SCICLONE PHARMACEUTICALS, INC.
1,500,000 Shares of Common Stock, no par value
PLACEMENT AGENCY AGREEMENT
__________________, 1997
EVEREN SECURITIES, INC.
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as Placement Agent
Dear Sir or Madam:
SciClone Pharmaceuticals, Inc., a California corporation (the
"Company"), proposes to issue and sell 1,500,000 shares (the "Shares") of common
stock, no par value (the "Common Stock"), to certain investors (collectively,
the "Investors"). The Company desires to engage you as its exclusive placement
agent (the "Placement Agent") in connection with such issuance and sale. The
Common Stock is more fully described in the Registration Statement (as
hereinafter defined).
The Company hereby confirms as follows its agreements with the
Placement Agent.
1. Agreement to Act as Placement Agent. On the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions of this Agreement, the Placement Agent
agrees to act as the Company's exclusive placement agent in connection with the
issuance and sale, on a best efforts basis, by the Company of the Shares to the
Investors. The Company shall pay to the Placement Agent _____% of the gross
proceeds received by the Company from the sale of the Shares as set forth on the
cover page of the Prospectus (as hereinafter defined).
2. Delivery and Payment. Concurrently with the execution and
delivery of this Agreement, the Company, the Placement Agent and Citibank, N.A.,
as escrow agent (the "Escrow Agent"), shall enter into an Escrow Agreement
substantially in the form of Exhibit A attached hereto (the "Escrow Agreement"),
pursuant to which an escrow account will be established, at the Company's
expense, for the benefit of the Investors (the "Escrow Account"). Prior to the
Closing Date (as defined below), (i) each of the Investors will deposit an
amount
equal to the Price to Public per Share as shown on the cover page of the
Prospectus multiplied by the number of Shares purchased by it in the Escrow
Account, and (ii) the Escrow Agent will notify the Company and the Placement
Agent in writing whether the Investors have deposited in the Escrow Account
funds in the amount equal to the proceeds of the sale of all of the Shares
offered hereby (the "Requisite Funds") into the Escrow Account. At 10:00 a.m.,
New York City time, on _____________, 1997, or at such other time on such other
date as may be agreed upon by the Company and the Placement Agent but in no
event prior to the date on which the Escrow Agent shall have received all of the
Requisite Funds (such date is hereinafter referred to as the "Closing Date"),
the Escrow Agent will release the Requisite Funds from the Escrow Account for
collection by the Company and the Placement Agent as provided in the Escrow
Agreement and the Company shall deliver the Shares to the Investors, which
delivery may be made through the facilities of The Depository Trust Company. The
closing (the "Closing") shall take place at the office of Stroock & Stroock &
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Closing shall be deemed to have occurred simultaneously.
Certificates evidencing the Shares shall be in definitive form
and shall be registered in such names and in such denominations as the Placement
Agent shall request by written notice to the Company. For the purpose of
expediting the checking and packaging of certificates for the Shares, the
Company agrees to make such certificates available for inspection at least 24
hours prior to delivery to the Investors.
3. Representations and Warranties of the Company. The Company
represents and warrants and covenants to the Placement Agent that:
(a) A registration statement (Registration No.
333-______) on Form S-3 relating to the Shares, including a preliminary
prospectus relating to the Shares and such amendments to such registration
statement as may have been required to the date of this Agreement, has been
prepared by the Company, under the provisions of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (collectively referred to as
the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission. The Commission
has not issued any order preventing or suspending the use of the Prospectus or
the Preliminary Prospectus (as defined below). The term "Preliminary Prospectus"
as used herein means a preliminary prospectus relating to the Shares as
contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules and Regulations
included at any time as part of the registration statement. Copies of such
registration statement and amendments and of each related Preliminary Prospectus
have been delivered to the Placement Agent. If such registration statement has
not become effective, a further amendment to such registration statement,
including a form of final prospectus, necessary to permit such registration
statement to become effective will be filed promptly by the Company with the
Commission. If such registration statement has become effective, a final
prospectus relating to the Shares containing information permitted to be omitted
at the time of effectiveness by Rule 430A will be filed by the Company with the
Commission in accordance with Rule 424(b) of the Rules and Regulations promptly
after execution and delivery of this Agreement. The term "Registration
Statement" means the registration statement as amended at
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the time it becomes or became effective (the "Effective Date"), including all
material incorporated by reference therein and any information deemed to be
included by Rule 430A. The term "Prospectus" means the prospectus relating to
the Shares as first filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations or, if no such filing is required, the form of final
prospectus relating to the Shares included in the Registration Statement at the
Effective Date, in either case, including all material, if any, incorporated by
reference therein.
(b) On the date that any Preliminary Prospectus was
filed with the Commission, the date the Prospectus is first filed with the
Commission pursuant to Rule 424(b) (if required), at all times subsequent to and
including the Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission, the Registration Statement, each
Preliminary Prospectus and the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment or supplement
thereto), including the financial statements included in the Prospectus, did or
will comply with all applicable provisions of the Act and the Rules and
Regulations and did or will contain all statements required to be stated therein
in accordance with the Act and the Rules and Regulations. On the Effective Date
and when any post-effective amendment to the Registration Statement becomes
effective, no part of the Registration Statement or any such amendment did or
will contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. At the Effective Date, at the date the Prospectus or any
amendment or supplement to the Prospectus is filed with the Commission and at
the Closing Date the Prospectus did not or will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The Company has not distributed any offering material in
connection with the offering or sale of the Common Stock, other than the
Registration Statement, the Preliminary Prospectus, the Prospectus, the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 (the
"Annual Report"), the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1997 and June 30, 1997 (the "Quarterly Reports"), the
Company's Current Report on Form 8-K filed on October 14, 1997 (the "Current
Report"), the Company's registration statement on Form 8-A dated January 31,
1992 and the Company's registration statement on Form 8-A dated October 14,
1997.
(c) The Company is, and at the Closing Date will be,
a corporation duly organized, validly existing and in good standing under the
laws of California. The Company has, and at the Closing Date will have, full
corporate power and authority to conduct all the activities conducted by it, to
own or lease all the assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus. The Company is, and
at the Closing Date will be, duly licensed or qualified to conduct its business
and in good standing as a foreign organization in all jurisdictions in which the
nature of the activities conducted by it or the character of the assets owned or
leased by it makes such licensing or qualification necessary, except where
failure to so license or qualify does not have a material adverse effect on the
business, prospects, properties, condition (financial or
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otherwise), net worth or results of operations of the Company and the
Subsidiaries (as defined herein), taken as a whole. Except for the stock of the
Subsidiaries and as disclosed in the Registration Statement, the Company does
not own, and at the Closing Date will 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. Complete and correct copies of the articles or
certificate of incorporation and of the bylaws of the Company and the
Subsidiaries, and all amendments thereto have been delivered to the Placement
Agent, and no changes therein will be made subsequent to the date hereof and
prior to the Closing Date.
(d) Each of the Company's subsidiaries (as defined in
the Act) are identified on Exhibit 23.1 of the Annual Report, which such Annual
Report is incorporated by reference into the Registration Statement, and is
referred to herein as a "Subsidiary" and collectively as the "Subsidiaries".
Each Subsidiary is, and at the Closing Date will be, duly organized, validly
existing and in good standing in the jurisdiction of its incorporation. Each
Subsidiary has, and at the Closing Date will have, full corporate power and
authority to conduct all the activities conducted by it, to own or lease all the
assets owned or leased by it and to conduct its business as described in the
Registration Statement or Prospectus. Each Subsidiary is, and at the Closing
Date will be, duly licensed or qualified to conduct its business and in good
standing as a foreign organization in all jurisdictions in which the nature of
the activities conducted by it or the character of the assets owned or leased by
it makes such licensing or qualification necessary, except where failure to so
license or qualify does not have a material adverse effect on the business,
prospects, properties, condition (financial or otherwise), net worth or results
of operations of the Company and the Subsidiaries, taken as a whole. All the
outstanding shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, and are wholly
owned by the Company directly, free and clear of any lien, adverse claim,
security interest, equity or other encumbrance, except as described in the
Registration Statement or Prospectus.
(e) The issued and outstanding shares of capital
stock of the Company have been duly authorized, validly issued, are fully paid
and nonassessable and are not subject to any preemptive or similar rights. The
Company has an authorized, issued and outstanding capitalization as of June 30,
1997 as set forth under the caption "Capitalization" in the Prospectus. The
description of the securities of the Company incorporated by reference into the
Registration Statement and the Prospectus is, and at the Closing Date will be,
complete and accurate in all respects. Except as set forth in the Registration
Statement and the Prospectus, and except for options to purchase shares of the
Company's Common Stock granted under the Company's stock option plans and shares
of Common Stock issued under the Company's Employee Stock Purchase Plan, neither
the Company nor the Subsidiaries has outstanding, and at the Closing Date will
not have outstanding, any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or
exchangeable for, or any contracts or commitments to issue or sell, any shares
of capital stock or other securities.
(f) This Agreement has been duly authorized and
validly executed and delivered by the Company and is a legal, valid and binding
agreement of the Company
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enforceable against the Company in accordance with its terms, subject to the
effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and similar
laws relating to or affecting creditors' rights generally and court decisions
with respect thereto. The Escrow Agreement has been duly authorized and validly
executed and delivered by the Company and is a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, subject to the effect of bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar laws relating to or affecting creditors' rights generally
and court decisions with respect thereto.
(g) The issuance and sale of the Shares have been
duly authorized by the Company, and the Shares, when issued and paid for in
accordance with this Agreement, will be duly and validly issued, fully paid and
nonassessable and will not be subject to preemptive or similar rights. The
holders of the Shares will not be subject to personal liability by reason of
being such holders. The Shares, when issued, will conform to the description
thereof set forth in the Prospectus.
