EXHIBIT 1.1
1,892,857 SHARES
NORTHFIELD LABORATORIES INC.
SHARES OF COMMON STOCK
($.01 PAR VALUE)
PLACEMENT AGENT AGREEMENT
July 23, 2003
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
NORTHFIELD LABORATORIES INC., a Delaware corporation (the "COMPANY"),
proposes to sell to the Purchasers, pursuant to the terms of this Placement
Agent Agreement (this "AGREEMENT") and Subscription Agreements in the form of
Exhibit A attached hereto (the "SUBSCRIPTION AGREEMENTS") entered into with the
Purchasers identified therein (each a "PURCHASER" and, collectively, the
"PURCHASERS"), an aggregate of 1,892,857 shares of Common Stock, $.01 par value
(the "COMMON STOCK"), of the Company. The aggregate of 1,892,857 shares so
proposed to be sold is hereinafter referred to as the "FIRM STOCK." The Company
also proposes to sell to the Purchasers, upon the terms and conditions set forth
in Section 3(b) hereof, up to an additional 567,857 shares of Common Stock (the
"OPTIONAL STOCK"). The Firm Stock and the Optional Stock are hereinafter
collectively referred to as the "STOCK." The Company hereby confirms its
agreement with ▇▇ ▇▇▇▇▇ Securities Corporation ("▇▇ ▇▇▇▇▇") as follows (certain
terms used herein are defined in Section 13 hereof):
1. AGREEMENT TO ACT AS PLACEMENT AGENT; PLACEMENT OF SECURITIES. On the
basis of the representations, warranties and agreements of the Company herein
contained, and subject to all the terms and conditions of this Agreement:
(a) The Company hereby authorizes ▇▇ ▇▇▇▇▇ to act as its exclusive
agent (in such capacity, the "PLACEMENT AGENT") to solicit offers for
the purchase of all or part of the Stock from the Company in connection
with the proposed offering of the Stock (the "OFFERING"). So long as
this Agreement shall remain in effect, the Company shall not, without
the prior consent of the Placement Agent, solicit or accept offers to
purchase Stock otherwise than through the Placement Agent.
(b) The Placement Agent agrees, as agent of the Company, to use
its commercially reasonable efforts to solicit offers to purchase the
Stock from
the Company on the terms and subject to the conditions set forth in the
Base Prospectus (as defined below) and the Prospectus Supplement (as
defined below). The Placement Agent shall make commercially reasonable
efforts to assist the Company in obtaining performance by each
Purchaser whose offer to purchase Stock has been solicited by the
Placement Agent and accepted by the Company, but the Placement Agent
shall not, except as otherwise provided in this Agreement, be obligated
to disclose the identity of any potential purchaser or have any
liability to the Company in the event any such purchase is not
consummated for any reason. Under no circumstances will the Placement
Agent be obligated to purchase any Stock for its own account and, in
soliciting purchases of Stock, the Placement Agent shall act solely as
the Company's agent and not as principal. Notwithstanding the foregoing
and except as otherwise provided in Section 1(c), it is understood and
agreed that the Placement Agent (or its affiliates) may, solely at its
discretion and without any obligation to do so, purchase Stock as
principal so long as the fact that the Placement Agent (or its
affiliate) is a Purchaser is fully disclosed to the Company and the
Company approves such purchase of Stock in accordance with Section
1(c).
(c) Subject to the provisions of this Section 1, offers for the
purchase of Stock may be solicited by the Placement Agent as agent for
the Company at such times and in such amounts as the Placement Agent
deems advisable. The Placement Agent shall communicate to the Company,
orally or in writing, each reasonable offer to purchase Stock received
by it as agent of the Company. The Company shall have the sole right to
accept offers to purchase the Stock and may reject any such offer, in
whole or in part. The Placement Agent shall have the right, in its
discretion reasonably exercised, subject to providing prior notice to
the Company, to reject any offer to purchase Stock received by it, in
whole or in part, and any such rejection shall not be deemed a breach
of its agreement contained herein.
(d) The purchases of the Stock by the Purchasers shall be
evidenced by the execution of the Subscription Agreements.
(e) As compensation for services rendered, the Company shall pay
to the Placement Agent at each Closing Date (as defined below), by wire
transfer of immediately available funds to an account or accounts
designated by the Placement Agent, an amount equal to seven percent
(7%) of the gross proceeds received by the Company from the sale of the
Stock on such Closing Date. In addition, on the First Closing Date (as
defined below), the Company will issue to ▇▇ ▇▇▇▇▇ a warrant (the
"PLACEMENT AGENT'S WARRANT"), in the form of Exhibit B attached hereto,
to purchase up to the number of shares of Common Stock equal to three
percent (3%) of the aggregate number of shares of Stock sold pursuant
to this Agreement. The Placement Agent's Warrant will not be
exercisable for one year, will have a term of five years and will be
exercisable at a price per share equal to the volume weighted average
closing price of our Common Stock as reported on the Nasdaq National
Market for the five trading day period immediately prior to the closing
of the Offering. The shares of Common Stock issuable to ▇▇ ▇▇▇▇▇
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upon exercise of the Placement Agent's Warrants are referred to herein
as the "WARRANT STOCK."
(f) No Stock which the Company has agreed to sell pursuant to this
Agreement shall be deemed to have been purchased and paid for, or sold
by the Company, until such Stock shall have been delivered to the
Purchaser thereof against payment by such Purchaser. If the Company
shall default in its obligations to deliver Stock to a Purchaser whose
offer it has accepted, the Company shall indemnify and hold the
Placement Agent harmless against any loss, claim or damage arising from
or as a result of such default by the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company and its
subsidiaries represents and warrants to, and agrees with, the Placement Agent
and the Purchasers that:
(a) The Company meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), and has
filed with the Securities and Exchange Commission (the "COMMISSION") a
registration statement on such Form (Registration File No. 333-106615),
which became effective as of July 3, 2003, for the registration under
the Securities Act of the Stock. Such registration statement meets the
requirements set forth in Rule 415(a)(1)(x) under the Securities Act
and complies in all other material respects with said Rule. The Company
will file with the Commission pursuant to Rule 424(b) under the
Securities Act, and the rules and regulations (the "RULES AND
REGULATIONS") of the Commission promulgated thereunder, a supplement to
the form of prospectus included in such registration statement relating
to a placement of the Stock and the plan of distribution thereof and
has advised the Placement Agent of all further information (financial
and other) with respect to the Company to be set forth therein. Such
registration statement, including the exhibits thereto, as amended at
the date of this Agreement, is hereinafter called the "REGISTRATION
STATEMENT"; such prospectus in the form in which it appears in the
Registration Statement is hereinafter called the "BASE PROSPECTUS"; and
the supplemented form of prospectus, in the form in which it will be
filed with the Commission pursuant to Rule 424(b) (including the Base
Prospectus as so supplemented) is hereinafter called a "PROSPECTUS
SUPPLEMENT." Any reference herein to the Registration Statement, the
Base Prospectus or the Prospectus Supplement shall be deemed to refer
to and include the documents incorporated by reference therein (the
"INCORPORATED DOCUMENTS") pursuant to Item 12 of Form S-3 which were
filed under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), on or before the date of this Agreement, or the issue
date of the Base Prospectus or the Prospectus Supplement, as the case
may be; and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Base
Prospectus or the Prospectus Supplement shall be deemed to refer to and
include the filing of any document under the Exchange Act after the
date of this Agreement, or the issue date of the Base Prospectus or the
Prospectus Supplement, as the case may be, deemed to be incorporated
therein by reference. All references in this Agreement to financial
statements and schedules and other information
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which is "contained," "included," "described" or "stated" in the
Registration Statement, the Base Prospectus or the Prospectus
Supplement (and all other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in
the Registration Statement, the Base Prospectus or the Prospectus
Supplement, as the case may be. No stop order suspending the
effectiveness of the Registration Statement or the use of the Base
Prospectus or the Prospectus Supplement has been issued, and no
proceeding for any such purpose is pending or has been initiated or, to
the Company's knowledge, is threatened by the Commission.
