company except upon termination of the
Offering pursuant to the terms of this Agreement or upon
expiration of the Offering Period (as hereinafter defined) in
accordance with the terms of this Agreement.
2. Terms of the Offering.
(a) A minimum of 1,000,000 and a maximum of 4,800,000 Shares
shall be offered for sale to prospective investors in this
Offering ("Prospective Investors") at a purchase price of $2.50
per Share (the "Purchase Price") of the Company's common stock,
par value $.01 (the "Common Stock"). Officers, directors and
employees of the Company and the Placement Agent may purchase
Shares on the same terms and conditions as other investors (the
"Affiliate Shares"). The Affiliate Shares shall be included in
determining whether the minimum and maximum number of Shares
have been subscribed for, and all references herein to
subscriptions from Prospective Investors shall be deemed to
include the Affiliate Shares.
(b) The Offering shall commence on the date hereof and shall
expire at 5:00 P.M., New York time, on March 31, 2000, unless
extended by mutual agreement of the Company and the Placement
Agent. Such period, as the same may be so extended, shall
hereinafter be referred to as the "Offering Period".
(c) Each Prospective Investor who desires to purchase Shares
shall be required to deliver to the Placement Agent one copy of
a subscription agreement in the form annexed to the Memorandum
(a "Subscription Agreement"), including the investor
questionnaire, and payment in the amount necessary to purchase
the number of Shares such Prospective Investor desires to
purchase. The Placement Agent shall not have any obligation to
independently verify the accuracy or completeness of any
information contained in any Subscription Agreement or the
authenticity, sufficiency or validity of any check or other
form of payment delivered by any Prospective Investor in
payment for Shares.
(d) Pursuant to an Escrow Agreement, dated as of February 29,
2000 (the "Escrow Agreement"), the Placement Agent will
establish a special account with the United States Trust
Company of New York (the "Escrow Agent") entitled "Access
Pharmaceuticals, Inc. - Escrow Account" (the "Special
Account"). The Placement Agent shall deliver each check
received from a Prospective Investor to the Escrow Agent for
deposit in the Special Account and shall deliver the executed
copy of the Subscription Agreement received from such
Prospective Investor to the Company. The Company shall notify
the Placement Agent promptly of the acceptance or rejection of
any subscription. The Company shall not unreasonably reject
any subscription.
(e) If subscriptions to purchase at least 1,000,000 Shares
are not received from Prospective Investors prior to the
expiration of the Offering Period and accepted by the Company,
the Offering shall be canceled, all funds received by the
Escrow Agent on behalf of the Company
shall be refunded in full
with interest, and this Agreement and the agency created hereby
shall be terminated without any further obligation on the part
of either party, except as provided in Section 10 hereof.
(f) You may engage other persons selected by you to assist
you in the Offering (each such person being hereinafter
referred to as a "Selected Dealer") and you may allow such
persons such part of the compensation payable to you hereunder
as you shall determine. Each Selected Dealer shall be required
to agree in writing to comply with the provisions of, and to
make the representations, warranties and covenants contained in
Sections 5(b) and 6(b) hereof by executing a form of Selected
Dealer Agreement attached hereto as Exhibit I. On or prior to
the Closing (as hereinafter defined), the Placement Agent shall
deliver a copy of each executed Selected Dealer Agreement to
the Company. By executing this Agreement, the Company hereby
agrees to make, and is deemed to make, the representations and
warranties to, and covenants and agreements with, each Selected
Dealer (including an agreement to indemnify such Selected
Dealer under Section 9 hereof) who has executed the Selected
Dealer Agreement as are contained in this Agreement.
3. Closing.
(a) Subject to the conditions set forth in Section 8 hereof,
if subscriptions to purchase at least 1,000,000 Shares have
been received prior to the expiration of the Offering Period
and accepted by the Company, the initial closing under this
Agreement (the "Closing") shall be held at the offices of
Squadron, Ellenoff, Plesent & ▇▇▇▇▇▇▇▇▇, LLP ("SEP&S"), ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 A.M., New York time,
on the third business day following the date upon which the
Placement Agent receives notice from the Company that
subscriptions to purchase at least 1,000,000 Shares (including
Affiliate Shares) have been so accepted or at such other place,
time and/or date as the Company and the Placement Agent shall
agree upon. The Company shall provide the notice required by
the preceding sentence as promptly as practicable. The date
upon which the Closing is held shall hereinafter be referred to
as the "Closing Date."
(b) Subject to the conditions set forth in Section 8 hereof,
if, subsequent to the date the subscriptions referred to in
Section 3(a) hereof are received and accepted and prior to the
expiration of the Offering Period, additional subscriptions to
purchase Shares are received from Prospective Investors, which
subscriptions are accepted by the Company, one or more
additional closings under this Agreement (each, an "Additional
Closing") shall be held at the offices of SEP&S at 10:00 A.M.,
New York time, on the third business day following the date
upon which the Placement Agent receives notice from the Company
that additional subscriptions have been so accepted, or at such
other place, time or date as the Company and the Placement
Agent shall agree upon. The Company shall notify the Placement
Agent as promptly as practicable whether any additional
subscriptions so received have been accepted. The date upon
which any Additional Closing is held shall hereinafter be
referred to as an "Additional Closing Date."
Notwithstanding anything contained here into the contrary, in
no event shall the Company accept subscriptions to purchase in
excess of 4,800,000 Shares including Affiliate Shares.
(c) At the Closing, or an Additional Closing, as the case may
be, the Company shall instruct the Escrow Agent to pay to the
Placement Agent at the Closing or an Additional Closing, from
the funds deposited in the Special Account in payment for the
Shares, the amounts payable to the Placement Agent pursuant to
Sections 4 and 7 of this Agreement. Promptly after the Closing
Date, or an Additional Closing Date, as the case may be, the
Company shall deliver to the purchasers of Shares certificates
representing the Shares to which they are entitled.
4. Compensation.
(a) If subscriptions to purchase at least 1,000,000 Shares
(including Affiliate Shares) are received from Prospective
Investors prior to the expiration of the Offering Period and
accepted by the Company, you shall be entitled, as compensation
for your services as Placement Agent under this Agreement, to
an amount equal to 10% of the gross proceeds received by the
Company from the sale of the Shares. Such compensation is
payable by the Company on the Closing Date, or an Additional
Closing Date, as the case may be, with respect to the Shares
sold on such date and may be paid, at the Placement Agent's
option, in part or in whole, in shares of the Common Stock,
valued at $2.50 per share, net of commission, provided,
however, that any such shares of Common Stock shall not be
included in the calculation of the minimum or the maximum
number of Shares offered for sale to prospective investors in
the Offering. Any such shares of Common Stock issued pursuant
to this paragraph shall be subject to the identical
registration rights granted pursuant to the Registration Rights
Agreement (as defined below) to investors in the Offering.