(h) The consolidated financial statements and the
related notes and schedules incorporated by reference into the Registration
Statement and the Prospectus present fairly the consolidated financial condition
of the Company and the Subsidiaries as of the respective dates thereof and the
results of operations, shareholder's equity (deficit) and cash flows at the
respective dates and for the respective periods covered thereby, all in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the entire period involved, except as otherwise
disclosed therein. No other financial statements or schedules of the Company,
the Subsidiaries, or any other entity are required by the Act or the Rules and
Regulations to be included in the Registration Statement or the Prospectus.
Ernst & Young LLP (the "Accountants"), who have reported on such financial
statements and schedules, are independent accountants with respect to the
Company and the Subsidiaries as required by the Act and the Rules and
Regulations. Such financial statements and the related notes and schedules
incorporated by reference into the Registration Statement and the Prospectus
have been prepared in conformity with the requirements of the Act and the Rules
and Regulations and present fairly the information presented therein; the pro
forma financial information set forth under the headings "Prospectus Summary -
The Offering" and "Capitalization" in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) has been prepared in
conformity with the applicable published rules and regulations of the Commission
with respect to pro forma financial information, and the assumptions used in
preparing such information are reasonable; and the other financial and
statistical information and data included in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) are accurately presented
and prepared on a basis consistent with such financial statements and the books
and records of the Company and the Subsidiaries.
(i) 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
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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.
(j) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and prior
to the Closing Date, except as set forth in or contemplated by the Registration
Statement and the Prospectus, (i) there has not been and will not have been any
change in the capitalization of the Company or the Subsidiaries other than
non-material changes in the ordinary course of business, or any material adverse
change in the business, prospects, properties, condition (financial or
otherwise), net worth or results of operations of the Company or the
Subsidiaries arising for any reason whatsoever, (ii) the Company and the
Subsidiaries have not incurred nor will any of them incur any material
liabilities or obligations, direct or contingent, nor has the Company or the
Subsidiaries entered into nor will any of them enter into any material
transactions other than pursuant to this Agreement, the Registration Statement
and the transactions referred to herein and therein and (iii) the Company has
not and will not have paid or declared any dividends or other distributions of
any kind on any class of its capital stock.
(k) Any real property and buildings held under lease
to the Company or the Subsidiaries are held or leased by them under valid,
binding and enforceable leases conforming to the description thereof
incorporated by reference into the Registration Statement and the Prospectus,
with such exceptions as do not interfere with the use made and proposed to be
made of such property and buildings by the Company or the Subsidiaries, as the
case may be.
(l) The Company is not an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act") and is not required to be registered under the
Investment Company Act.
(m) Except as set forth or referred to in the
Registration Statement and the Prospectus, there are no actions, suits or
proceedings pending, or to the Company's knowledge, threatened, against or
affecting the Company or the Subsidiaries or any of their respective officers in
their capacity as such, before or by any Federal or state court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding might materially
adversely affect the business, prospects, properties, condition (financial or
otherwise), net worth or results of operations of the Company and the
Subsidiaries, taken as a whole.
(n) The Company and each Subsidiary has, and at the
Closing Date will have, (i) all governmental licenses, permits, consents,
orders, approvals and other authorizations necessary to carry on its business as
contemplated in the Prospectus (or if the Prospectus is not in existence, the
most recent Preliminary Prospectus), (ii) complied with all laws, regulations
and orders applicable to either it or its business, where the failure to so
comply would have a material adverse effect on the business, prospects,
properties, condition
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(financial or otherwise), net worth or results of operations of the Company and
the Subsidiaries, taken as a whole, and (iii) performed all its obligations
required to be performed, and is not, and at the Closing Date will not be in
default, under any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement, lease, contract or other
agreement or instrument (collectively, a "contract or other agreement") to which
it is a party or by which its property is bound or affected, except as otherwise
set forth in the Registration Statement and the Prospectus and except where such
default would not have a material adverse effect on the business, prospects,
properties, condition (financial or otherwise), net worth or results of
operations of the Company, and, to the Company's knowledge, no other party under
any contract or other agreement to which it is a party is in default in any
respect thereunder. Neither the Company nor the Subsidiaries are in violation of
any provision of its organizational or governing documents.
(o) The Company has all corporate power and authority
to enter into this Agreement and the Escrow Agreement, and to carry out the
provisions and conditions hereof and thereof, and all consents, authorizations,
approvals and orders of any court, government, or governmental agency or body
having jurisdiction over the Company or its properties or operations required in
connection herewith and therewith have been obtained, except such as may be
required under state securities or Blue Sky laws or the by-laws and rules of the
National Association of Securities Dealers, Inc. (the "NASD").
(p) Neither (i) the issuance, offering and sale of
the Shares pursuant hereto, nor (ii) the compliance by the Company with the
other provisions hereof require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except such
as have been obtained, such as may be required under state securities or Blue
Sky laws or the bylaws and rules of the NASD and, if the Registration Statement
is not effective under the Act as of the time of execution hereof, such as may
be required (and shall be obtained as provided in this Agreement) under the Act.
(q) Neither the execution of this Agreement or the
Escrow Agreement, nor the issuance, offering or sale of the Shares, nor the
consummation of any of the transactions contemplated herein or in the Escrow
Agreement, nor the compliance by the Company with the terms and provisions
hereof or thereof will conflict with, or will result in a breach of, any of the
terms and provisions of, or has constituted or will constitute a default under,
or has resulted in or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or the
Subsidiaries pursuant to the terms of any contract or other agreement to which
the Company or the Subsidiaries may be bound or to which any of the property or
assets of the Company or the Subsidiaries is subject; nor will such action
result in any violation of the provisions of the Company's or the Subsidiaries'
organizational or governing documents, or any statute or any order, rule or
regulation applicable to the Company or the Subsidiaries or of any court or of
any federal, state or other regulatory authority or other government body having
jurisdiction over the Company or the Subsidiaries, except for such conflicts,
breaches, defaults, liens, charges, encumbrances or violations which will not
have a material adverse effect on business, prospects, properties,
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condition (financial or otherwise), net worth or results of operations of the
Company and the Subsidiaries, taken as a whole.
(r) There is no document or contract of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement which is not described or
filed as required. All such contracts to which the Company or the Subsidiaries
is a party have been duly authorized, executed and delivered by the Company or
the Subsidiaries, constitute valid and binding agreements of the Company or the
Subsidiaries, as the case may be, and are enforceable against the Company or the
Subsidiaries in accordance with the terms thereof, subject to the effect of
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and equitable principles of general applicability.
(s) No statement, representation or warranty made by
the Company in this Agreement or made in any certificate or document required by
this Agreement or the Escrow Agreement to be delivered to the Placement Agent,
the Investors or the Escrow Agent was or will be, when made, inaccurate, untrue
or incorrect in any material respect.
(t) The Company and its directors, officers or
controlling persons have not taken, directly or indirectly, any action intended,
or which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Common Stock.
(u) No holder of securities of the Company has rights
to the registration of any securities of the Company as a result of the filing
of the Registration Statement.
(v) The Common Stock is currently listed on the
Nasdaq National Market (the "NNM").
(w) Neither the Company nor the Subsidiaries are
involved in any material labor dispute nor is any such dispute threatened.
(x) None of the Company or the Subsidiaries or any of
their respective employees or agents have made any payment of funds of the
Company or the Subsidiaries, or received or retained any such funds in violation
of any law, rule or regulation where such actions are of a character required to
be disclosed in the Prospectus.
(y) The Company maintains insurance of the types and
in the amounts generally deemed adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company and the Subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
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(z) The Company, either directly or indirectly
through the Subsidiaries, has sufficient patent rights, trademarks, trade names,
copyrights, licenses, approvals and governmental authorizations to conduct its
business as described in the Prospectus; except as described in the Prospectus,
the expiration of any patent rights, trademarks, trade names, copyrights,
licenses, approvals or governmental authorizations would not have a material
adverse effect on the business, prospects, properties, condition (financial or
otherwise), net worth or results of operations of the Company and the
Subsidiaries taken as a whole; and the Company has no knowledge of any material
infringement by it of patent rights, trademark, trade name rights, copyrights,
licenses, trade secrets or other similar rights of others, and there is no claim
being made against the Company or any of the Subsidiaries regarding patents,
trademark, trade names, copyright, license, trade secrecy or other infringement
which could have a material adverse effect on the business, prospects,
properties, condition (financial or otherwise), net worth or results of
operations of the Company and the Subsidiaries, taken as a whole.
(aa) The business, operations and properties of the
Company and the Subsidiaries have been and are being conducted in compliance
with all applicable laws, ordinances, rules, regulations, licenses, permits,
approvals, plans, authorizations or requirements relating to occupational safety
and health, or pollution, or protection of health or the environment (including,
without limitation, those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic
substances, materials or wastes into ambient air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of chemical substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, gaseous or liquid in nature) of any governmental department, commission,
board, bureau, agency or instrumentality of the United States, any state or
political subdivision thereof, or any foreign jurisdiction, and all applicable
judicial or administrative agency or regulatory decrees, awards, judgments and
orders relating thereto, and neither the Company nor the Subsidiaries has
received any notice from any governmental instrumentality or any third party
alleging any violation thereof or liability thereunder (including, without
limitation, liability for costs of investigating or remediating sites containing
hazardous substances and/or damages to natural resources).
(bb) The information contained in the following
documents, which are incorporated by reference into the Registration Statement,
is true and correct in all material respects as of their respective final dates:
(i) the Annual Report;
(ii) the Quarterly Reports;
(iii) the Current Report;
(iv) the Company's registration statement on
Form 8-A dated January 31, 1992; and
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(v) the Company's registration statement on
Form 8-A dated October 14, 1997.