(b) The Registration Statement (and any further documents to be
filed with the Commission) contains all exhibits and schedules as
required by the Securities Act. Each of the Registration Statement and
any post-effective amendment thereto, at the time it became effective,
complied in all material respects with the Securities Act and the
Exchange Act and the applicable Rules and Regulations and did not and,
as amended or supplemented, if applicable, will not, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. The Base Prospectus and the Prospectus Supplement, as of
its respective date, comply in all material respects with the
Securities Act and the Exchange Act and the applicable Rules and
Regulations. Each of the Base Prospectus and the Prospectus Supplement,
as amended or supplemented, did not and will not contain as of the
effective date thereof any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Incorporated Documents, when they were filed with the
Commission, conformed in all material respects to the requirements of
the Exchange Act and the applicable Rules and Regulations, and none of
such documents, when they were filed with the Commission, contained any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading; and any
further documents so filed and incorporated by reference in the Base
Prospectus or Prospectus Supplement, when such documents are filed with
the Commission, will conform in all material respects to the
requirements of the Exchange Act and the applicable Rules and
Regulations, as applicable, and will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein not misleading. Notwithstanding the foregoing,
the Company makes no representations or warranties as to information,
if any, contained in or omitted from the Prospectus Supplement or any
amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by or
on behalf of the Placement Agent specifically for use in the
Registration Statement or the Prospectus Supplement. No post-effective
amendment to the Registration Statement reflecting any facts or events
arising after the date hereof which represent, individually or in the
aggregate, a fundamental change in the information set forth therein is
required to be filed with the Commission. There are no documents
required to be filed with the Commission in connection with the
transaction contemplated hereby that have not been filed as required
pursuant to the Securities Act or will not be filed
4
within the requisite time period. There are no contracts or other
documents required to be described in the Base Prospectus or Prospectus
Supplement, or to be filed as exhibits or schedules to the Registration
Statement, which have not been described or filed as required.
(c) The Company has delivered, or will as promptly as practicable
deliver, to the Placement Agent complete conformed copies of the
Registration Statement and of each consent and certificate of experts
filed as a part thereof, and conformed copies of the Registration
Statement (without exhibits) and the Base Prospectus and the Prospectus
Supplement, as amended or supplemented, in such quantities and at such
places as the Placement Agent reasonably requests. The Company has not
distributed and will not distribute, prior to the completion of the
distribution of the Stock, any offering material in connection with the
offering and sale of the Stock other than the Base Prospectus and the
Prospectus Supplement or the Registration Statement and copies of the
documents incorporated by reference therein.
(d) The Company and each of its subsidiaries have been duly
organized and are validly existing as corporations or other legal
entities in good standing (or the equivalent thereof, if any) under the
laws of their respective jurisdictions of incorporation, are duly
qualified to do business and are in good standing (or the equivalent
thereof, if any) as foreign corporations in each jurisdiction in which
their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power
and authority necessary to own or hold their respective properties and
to conduct the businesses in which they are engaged, except where the
failure to be so qualified and in good standing or have such power or
authority would not have, singularly or in the aggregate, a material
adverse effect on the condition (financial or otherwise), results of
operations, business, properties or prospects of the Company and its
subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT").
(e) The Stock to be issued and sold by the Company hereunder has
been duly and validly authorized and, when issued and delivered against
payment therefor as provided herein, will be duly and validly issued,
fully paid and nonassessable and free of any preemptive or similar
rights and will conform to the description thereof contained in the
Base Prospectus and the Prospectus Supplement.
(f) The Company has an authorized capitalization as set forth in
the Base Prospectus and the Prospectus Supplement, all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and conform to
the description thereof contained in the Base Prospectus and the
Prospectus Supplement and, except as set forth in the Base Prospectus
and the Prospectus Supplement, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares of
capital stock of, or ownership interests in, the Company are
outstanding.
(g) The Company has no subsidiaries and holds no interest in the
stock or other equity securities of any other entity.
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(h) The Company has the full right, power and authority to enter
into this Agreement and to perform and to discharge its obligations
hereunder; and this Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms.
(i) The Company has the full right, power and authority to enter
into the Placement Agent's Warrant and to perform and discharge its
obligations thereunder. The Placement Agent's Warrant has been duly and
validly authorized by the Company and upon delivery to the Placement
Agent upon the First Closing Date will be duly issued and constitute a
legal, valid and binding obligation of the Company. The Warrant Stock
has been duly authorized and reserved for issuance upon the exercise of
the Placement Agent's Warrant and when issued upon payment of the
exercise price therefor will be validly issued, fully paid and
nonassessable.
(j) The execution, delivery and performance of this Agreement and
the Placement Agent's Warrant by the Company and the consummation of
the transactions contemplated hereby and thereby will not conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor will
such actions result in any violation of the provisions of the charter
or by-laws of the Company or any of its subsidiaries or any statute,
law, rule or regulation or any judgment, order or decree of any court
or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties or assets.
(k) There is no franchise, contract, lease, instrument or other
document of a character required by the Securities Act or the Rules and
Regulations to be described in the Base Prospectus and the Prospectus
Supplement, or to be filed as an exhibit to the Registration Statement,
which is not described or filed as required; and all statements
summarizing any such franchises, contracts, leases, instruments or
other documents or legal matters contained in the Registration
Statement are accurate and complete in all material respects.