(b) If subscriptions to purchase at least 1,000,000 Shares
(including Affiliate Shares) have been received from
Prospective Investors prior to the expiration of the Offering
Period and accepted by the Company, the Company shall issue to
you or, at your discretion, your Selected Dealers or your
designees, in addition to the amount set forth in Section 4(a)
above, warrants (the "Placement Agent Warrants") to purchase a
number of Shares of the Company equal to 10% of the aggregate
number of Shares issued in the Offering including Shares
issued, if any, to the Placement Agent in satisfaction of its
selling commission or the non-accountable expense allowance.
Each Placement Agent Warrant will entitle the holder thereof
for a five-year period commencing on the first anniversary of
the Closing Date or any Additional Closing Date as the case may
be, to purchase one share of Common Stock of the Company at an
exercise price equal to the Purchase Price per share (the
"Warrant Shares"). The Placement Agent Warrants shall be in
the form attached hereto as Exhibit II.
(c) Notwithstanding anything contained herein to the
contrary, the number of Shares upon which the commission
provided for in Section 4(a) and the Placement Agent Warrants
described in Section 4(b) shall be based shall include Shares
with respect to which the Company unreasonably rejected
subscriptions.
(d) Notwithstanding anything herein to the contrary, all
amounts set forth in this Agreement are subject to adjustment
for mergers, recapitalizations, stock dividends or any other
action having a similar effect on the Common Stock.
5. Representations and Warranties.
(a) Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, the
Placement Agent and the Selected Dealers that:
(i) The Memorandum, as supplemented or amended from time to
time, at all times during the period from the date hereof to
and including the later of the Closing Date and the expiration
of the Offering Period, and the last Additional Closing Date
(if any), does not, and during such period 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, all in light of the
circumstances under which they were made. Each contract,
agreement, instrument, lease, license or other document
described in the Memorandum is accurately described therein in
all material respects.
(ii) No document provided by the Company to Prospective
Investors pursuant to Section 6(a)(vii) hereof, and no oral
information provided by the Company to Prospective Investors,
contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
Contracts to which the Company is a party provided by the
Company to Prospective Investors shall not be deemed to contain
any untrue statement of a material fact or to omit to state any
material fact if the contract so provided is a true, correct
and complete copy of such contract, as amended or modified
through the date it is so provided.
(iii) The Company has not, directly or indirectly, solicited
any offer to buy or offered to sell any Shares or any other
securities of the Company during the twelve-month period ending
on the date hereof except as may be described in the Memorandum
or which would not be integrated with the sale of the Shares in
a manner that would require the registration of the Offering
pursuant to the Act and has no present intention to solicit any
offer to buy or offer to sell any Shares or any other
securities of the Company other than pursuant to this Agreement
or pursuant to a registered public offering of the Company's
securities which may be commenced after the completion of the
Offering.
(iv) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Delaware, with full power and authority, and all necessary
consents, authorizations, approvals, orders, licenses,
certificates, and permits of and from, and declarations and
filings with (collectively, "Consents"), all federal, state,
local, foreign, and other governmental authorities and all
courts and other tribunals, to own, lease, license and use its
properties and assets and to carry on its business in the
manner described in the Memorandum, except where the failure to
have obtained such Consents would not have a material adverse
effect on the Company and the Company has not received any
notice of proceedings relating to the revocation or
modification of any such consent, authorization, approval,
order, license certificate, or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding would result in a material adverse change in the
financial condition, results of operations, business,
properties, assets, liabilities or future prospects of the
Company. The Company is duly qualified to do business and is
in good standing in every jurisdiction in which its ownership,
leasing, licensing or use of property and assets or the conduct
of its business makes such qualification necessary. The
Company's subsidiaries include Tacora Corporation and Virologix
Corporation ("Virologix") (together, the "Subsidiaries"), as
described in the Memorandum.
(v) Each of the Subsidiaries is a corporation duly organized,
validly existing, and in good standing under the laws of the
respective jurisdictions set forth in the Memorandum, with full
power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and
permits of and from, and declarations and filings with, all
federal, state, local, foreign, and other governmental
authorities and all courts and other tribunals, to own, lease,
license, and use its properties and assets and to carry on its
business in the manner described in the Memorandum. Each of
the Subsidiaries is duly qualified to do business and is in
good standing in every jurisdiction in which its ownership,
leasing, licensing, or use of property and assets or the
conduct of its business makes such qualification necessary.
(vi) The Company has, as of the date hereof, an authorized
and outstanding capitalization as set forth in the Memorandum.
Each outstanding share of capital stock of the Company, and
each outstanding share of capital stock of each Subsidiary, is
duly authorized, validly issued, fully paid and nonassessable
and has not been issued and is not owned or held in violation
of any preemptive rights set forth in the Company's Certificate
of Incorporation or By-laws, each as amended to date, or any
agreement to which the Company is a party and in the case of
the Subsidiaries, is owned of record and beneficially by the
Company, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements and
voting trusts, except as may be described in the Memorandum.
There is no commitment, plan or arrangement to issue, and no
outstanding option, warrant or other right calling for the
issuance of, any share of capital stock of the Company or of
any Subsidiary or any security or other instrument which by its
terms is convertible into, exercisable for or exchangeable for
shares of capital stock of the Company, except as may be
described in the Memorandum. There is outstanding no security
or other instrument which by its terms is convertible into or
exchangeable for any class of shares of capital stock of the
Company or of any Subsidiary, except as may be described in the
Memorandum, which description may be an aggregate description
of such securities. The capital stock of the Company conforms
to the description thereof contained in the Memorandum.
(vii) The financial statements of the Company included in the
Memorandum (by incorporation by reference or otherwise) fairly
present the financial position, the results of operations, cash
flows and the other information purported to be shown therein
at the respective dates and for the respective periods to which
they apply. Such financial statements have been prepared in
accordance with United States generally accepted accounting
principles consistently applied throughout the periods
involved, are correct and complete and are in accordance with
the books and records of the Company. There has at no time been
a material adverse change in the financial condition, results
of operations, business, properties, assets, liabilities or
future prospects of the Company from the latest information set
forth in the Memorandum, except as may be described in such
Memorandum as having occurred.