4. Agreements of the Company. The Company covenants and agrees
with the Placement Agent as follows:
(a) The Company will not, either prior to the
Effective Date or thereafter during such period as the Prospectus would be
required by law to be delivered in connection with sales of the Shares by an
underwriter or dealer, file any amendment or supplement to the Registration
Statement or the Prospectus, unless a copy thereof shall first have been
submitted to the Placement Agent within a reasonable period of time prior to the
filing thereof and the Placement Agent shall not have objected thereto in good
faith.
(b) The Company will use its best efforts to cause
the Registration Statement to become effective, and will notify the Placement
Agent promptly, and will confirm such advice in writing, (1) when the
Registration Statement has become effective and when any post-effective
amendment thereto becomes effective, (2) of any request by the securities or
other governmental authority (including, without limitation, the Commission) of
any jurisdiction for amendments or supplements to the Registration Statement or
the Prospectus or for additional information, (3) of the issuance by any
securities or other governmental authority (including, without limitation, the
Commission) of any jurisdiction of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose or the threat thereof, (4) of the happening of any event during the
period mentioned in Section 4(a) that in the judgment of the Company makes any
statement made in the Registration Statement or the Prospectus untrue or that
requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances in which they are made, not misleading and (5) of receipt by the
Company or any representative or attorney of the Company of any other
communication from the securities or other governmental authority (including,
without limitation, the Commission) of any jurisdiction relating to any of the
Registration Statement, any Preliminary Prospectus or the Prospectus. If at any
time any securities or other governmental authority (including, without
limitation, the Commission) of any jurisdiction shall issue any order suspending
the effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible moment. If the Company has omitted any information from the
Registration Statement, pursuant to Rule 430A, it will use its best efforts to
comply with the provisions of and make all requisite filings with the Commission
pursuant to said Rule 430A and to notify the Placement Agent promptly of all
such filings.
(c) If, at any time when a Prospectus relating to the
Shares is required to be delivered under the Act, any event occurs as a result
of which the Prospectus, as then amended or supplemented, would, in the judgment
of counsel to the Company or counsel to the Placement Agent, include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
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under which they were made, not misleading, or the Registration Statement, as
then amended or supplemented, would, in the judgment of counsel to the Company
or counsel to the Placement Agent, include any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein
not misleading, or if for any other reason it is necessary, in the judgment of
counsel to the Company or counsel to the Placement Agent, at any time to amend
or supplement the Prospectus or the Registration Statement to comply with the
Act or the Rules and Regulations, the Company will promptly notify the Placement
Agent and, subject to Section 4(a) hereof, will promptly prepare and file with
the Commission, at the Company's expense, an amendment to the Registration
Statement or an amendment or supplement to the Prospectus that corrects such
statement or omission or effects such compliance and will deliver to the
Placement Agent, without charge, such number of copies thereof as the Placement
Agent may reasonably request. The Company consents to the use of the Prospectus
or any amendment or supplement thereto by the Placement Agent.
(d) The Company will furnish to the Placement Agent
and its counsel, without charge, (i) two copies of the registration statement
described in Section 3(a) hereof and each pre-effective amendment thereto,
including financial statements and schedules, and all exhibits thereto and (ii)
so long as a prospectus relating to the Shares is required to be delivered under
the Act, as many copies of each Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto as the Placement Agent may reasonably request.
(e) The Company will comply with all the undertakings
contained in the Registration Statement.
(f) Prior to the sale of the Shares to the Investors,
the Company will cooperate with the Placement Agent and its counsel in
connection with the registration or qualification of the Shares for offer and
sale under the state securities or Blue Sky laws of such jurisdictions as the
Placement Agent may request; provided, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject.
(g) During the period of three years commencing on
the Effective Date, the Company will furnish to the Placement Agent copies of
such financial statements and other periodic and special reports as the Company
may from time to time distribute generally to the holders of any class of its
capital stock, and will furnish to the Placement Agent a copy of each annual or
other report it shall be required to file with the Commission.
(h) The Company will make generally available to
holders of its securities, as soon as may be practicable, but in no event later
than the last day of the fifteenth full calendar month following the calendar
quarter in which the Effective Date falls, a consolidated earnings statement
(which need not be audited but shall be in reasonable detail) for a period of 12
months ended commencing after the Effective Date, and satisfying the provisions
of Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).
-11-
(i) The Company will not at any time, directly or
indirectly, take any action intended, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of the
Shares to facilitate the sale or resale of any of the Shares.
(j) The Company will apply the net proceeds from the
offering and sale of the Shares in the manner set forth in the Prospectus under
the caption "Use of Proceeds."
5. Expenses. Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, the Company will
pay all costs and expenses incident to the performance of the obligations of the
Company under this Agreement, including but not limited to costs and expenses of
or relating to (1) the preparation, printing and filing of the Registration
Statement (including each pre- and post-effective amendment thereto) and
exhibits thereto, each Preliminary Prospectus, the Prospectus and any amendment
or supplement to the Prospectus, including all fees, disbursements and other
charges of counsel to the Company, (2) the preparation and delivery of
certificates representing the Shares, (3) furnishing (including costs of
shipping and mailing) such copies of the Registration Statement (including all
pre- and post-effective amendments thereto), the Prospectus and any Preliminary
Prospectus, and all amendments and supplements to the Prospectus, as may be
requested for use in connection with the direct placement of the Shares, (4) the
listing of the Shares on the NNM, (5) any filings required to be made by the
Placement Agent with the NASD and the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions designated pursuant to Section 4(f), including the reasonable
fees, disbursements and other charges of counsel to the Placement Agent in
connection therewith, and the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, (6) fees, disbursements and other
charges of counsel to the Company and (7) the fees of the Escrow Agent. The
Company shall reimburse the Placement Agent for all its travel, legal and other
out-of-pocket expenses incurred in connection with the engagement hereunder, up
to a maximum of $___________.
6. Conditions of the Obligations of the Placement Agent. The
obligations of the Placement Agent hereunder are subject to the following
conditions:
(a) Notification that the Registration Statement has
become effective shall be received by the Placement Agent not later than 4:00
p.m., New York City time, on the date of this Agreement or at such later date
and time as shall be consented to in writing by the Placement Agent and all
filings required by Rule 424 of the Rules and Regulations and Rule 430A shall
have been made.
(b) (i) No stop order suspending the effectiveness of
the Registration Statement shall have been issued, and no proceedings for that
purpose shall be pending or threatened by any securities or other governmental
authority (including, without limitation, the Commission), (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or
-12-
threatened or contemplated by any securities or other governmental authority
(including, without limitation, the Commission), (iii) any request for
additional information on the part of the staff of any securities or other
governmental authority (including, without limitation, the Commission) shall
have been complied with, and, to the Company's knowledge, to the satisfaction of
the staff of the Commission or such authorities and (iv) after the date hereof
no amendment or supplement to the Registration Statement or the Prospectus shall
have been filed unless a copy thereof was first submitted to the Placement Agent
and the Placement Agent did not object thereto in good faith, and the Placement
Agent shall have received certificates, dated the Closing Date and signed by the
President and Chief Executive Officer or the Chairman of the Board of Directors
of the Company, and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon their information and belief), to the effect
of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i) there
shall not have been a material adverse change in the general affairs, business,
business prospects, properties, management, condition (financial or otherwise),
net worth or results of operations of the Company or the Subsidiaries, whether
or not arising from transactions in the ordinary course of business, in each
case other than as set forth in or contemplated by the Registration Statement
and the Prospectus and (ii) neither the Company nor the Subsidiaries shall have
sustained any material loss or interference with its business or properties from
fire, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration Statement
and the Prospectus, if in the sole judgment of the Placement Agent any such
development makes it impracticable or inadvisable to consummate the sale and
delivery of the Shares to Investors at the offering price.
(d) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
shall have been no litigation or other proceeding instituted against the Company
or the Subsidiaries or any of its officers or directors in their capacities as
such, before or by any Federal, state or local court, commission, regulatory
body, administrative agency or other governmental body, domestic or foreign, in
which litigation or proceeding an unfavorable ruling decision or finding would
materially and adversely affect the business, prospects, properties, condition
(financial or otherwise), net worth or results of operations of the Company or
its Subsidiaries.
(e) Each of the representations and warranties of the
Company contained herein shall be true and correct in all material respects at
the Closing Date, as if made on such date, and all covenants and agreements
herein contained to be performed on the part of the Company and all conditions
herein contained to be fulfilled or complied with by the Company at or prior to
the Closing Date shall have been duly performed, fulfilled or complied with.