(l) All existing minute books of the Company and each of its
subsidiaries, including all existing records of all meetings and
actions of the board of directors (including, Audit, Compensation and
Nomination/Corporate Governance Committees) and stockholders of the
Company through the date of the latest meeting and action
(collectively, the "CORPORATE RECORDS") have been made available to the
Placement Agent and counsel for the Placement Agent. All such Corporate
Records are complete and accurately reflect, in all material respects,
all transactions referred to in such Corporate Records. There are no
material transactions, agreements or other actions of the Company that
are not properly approved and/or recorded in the Corporate Records.
6
(m) No consent, approval, authorization, filing with or order of
or registration with, any court or governmental agency or body is
required in connection with the transactions contemplated herein or in
the Placement Agent's Warrant, except such as have been obtained or
made under the Securities Act or the Exchange Act and such as may be
required under the securities, or blue sky, laws of any jurisdiction in
connection with the offer and sale of the Stock and the Warrant Stock
by the Company in the manner contemplated herein and in the Base
Prospectus and the Prospectus Supplement.
(n) Except as described in the Base Prospectus and the Prospectus
Supplement, no person or entity has the right to require registration
of shares of Common Stock or other securities of the Company because of
the filing or effectiveness of the Registration Statement or otherwise,
except for persons and entities who have expressly waived such right or
who have been given proper notice and have failed to exercise such
right within the time or times required under the terms and conditions
of such right, and the Company is not required under the terms and
conditions of any existing agreement to which the Company is a party or
otherwise bound to file any registration statement for the registration
of any securities of any person or register any such securities
pursuant to any other registration statement filed by the Company under
the Securities Act for a period of at least 180 days after the
Effective Date.
(o) The financial statements with the related notes and schedules
of the Company included in the Base Prospectus, the Prospectus
Supplement or the Registration Statement, or incorporated by reference
therein, present fairly the financial condition, results of operations
and cash flows of the Company as of the dates and for the periods
indicated, comply as to form with the applicable accounting
requirements of the Securities Act and have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis throughout the periods involved.
(p) Except as set forth in the Base Prospectus and the Prospectus
Supplement, there is no legal or governmental proceeding pending to
which the Company or any of its subsidiaries is a party or of which any
property or assets of the Company or any of its subsidiaries is the
subject which, singularly or in the aggregate, if determined adversely
to the Company or any of its subsidiaries, might have a Material
Adverse Effect or would prevent or adversely affect the ability of the
Company to perform its obligations under this Agreement or the
Placement Agent's Warrant; and to the best of the Company's knowledge,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(q) The Company and each of its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real or personal property which are
material to the business of the Company and its subsidiaries taken as a
whole, in each case free and clear of all liens, encumbrances, claims
and defects that may result in a Material Adverse Effect.
7
(r) Neither the Company nor any of its subsidiaries is (i) in
violation of any provision of its charter or bylaws, (ii) is in default
in any respect, and no event has occurred which, with notice or lapse
of time or both, would constitute such a default, in the due
performance or observance of any term, covenant, or condition of any
indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or by which it is bound or to which
any of its property or assets is subject, or (iii) is in violation in
any respect of any statute, law, rule, regulation, ordinance, judgment,
order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company, its subsidiaries or any of its properties, as
applicable (including, without limitation, those administered by the
Food and Drug Administration of the U.S. Department of Health and Human
Services (the "FDA") or by any foreign, federal, state or local
governmental or regulatory authority performing functions similar to
those performed by the FDA), except, with respect to clauses (ii) and
(iii), any violations or defaults which, singularly or in the
aggregate, would not have a Material Adverse Effect.
(s) The contracts described in the Company's regular reports on
Forms 10-Q, 10-K, and 8-K as filed by the Company with the Commission
or incorporated by reference therein that are material to the Company
are in full force and effect on the date hereof, and neither the
Company nor, to the Company's knowledge, any other party to such
contracts is in breach of or default under any of such contracts which
would have a Material Adverse Effect.
(t) No labor problem or dispute with the employees of the Company
exists or, to the Company's knowledge, is threatened or imminent, which
might be expected to have a Material Adverse Effect. The Company is not
aware that any key employee or significant group of employees of the
Company or any subsidiary plans to terminate employment with the
Company or any such subsidiary.
(u) Each of the Company and its subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of ▇▇▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder
with respect to each "PLAN" (as defined in Section 3(3) of ERISA and
such regulations and published interpretations) in which employees of
the Company and its subsidiaries are eligible to participate and each
such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and such regulations and published
interpretations. No "PROHIBITED TRANSACTION" (as defined in Section 406
of ERISA, or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "CODE")) has occurred with respect to
any employee benefit plan which could have a Material Adverse Effect.
The Company and each of its subsidiaries has not incurred any unpaid
liability to the Pension Benefit Guaranty Corporation (other than for
the payment of premiums in the ordinary course) or to any such plan
under Title IV of ERISA. Each "PENSION PLAN" (as defined in ERISA) for
which the
8
Company would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which
could cause the loss of such qualification.
(v) The Company and each of its subsidiaries is insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; all policies of insurance and
fidelity or surety bonds insuring the Company and each of its
subsidiaries and their businesses, assets, employees, officers and
directors are in full force and effect; the Company and each of its
subsidiaries is in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the
Company and each of its subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause; the Company and each of
its subsidiaries has not been refused any insurance coverage sought or
applied for; and the Company and each of its subsidiaries has no reason
to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect,
except as set forth in the Prospectus.
(w) The Company and each of its subsidiaries has made all filings,
applications and submissions required by, and possesses all approvals,
licenses, certificates, certifications, clearances (including, without
limitation, clearance from the FDA to proceed with a Phase III
pre-hospital trial with PolyHeme(R), the Company's oxygen-carrying
blood substitute, subject to obtaining institutional review board
approval at the trial sites participating in the Company's clinical
trials and compliance with the FDA's public notice and other
requirements for conducting clinical trials pursuant to a waiver of
informed consent), consents, exemptions, marks, notifications, orders,
permits and other authorizations issued by, the appropriate federal,
state or foreign regulatory authorities (including, without limitation,
the FDA, and any other foreign, federal, state or local government or
regulatory authorities performing functions similar to those performed
by the FDA) necessary to conduct its businesses (collectively,
"PERMITS"), except for such Permits which the failure to obtain would
not have a Material Adverse Effect, and is in compliance with the terms
and conditions of all such Permits; all of such Permits held by the
Company and each of its subsidiaries are valid and in full force and
effect; there is no pending or threatened action, suit, claim or
proceeding which may cause any such Permit to be limited, revoked,
cancelled, suspended, modified or not renewed and the Company and each
of its subsidiaries has not received any notice of proceedings relating
to the limitation, revocation, cancellation, suspension, modification
or non-renewal of any such Permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated
by the Prospectus.