(viii) There is no litigation, arbitration, governmental or
other proceeding (formal or informal) or claim or investigation
pending or, to the knowledge of the Company, threatened with
respect to the Company, or any of the Subsidiaries, or any of
its or their operations, businesses,
properties or assets,
except as may be described in the Memorandum or such as
individually or in the aggregate do not now have and will not
in the future have a material adverse effect upon the
operations, business, properties or assets of the Company and
the Subsidiaries, taken as a whole. Neither the Company nor
any of its Subsidiaries is in violation of, or in default with
respect to, any law, rule, regulation, order, judgment or
decree, except as may be described in the Memorandum or such as
in the aggregate do not now have and will not in the future
have a material adverse effect upon the operations, business,
properties, assets or future prospects of the Company and the
Subsidiaries, taken as a whole.
(ix) Any real property and buildings held under lease by the
Company or any of the Subsidiaries are held by it under valid,
subsisting and enforceable leases with such exceptions as in
the aggregate are not material.
(x) Neither the Company, the Subsidiaries nor, to the
knowledge of the Company, any other party, is in violation or
breach of or in default with respect to, complying in any
material respect with any contract, agreement, instrument,
lease, license, arrangement or understanding which is material
to the Company or any of the Subsidiaries, as described in the
Memorandum, and each such contract, agreement, instrument,
lease, license, arrangement and understanding is in full force
and effect and is the legal, valid and binding obligation of
the parties thereto enforceable as to them in accordance with
its terms (subject to applicable bankruptcy, insolvency and
other laws affecting the enforceability of creditors' rights
generally and to general equitable principles). Except as
described in the Memorandum, the Company and each of its
Subsidiaries enjoys peaceful and undisturbed possession under
all real property leases under which it is operating. Neither
the Company, nor any of its Subsidiaries, is in violation or
breach of, or in default with respect to, any term of its
Certificate of Incorporation or its By-laws, each as amended to
date.
(xi) There is no right under any patent, patent application,
trademark, trademark application, trade name, service ▇▇▇▇,
copyright, franchise or other intangible property or asset (all
of the foregoing being herein called "Intangibles") necessary
to the business of the Company or any of the Subsidiaries as
presently conducted or as the Memorandum indicates they
contemplate conducting, except as may be so designated in the
Memorandum and which the Company has the right or license to
use as necessary. To the Company's knowledge, except as
described in the Memorandum, neither the Company nor any of the
Subsidiaries has infringed nor is infringing with respect to
Intangibles of others, and neither the Company, nor any of its
Subsidiaries, has received notice of infringement with respect
to asserted Intangibles of others. To the Company's knowledge,
except as described in the Memorandum, there is no Intangible
of others which has had or may in the future have a material
adverse effect on the financial condition, results of
operations, business, properties, assets, liabilities or future
prospects of the Company or any of the Subsidiaries.
(xii) The Company has all requisite power and authority to
execute, deliver and perform this Agreement, the Subscription
Agreements, the Escrow Agreement, the Placement Agent Warrants
and the Registration Rights Agreement made by the Company for
the benefit of purchasers of Shares (the "Registration Rights
Agreement") (collectively, the "Operative Agreements") and to consummate
the transactions contemplated by the Operative Agreements. All
necessary corporate proceedings of the Company
have been duly taken to authorize the execution, delivery and
performance by the Company of the Operative Agreements. This
Agreement and the Escrow Agreement have been duly authorized,
executed, and delivered by the Company, are the legal, valid
and binding obligations of the Company and are enforceable as
to the Company in accordance with their terms (subject to
applicable bankruptcy, insolvency and other laws affecting the
enforceability of creditors' rights generally and to general
equitable principles). The Subscription Agreements, the
Placement Agent Warrants and the Registration Rights Agreement
have been duly authorized by the Company and, when executed and
delivered by the Company, will be the legal, valid and binding
obligations of the Company enforceable against it in accordance
with their respective terms (subject to applicable bankruptcy,
insolvency and other laws affecting the enforceability of
creditors' rights generally and to general equitable
principles). No consent, authorization, approval, order,
license, certificate or permit of or from, or registration,
qualification, declaration or filing with, any federal, state,
local, foreign or other governmental authority or any court or
other tribunal is required by the Company for the execution,
delivery or performance by the Company of the Operative
Agreements or the consummation of the transactions contemplated
by the Operative Agreements, except (A) the filing of a Notice
of Sales of Securities on Form D pursuant to Regulation D, (B)
such consents, authorizations, approvals, registrations and
qualifications as may be required under securities or "blue
sky" laws in connection with the issuance, sale and delivery of
the Shares and Placement Agent Warrants pursuant to this
Agreement and the Warrant Shares and Shares underlying the
Placement Agent Warrants upon exercise of the Placement Agent
Warrants and (C) the filing of a registration statement and any
necessary consents, authorizations and approvals thereunder
pursuant to the Registration Rights Agreement. No consent of
any party to any contract, agreement, instrument, lease,
license, arrangement or understanding to which the Company is
a party or to which any of their properties or assets are
subject is required for the execution, delivery or performance
of the Operative Agreements or the consummation of the
transactions contemplated by the Operative Agreements, which
has not been or will not be obtained prior to the Closing or
any Additional Closings and the execution, delivery and
performance of the Operative Agreements, and the consummation
of the transactions contemplated by the Operative Agreements,
will not violate, result in a breach of, conflict with or (with
or without the giving of notice or the passage of time or both)
entitle any party to terminate, call a default or receive any
right under any such contract, agreement, instrument, lease,
license, arrangement or understanding (except for any such
violation, breach or conflict which has been properly waived
thereunder), violate or result in a breach of any term of the
Company's Certificate of Incorporation or By-laws, each as
amended to date, or violate, result in a breach of or conflict
with any law, rule, regulation, order, judgment or decree
binding on the Company or any of the Subsidiaries, or to which
any of its operations, businesses, properties or assets are
subject.
(xiii) The Shares, the Placement Agent Warrants and the
Warrant Shares conform to all statements relating thereto
contained in the Memorandum. The Shares, when issued and
delivered to the subscribers therefor, pursuant to the terms of
this Agreement and the Subscription Agreements, and the Warrant
Shares, when issued and delivered pursuant to the terms of the
Placement Agent Warrants, shall be duly authorized, validly
issued, fully paid and nonassessable and shall not have been
issued in violation of any preemptive rights set forth in the
Company's Certificate of Incorporation or By-laws, each as
amended to date, or any agreement to which the Company is a
party.