-13-
(f) The Placement Agent shall have received an
opinion, dated the Closing Date, of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich ("▇▇▇▇ ▇▇▇▇"),
counsel to the Company, in form and substance satisfactory to the Placement
Agent, to the effect that:
(i) each of the Company and the Subsidiaries has been
duly organized and is validly existing in good standing under the laws
of its jurisdiction of incorporation and is duly qualified to transact
business as a foreign corporation and is in good standing under the
laws of all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified or in good standing would
not have a material adverse effect on the business, prospects,
properties, condition (financial or otherwise), net worth or results of
operations of the Company and the Subsidiaries, taken as a whole;
(ii) each of the Company and the Subsidiaries has
full power and authority to own or lease all the assets owned or leased
by it and to conduct its business as described in the Registration
Statement and the Prospectus; and the Company has all corporate power
and authority to enter into this Agreement and the Escrow Agreement,
and to carry out the provisions and conditions hereof and thereof, and
all consents, authorizations, approvals and orders required in
connection herewith and therewith have been obtained;
(iii) the Company has an authorized capitalization as
of June 30, 1997 as set forth under the caption "Capitalization" in the
Prospectus; all of the issued shares of capital stock of the Company
have been duly authorized and validly issued, and are fully paid and
nonassessable and free of preemptive or other similar rights; the
Shares have been duly authorized by all necessary action of the Company
and, when issued by the Company will be validly issued and outstanding;
to such counsel's knowledge, no holders of outstanding shares of
capital stock of the Company are entitled as such to any preemptive or
other rights to subscribe for any of the Shares; to such counsel's
knowledge, no holders of securities of the Company are entitled to have
such securities registered under the Registration Statement; and, to
the best of such counsel's knowledge, there are no outstanding options,
warrants or other rights calling for the issuance of, and no
commitment, plan or arrangement to, issue or register any shares of
capital stock or other securities of the Company or the Subsidiaries
other than as disclosed in the Registration Statement and the
Prospectus;
(iv) the issuance and sale of the Shares have been
duly authorized by the Company, and the Shares, when issued and paid
for in accordance with this Agreement, will be duly and validly issued,
fully paid and nonassessable and will not be subject to preemptive or
other similar rights; the holders of the Shares will not be subject to
personal liability by reason of being such holders; and the Shares,
when issued, will conform to the description thereof set forth in the
Prospectus;
(v) the statements set forth under the headings
["Description of Capital Stock" and "________"] in the Company's
registration statement on Form 8-A
-14-
dated January 31, 1992 and in the Company's registration statement on
Form 8-A dated October 14, 1997 each of which is incorporated by
reference into the Registration Statement, insofar as such statements
purport to summarize certain provisions of the securities of the
Company, constitute a fair summary of such provisions, and inasmuch as
such statements constitute matters of law or legal conclusions, have
been reviewed by such counsel and are accurate in all material
respects;
(vi) the execution and delivery of this Agreement and
the Escrow Agreement have been duly authorized by all necessary action
of the Company and each has been duly executed and delivered by the
Company, and each is the legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to or
affecting creditors' rights and to general principles of equity and, in
the case of this Agreement, except as rights to indemnity and
contribution may be limited by federal or state securities laws or the
public policy underlying such laws;
(vii) to such counsel's knowledge, no legal or
governmental proceedings are pending to which the Company or the
Subsidiaries or to which the property of the Company or the
Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not described therein,
and, to such counsel's knowledge, no such proceedings have been
threatened against the Company or the Subsidiaries or with respect to
any of their respective assets; and no contract or other document is
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
that is not described therein or filed as required;
(viii) the Registration Statement is effective under
the Act; any required filing of the Prospectus pursuant to Rule 424(b)
has been made in the manner and within the time period required by Rule
424(b); and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto and no order directed at any amendment or supplement
thereto has been issued, and no proceedings for that purpose have been
instituted or threatened or are contemplated by the Commission;
(ix) the Company is not an "investment company" as
such term is defined under the Investment Company Act, and is not
required to be registered under the Investment Company Act;
(x) the statements set forth in the Prospectus under
the captions "Risk Factors" and "Business" and in Part III of the
Annual Report (which report is incorporated by reference into the
Registration Statement), insofar as such statements constitute matters
of law or legal conclusions, have been reviewed by such counsel and are
accurate in all material respects (it being understood that such
counsel need express
-15-
no opinion with respect to statements set forth under the captions
"Risk Factors -- Patents and Proprietary Rights," and "Business --
Patents and Proprietary Rights");
(xi) the registration statement described in Section
3(a) hereof as originally filed with respect to the Shares and each
amendment thereto and the Prospectus (in each case, not including the
financial statements and other financial and statistical information
contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable
requirements of the Act and the Rules and Regulations;
(xii) neither the issuance, offering and sale of the
Shares pursuant hereto nor the compliance by the Company with the other
provisions of this Agreement and with the provisions of the Escrow
Agreement require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as
have been obtained (it being understood that such counsel need express
no opinion with respect to state securities or Blue Sky Laws or the
bylaws and rules of the NASD);
(xiii) neither the execution or delivery of this
Agreement or the Escrow Agreement, nor the issuance, offering or sale
of the Shares, nor the compliance by the Company with the terms and
provisions hereof or thereof will conflict with, or result in a breach
or violation of, any of the terms and provisions of, or constitute a
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or of
the Subsidiaries pursuant to the terms of, (A) any material contract or
other agreement to which the Company or the Subsidiaries is a party or
by which the Company or the Subsidiaries or any of their respective
properties or assets are subject, (B) the organizational or governing
documents of the Company or the Subsidiaries, (C) any statute, rule or
regulation applicable to the Company or the Subsidiaries, or (D) any
judgment, decree or order of any court or other governmental authority
or any arbitrator known to such counsel and applicable to the Company
or the Subsidiaries; and
(xiv) the Shares have been authorized for quotation
on the NNM.
▇▇▇▇ ▇▇▇▇ shall also state that in the course of the
preparation of the Registration Statement and the Prospectus, such counsel has
participated in conferences with officers and representatives of the Company and
with the Accountants, at which conferences the contents of the Registration
Statement and the Prospectus were discussed and, on the basis of the foregoing,
that they have no reason to believe that the Registration Statement, as of its
effective date and as of the date of such opinion, contained or contains any
untrue statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus, as of its date and the date of such
opinion, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (other than
-16-
financial statements and schedules and other financial and statistical data
included therein, as to which such counsel need express no view).
In rendering any such opinion, ▇▇▇▇ ▇▇▇▇ may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials and, as to matters
involving the application of laws of any jurisdictions in which such counsel are
not admitted to practice, to the extent satisfactory in form and substance to
counsel for the Placement Agent, upon the opinion of local counsel. The
foregoing opinion shall also state that the Placement Agent is justified in
relying upon such opinions of local counsel, and copies of such opinions shall
be delivered to the Placement Agent and their counsel.
References to the Registration Statement and the Prospectus in
this paragraph (f) shall include any amendment or supplement thereto at the date
of such opinion.
(g) The Placement Agent shall have received an
opinion, dated the Closing Date, of __________________, special intellectual
property counsel to the Company, in form and substance satisfactory to the
Placement Agent, to the effect that:
(i) to the best of such counsel's knowledge after due
and diligent inquiry, there are no legal or governmental proceedings
pending relating to patent rights, trade secrets, trademarks, service
marks or other proprietary information or materials of the Company, and
to the best of such counsel's knowledge no such proceedings are
threatened or contemplated by governmental authorities or others;
(ii) such counsel do not know of any contracts or
other documents relating to governmental regulation affecting the
Company or the Company's patents, trade secrets, trademarks, service
marks or other proprietary information or materials, of a character
required to be filed as an exhibit to the Registration Statement or
required to be described in the Registration Statement or the
Prospectus that are not filed or described as required;
(iii) to the best of such counsel's knowledge after
due and diligent inquiry, the Company is not infringing or otherwise
violating any patents, trade secrets, trademarks, service marks or
other proprietary information or materials, of others, and to the best
of such counsel's knowledge there are no infringements by others of any
of the Company's patents, trade secrets, trademarks, service marks or
other proprietary information or materials which in the judgment of
such counsel could affect materially the use thereof by the Company;
(iv) to the best of counsel's knowledge after due and
diligent inquiry, the Company is not aware of any claims that the
technology developed by Company's scientists while employed by or
associated with the Company was first discovered when they were
employed at any other companies; and
-17-
(v) to the best of counsel's knowledge after due and
diligent inquiry, the Company is not aware of any claims of ownership
or misappropriation of the Company's technology by third parties as a
result of previous employments or associations of the Company's
scientists with others.
_______________ shall also state that in the course of the preparation
of the Registration Statement and the Prospectus, such counsel has participated
in conferences with officers and representatives of the Company, at which
conferences the contents of the Registration Statement and the Prospectus were
discussed and, on the basis of the foregoing, that they have no reason to
believe that the Registration Statement or the Prospectus (A) contains any
untrue statement of a material fact with respect to patents, trade secrets,
trademarks, service marks or other proprietary information or materials owned or
used by the Company, or the manner of its use thereof, or any allegation on the
part of any person that the Company is infringing any patent rights, trade
secrets, trademarks, service marks or other proprietary information or materials
of any such person or (B) omits to state any material fact relating to patents,
trade secrets, trademarks, service marks or other proprietary information or
materials owned or used by the Company, or the manner of its use thereof, or any
allegation of which such counsel have knowledge, that is required to be stated
in the Registration Statement or the Prospectus or is necessary to make the
statements therein not misleading.
References to the Registration Statement and the Prospectus in
this paragraph (g) shall include any amendment or supplement thereto at the date
of such opinion.