9
(x) KPMG LLP, who have certified certain financial statements of
the Company and delivered their report with respect to the audited
consolidated financial statements and schedules included in the Base
Prospectus, the Prospectus Supplement or the Registration Statement, or
incorporated by reference therein, are independent public accountants
with respect to the Company within the meaning of the Securities Act
and the Rules and Regulations.
(y) The Company and each of its subsidiaries has filed all
foreign, federal, state and local tax returns that are required to be
filed or has requested extensions thereof (except in any case in which
the failure so to file would not have a Material Adverse Effect, except
as set forth in the Base Prospectus and the Prospectus Supplement) and
has paid all taxes required to be paid by it and any other assessment,
fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith or as would not
have a Material Adverse Effect, except as set forth in the Base
Prospectus and the Prospectus Supplement.
(z) There is and has been no failure on the part of the Company or
any of the Company's directors or officers, in their capacities as
such, to comply in all material respects with any provision of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated in
connection therewith (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ ACT"), including Section 402
related to loans and Sections 302 and 906 related to certifications.
(aa) The Company and each of its subsidiaries 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 authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability of 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 the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(bb) Neither the Company nor any of its subsidiaries nor any of
their officers, directors or affiliates has taken or will take,
directly or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or which caused or
resulted in, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any
security of the Company.
(cc) The Company and each of its subsidiaries (i) is in compliance
in all material respects with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), (ii) has received and is in compliance with all permits,
licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (iii) has not received
notice of
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any actual or potential liability for the investigation or remediation
of any disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated by the Base Prospectus and the Prospectus Supplement
(exclusive of any supplement thereto). The Company has not been named
as a "POTENTIALLY RESPONSIBLE PARTY" under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended.
(dd) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and each of its subsidiaries,
in the course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws, or any permit, license or approval, any
related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company
has reasonably concluded that such associated costs and liabilities
would not, singly or in the aggregate, have a Material Adverse Effect,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated by the Base Prospectus
and the Prospectus Supplement.
(ee) The Company and its subsidiaries own, possess, license or have
other rights to use all foreign and domestic patents, patent
applications, trade and service marks, trade and service ▇▇▇▇
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, Internet domain names, know-how and other
intellectual property (collectively, the "INTELLECTUAL PROPERTY")
necessary for the conduct of the Company's business as now conducted or
as proposed in the Base Prospectus and the Prospectus Supplement to be
conducted. Except as set forth in the Base Prospectus and the
Prospectus Supplement (a) there are no rights of third parties to any
such Intellectual Property; (b) to the best of the Company's knowledge,
there is no infringement by third parties of any such Intellectual
Property; (c) there is no pending or, to the best of the Company's
knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's and its subsidiaries' rights in or to any
such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (d) there is no
pending or, to the best of the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the validity or scope
of any such Intellectual Property; (e) there is no pending or, to the
best of the Company's knowledge, threatened action, suit, proceeding or
claim by others that the Company and its subsidiaries infringe or
otherwise violate any patent, trademark, copyright, trade secret or
other proprietary rights of others, and the Company is unaware of any
other fact which would form a reasonable basis for any such claim; (f)
to the Company's knowledge, there is no third-party U.S. patent or
published U.S. patent application which contains claims for which an
Interference Proceeding could be commenced against any patent or
11
patent application described in the Base Prospectus and the Prospectus
Supplement as being owned by or licensed to the Company; and (g) the
Company and its subsidiaries have taken all steps necessary to perfect
its ownership of the Intellectual Property.
(ff) The clinical, pre-clinical and other studies and tests
conducted by or on behalf of or sponsored by the Company and its
subsidiaries were and, if still pending, are being conducted in
accordance with all statutes, laws, rules and regulations, as
applicable (including, without limitation, those administered by the
FDA or by any foreign, federal, state or local governmental or
regulatory authority performing functions similar to those performed by
the FDA). The descriptions of the results of such studies and tests are
accurate and complete in all material respects and fairly present the
published data derived from such studies and tests, and the Company has
no knowledge of other studies or tests the results of which are
inconsistent with or otherwise call into question the results described
or referred to in the Base Prospectus and the Prospectus Supplement,
except as described in the Base Prospectus and the Prospectus
Supplement. Neither the Company nor any of its subsidiaries have
received any notices or other correspondence from the FDA or any other
foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA with respect
to any ongoing clinical or pre-clinical studies or tests requiring the
termination, suspension or material modification of such studies or
tests.
(gg) The Company has established and administers a compliance
program (including a written compliance policy) applicable to the
Company, to assist the Company and the directors, officers and
employees of the Company in complying with applicable regulatory
guidelines (including, without limitation, those administered by the
FDA and any other foreign, federal, state or local governmental or
regulatory authority performing functions similar to those performed by
the FDA).
(hh) Neither the Company nor any of its subsidiaries has failed to
file with the applicable regulatory authorities (including, without
limitation, the FDA or any foreign, federal, state or local
governmental or regulatory authority performing functions similar to
those performed by the FDA) any material required filing, declaration,
listing, registration, report or submission; all such filings,
declarations, listings, registrations, reports or submissions were in
material compliance with applicable laws when filed and, except as
referred to or described in the Base Prospectus or the Prospectus
Supplement, no deficiencies have been asserted by any applicable
regulatory authority (including, without limitation, the FDA or any
foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA) with
respect to any such filings, declarations, listings, registrations,
reports or submissions.
(ii) No relationship, direct or indirect, exists between or among
the Company on the one hand and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand which is
required to be described in the Base Prospectus and the Prospectus
Supplement and which is not so described.
12
(jj) Neither the Company nor any of its subsidiaries is or, after
giving effect to the offering and sale of the Stock and the application
of the proceeds thereof as described in the Base Prospectus and the
Prospectus Supplement, will become an "INVESTMENT COMPANY" as defined
in the Investment Company Act of 1940, as amended.
(kk) No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Base Prospectus and the Prospectus Supplement has been
made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith.
(ll) Neither the Company nor any of its subsidiaries is a party to
any contract, agreement or understanding with any person that would
give rise to a valid claim against the Company or the Placement Agent
for a brokerage commission, finder's fee or like payment in connection
with the offering and sale of the Stock.
(mm) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included in
the Base Prospectus, the Prospectus Supplement or the Registration
Statement, or incorporated by reference therein, any material loss or
interference with its business from fire, explosion, flood, terrorist
act or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth in or contemplated by the Base Prospectus
and the Prospectus Supplement; and, since such date, there has not been
any change in the capital stock or long-term debt of the Company or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the business, general affairs,
management, financial position, stockholders' equity, results of
operations or prospects of the Company, otherwise than as set forth or
contemplated by the Base Prospectus and the Prospectus Supplement.