(xiv) Subsequent to the dates as of which information is
given in the Memorandum, and except as may otherwise be
properly described in the Memorandum, (A) neither the Company
nor any Subsidiary had, except in the ordinary course of
business, incurred any liability or obligation, primary or
contingent, for borrowed money, (B) there has not been any
material change in the capital stock, short-term debt or
long-term debt of the Company or any Subsidiary, (C) neither
the Company nor any Subsidiary had entered into any
transaction not in the ordinary course of business, (D) the
Company has not purchased any of its outstanding capital stock
nor declared or paid any dividend or distribution of any kind
on its capital stock, (E) neither the Company nor any
Subsidiary had sustained any material loss or interference with
its businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or
governmental proceeding or (F) there has not been any material
adverse change, or any development which the Company reasonably
believes could result in a prospective material adverse change,
in the financial condition results of operations, business,
properties, assets, liabilities or future prospects of the
Company and the Subsidiaries taken as a whole, except in each
case as described in or contemplated by the Memorandum.
(xv) Neither the Company nor, to the knowledge of the
Company, any of its affiliates has, directly or through any
agent, sold, offered for sale or solicited offers to buy, nor
will any of the foregoing directly buy (other than pursuant to
the Offering) any security of the Company, as defined in the
Act, which is or will be integrated with the sale of the
Shares, the Placement Agent Warrants or the Warrant Shares in
a manner that would require the registration, pursuant to the
Act, of the Offering.
(xvi) Neither the Company nor, to the knowledge of the
Company, any of its affiliates has, directly or indirectly,
taken any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of
the Shares or sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Shares.
(xvii) The Company and each of its Subsidiaries has good and
marketable title to all real and personal property owned by it,
in each case free and clear of any security interests, liens,
encumbrances, equities, claims and other defects, except such
as do not materially and adversely affect the value of such
property and do not interfere with the use made or proposed to
be made of such property by the Company or any of the
Subsidiaries, and any real property and buildings held under
lease by the Company are held under valid, subsisting and
enforceable leases, with such exceptions as are not material
and do not interfere with the use made or proposed to be made
of such property and buildings by the Company or any of the
Subsidiaries, in each case except as described in or
contemplated by the Memorandum.
(xviii) No labor dispute with the employees of the Company or
any of the Subsidiaries exists or is threatened or imminent
that could result in a material adverse change in the financial
condition, results of operations, business, properties, assets,
liabilities or future prospects
of the Company and the Subsidiaries taken as a whole, except as
described in or contemplated by the Memorandum.
(xix) The Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and
customary in the businesses in which they are engaged; the
Company has not been refused any insurance coverage sought or
applied for; and the Company has no reason to believe that it
will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage
from insurers of recognized financial responsibility as may be
necessary to continue its business at a cost that would not
materially and adversely affect the financial condition,
results of operations, business, properties, assets,
liabilities or future prospects of the Company and the
Subsidiaries taken as a whole, except as described in or
contemplated by the Memorandum.
(xx) The Company and the Subsidiaries taken as a whole have
filed all foreign, federal, state and local tax returns that
are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not
have a material adverse affect on the Company and the
Subsidiaries taken as a whole); and has paid all taxes required
to be paid by it and any other assessment, fine or penalty
levied against it to the extent that any of the foregoing is
due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith or as
described in or contemplated by the Memorandum.
(xxi) To the Company's knowledge, neither the Company nor any
Subsidiary is in violation of any federal or state law or
regulation relating to occupational safety and health or to the
storage, handling or transportation of hazardous or toxic
materials and the Company and each Subsidiary have received all
permits, licenses or other approvals required of it under
applicable federal and state occupational safety and health and
environmental laws and regulations to conduct their business,
and the Company and each Subsidiary is in compliance with all
terms and conditions of any such permit, license or approval,
except any such violation of law or regulation, failure to
receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such
permits, licenses or approvals which would not, singly or in
the aggregate, result in a material adverse change in the
financial condition, results of operations, business,
properties, assets, liabilities or future prospects of the
Company, except as described in or contemplated by the
Memorandum.
(xxii) The Company and its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability;
(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 the
existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(xxiii) The Company has timely filed all reports as required
under the Securities Exchange Act of 1934 (the "Exchange Act")
and such reports, as of their respective dates, did 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, all in light of the
circumstances under which they were made.
(b) Representations and Warranties of the Placement Agent and
Selected Dealers. The Placement Agent, and each Selected
Dealer that the Placement Agent may from time to time appoint,
by signing the Selected Dealer Agreement, hereby represent and
warrant to, and agree with, the Company and each other as to
themselves only as follows:
(i) Neither the Placement Agent nor any Selected Dealer will
offer or sell any Shares to any investor which the Placement
Agent or such Selected Dealer did not have reasonable grounds
to believe and did not believe, was an "accredited investor".
(ii) Neither the Placement Agent nor any Selected Dealer will
offer or sell any Shares by means of any form of general
solicitation or general advertising, including, without
limitation, the following:
(A) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or
broadcast over television or radio; and
(B) any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(iii) The Placement Agent and each Selected Dealer is a
member in good standing of the National Association of
Securities Dealers, Inc. or a registered representative
thereof.
(iv) The representations and warranties contained in the
Certificate of Selected Dealer attached to the form of Selected
Dealer Agreement are true and correct as to the Selected Dealer
which executed such Certificate and are true and correct as to
the Placement Agent as if it had executed such a certificate.
(v) Each of the Placement Agent and each Selected Dealer has
all requisite power and authority to execute, deliver and
perform this Agreement and to consummate the transactions
contemplated hereby. All necessary corporate proceedings of
the Placement Agent and each Selected Dealer have been duly
taken to authorize the execution, delivery and performance by
the Placement Agent and each Selected Dealer of this Agreement.
This Agreement has been duly authorized, executed, and
delivered by the Placement Agent and each Selected Dealer and
is the legal, valid and binding obligation of the Placement
Agent and each Selected Dealer in accordance with its terms
(subject to applicable bankruptcy, insolvency and other laws
affecting the enforceability of creditors' rights generally and
to general equitable principles).