(h) Concurrently with the execution and delivery of
this Agreement, or, if the Company elects to rely on Rule 430A, on the date of
the Prospectus, the Accountants shall have furnished to the Placement Agent a
letter, dated the date of its delivery (the "Original Letter"), addressed to the
Placement Agent and in form and substance satisfactory to the Placement Agent,
confirming that (i) they are independent public accountants with respect to the
Company and the Subsidiaries within the meaning of the Act and the Rules and
Regulations; (ii) in their opinion, the financial statements and any
supplementary financial information and schedules (and pro forma financial
information) included in the Registration Statement and examined by them comply
as to form in all material respects with the applicable accounting requirements
of the Act and the Rules and Regulations; (iii) on the basis of procedures, not
constituting an examination in accordance with generally accepted auditing
standards, set forth in detail in the Original Letter, a reading of the latest
available interim financial statements of the Company and the Subsidiaries,
inspections of the minute books of the Company and the Subsidiaries since the
latest audited financial statements included in the Prospectus, inquiries of
officials of the Company responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in the Original Letter
to a date not more than five days prior to the date of the Original Letter,
nothing came to their attention that caused them to believe that: (A) the
unaudited financial statements and schedules of the Company and the Subsidiaries
included in the Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the Rules and
Regulations, or are not fairly presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with the basis
for the audited financial
-18-
statements included in the Prospectus; (B) any other unaudited income statement
data and balance sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited financial statements from which such data
and items were derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited financial statements included in the
Prospectus; (C) the unaudited financial statements which were not included in
the Prospectus but from which were derived any unaudited financial statements
referred to in clause (A) and any unaudited income statement data and balance
sheet items included in the Prospectus and referred to in clause (B) were to be
determined on a basis substantially consistent with the basis for the audited
financial statements included in the Prospectus; (D) as of a specified date not
more than five days prior to the date of the Original Letter, there have been
any changes in the capital stock of the Company or any increase in the long-term
debt of the Company, or any decreases in net current assets or net assets or
other items specified by the Placement Agent, or any increases in any items
specified by the Placement Agent, in each case as compared with amounts shown in
the latest balance sheet included in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in the Original Letter; and (E) for the period
from the date of the latest financial statements included in the Prospectus to
the specified date referred to in Clause (D), there were any decreases in
revenues or the total or per share amounts of net income or other items
specified by the Placement Agent, or any increases in any items specified by the
Placement Agent, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length specified by
the Placement Agent, except in each case for decreases or increases which the
Prospectus discloses have occurred or may occur or which are described in the
Original Letter; and (iv) in addition to the examination referred to in their
reports included in the Prospectus and the procedures referred to in clause
(iii) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Placement Agent, which are derived from the general
accounting, financial or other records of the Company or the Subsidiaries, as
the case may be, which appear in the Prospectus or in Part II of, or in exhibits
or schedules to, the Registration Statement, and have compared such amounts,
percentages and financial information with such accounting, financial and other
records and have found them to be in agreement. At the Closing Date, the
Accountants shall have furnished to the Placement Agent a letter, dated the date
of its delivery, which shall confirm, on the basis of a review in accordance
with the procedures set forth in the Original Letter, that nothing has come to
their attention during the period from the date of the Original Letter referred
to in the prior sentence to a date (specified in the letter) not more than five
days prior to the Closing Date which would require any change in the Original
Letter if it were required to be dated and delivered at the Closing Date.
(i) At the Closing Date, there shall be furnished to
the Placement Agent a certificate, dated the date of its delivery, signed by
each of the Chief Executive Officer and the Chief Financial Officer of the
Company, in form and substance satisfactory to the Placement Agent, to the
effect that:
-19-
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus and (A) as of
the date of such certificate, (x) the Registration Statement does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein not misleading and (y) the Prospectus does
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading and (B) since the Effective Date no
event has occurred as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect.
(ii) Each of the representations and warranties of
the Company contained in this Agreement were, when originally made, and
are, at the time such certificate is delivered, true and correct in all
material respects.
(iii) Each of the covenants required herein to be
performed by the Company on or prior to the date of such certificate
has been duly, timely and fully performed and each condition herein
required to be complied with by the Company on or prior to the delivery
of such certificate has been duly, timely and fully complied with.
(iv) No stop order suspending the effectiveness of
the Registration Statement or of any part thereof has been issued and
are pending or, to the knowledge of each signer, threatened by the
Commission.
(v) Subsequent to the date of the most recent
financial statements in the Prospectus, there has been no material
adverse change in the financial position or results of operations of
the Company or the Subsidiaries, except as set forth in or contemplated
by the Prospectus.
(j) The Shares shall be qualified for sale in such
states as the Placement Agent may reasonably request, each such qualification
shall be in effect and not subject to any stop order or other proceeding on the
Closing Date.
(k) The Shares shall have been authorized for
quotation, subject only to official notice of issuance, on the NNM.
(l) The Company shall have furnished to the Placement
Agent such certificates, in addition to those specifically mentioned herein, as
the Placement Agent may have reasonably requested as to the accuracy and
completeness at the Closing Date of any statement in the Registration Statement
or the Prospectus, as to the accuracy at the Closing Date of the representations
and warranties of the Company as to the performance by the Company of its
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to the obligations hereunder of the Placement Agent.
7. Indemnification.
-20-
(a) The Company shall indemnify and hold harmless the
Placement Agent, the directors, officers, employees and agents of the Placement
Agent and each person, if any, who controls the Placement Agent within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), from and against any and all losses,
claims, liabilities, expenses and damages, joint or several, (including any and
all investigative, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), to which it, or any of them, may become subject under the
Act or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based on (i) any untrue statement or alleged untrue
statement made by the Company in Section 3 of this Agreement, (ii) any untrue
statement or alleged untrue statement of any material fact contained in (A) any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus, (B) any
document incorporated by reference into the Registration Statement and (C) any
application or other document, or any amendment or supplement thereto, executed
by the Company based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Shares under the
securities or Blue Sky laws thereof or filed with the Commission or any
securities association or securities exchange (each, an "Application") or (iii)
the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any supplement to the Registration
Statement or the Prospectus or any document incorporated by reference into the
Registration Statement or any Application a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
the Company will not be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Shares in the public offering to
any person and is based solely on an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to the Placement Agent furnished in writing to the Company
by the Placement Agent expressly for inclusion in the Registration Statement,
any Preliminary Prospectus or the Prospectus; and provided further, that such
indemnity with respect to any Preliminary Prospectus shall not inure to the
benefit of any indemnified person where the person asserting any such loss,
claim, damage, liability or action purchased Shares which are the subject
thereof to the extent that any such loss, claim, damage or liability (i) results
from the fact that such Placement Agent failed to send or give a copy of the
Prospectus (as amended or supplemented) to such person at or prior to the
confirmation of the sale of such Shares to such person in any case where such
delivery is required by the Act and (ii) arises out of or is based upon an
untrue statement or omission of a material fact contained in such Preliminary
Prospectus that was corrected in the Prospectus (or any amendment or supplement
thereto), unless such failure to deliver the Prospectus (as amended or
supplemented) was the result of noncompliance by the Company with Section 4(d).
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
In addition to its other obligations under this paragraph (a),
the Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or
-21-
other proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, or any inaccuracy in the representations and
warranties of the Company in this Agreement or failure to perform its
obligations in this Agreement, all as described in this paragraph (a), it will
reimburse the Placement Agent on a quarterly basis for all reasonable legal or
other expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the Company's obligation, to reimburse the Placement Agent for such expenses and
the possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Placement Agent
shall promptly return it to the Company together with interest, compounded
daily, determined on the basis of the Prime Rate (or other commercial lending
rate for borrowers of the highest credit standing) announced from time to time
by Bank of America National Trust and Savings Association, San Francisco,
California (the "Prime Rate"). Any such interim reimbursement payments which are
not made to the Placement Agent within 30 days of a request for reimbursement
shall bear interest at the Prime Rate from the date of such request.
(b) The Placement Agent will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, each
director of the Company and each officer of the Company who signs the
Registration Statement to the same extent as the foregoing indemnity from the
Company to the Placement Agent, but only insofar as losses, claims, liabilities,
expenses or damages arise out of or are based on any untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to the Placement Agent furnished in writing
to the Company by the Placement Agent expressly for use in the Registration
Statement, any Preliminary Prospectus or the Prospectus. This indemnity
agreement will be in addition to any liability that the Placement Agent might
otherwise have. The Company acknowledges that, for all purposes under this
Agreement, the first, third and fourth legends on the inside front cover page
and the statements set forth under the caption "Plan of Distribution" in any
Preliminary Prospectus and the Prospectus constitute the only information
relating to the Placement Agent furnished in writing to the Company by the
Placement Agent expressly for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus.
(c) Any party that proposes to assert the right to be
indemnified under this Section 7 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 7, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve it from any liability that it may have to any indemnified party
under the foregoing provisions of this Section 7 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defenses
by, or otherwise prejudices, the indemnifying party. If any such action is
brought against any indemnified party and it notifies the indemnifying party of
its commencement, the indemnifying party will be entitled to participate in and,
to the extent that it elects by delivering written notice to the indemnified
party promptly
-22-
after receiving notice of the commencement of the action from the indemnified
party, jointly with any other indemnifying party similarly notified, to assume
the defense of the action, with counsel satisfactory to the indemnified party,
and after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided below and
except for the reasonable costs of investigation incurred by the indemnified
party in connection with the defense. The indemnified party will have the right
to employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that a conflict exists (based on advice
of counsel to the indemnified party) between the indemnified party and the
indemnifying party that would prevent the counsel selected by the indemnifying
party from representing the indemnified party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf of
the indemnified party) or (3) the indemnifying party has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. The Company will not,
without the prior written consent of the Placement Agent, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification has been sought
hereunder (whether or not the Placement Agent or any person who controls the
Placement Agent within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Placement Agent and each such controlling person from all liability arising out
of such claim, action, suit or proceeding. An indemnifying party will not be
liable for any settlement of any action or claim effected without its written
consent (which consent will not be unreasonably withheld).