Any certificate signed by any officer of the Company and delivered to
the Placement Agent or counsel for the Placement Agent in connection with the
offering of the Stock shall be deemed a representation and warranty by the
Company and its subsidiaries, as to the matters covered thereby, to the
Placement Agent and the Purchasers.
3. THE CLOSINGS.
(a) First Closing. The completion of the initial purchase and sale
of the Firm Stock (the "FIRST CLOSING") will occur at the office of
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Company, at One Prudential Plaza, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ at such time (the "FIRST CLOSING
DATE") as is specified by the Company and the Placement Agent. At the
First Closing, the Company will cause the transfer agent for the Stock
to deliver to each Purchaser by means of electronic book-entry the
number of shares of Firm Stock set forth on the signature page to such
Purchaser's Subscription Agreement under the heading "Firm Shares"
registered in the name of the Purchaser or, if so indicated on the
Stock Certificate Questionnaire attached as Exhibit A thereto, in the
name of a nominee designated by such Purchaser.
13
(b) Option Closing. Pursuant to the terms of the Subscription
Agreements, each Purchaser shall have the option (the "OPTION") to
purchase the number of shares of Optional Stock set forth therein. The
Option may be exercised as to all or any part of the Optional Stock at
any time, and from time to time, not more than sixty (60) days
subsequent to the date of such Purchaser's Subscription Agreement. No
Optional Stock shall be sold and delivered to any Purchaser unless the
Firm Stock purchased by such Purchaser at the First Closing shall have
been sold and delivered. The right to purchase the Optional Stock or
any portion thereof may be surrendered and terminated at any time upon
notice by Purchaser to the Company.
The Option, if exercised, shall be exercised by written notice
(the "OPTION NOTICE") being given to the Company by the Purchaser
setting forth the number of Optional Stock to be purchased by such
Purchaser. The completion of the purchase and sale of Optional Stock
(an "OPTION CLOSING") will occur at a place and time (each, an "OPTION
CLOSING DATE", and together with the First Closing Date, the "CLOSING
DATES") to be specified by the Company and the Placement Agent, and of
which such Purchaser will be notified in advance by the Placement
Agent. Each Option Closing shall in no event be earlier than two (2)
business days nor later than five (5) business days after written
notice is given. At an Option Closing, the Company will cause the
transfer agent for the Stock to deliver to the Purchaser by means of
electronic book-entry the number of shares of Optional Stock set forth
in the Option Notice registered in the name of the Purchaser or, if so
indicated on the Stock Certificate Questionnaire attached as Exhibit A
to the Subscription Agreement, in the name of a nominee designated by
the Purchaser.
4. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the
Placement Agent and the Purchasers that:
(a) The Company agrees (i) to make no further amendment or
supplement prior to the Closing Dates to the Registration Statement or
any amendment or supplement to the Prospectus Supplement, which shall
be reasonably disapproved by the Placement Agent in good faith promptly
after reasonable notice thereof; (ii) for so long as the delivery of a
prospectus is required in connection with the offering or sale of the
Stock, to advise the Placement Agent promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement
has been filed or becomes effective or any supplement to the Prospectus
Supplement or any amended Prospectus Supplement has been filed and to
furnish the Placement Agent with copies thereof; (iii) to use its
commercially reasonable efforts to file promptly all reports and any
definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 15 or 15(d) of
the Exchange Act subsequent to the date of the Prospectus Supplement
and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Stock; (iv) to advise the
Placement Agent, promptly after it receives notices thereof, (x) of any
request by the Commission to amend the Registration Statement or to
amend or supplement the Prospectus Supplement or for additional
information and (y) of the issuance by the Commission, of any stop
order suspending the effectiveness of the
14
Registration Statement or any post-effective amendment thereto or any
order directed at any Incorporated Document or any amendment or
supplement thereto or any order preventing or suspending the use of the
Base Prospectus or the Prospectus Supplement or any amendment or
supplement thereto, of the suspension of the qualification of the Stock
for offering or sale in any jurisdiction, of the institution or
threatening of any proceeding for any such purpose, or of any request
by the Commission for the amending or supplementing of the Registration
Statement or Prospectus Supplement or for additional information; and,
(v) in the event of the issuance of any stop order or of any order
preventing or suspending the use of the Base Prospectus or Prospectus
Supplement or suspending any such qualification, promptly to use its
reasonable best efforts to obtain the withdrawal of such order.
(b) The Company will comply with the Securities Act and the
Exchange Act, and the Rules and Regulations thereunder, so as to permit
the completion of the distribution of the Stock as contemplated in this
Agreement and the Prospectus Supplement. If during the period in which
a prospectus is required by law to be delivered by a Placement Agent or
a dealer in connection with the distribution of Stock contemplated by
the Prospectus Supplement, any event shall occur as a result of which,
in the judgment of the Company or in the reasonable opinion of the
Placement Agent or counsel for the Placement Agent, it becomes
necessary to amend or supplement the Prospectus Supplement in order to
make the statements therein, in the light of the circumstances existing
at the time the Prospectus Supplement is delivered to a purchaser, not
misleading, or, if it is necessary at any time to amend or supplement
the Prospectus Supplement to comply with any law, the Company promptly
will prepare and file with the Commission, and furnish at its own
expense to the Placement Agent and to dealers, an appropriate amendment
to the Registration Statement or supplement to the Prospectus
Supplement so that the Prospectus Supplement as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus Supplement will
comply with such law. Before amending the Registration Statement or
supplementing the Base Prospectus in connection with the Offering, the
Company will furnish you with a copy of such proposed amendment or
supplement and will not file such amendment or supplement to which you
reasonably object.
(c) To furnish promptly to the Placement Agent and to counsel for
the Placement Agent a copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
(d) To deliver promptly to the Placement Agent such number of the
following documents as the Placement Agent shall reasonably request:
(i) conformed copies of the Registration Statement as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits), (ii) the Base Prospectus, (iii) the Prospectus Supplement
(not later than 10:00 A.M., New York time, on the Business Day
following the execution and delivery of this Agreement) and any
amendment or supplement thereto (not later than 10:00 A.M., New York
City time, on the Business Day following
15
the date of such amendment or supplement); and (iv) any document
incorporated by reference in the Base Prospectus or Prospectus
Supplement. The Company will pay the expenses of printing or other
production of all documents relating to the Offering.
(e) To make generally available to its stockholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Securities Act), an earnings statement of the Company (which
need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the Company,
Rule 158).