6. Covenants.
(a) Covenants of the Company. The Company covenants to the
Placement Agent and each Selected Dealer that it will:
(i) Notify you immediately, and confirm such notice promptly
in writing, (A) when any event shall have occurred during the
period commencing on the date hereof and ending on the later of
the Closing Date, the expiration of the Offering Period and the
last Additional Closing Date (if any) as a result of which the
Memorandum would include 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, and (B) of the receipt of any notification with
respect to the modification, rescission, withdrawal or
suspension of the qualification or registration of the Shares
or of an exemption from such registration or qualification in
any jurisdiction. The Company will use its best efforts to
prevent the issuance of any such modification, rescission,
withdrawal or suspension and, if any such modification,
rescission, withdrawal or suspension is issued and you so
request, to obtain the lifting thereof as promptly as possible.
(ii) Not supplement or amend the Memorandum unless you shall
have approved of such supplement or amendment in writing. If,
at any time during the period commencing on the date hereof and
ending on the later of the Closing Date, the expiration of the
Offering Period or the last Additional Closing Date (if any),
any event shall have occurred as a result of which the
Memorandum contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or
if, in the opinion of counsel to the Company or counsel to the
Placement Agent, it is necessary at any time to supplement or
amend the Memorandum to comply with the Act, Regulation D or
any applicable securities or "blue sky" laws, the Company will
promptly prepare an appropriate supplement or amendment (in
form and substance satisfactory to you) which will correct such
statement or omission or which will effect such compliance.
(iii) Deliver without charge to the Placement Agent such
number of copies of the Memorandum and any supplement or
amendment thereto as may reasonably be requested by the
Placement Agent.
(iv) Not, directly or indirectly, solicit any offer to buy
from, or offer to sell to any person any Shares except through
the Placement Agent.
(v) Not solicit any offer to buy or offer to sell Shares by
any form of general solicitation or advertising, including,
without limitation, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar
medium or broadcast over television or radio or any seminar or
meeting whose attendees have been invited by any general
solicitation or advertising.
(vi) Use its best efforts to qualify or register the Shares
for offering and sale under, or establish an exemption from
such qualification or registration under, the securities or
"blue sky" laws of such jurisdictions as you may reasonably
request. The Company will not
consummate any sale of Shares in any jurisdiction or in any
manner in which such sale may not be lawfully made.
(vii) At all times during the period commencing on the date
hereof and ending on the later of the Closing Date, the
expiration of the Offering Period and the last Additional
Closing Date (if any), provide to each Prospective Investor or
his purchaser representative, if any, on request, such
information (in addition to that contained in the Memorandum)
concerning the Offering, the Company and any other relevant
matters as it possesses or can acquire without unreasonable
effort or expense and extend to each Prospective Investor or
his purchaser representative, if any, the opportunity to ask
questions of, and receive answers from, the Company concerning
the terms and conditions of the Offering and the business of
the Company and to obtain any other additional information, to
the extent it possesses the same or can acquire it without
unreasonable effort or expense, as such Prospective Investor or
purchaser representative may consider necessary in making an
informed investment decision or in order to verify the accuracy
of the information furnished to such Prospective Investor or
purchaser representative, as the case may be.
(viii) Before accepting any subscription to purchase Shares
from, or making any sale to, any Prospective Investor, have
reasonable grounds to believe and actually believe that (A)
such Prospective Investor meets the suitability requirements
for investing in the Shares set forth in the Memorandum and (B)
such Prospective Investor is an accredited investor.
(ix) Notify you promptly of the acceptance or rejection of
any subscription. The Company shall not unreasonably reject
any subscription for Shares unless it pays the Placement Agent
its compensation pursuant to Section 4 with respect thereto.
Any subscription unreasonably rejected shall be deemed to have
been accepted for purposes of determining whether at least
1,000,000 Shares (including Affiliate Shares) have been sold
solely for the purpose of determining whether the Placement
Agent is entitled to its compensation pursuant to Section 4
hereof and this subsection (ix).
(x) File five (5) copies of a Notice of Sales of Securities
on Form D with the Securities and Exchange Commission (the
"Commission") no later than 15 days after the first sale of the
Shares. The Company shall file promptly such amendments to
such Notices on Form D as shall become necessary and shall also
comply with any filing requirement imposed by the laws of any
state or jurisdiction in which offers and sales are made. The
Company shall furnish you with copies of all such filings.
(xi) Place the following legend on all certificates
representing the Shares and the Placement Agent Warrants:
"The securities represented hereby have not been registered
under the Securities Act of 1933, as amended or any state
securities laws and neither the securities nor any interest
therein may be offered, sold, transferred, pledged or otherwise
disposed of except pursuant to an effective registration
statement under such
act or such laws or an exemption from
registration under such act and such laws which, in the opinion
of counsel for the holder, which counsel and opinion are
reasonably satisfactory to counsel for this corporation, is
available."
(xii) Not, directly or indirectly, engage in any act or
activity which may jeopardize the status of the offering and
sale of the Shares as exempt transactions under the Act or
under the securities or "blue sky" laws of any jurisdiction in
which the Offering may be made. Without limiting the
generality of the foregoing, and notwithstanding anything
contained herein to the contrary, the Company shall not, during
the six (6) months following completion of the Offering, (A)
directly or indirectly, engage in any offering of securities
which, if integrated with the Offering in the manner prescribed
by Rule 502(a) of Regulation D and applicable releases of the
Commission, may jeopardize the status of the Offering and sale
of the Shares as exempt transactions under Regulation D or (B)
engage in any offering of securities, without the opinion of
counsel reasonably satisfactory to the Placement Agent, to the
effect that such offering would not result in integration with
this Offering, or if integration would so result, that such
integration would not jeopardize the status of this Offering as
an exempt transaction under Regulation D.
(xiii) Apply the net proceeds from the sale of the Shares for
the purposes set forth under the caption "Use of Proceeds" in
the Memorandum in substantially the manner indicated
thereunder.
(xiv) Not, during the period commencing on the date hereof
and ending on the later of the Closing Date, the expiration of
the Offering Period and the last Additional Closing Date (if
any), issue any press release or other communication or hold
any press conference with respect to the Company, its financial
condition, results of operations, business, properties, assets,
liabilities or future prospects or the Offering, without your
prior written consent.
(xv) Not, until February 1, 2001, without your prior written
consent, offer, issue, sell, contract to sell, grant any option
for the sale of or otherwise dispose of, directly or
indirectly, any shares of Common Stock (or any security or
other instrument which by its terms is convertible into,
exercisable for, or exchangeable for shares of Common Stock).
Notwithstanding the foregoing, the Company will be able to
sell, transfer or dispose of (A) the securities issuable under
this Agreement, (B) shares of Common Stock issuable upon the
exercise of stock options under any stock option plan of the
Company, warrants and other commitments, each of which are
outstanding on the date hereof and which are described in the
Memorandum, (C) options granted after the date hereof under
existing stock option plans, (D) securities disposed of in
strategic alliances and (E) shares of Common Stock sold at a
price at or over $2.50 per share (based on the current
capitalization and to be adjusted for stock splits).