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in the
foregoing paragraphs of this Section 7 is applicable in accordance with its
terms but for any reason is held to be unavailable from the Company or the
Placement Agent, the Company and the Placement Agent will contribute to the
total losses, claims, liabilities, expenses and damages (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted, but after deducting any contribution received by the Company
from persons other than the Placement Agent such as persons who control the
Company within the meaning of the Act or the Exchange Act, officers of the
Company who signed the Registration Statement and directors of the Company, who
also may be liable for contribution) to which the Company and the Placement
Agent may
-23-
be subject in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Placement Agent on the
other. The relative benefits received by the Company on the one hand and the
Placement Agent on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting Company expenses)
received by the Company as set forth in the table on the cover page of the
Prospectus bear to the fee received by the Placement Agent hereunder. If, but
only if, the allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in such proportion
as is appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and the Placement Agent on the other, with respect to the statements or
omissions which resulted in such loss, claim, liability, expense or damage, or
action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Placement Agent, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Placement
Agent agree that it would not be just and equitable if contributions pursuant to
this Section 7(d) were to be determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 7(d) shall be deemed to
include, for purpose of this Section 7(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7(d), the Placement Agent shall not be required to contribute any amount
in excess of the fee received by it, and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7(d), any person who controls a
party to this Agreement within the meaning of the Act or the Exchange Act will
have the same rights to contribution as that party, and each officer of the
Company who signed the Registration Statement will have the same rights to
contribution as the Company, subject in each case to the provisions hereof. Any
party entitled to contribution, promptly after receipt of notice of commencement
of any action against such party in respect of which a claim for contribution
may be made under this Section 7(d), will notify any such party or parties from
whom contribution may be sought, but the omission so to notify will not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have under this Section 7(d). No party will be liable
for contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
8. Termination.
(a) The obligations of the Placement Agent under this
Agreement may be terminated at any time prior to the Closing Date, by notice to
the Company from the Placement Agent, without liability on the part of the
Placement Agent to the Company if, prior to delivery and payment for the Shares,
in the sole judgment of the Placement Agent (i) trading
-24-
in the Common Stock of the Company shall have been suspended by the Commission
or by the NNM, (ii) trading in securities generally on the New York Stock
Exchange or the NNM shall have been suspended or limited or minimum or maximum
prices shall have been generally established on any of such exchanges, or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by any
of such exchanges or by order of the Commission or any court or other
governmental authority, (iii) a general banking moratorium shall have been
declared by Federal or New York State authorities or (iv) any material adverse
change in the financial or securities markets in the United States or any
outbreak or material escalation of hostilities or declaration by the United
States of a national emergency or war or other calamity or crisis shall have
occurred, the effect of any of which is such as to make it, in the sole judgment
of the Placement Agent, impracticable or inadvisable to market the Shares on the
terms and in the manner contemplated by the Prospectus.
(b) The obligations of the parties under this
Agreement shall be automatically terminated in the event that the Requisite
Funds have not been deposited by the Investors into the Escrow Account by the
close of business on the date scheduled for the Closing.
9. Notices. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: President or
(b) if to the Placement Agent, at the office of EVEREN Securities, Inc., ▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇. Any
such notice shall be effective only upon receipt. Any notice under Section 7 may
be made by facsimile or telephone, but if so made shall be subsequently
confirmed in writing.
10. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers and the Placement Agent set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, the Placement Agent or any
controlling person referred to in Section 7 hereof and (ii) delivery of and
payment for the Shares. The respective agreements, covenants, indemnities and
other statements set forth in Sections 5 and 7 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement.
11. Successors. This Agreement shall inure to the benefit of
and shall be binding upon the Placement Agent, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnification and contribution contained in Sections 7(a) and (d) of this
Agreement shall also be for the benefit of the directors, officers, employees
and agents of the Placement Agent and any person or persons who control the
Placement Agent within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnification and contribution contained in Sections
7(b) and (d) of this Agreement shall also be for the
-25-
benefit of the directors of the Company, the officers of the Company who have
signed the Registration Statement and any person or persons who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No Investor shall be deemed a successor because of such purchase.
12. Headings. Section headings in this Agreement are for
convenience of reference only, do not constitute a part of this Agreement, and
shall not affect its interpretation.
13. Changes. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and the
Placement Agent.
14. Applicable Law; Severability. The validity and
interpretations of this Agreement, and the terms and conditions set forth
herein, shall be governed by and construed in accordance with the laws of the
State of New York, without giving effect to any provisions relating to conflicts
of laws.
Whenever possible each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this agreement is held to be prohibited or invalid, then such provision or
term will be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.
15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-26-
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement between the Company and the
Placement Agent in accordance with its terms.
Very truly yours,
SCICLONE PHARMACEUTICALS, INC.
By:___________________________________
Name:
Title:
The foregoing Placement Agency
Agreement is hereby confirmed
and accepted as of the date
first above written.
EVEREN SECURITIES INTERNATIONAL, INC.
By: _________________________________________
Name:
Title:
-27-
EXHIBIT A
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of ______________, 1997, by and
among SCICLONE PHARMACEUTICALS, INC., a California corporation (the "Company"),
EVEREN SECURITIES, INC. (the "Placement Agent") and ____________, a national
banking institution incorporated under the laws of the United States of America
(the "Escrow Agent").
WHEREAS, the Company proposes to sell an aggregate of
1,500,000 shares of its common stock, no par value (the "Shares"), for an
aggregate of $_______, all as described in the Company's registration statement
on Form S-3 (Registration No. 333-_____)(which, together with all amendments or
supplements thereto is referred to herein as the "Registration Statement");
WHEREAS, the Shares are being offered by the Company to
investors whom the Placement Agent has introduced to the Company, pursuant to
registration under the Securities Act of 1933, as amended, and pursuant to
registration or exemptions from registration under state securities laws;
WHEREAS, the offering of the Shares will terminate on
_________, 1997 (the "Final Closing Date") and, if subscriptions for the total
number of Shares being offered pursuant to the Registration Statement have not
been received by the Company on or before the Final Closing Date, no Shares will
be sold and all payments made by subscribers will be refunded by the Escrow
Agent with interest earned thereon, if any; and
WHEREAS, with respect to all subscription payments received
from subscribers, the Company proposes to establish an escrow account with the
Escrow Agent at the office of its Escrow Administration, [street address].
NOW, THEREFORE, it is agreed as follows:
1. Establishment of Escrow. The Escrow Agent hereby agrees to
receive and disburse the proceeds from the offering of the Shares and any
interest earned thereon in accordance herewith.
2. Deposit of Escrowed Property. The Placement Agent, on
behalf of the subscribers for the Shares, shall from time to time, but in no
event later than 12:00 noon on the date following receipt by the Placement
Agent, cause to be wired to or deposited with, or, cause the subscribers for the
Shares to wire or deposit with, the Escrow Agent funds or checks of the
subscribers delivered in payment for Shares (the "Escrowed Property"). Any
checks delivered to the Escrow Agent pursuant to the terms hereof shall be made
payable to or endorsed to the order of the Escrow Agent. The Escrow Agent upon
receipt of such checks shall present such checks for
payment to the drawee-bank under such checks. Any checks not honored by the
drawee-bank thereunder after the first presentment for payment shall be returned
to the Placement Agent, on behalf of such subscriber, in the same manner notices
are delivered pursuant to Section 6. Upon receipt of funds or checks from the
Placement Agent, the Escrow Agent shall credit such funds and the amount of such
checks to a non-interest-bearing account (the "Escrow Account") held by the
Escrow Agent. If following the credit of the amount of any check to the Escrow
Account such check is dishonored, the Escrow Agent, if such dishonored check
amount shall have been invested pursuant to Section 3, shall liquidate to the
extent of such dishonored check amount such investments and debit the Escrow
Account for the amount of such dishonored check plus, if any, the amount of
interest and other income earned with respect to any investment of such
dishonored check amount.
3. Investment of Escrowed Property. The Escrow Agent on the
second business day ("business day" defined for purposes of this Escrow
Agreement as any day which is not a Saturday, a Sunday or a day on which banks
or trust companies in the City and State of New York are authorized or obligated
by law, regulation or executive order to remain closed) succeeding (unless such
deposit is made in federal or other immediately available or "same day" funds,
in which case, on the business day next succeeding) the credit of any
subscription proceeds to the Escrow Account pursuant to Section 2 and until
release of such proceeds in accordance with the terms hereof, shall deposit such
proceeds in a __________ Money Market Deposit Account, pursuant to Rule 15c2-4
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, in accordance with the terms set forth on
Exhibit A hereto (made a part of this Escrow Agreement as if herein set forth).
The Escrow Agent shall in no event be liable for any loss resulting from any
change in interest rates applicable to proceeds invested pursuant to this
Section. Interest on proceeds invested pursuant to this Section shall accrue
from the date of investment of such proceeds until the termination of such
investment pursuant to the terms hereof and shall be paid as set forth in
Section 5.
The parties recognize that in authorizing the Escrow Agent to
invest principal and income cash balances held as Escrowed Property into money
market instruments or deposits that are obligations of __________ or related
entities, in addition to the fees provided for herein, the Escrow Agent or a
related entity may also receive a benefit or profit from the use of such
obligations. The parties hereby authorize the receipt of such benefit or profit
and expressly waive any special computation or accounting. The Escrow Agent
hereby agrees to provide the parties with periodic statements describing such
obligations and reporting the interest earned thereon so that the parties may
review and evaluate the transactions effected by the Escrow Agent pursuant to
this authorization.
4. List of Subscribers. The Placement Agent shall furnish or
cause to be furnished to the Escrow Agent, at the time of each deposit of funds
or checks pursuant to Section 2, a list, substantially in the form of Exhibit B
hereto, containing the name of, the address of, the number of Shares subscribed
for by, the subscription amount delivered to the Escrow Agent on behalf of, and
the social security or taxpayer identification number, if applicable, of, each
subscriber
-2-
whose funds are being deposited, and to which is attached a completed W-9 form
(or, in the case of any subscriber who is not a United States citizen or
resident, a W-8 form) for each listed subscriber. The Escrow Agent shall notify
the Placement Agent and the Company of any discrepancy between the subscription
amounts set forth on any list delivered pursuant to this Section 4 and the
subscription amounts received by the Escrow Agent. The Escrow Agent is
authorized to revise such list to reflect the actual subscription amounts
received and the release of any subscription amounts pursuant to Section 5.