(f) The Company will promptly take from time to time such actions
as the Placement Agent may reasonably request to qualify the Stock for
offering and sale under the securities, or blue sky, laws of such
jurisdictions as the Placement Agent may designate and to continue such
qualifications in effect for so long as required for the distribution
of the Stock and will pay the fee of the National Association of
Securities Dealers, Inc. ("NASD") in connection with its review of the
Offering. The Company shall not be obligated to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified, to
submit to taxation in any jurisdiction or to file a general consent to
service of process in any jurisdiction.
(g) The Company will not directly or indirectly offer, sell,
assign, transfer, pledge, contract to sell, or otherwise dispose of any
shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock for a period of 60 days from the date of
the Prospectus Supplement without the prior written consent of ▇▇
▇▇▇▇▇, other than (i) the sale of the Stock and the issuance of the
Placement Agent's Warrant hereunder, (ii) the issuance of Common Stock
pursuant to the exercise of currently outstanding stock options, (iii)
the issuance of stock options pursuant to the Company's existing stock
option plans and (iv) the issuance of Common Stock, stock options,
stock appreciation rights or other securities or rights to the
Company's directors, officers, employees, consultants or agents
pursuant to equity incentive compensation plans adopted or approved by
the board of directors of the Company after the date of this Agreement
consistent with past practice. The Company will cause each of its
executive officers and directors to furnish to the Placement Agent,
prior to the First Closing Date, a letter, substantially in the form of
Exhibit C hereto, pursuant to which each such person shall agree not to
directly or indirectly offer, sell, assign, transfer, pledge, contract
to sell, or otherwise dispose of any shares of Common Stock or
securities convertible into or exercisable or exchangeable for Common
Stock for a period of 90 days from the date of the Prospectus
Supplement, without the prior written consent of ▇▇ ▇▇▇▇▇.
(h) Prior to each Closing Date the Company will furnish to the
Placement Agent, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for
any periods subsequent to the periods covered by the financial
statements appearing or incorporated by reference in the Base
Prospectus, the Prospectus Supplement or the Registration Statement.
16
(i) Prior to each Closing Date, the Company will not issue any
press release or other communication directly or indirectly or hold any
press conference with respect to the Company, its condition, financial
or otherwise, or earnings, business affairs or business prospects
(except for routine oral marketing communications in the ordinary
course of business and consistent with the past practices of the
Company and of which the Placement Agent is notified), without the
prior written consent of the Placement Agent, unless in the judgment of
the Company and its counsel, and after notification to the Placement
Agent, such press release or communication is required by law.
(j) The Company will apply the net proceeds from the sale of the
Stock as set forth in the Prospectus Supplement under the heading "USE
OF PROCEEDS".
(k) The Company will comply in all material respects with all
applicable securities and other applicable laws, rules and regulations,
including, without limitation, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and use its best
efforts to cause the Company's directors and officers, in their
capacities as such, to comply with such laws, rules and regulations,
including, without limitation, the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
(l) The Company shall engage and maintain, at its expense, a
registrar and transfer agent for the Stock.
(m) The Company will not take any action prior to the First
Closing Date which would require the Prospectus Supplement to be
amended or supplemented pursuant to Section 4(b).
(n) The Company will supply the Placement Agent with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Stock under the
Securities Act.
5. PAYMENT OF EXPENSES. The Company agrees with the Placement Agent to pay
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Stock and any taxes payable in that connection; (b) the costs
incident to the Registration of the Stock under the Securities Act; (c) the
costs incident to the preparation, printing and distribution of the Registration
Statement, Base Prospectus and Prospectus Supplement and any amendments and
exhibits thereto or any document incorporated by reference therein, and the
costs of printing, reproducing and distributing, this Agreement by mail, telex
or other means of communication; (d) the fees and expenses (including related
reasonable fees and expenses of counsel for the Placement Agent) incurred in
connection with filings made with the NASD; (e) any applicable listing or other
fees; (f) the fees and expenses of qualifying the Stock under the securities
laws of the several jurisdictions as provided in Section 4(f) and of preparing,
printing and distributing Blue Sky Memoranda (including related reasonable fees
and expenses of counsel to the Placement Agent); (g) all fees and expenses of
the registrar and transfer agent of the Stock; and (h) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement (including, without limitation, the fees and expenses of the
Company's counsel and the Company's independent accountants); provided that,
except as
17
otherwise provided in this Section 5 and in Section 9, the Placement Agent shall
pay its own costs and expenses, including the fees and expenses of its counsel.
6. CONDITIONS TO THE OBLIGATIONS OF THE PLACEMENT AGENT AND THE SALE OF
THE STOCK. The obligations of the Placement Agent and the closing of the sale of
the Stock hereunder are subject to the accuracy, when made and on each Closing
Date, of the representations and warranties on the part of the Company and its
subsidiaries contained herein, to the accuracy of the statements of the Company
and its subsidiaries made in any certificates pursuant to the provisions hereof,
to the performance by the Company and its subsidiaries of their obligations
hereunder, and to each of the following additional terms and conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose
shall have been initiated or threatened by the Commission, and any
request for additional information on the part of the Commission (to be
included in the Registration Statement, the Base Prospectus or the
Prospectus Supplement or otherwise) shall have been complied with to
the reasonable satisfaction of the Placement Agent. Any filings
required to be made by the Company in accordance with Section 4(a)
shall have been timely filed with the Commission.
(b) The Placement Agent shall not have discovered and disclosed to
the Company on or prior to such Closing Date that the Registration
Statement, the Base Prospectus or the Prospectus Supplement or any
amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of counsel for the Placement Agent, is material
or omits to state any fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of this Agreement, the
Stock, the Registration Statement, the Base Prospectus and the
Prospectus Supplement and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Placement
Agent, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable
them to pass upon such matters.