Additionally, prior to February 1, 2001, the Company will not,
without your prior written consent, change any terms of the
Company's outstanding stock options or warrants.
(xvi) For a period of four years after the date hereof,
furnish you, without charge, upon request, the following:
(A) within 90 days after the end of each fiscal year, three
(3) copies of financial statements certified by independent
certified public accountants, including a balance sheet,
statement of income and statement of cash flows of the Company
and its then existing subsidiaries, with supporting schedules,
prepared in accordance with generally accepted accounting
principles, as at the end of such fiscal year and for the 12
months then ended, which may be on a consolidated basis, copies
of which financial statements shall also be furnished to the
purchasers in this Offering and, within 45 days after the end
of each fiscal quarter, three (3) copies of unaudited interim
financial statements, as at the end of such quarter and for the
three (3) months then ended;
(B) as soon as practicable after they have been sent to
stockholders of the Company or filed with the Commission, three
(3) copies of each annual and interim financial and other
report or communication sent by the Company to its stockholders
or filed with the Commission; and
(C) as soon as practicable, two copies of every press release
and every material news item and article in respect of the
Company or its affairs which was released by the Company.
(xvii) Comply in all respects with its obligations under the
Operative Agreements.
(xviii) Not, prior to the completion of the Offering, bid
for, purchase, attempt to induce others to purchase, or sell,
directly or indirectly, any Shares or any other securities of
the Company of the same class and series as the Shares in
violation of the provisions of Regulation M under the Exchange
Act.
(xix) Not, for a period of eighteen (18) months from the date
hereof, solicit any offer to buy from or offer to sell (except
in an underwritten public offering) to any person introduced to
the Company by you in connection with the Offering, who is not
a stockholder of the Company at the time of such solicitation,
directly or indirectly, any securities of the Company or of any
other entity, or provide the name of any such person to any
other securities broker or dealer or selling agent, except as
otherwise required by law. In the event that the Company or
any of its officers, directors or affiliates, directly or
indirectly, solicits offers to buy from or offers to sell to
any such person any such securities or provides the name of any
such person to any other securities broker or dealer or selling
agent, and such person purchases such securities or purchases
securities from any such other securities broker or dealer or
selling agent within such eighteen month period except in
connection with an underwritten public offering, the Company
shall pay to the Placement Agent an amount equal to 10% of the
aggregate purchase price of the securities so purchased by such
person. Set forth on Schedule A hereto is a list of persons
and entities introduced to the Company by the Placement Agent.
(xx) Use its best efforts to secure the inclusion of the
Common Stock on Nasdaq as soon as it meets the qualification
requirements.
(b) Covenants of the Placement Agent and Selected Dealers.
(i) Neither the Placement Agent nor any Selected Dealer, by
signing the Selected Dealer Agreement, will accept the
subscription of any person unless immediately before accepting
such subscription the Placement Agent or such Selected Dealer
has reasonable grounds to believe and does believe that (A)
such person is an accredited investor and (B) all
representations made and information furnished by such person
in the Subscription Agreement and related documents are true
and correct in all material respects. The Placement Agent and
Selected Dealers agree to notify the Company promptly if the
Placement Agent or a Selected Dealer, as applicable, shall, at
any time during the period after delivery of the documents
furnished by such person to the Company in connection with
subscription for Shares and immediately before the sale of
Shares to such person, no longer reasonably believe one or more
of the foregoing matters with respect to such person.
(ii) Neither the Placement Agent nor any Selected Dealer will
solicit purchasers of Shares other than in the jurisdictions in
which such solicitation may, upon the advice of counsel, be
made under applicable securities or "blue sky" laws and in
which the Placement Agent or such Selected Dealer, as the case
may be, is qualified so to act.
(iii) Neither the Placement Agent nor any Selected Dealer
will sell any Shares to any investor unless a Memorandum is
furnished to such investor within a reasonable time prior
thereto.
(iv) Upon notice from the Company that the Memorandum is to
be amended or supplemented (which the Company will promptly
give upon becoming aware of any untrue statement of a material
fact required to be stated in the Memorandum or omission to
state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading), the Placement Agent and each Selected
Dealer, if any, will immediately cease use of the Memorandum
until the Placement Agent and such Selected Dealers have
received such amendment or supplement and thereafter will make
use of the Memorandum only as so amended or supplemented, and
the Placement Agent and each Selected Dealer, if any, will
deliver a copy of such amendment or supplement to each
Prospective Investor to whom a copy of the Memorandum had
previously been delivered (and who had not returned such copy)
and whose subscription had not been rejected.
7. Payment of Expenses.
(a) The Company hereby agrees to pay all fees, charges and
expenses of the Offering, including, without limitation, all
fees, charges, and expenses in connection with (i) the
preparation, printing, reproduction, filing, distribution and
mailing of the Memorandum, and all other documents relating to
the offering, purchase, sale and delivery of the Shares, and
any supplements or amendments thereto, including the fees and
expenses of counsel to the Company, and the cost of all copies
thereof, (ii) the issuance, sale, transfer and delivery of the
Shares and the Placement Agent Warrants, including any transfer
or other taxes payable thereon and the fees of any Transfer
Agent, Warrant Agent or Registrar, (iii) the registration or
qualification of the Shares or the
securing of an exemption
therefrom under state or foreign "blue sky" or securities laws,
including, without limitation, filing fees payable in the
jurisdictions in which such registration or qualification or
exemption therefrom is sought, the costs of preparing
preliminary, supplemental and final "Blue Sky Surveys" relating
to the offer and sale of the Shares and the fees ($7,500) and
disbursements of counsel actually incurred to the Placement
Agent in connection with such "blue sky" matters, (iv) the
filing fees, if any, payable to the Commission; and (v) the
retention of the Escrow Agent, including the fees and expenses
of the Escrow Agent for serving as such and the fees and
expenses of its counsel.
(b) If subscriptions to purchase at least 1,000,000 shares
(including the Affiliate Shares) are not received prior to the
expiration of the Offering Period or if this Agreement is
terminated by the Placement Agent pursuant to Section 8 hereof
prior to the issuance, sale and delivery of any Shares, the
Company shall reimburse the Placement Agent for its reasonable
out-of-pocket expenses hereunder (including, without
limitation, the reasonable fees and expenses of counsel) and
pay any compensation due with respect to unreasonably rejected
subscriptions.