5. Withdrawal of Subscription Amounts. (a) If the Escrow Agent
shall receive a notice, substantially in the form of Exhibit C hereto (an
"Offering Termination Notice"), from the Company, the Escrow Agent shall (i)
promptly after receipt of such Offering Termination Notice and the clearance of
all checks received by the Escrow Agent as Escrowed Property, liquidate any
investments that shall have been made pursuant to Section 3 and send to each
subscriber listed on the list held by the Escrow Agent pursuant to Section 4
whose total subscription amount shall not have been released pursuant to
paragraph (b) or (c) of this Section 5, in the manner set forth in paragraph (d)
of this Section 5, a check to the order of such subscriber in the amount of the
remaining subscription amount held by the Escrow Agent as set forth on such list
held by the Escrow Agent, and (ii) promptly after the fourth business day of the
month immediately following the month in which the investments made pursuant to
Section 3 were terminated pursuant to this paragraph, send, in the manner set
forth in paragraph (e) of this Section 5, a check to the order of each such
subscriber in the amount of interest and other income earned and not yet paid
with respect to any investment of such subscriber's funds. The Escrow Agent
shall notify the Company and the Placement Agent of the distribution of such
funds to the subscribers.
(b) In the event that (i) the Shares have been
subscribed for and funds in respect thereof shall have been deposited with the
Escrow Agent on or before the Final Closing Date and (ii) no Offering
Termination Notice shall have been delivered to the Escrow Agent, the Company
and the Placement Agent, shall deliver to the Escrow Agent a joint notice,
substantially in the form of Exhibit D hereto (a "Closing Notice"), designating
the date on which Shares are to be sold and delivered to the subscribers thereof
(the "Closing Date"), which date shall not be earlier than the clearance of any
checks received by the Escrow Agent as Escrowed Property, the proceeds of which
are to be distributed on such Closing Date, and identifying the subscribers and
the number of Shares to be sold to each thereof on such Closing Date, not less
than two (2) nor more than seven (7) business days prior to such Closing Date.
The Escrow Agent, after receipt of such Closing Notice and the clearance of such
checks:
(i) on or prior to the Closing Date identified in
such Closing Notice, shall liquidate any investments that shall have
been made pursuant to Section 3 to the extent of the subscription
amount to be distributed pursuant to the immediately succeeding clause
(ii);
(ii) on such Closing Date, pay to the Company and the
Placement Agent, in federal or other immediately available funds and
otherwise in the manner specified by the Company in such Closing
Notice, an amount equal to the aggregate of the subscription
-3-
amounts paid by the subscribers identified in such Closing Notice for
the Shares to be sold on such Closing Date as set forth on the list
held by the Escrow Agent pursuant to Section 4; and
(iii) promptly after the fourth business day of the
month immediately following the month in which the investments made
pursuant to Section 3 were terminated pursuant to such Closing Notice,
shall send, in the manner set forth in paragraph (e) of this Section 5,
a check to the order of each subscriber identified in such Closing
Notice in the amount of interest and other income earned and not yet
paid with respect to any investment of each such subscriber's funds
distributed on such Closing Date. At the time of such transfer, the
Escrow Agent shall identify in writing to the Company and the Placement
Agent the amount of the interest earned for the account of each
subscriber and the date such subscription was received.
(c) If at any time and from time to time prior to the
release of any subscriber's total subscription amount pursuant to paragraph (a)
or (b) of this Section 5 from escrow, the Company shall deliver to the Escrow
Agent a notice, substantially in the form of Exhibit E hereto (a "Subscription
Termination Notice"), to the effect that any or all of the subscriptions of such
subscriber have been rejected by the Company (a "Rejected Subscription"), the
Escrow Agent (i) promptly after receipt of such Subscription Termination Notice
and, if such subscriber delivered a check in payment of its Rejected
Subscription, after the clearance of such check, shall liquidate, to the extent
of the sum of such subscriber's Rejected Subscription amount as set forth in the
Subscription Termination Notice, any investments that shall have been made
pursuant to Section 3 and send to such subscriber, in the manner set forth in
paragraph (e) of this Section 5, a check to the order of such subscriber in the
amount of such Rejected Subscription amount, and (ii) promptly after the fourth
business day of the month immediately following the month in which the
investments made pursuant to Section 3 were terminated pursuant to this
paragraph, shall send to such subscriber, in the manner set forth in paragraph
(e) of this Section 5, a check to the order of such subscriber in the amount of
interest and other income earned and not yet paid with respect to any investment
of such subscriber's Rejected Subscription amount. At the time of such transfer,
the Escrow Agent shall identify in writing to the Company and the Placement
Agent the amount of the interest earned for the account of each subscriber and
the date such subscription was received.
(d) On a date following the transfer of any interest
earned for the account of each subscriber pursuant to Section 5(a), (b) or (c),
but not later than _________, 199_, the Escrow Agent shall provide each
subscriber with tax form 1099 setting forth the amount of such interest.
(e) For the purposes of this Section 5, any check
that the Escrow Agent shall be required to send to any subscriber shall be sent
to such subscriber by first class mail, postage prepaid, at such subscriber's
address furnished to the Escrow Agent pursuant to Section 4.
-4-
6. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be (a) delivered
by hand or (b) sent by mail, registered or certified, with proper postage
prepaid, and addressed as follows:
if to the Company, to:
SciClone Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich
A Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
if to the Placement Agent, to:
EVEREN Securities, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
Stroock & Stroock & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
if to the Escrow Agent, to:
--------------------
--------------------
--------------------
Attention: ________
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. All such
notices and communications, if mailed, shall
-5-
be effective when deposited in the mails, except that notices and communications
to the Escrow Agent and notices of changes of address shall not be effective
until received.
7. Concerning the Escrow Agent. To induce the Escrow Agent to
act hereunder, it is further agreed by the Company and Placement Agent that:
(a) The Escrow Agent shall not be under any duty to
give the Escrowed Property held by it hereunder any greater degree of care than
it gives its own similar property and shall not be required to invest any funds
held hereunder except as directed in this Escrow Agreement. Uninvested funds
held hereunder shall not earn or accrue interest.
(b) This Escrow Agreement expressly sets forth all
the duties of the Escrow Agent with respect to any and all matters pertinent
hereto. No implied duties or obligations shall be read into this Escrow
Agreement against the Escrow Agent. The Escrow Agent shall not be bound by the
provisions of any agreement among the other parties hereto except this Escrow
Agreement.
(c) The Escrow Agent shall not be liable, except for
its own gross negligence or willful misconduct, and, except with respect to
claims based upon such gross negligence or willful misconduct that are
successfully asserted against the Escrow Agent, and the other parties hereto
shall jointly and severally indemnify and hold harmless the Escrow Agent (and
any successor Escrow Agent) from and against any and all losses, liabilities,
claims, actions, damages and expenses, including reasonable attorneys' fees and
disbursements, arising out of and in connection with this Escrow Agreement.
Without limiting the foregoing, the Escrow Agent shall in no event be liable in
connection with its investment or reinvestment of any cash held by it hereunder
in good faith, in accordance with the terms hereof, including without limitation
any liability for any delays (not resulting from gross negligence or willful
misconduct) in the investment or reinvestment of the Escrowed Property, or any
loss of interest incident to any such delays.
(d) The Escrow Agent shall be entitled to rely upon
any order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity of
the service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it in good faith to be genuine and may assume, if in good
faith, that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
(e) The Escrow Agent may act pursuant to the advice
of counsel with respect to any matter relating to this Escrow Agreement and
shall not be liable for any action taken or omitted in good faith and in
accordance with such advice.
(f) The Escrow Agent does not have any interest in
the Escrowed Property deposited hereunder but is serving as escrow holder only.
Any payments of income from
-6-
the Escrow Account shall be subject to withholding regulations then in force
with respect to United States taxes. The parties hereto will provide the Escrow
Agent with appropriate W-9 forms for tax I.D., number certification, or
non-resident alien certifications.
This paragraph (f) and paragraph (c) of this Section
7 shall survive notwithstanding any termination of this Escrow Agreement or the
resignation of the Escrow Agent.
(g) The Escrow Agent makes no representation as to
the validity, value, genuineness or the collectibility of any security or other
document or instrument held by or delivered to it.
(h) The Escrow Agent shall not be called upon to
advise any party as to the wisdom of selling or retaining or taking or
refraining from any action with respect to any securities or other property
deposited hereunder.
(i) The Escrow Agent (and any successor escrow agent)
at any time may be discharged from its duties and obligations hereunder by the
delivery to it of notice of termination signed by both the Company and the
Placement Agent or at any time may resign by giving written notice to such
effect to the Company and the Placement Agent. Upon any such termination or
resignation, the Escrow Agent shall deliver the Escrowed Property to any
successor escrow agent jointly designated by the other parties hereto in
writing, or to any court of competent jurisdiction if no such successor escrow
agent is agreed upon, whereupon the Escrow Agent shall be discharged of and from
any and all further obligations arising in connection with this Escrow
Agreement. The termination or resignation of the Escrow Agent shall take effect
on the earlier of (i) the appointment of a successor (including a court of
competent jurisdiction) or (ii) the day that is 30 days after the date of
delivery: (A) to the Escrow Agent of the other parties' notice of termination or
(B) to the other parties hereto of the Escrow Agent's written notice of
resignation. If at that time the Escrow Agent has not received a designation of
a successor escrow agent, the Escrow Agent's sole responsibility after that time
shall be to keep the Escrowed Property safe until receipt of a designation of
successor escrow agent or a joint written disposition instruction by the other
parties hereto or any enforceable order of a court of competent jurisdiction.
(j) The Escrow Agent shall have no responsibility for
the contents of any writing of any third party contemplated herein as a means to
resolve disputes and may rely without any liability upon the contents thereof.