(d) ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ shall have furnished to the Placement Agent,
such counsel's written opinion, as counsel for the Company, addressed
to the Placement Agent and the Purchasers and dated as of such Closing
Date in form and substance reasonably satisfactory to the Placement
Agent, to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation, is duly qualified
to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such
qualification, except where the failure to so qualify would
not
18
have, singularly or in the aggregate, a Material Adverse
Effect, and the Company has the corporate power to own its
properties and engage in its business as described in the
Registration Statement, the Base Prospectus and the Prospectus
Supplement;
(ii) the Company has an authorized capitalization as
set forth in the Base Prospectus and the Prospectus
Supplement, and all of the issued and outstanding shares of
capital stock of the Company as of immediately prior to the
Closing, have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description
thereof contained in the Base Prospectus and the Prospectus
Supplement;
(iii) other than the Optional Stock, there are no
preemptive or other rights to subscribe for or to purchase,
nor any restriction upon the voting or transfer of, any shares
of the Stock pursuant to the Company's charter or by-laws or
any agreement or other instrument known to such counsel;
(iv) the execution, delivery and performance by the
Company of its obligations under this Agreement, the Placement
Agent's Warrants and the Subscription Agreements have been
duly authorized by all necessary corporate action on the part
of the Company. This Agreement, the Placement Agent's Warrants
and the Subscription Agreements executed by the Company have
been duly executed and delivered by the Company and constitute
the valid and binding agreement of the Company, enforceable
against the Company in accordance with each of their terms;
(v) the execution and delivery of this Agreement, the
Placement Agent's Warrants and the Subscription Agreements by
the Company, and the consummation by the Company of the
transactions thereunder to be consummated on the Closing Date,
do not violate (a) the Company's charter or by laws, (b) any
statute, law, rule or regulation or (c) any judgment, decree
or order of any court or any other agency of government known
to such counsel that is applicable to the Company or its
property. The execution and delivery of this Agreement, the
Placement Agent's Warrant and the Subscription Agreements by
the Company, and the consummation by the Company of the
transactions thereunder to be consummated on such Closing
Date, do not cause a material default by the Company under any
agreement included as an exhibit to the Registration Statement
or as an exhibit to any other registration statement or report
filed by the Company with the Commission;
(vi) the Stock has been duly and validly authorized
and, when issued in accordance with the terms of this
Agreement, the Placement Agent's Warrant and the Subscription
Agreements, will be validly issued, fully paid and
nonassessable. The shares of the Company's Common Stock which
may be issued from time to time upon the
19
exercise of the Placement Agent's Warrants have been duly and
validly authorized and, upon payment of the exercise price in
accordance with the terms of the Placement Agent's Warrants,
and assuming no change in the applicable law or facts, will be
validly issued, fully paid and nonassessable;
(vii) the Registration Statement was declared
effective under the Securities Act as of the date and time
specified in such opinion, the Prospectus Supplement was filed
with the Commission pursuant to the subparagraph of Rule
424(b) of the Rules and Regulations specified in such opinion
on the date specified therein and no stop order suspending the
effectiveness of the Registration Statement has been issued
and, to the knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the Commission;
(viii) no approval, authorization or other action by
or filing with any governmental authority is required in
connection with the execution and delivery by the Company of
this Agreement, the Placement Agent's Warrant and the
Subscription Agreements or the consummation by the Company of
the transactions thereunder to be consummated on such Closing
Date, except for such as have been duly obtained or made;
(ix) to such counsel's knowledge no person or entity
has the right to require registration of shares of Common
Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement, the completion
of the Offering or otherwise, except for persons and entities
who have expressly waived such right or who have been given
proper notice and have failed to exercise such right within
the time or times required under the terms and conditions of
such right;
(x) the statements in the Base Prospectus and the
Prospectus Supplement under the headings "Our Business," "Risk
Factors," "Description of the Securities We May Offer" and
"Plan of Distribution," Item 15 of Part II of the Registration
Statement and "Description of the Business" in the Company's
Annual Report on Form 10-K for the fiscal year ended May 31,
2002, in each case to the extent that they constitute
summaries of matters of law or regulation or legal
conclusions, have been reviewed by such counsel and fairly
summarize the matters described therein in all material
respects;
(xi) to such counsel's knowledge, there is no action,
suit or proceeding that is pending or threatened against the
Company in any court or before any governmental authority,
arbitration board or tribunal that seeks to question, delay or
prevent the consummation of the transactions contemplated by
this Agreement, the Placement Agent's Warrant and the
Subscription Agreements or that, if decided adversely to the
Company, would have a Material Adverse Effect;
20
(xii) to such counsel's knowledge, the Company is not
a party to any contract or agreement of a character required
to be described or incorporated by reference in the
Registration Statement, the Base Prospectus or the Prospectus
Supplement or to be filed as an exhibit to the Registration
Statement that has not been described or filed as required;
(xiii) the Registration Statement (including the Base
Prospectus), as of its effective date, and the Prospectus
Supplement, as of its date, complied as to form in all
material respects with the requirements of the Securities Act
and the Rules and Regulations, and the documents incorporated
by reference in the Registration Statement, the Base
Prospectus or the Prospectus Supplement, including any Current
Report on Form 8-K filed with the Commission prior to the
Closing Date, when they became effective or were filed with
the Commission, as applicable, complied as to form in all
material respects with the requirements of the Securities Act
and the Rules and Regulations; and
(xiv) the Company is not, and will not be after
giving effect to the offering of the Stock and the application
of the proceeds thereof as described in the Base Prospectus
and the Prospectus Supplement, an "INVESTMENT COMPANY" as
defined in the Investment Company Act of 1940, as amended.
Such counsel shall also have furnished to the Placement Agent
a written statement, addressed to the Placement Agent and the
Purchasers and dated such Closing Date, in form and substance
reasonably satisfactory to the Placement Agent, to the effect that (x)
such counsel has acted as counsel to the Company in connection with the
preparation of the Registration Statement, (y) based on such counsel's
examination of the Registration Statement and such counsel's
investigations made in connection with the preparation of the
Registration Statement and conferences with certain officers and
employees of and with auditors for and counsel to the Company, such
counsel has no reason to believe that (I) the Registration Statement,
as of its effective date, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, or that the Base Prospectus or the Prospectus Supplement
contains any untrue statement of a material fact or omits to state any
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 or (II) any document incorporated by
reference in the Base Prospectus or the Prospectus Supplement or any
further amendment or supplement to any such incorporated document made
by the Company prior to such Closing Date, when they became effective
or were filed with the Commission, as the case may be, contained, in
the case of a registration statement which became effective under the
Securities Act, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or, in the case of
other documents which were filed
21
under the Exchange Act with the Commission, any untrue statement of a
material fact or omitted to state any material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading; it being understood that such
counsel need express no opinion as to the financial statements or other
financial data contained in the Registration Statement, the Base
Prospectus or the Prospectus Supplement.
(e) The Placement Agent shall have received from ▇▇▇▇▇ Raysman
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, such opinion or opinions, dated such
Closing Date and addressed to the Placement Agent, with respect to the
issuance and sale of the Stock, the Registration Statement, the Base
Prospectus, the Prospectus Supplement (together with any supplement
thereto) and other related matters as the Placement Agent may
reasonably require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them
to pass upon such matters.