8. Conditions of Placement Agent's Obligations. The
obligations of the Placement Agent pursuant to this Agreement
shall be subject, in its discretion, to the continuing accuracy
of the representations and warranties of the Company contained
herein and in each certificate and document contemplated under
this Agreement to be delivered to the Placement Agent, as of
the date hereof and as of the Closing Date (and, if applicable,
each Additional Closing Date) to the performance by the Company
of its obligations hereunder, and to the following conditions:
(a) At the Closing and each Additional Closing, as the case
may be, the Placement Agent shall have received the favorable
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, counsel for the Company, addressed
to the Placement Agent, in substantially the form of Exhibit
III-1 hereto.
(b) On or prior to the Closing Date and each Additional
Closing Date, as the case may be, the Placement Agent shall
have been furnished such information, documents and
certificates as it may reasonably require for the purpose of
enabling it to review the matters referred to in this Section
8 and in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties,
covenants, agreements or conditions herein contained, or as it
may otherwise reasonably request.
(c) At the Closing and each Additional Closing, as the case
may be, the Placement Agent shall have received a certificate
of the chief executive officer and of the chief financial
officer of the Company, dated the Closing Date or such
Additional Closing Date, as the case may be, to the effect
that, as of the date of this Agreement and as of the Closing
Date or such Additional Closing Date, as the case may be, the
representations and warranties of the Company contained herein
were and are accurate, and that as of the Closing Date or such
Additional Closing Date, as the case may be, the obligations to
be performed by the Company hereunder on or prior thereto have
been fully performed.
(d) All proceedings taken in connection with the issuance,
sale and delivery of the Shares shall be reasonably
satisfactory in form and substance to you and your counsel.
(e) There shall not have occurred, at any time prior to the
Closing or, if applicable, an Additional Closing, as the case
may be, (i) any domestic or international event, act or
occurrence which has materially disrupted, or in your
reasonable opinion will in the immediate future materially
disrupt, the securities markets; (ii) a general suspension of,
or a general limitation on prices for, trading in securities on
the New York Stock Exchange or in the over-the-counter market;
(iii) any outbreak of major hostilities or other national or
international calamity affecting securities markets in the
United States; (iv) any banking moratorium declared by a state
or federal authority; (v) any moratorium declared in foreign
exchange trading by major international banks or other persons;
(vi) any material interruption in the mail service or other
means of communication within the United States; (vii) any
material adverse change in the business, properties, assets,
results of operations or financial condition of the Company; or
(viii) any change in the market for securities in general or in
political, financial or economic conditions which, in your
reasonable business judgment, makes it inadvisable to proceed
with the offering, sale and delivery of the Shares.
(f) The Placement Agent shall have received an agreement
reflecting the provisions of Section 6(a)(xv) hereof.
Any certificate or other document signed by any officer of the
Company on behalf of the Company and delivered to you or to
your counsel as required hereunder shall be deemed a
representation and warranty by the Company hereunder as to the
statements made therein. If any condition to your obligations
hereunder has not been fulfilled as and when required to be so
fulfilled, you may terminate this Agreement or, if you so
elect, in writing waive any such conditions which have not been
fulfilled or extend the time for their fulfillment. In the
event that you elect to terminate this Agreement, you shall
notify the Company of such election in writing. Upon such
termination, neither party shall have any further liability or
obligation to the other except as provided in Section 10
hereof.
9. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the
Placement Agent, the Selected Dealers, their officers,
directors, stockholders, employees, agents, advisors,
consultants and counsel, and each person, if any, who controls
the Placement Agent or a Selected Dealer within the meaning of
Section 15 of the Act or Section 20(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against
any and all loss, liability, claim, damage and expense
whatsoever (which shall include, for all purposes of this
Section 9, without limitation, attorneys' fees and any and all
reasonable expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts
paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon or in connection with (i)
any untrue statement or alleged untrue statement of a material
fact contained in (A) the Memorandum or in any document
delivered or statement made pursuant to Section 6(a)(vii), or
(B) in any application or other document or communication (in
this Section 9 collectively called an "application") executed
by or on behalf of the Company or based upon written
information furnished by or on behalf of the Company filed in
any jurisdiction in order to register or qualify the Shares
under the "blue sky" or securities laws thereof or in order to secure an
exemption from such registration or qualification or
filed with the Commission; or any omission or alleged omission
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, all in
light of the circumstances in which made, unless such statement
or omission was made in reliance upon and in conformity with
written information furnished to the Company as stated in
Section 9(b) with respect to the Placement Agent expressly for
inclusion in the Memorandum or in any application, as the case
may be; or (ii) any breach of any representation, warranty,
covenant or agreement of the Company contained in this
Agreement or any Operative Agreement. The foregoing agreement
to indemnify shall be in addition to any liability the Company
may otherwise have, including liabilities arising under this
Agreement.
If any action is brought against the Placement Agent, a
Selected Dealer or any of their officers, directors,
stockholders, employees, agents, advisors, consultants and
counsel, or any controlling persons of the Placement Agent or
a Selected Dealer (an "indemnified party"), in respect of which
indemnity may be sought against the Company pursuant to the
foregoing paragraph, such indemnified party or parties shall
promptly notify the Company (the "indemnifying party") in
writing of the institution of such action (but the failure so
to notify shall not relieve the indemnifying party from any
liability it may have other than pursuant to this Section 9(a)
unless such failure materially prejudices the indemnifying
party), and the indemnifying party shall promptly assume the
defense of such action, including the employment of one counsel
(reasonably satisfactory to such indemnified party or parties)
and payment of expenses. Such indemnified party 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 such
indemnified party unless the employment of such counsel shall
have been authorized in writing by the indemnifying party in
connection with the defense of such action or the indemnifying
party shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties to have
charge of the defense of such action or such indemnified party
or parties shall have reasonably concluded that there may be
one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to
those available to one or more of the indemnifying parties and
it would be inappropriate for the same counsel to represent
both parties due to actual or potential differing interests
between them, in any of which events such fees and expenses
shall be borne by the indemnifying party and the indemnifying
party shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties. Anything
in this paragraph to the contrary notwithstanding, the
indemnifying party shall not be liable for any settlement of
any such claim or action effected without its written consent.
The Company agrees promptly to notify the Placement Agent of
the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with
the sale of the Shares, the Memorandum or any application.