(k) In the event of any disagreement among or between
the other parties hereto and/or the subscribers of the Shares resulting in
adverse claims or demands being made in connection with the Escrowed Property,
or in the event that the Escrow Agent in good faith is in doubt as to what
action it should take hereunder, the Escrow Agent shall be entitled to retain
the Escrowed Property until the Escrow Agent shall have received (i) a final and
non-appealable order of a court of competent jurisdiction directing delivery of
the Escrowed Property or (ii) a written agreement executed by the other parties
hereto and consented to by the subscribers directing
-7-
delivery of the Escrowed Property, in which event the Escrow Agent shall
disburse the Escrowed Property in accordance with such order or agreement. Any
court order referred to in (i) above shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to the Escrow Agent to the effect
that said court order is final and non-appealable. The Escrow Agent shall act on
such court order and legal opinion without further question.
(l) As consideration for its agreement to act as
Escrow Agent as herein described, the Company agrees to pay the Escrow Agent the
fee set forth on Exhibit F hereto (made a part of this Escrow Agreement as if
herein set forth). In addition, the Company agrees to reimburse the Escrow Agent
for all reasonable expenses, disbursements and advances incurred or made by the
Escrow Agent in performance of its duties hereunder (including reasonable fees,
expenses and disbursements of its counsel).
(m) All parties hereto irrevocably (i) submit to the
jurisdiction of any New York State or federal court sitting in New York City in
any action or proceeding arising out of or relating to this Escrow Agreement,
(ii) agree that all claims with respect to such action or proceeding shall be
heard and determined in such New York State or federal court and (iii) waive, to
the fullest extent possible, the defense of an inconvenient forum. The other
parties hereby consent to and grant any such court jurisdiction over the persons
of such parties and over the subject matter of any such dispute and agree that
delivery or mailing of process or other papers in connection with any such
action or proceeding in the manner provided hereinabove, or in such other manner
as may be permitted by law, shall be valid and sufficient service thereof.
(n) No printed or other matter in any language
(including, without limitation, the Registration Statement, the Prospectus,
notices, reports and promotional material) which mentions the Escrow Agent's
name or the rights, powers, or duties of the Escrow Agent shall be issued by the
other parties hereto or on such parties' behalf unless the Escrow Agent shall
first have given its specific written consent thereto. The Escrow Agent hereby
consents to the use of its name and the reference to the escrow arrangement in
the Registration Statement and in the Prospectus.
8. Miscellaneous.
(a) This Escrow Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their respective
successors and assigns, heirs, administrators and representatives, and the
subscribers of the Shares and shall not be enforceable by or inure to the
benefit of any other third party except as provided in paragraph (i) of Section
7 with respect to the termination of, or resignation by, the Escrow Agent. No
party may assign any of its rights or obligations under this Escrow Agreement
without the written consent of the other parties.
(b) This Escrow Agreement shall be construed in
accordance with and governed by the internal law of the State of New York
(without reference to its rules as to conflicts of law).
-8-
(c) This Escrow Agreement may only be modified by a
writing signed by all of the parties hereto and consented to by the subscribers
of the Shares adversely affected by such modifications. No waiver hereunder
shall be effective unless in a writing signed by the party to be charged.
(d) This Escrow Agreement shall terminate upon the
payment pursuant to Section 5 of all amounts held in the Escrow Account.
(e) The section headings herein are for convenience
only and shall not affect the construction thereof. Unless otherwise indicated,
references to Sections are to Sections contained herein.
(f) This Escrow Agreement may be executed in one or
more counterparts but all such separate counterparts shall constitute but one
and the same instrument; provided that, although executed in counterparts, the
executed signature pages of each such counterpart may be affixed to a single
copy of this Agreement which shall constitute an original.
-9-
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the day and year first above written.
SCICLONE PHARMACEUTICALS, INC.
By:________________________________
Name:
Title:
EVEREN SECURITIES, INC.
By:________________________________
Name:
Title:
[escrow agent]
By:________________________________
Name:
Title:
-10-
EXHIBIT A
____________ Insured Money Market Deposit Accounts
Deposits/Withdrawals may be made to the __________ Money
Market Deposit Account ("MMDA") established under the Escrow Agreement to which
this Exhibit is attached only through the Escrow Account. All transaction and
balance reporting of the MMDA will be included as part of the Escrow Account
Statement. Activity in the MMDA will be reflected as the equivalent of dollars
on deposit in a __________ Money Market Deposit Account. Deposits/Withdrawals to
the MMDA will be made only as permitted by the Escrow Agreement to which this
Exhibit is attached. The MMDA has certain regulatory restrictions as well as
some minimum requirements:
1. By regulation, _____________ is required to reserve the
right to require seven days' prior notice of any withdrawals of funds from an
account; provided, however, that, if _______ elects to exercise its right to
require seven days' prior notice, it shall exercise such right as to all such
accounts established.
2. Rates will be determined by __________ and can be
determined by calling your custody account officer.
3. Balances up to $100,000 (total on deposit at ___________)
are FDIC-insured.
A-1
EXHIBIT B
SUMMARY OF CASH RECEIVED
NEW PARTICIPANT DEPOSIT
Date:
Deposit Date: List Number:
Investment Date: Page of
Batch Number: Approved By:
JOB#:
For Bank use only
TITLE:
--------------------------------------------------------------------------------------------
* *AMOUNT OF * *TAX ID NO./| | FOR BANK
NAME * DEPOSIT * SHARES * ADDRESS |SOC.SEC. NO.* * USE ONLY * * *
---------------------------- --------- -------------------------- ----------- -------------
* * *TAX CODE
* * * * * * * EXEMPT(Y/N)
* * * * * * * W-9(YR) NRA
* * * * * * * W-8(YR)
* * * * * * * 1008(87)
* * * * * * *
--------------------------------------------------------------------------------------------------------------------
Broker Misc. * * * * * Misc. II * Misc. III | TAX CODE
* * * * * * * EXEMPT(Y/N)
* * * * * * * W-2(YR) NRS
* * * * * * * W-8(YR)
* * * * * * * 1008(87)
* * * * * * *
--------------------------------------------------------------------------------------------------------------------
Broker Misc. * * * * * Misc. II * Misc. III | TAX CODE
* * * * * * * EXEMPT(Y/N)
* * * * * * * W-2(YR) NRS
* * * * * * * W-8(YR)
* * * * * * * 1008(87)
* * * * * * *
--------------------------------------------------------------------------------------------------------------------
B-1
Broker Misc. * * * * * Misc. II * Misc. III | TAX CODE
* * * * * * * EXEMPT(Y/N)
* * * * * * * W-2(YR) NRS
* * * * * * * W-8(YR)
* * * * * * * 1000(87)
* * * * * * *
--------------------------------------------------------------------------------------------------------------------
Broker Misc. * * * * * Misc. II * Misc. III |*
B-2
EXHIBIT C
[Form of Offering Termination Notice]
_________, 1997
[escrow agent]
Corporate Trust
Escrow Administration
______________
______________
Attention: ______________
Dear __________:
Pursuant to Section 5(a) of the Escrow Agreement dated as of
________, 1997 (the "Escrow Agreement") among SciClone Pharmaceuticals, Inc.,
(the "Company"), EVEREN Securities, Inc. and you, the Company hereby notifies
you of the termination of the offering of the Shares (as that term is defined in
the Escrow Agreement) and directs you to make payments to subscribers as
provided for in Section 5(a) of the Escrow Agreement.
Very truly yours,
SCICLONE PHARMACEUTICALS, INC.
By: _______________________________
Name:
Title:
C-1
EXHIBIT D
[Form of Closing Notice]
_____________, 1997
[escrow agent]
______________
______________
Attention: _____________
Ladies and Gentlemen:
Pursuant to Section 5(b) of the Escrow Agreement dated as of
_______, 1997, (the "Escrow Agreement") among SciClone Pharmaceuticals, Inc.
(the "Company"), EVEREN Securities, Inc. and you, the Company hereby certifies
that it has received subscriptions for the Shares (as that term is defined in
the Escrow Agreement) and the Company will sell and deliver Shares to the
subscribers thereof at a closing to be held on ___________, 1997 (the "Closing
Date"). The names of the subscribers concerned, the number of Shares subscribed
for by each of such subscribers and the related subscription amounts are set
forth on Schedule I annexed hereto.
Please accept these instructions as standing instructions for
the closing to be held on the Closing Date. The parties hereto certify that they
do not wish to have a call back regarding these instructions.
We hereby request that the aggregate subscription amount be
paid to you, the Placement Agent and us as follows:
1. To the Company, $_________;
2. To EVEREN Securities, Inc., $_________; and
3. To the Escrow Agent, $_____.
D-1
These instructions may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
Very truly yours,
SCICLONE PHARMACEUTICALS, INC.
By: _____________________________
Name:
Title:
EVEREN SECURITIES, INC.
By: ______________________________
Name:
Title:
D-2
SCHEDULE I
Name of Number of Subscription
Subscriber Shares ▇▇▇▇▇▇
▇-▇
EXHIBIT E
[Form of Subscription Termination Notice]
[escrow agent]
______________
______________
Attention: _____________
Dear __________:
Pursuant to Section 5(c) of the Escrow Agreement dated as of
__________, 1997 (the "Escrow Agreement") among SciClone Pharmaceuticals, Inc.
(the "Company"), EVEREN Securities, Inc. and you, the Company hereby notifies
you that the following subscription(s) have been rejected:
Dollar
Name of Amount of Subscribed Amount of
Subscriber Shares Rejected Rejected Subscription
---------- --------------- ---------------------
Very truly yours,
SCICLONE PHARMACEUTICALS, INC.
By: ____________________________
Name:
Title:
E-1
EXHIBIT F
Fee to [escrow agent]: $__________