(b) The Placement Agent agrees to indemnify and hold harmless
the Company, its officers, directors, employees, agents and
counsel, and each other person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Placement Agent in Section
9(a), but only with respect to statements or omissions, if any,
made in the Memorandum in reliance upon and in conformity with
written information furnished to the Company as stated in this
Section 9(b) with respect to the Placement Agent expressly for
inclusion in the Memorandum. If any action shall be brought
against the Company or any other person so indemnified based on the
Memorandum and in respect of which indemnity may be sought
against the Placement Agent pursuant to this Section 9(b), the
Placement Agent shall have the rights and duties given to the
indemnifying party, and the Company and each other person so
indemnified shall have the rights and duties given to the
indemnified parties, by the provisions of Section 9(a). The
foregoing agreement to indemnify shall be in addition to any
liability the Placement Agent may otherwise have, including
liabilities arising under this Agreement.
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to
Section 9(a) or 9(b) but it is found in a final judicial
determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though
this Agreement expressly provides for indemnification in such
case, or (ii) any indemnified or indemnifying party seeks
contribution under the Act, the Exchange Act, or otherwise,
then the Company (including for this purpose any contribution
made by or on behalf of any officer, director, employee, agent
or counsel of the Company or any controlling person of the
Company), on the one hand, and the Placement Agent and the
Selected Dealers (including for this purpose any contribution
by or on behalf of an indemnified party), on the other hand,
shall contribute to the losses, liabilities, claims, damages
and expenses whatsoever to which any of them may be subject, in
such proportions as are appropriate to reflect the relative
benefits received by the Company, on the one hand, and the
Placement Agent and the Selected Dealers, on the other hand;
provided, however, that if applicable law does not permit such
allocation, then other relevant equitable considerations such
as the relative fault of the Company and the Placement Agent
and the Selected Dealers in connection with the facts which
resulted in such losses, liabilities, claims, damages and
expenses shall also be considered. The relative benefits
received by the Company, on the one hand, and the Placement
Agent and the Selected Dealers, on the other hand, shall be
deemed to be in the same proportion as (x) the total proceeds
from the Offering (net of compensation payable to the Placement
Agent pursuant to Section 4 hereof but before deducting
expenses) received by the Company, and (y) the compensation
received by the Placement Agent pursuant to Section 4 hereof
or, in the case of a Selected Dealer, the allowance paid to
such Selected Dealer.
The relative fault, in the case of an untrue statement, alleged
untrue statement, omission or alleged omission, shall be
determined by, among other things, whether such statement,
alleged statement, omission or alleged omission relates to
information supplied by the Company or by the Placement Agent
and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such
statement, alleged statement, omission or alleged omission.
The Company and the Placement Agent agree that it would be
unjust and inequitable if the respective obligations of the
Company and the Placement Agent and the Selected Dealers for
contribution were determined by pro rata or per capita
allocation of the aggregate losses, liabilities, claims,
damages and expenses or by any other method of allocation that
does not reflect the equitable considerations referred to in
this Section 9(c). In no case shall the Placement Agent or a
Selected Dealer be responsible for a portion of the
contribution obligation in excess of the compensation received
by it pursuant to Section 4 hereof or the Selected Dealer
Agreement, as the case may be, less the aggregate amount of any
damages that such Placement Agent or Selected Dealer has
otherwise been required to pay in respect of the same or any
substantially similar claim. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be
entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation. For purposes
of this Section 9(c), each person, if any, who controls the
Placement Agent or a Selected Dealer within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and
each officer, director, stockholder, employee, agent and
counsel of the Placement Agent and the Selected Dealers shall
have the same rights to contribution as the Placement Agent or
the Selected Dealer, and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and each officer, director, employee,
agent and counsel of the Company shall have the same rights to
contribution as the Company, subject in each case to the
provisions of this Section 9(c). Anything in this Section 9(c)
to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or
action effected without its written consent. This Section 9(c)
is intended to supersede any right to contribution under the
Act, the Exchange Act or otherwise.
10. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants and agreements contained
in this Agreement shall be deemed to be representations,
warranties, covenants and agreements at the Closing Date and,
if applicable, each Additional Closing Date, and such
representations, warranties, covenants and agreements,
including the indemnity and contribution agreements contained
in Section 9, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
the Placement Agent or any indemnified person, or by or on
behalf of the Company or any person or entity which is entitled
to be indemnified under Section 9(b), and shall survive
termination of this Agreement or the issuance, sale and
delivery of the Shares. In addition, notwithstanding any
election hereunder or any termination of this Agreement, and
whether or not the terms of this Agreement are otherwise
carried out, the provisions of Sections 6(a)(xvii), 7, 9, 10
and 12 shall survive termination of this Agreement and shall
not be affected in any way by such election or termination or
failure to carry out the terms of this Agreement or any part
thereof.
11. Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing
and, if sent to the Placement Agent, shall be mailed, delivered
or telexed or telegraphed and confirmed by letter, to its
address set forth above, with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
At Squadron, Ellenoff, Plesent & ▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or if sent to the Company,
shall be mailed, delivered or telexed or telegraphed and
confirmed by letter, to Access Pharmaceuticals, Inc., ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, with a copy
to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq. at ▇▇▇▇▇▇▇ ▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. All notices hereunder
shall be effective upon receipt by the party to which it is
addressed.
12. Assignment. This Agreement shall not be assigned by any
party hereto without the prior written consent of the other
parties hereto.
13. Parties. This Agreement shall inure solely to the
benefit of, and shall be binding upon, the Placement Agent and
the Company and the persons and entities referred to in Section
9 who are entitled to indemnification or contribution and their
respective successors, legal representatives and assigns (which
shall not include any purchaser, as such, of Shares), and no other
person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained.
14. Construction. This Agreement shall be construed in
accordance with the laws of the State of New York, without
giving effect to conflict of laws.
15. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and
all of which, when taken together, shall constitute one
agreement.
16. Entire Agreement. This Agreement, including the Exhibits
attached hereto, constitutes the entire agreement between the
parties hereto and supersedes all previous negotiations,
agreements and commitments with respect thereto, and may only
be amended by a written document, signed by duly authorized
officers or representatives of each of the parties hereto.
17. Option to Terminate Agreement. The Placement Agent shall
have the option to terminate this Agreement in the event that
the Memorandum is not satisfactory to the Placement Agent in
its sole discretion.
If the foregoing correctly sets forth the understanding between
us, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding
agreement among us.
Very truly yours,
ACCESS PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇
President
Accepted as of the date first above written.
New York, New York
SUNRISE SECURITIES CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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