(f) The Company shall have furnished to the Placement Agent and
the Purchasers a certificate, dated as of such Closing Date, executed
by its Chairman of the Board, its Chief Executive Officer or a Vice
President and its Chief Financial Officer stating that (i) such
officers have carefully examined the Registration Statement, the Base
Prospectus and the Prospectus Supplement and, in their opinion, the
Registration Statement (including the Base Prospectus) as of its
effective date and the Prospectus Supplement, as of each such effective
date, did not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) since the
effective date of the Registration Statement no event has occurred
which should have been set forth in a supplement or amendment to the
Registration Statement, the Base Prospectus or the Prospectus
Supplement, (iii) to the best of their knowledge after reasonable
investigation, as of such Closing Date, the representations and
warranties of the Company and its subsidiaries in this Agreement are
true and correct and the Company and its subsidiaries have complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date, and
(iv) subsequent to the date of the most recent financial statements
included or incorporated by reference in the Base Prospectus and the
Prospectus Supplement, there has been no material adverse change in the
financial position or results of operation of the Company and its
subsidiaries, or any change, or any development including a prospective
change, in or affecting the condition (financial or otherwise), results
of operations, business or prospects of the Company and its
subsidiaries taken as a whole, except as set forth in the Base
Prospectus and the Prospectus Supplement.
(g) At the time of the execution of this Agreement, the Placement
Agent shall have received from KPMG LLP a letter, addressed to the
Placement Agent and the Purchasers and dated such date, in form and
substance reasonably satisfactory to the Placement Agent (i) confirming
that they are independent certified public accountants with respect to
the Company within the meaning of the Securities Act and the Rules and
Regulations and (ii) stating the conclusions and findings of such firm
with respect to the financial
22
statements and certain financial information contained or incorporated
by reference in the Base Prospectus and the Prospectus Supplement.
(h) On each Closing Date, the Placement Agent shall have received
a letter (the "BRING-DOWN LETTER") from KPMG addressed to the Placement
Agent and dated the Closing Date confirming, as of the date of the
bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Base Prospectus and the Prospectus
Supplement as of a date not more than three Business Days prior to the
date of the bring-down letter), the conclusions and findings of such
firm with respect to the financial information and other matters
covered by its letter delivered to the Placement Agent concurrently
with the execution of this Agreement pursuant to Section 6(g).
(i) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Base Prospectus and the
Prospectus Supplement any loss or interference with its business from
fire, explosion, flood, terrorist act or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth in or
contemplated by the Base Prospectus and the Prospectus Supplement, and
(ii) since such date there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the business, general affairs, management,
financial position, stockholders' equity, results of operations or
prospects of the Company and its subsidiaries, otherwise than as set
forth in or contemplated by the Base Prospectus and the Prospectus
Supplement, the effect of which, in any such case described in clause
(i) or (ii), is, in the reasonable judgment of the Placement Agent, so
material and adverse as to make it impracticable or inadvisable to
proceed with the sale or delivery of the Stock on the terms and in the
manner contemplated by the Base Prospectus and the Prospectus
Supplement.
(j) The Stock and Warrant Stock shall have been listed and
admitted and authorized for trading on the Nasdaq National Market, and
satisfactory evidence of such actions shall have been provided to the
Placement Agent.
(k) At the Execution Time, the Company shall have furnished to the
Placement Agent a letter substantially in the form of Exhibit B hereto
from each officer and director of the Company.
(l) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, the Nasdaq
National Market or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the Company on
any exchange or in the over-the-counter market, shall have been
suspended or minimum or maximum prices or maximum ranges for prices
shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall
23
have been declared by Federal or state authorities or a material
disruption has occurred in commercial banking or securities settlement
or clearance services in the United States, (iii) the United States
shall have become engaged in hostilities, or the subject of an act of
terrorism, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the
financial markets in the United States shall be such) as to make it, in
the sole judgment of the Placement Agent, impracticable or inadvisable
to proceed with the sale or delivery of the Stock on the terms and in
the manner contemplated by the Base Prospectus and the Prospectus
Supplement.
(m) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of such Closing Date,
prevent the issuance or sale of the Stock; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance or sale of the Stock.
(n) The Company shall have prepared and filed with the Commission
a Current Report on Form 8-K with respect to the Offering, including as
an exhibit thereto the Placement Agent Agreement and any other
documents relating thereto.
(o) The Company shall have entered into Subscription Agreements
with each of the Purchasers.
(p) The Company shall have issued and delivered the Placement
Agent's Warrant to ▇▇ ▇▇▇▇▇.
(q) Prior to the Closing Date, the Company shall have furnished to
▇▇ ▇▇▇▇▇ such further information, certificates and documents as ▇▇
▇▇▇▇▇ may reasonably request.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Placement Agent.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless the Placement
Agent, its officers, employees, representatives and agents and each
person, if any, who controls the Placement Agent within the meaning of
the Securities Act (collectively the "PLACEMENT AGENT INDEMNIFIED
PARTIES" and each a "PLACEMENT AGENT INDEMNIFIED PARTY") against any
loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which that Placement Agent Indemnified Party may
become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of or is based upon
(i) any untrue statement or alleged untrue statement of
24
a material fact contained in the Base Prospectus, the Registration
Statement or the Prospectus Supplement or in any amendment or
supplement thereto, (ii) the omission or alleged omission to state in
the Base Prospectus, the Registration Statement or the Prospectus
Supplement or in any amendment or supplement thereto a material fact
required to be stated therein or necessary to make the statements
therein not misleading, (iii) any breach of the representations and
warranties of the Company contained herein or (iv) any act or failure
to act, or any alleged act or failure to act, by the Placement Agent in
connection with, or relating in any manner to, the Stock or the
Offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out
of or based upon matters covered by clause (i), (ii) or (iii) above;
(provided that the Company shall not be liable in the case of any
matter covered by this clause (iv) to the extent that it is determined
in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any
such act or failure to act undertaken or omitted to be taken by such
Placement Agent through its gross negligence or willful misconduct) and
shall reimburse each Placement Agent Indemnified Party promptly upon
demand for any legal or other expenses reasonably incurred by that
Placement Agent Indemnified Party in connection with investigating or
preparing to defend or defending against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based
upon (i) an untrue statement or alleged untrue statement in or omission
or alleged omission from the Base Prospectus, the Registration
Statement or the Prospectus Supplement or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company through the Placement Agent specifically for
use therein, which information the parties hereto agree is limited to
the Placement Agent's Information (as defined in Section 15). This
indemnity agreement is not exclusive and will be in addition to any
liability, which the Company might otherwise have and shall not limit
any rights or remedies which may otherwise be available at law or in
equity to each Placement Agent Indemnified Party.
(b) The Placement Agent shall indemnify and hold harmless the
Company its officers, employees, representatives and agents, each of
its directors and each person, if any, who controls the Company within
the meaning of the Securities Act (collectively the "COMPANY
INDEMNIFIED PARTIES" and each a "COMPANY INDEMNIFIED PARTY") against
any loss, claim, damage or liability, joint or several, or any action
in respect thereof, to which the Company Indemnified Parties may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of or is based upon (i)
any untrue statement or alleged untrue statement of a material fact
contained in the Base Prospectus, the Registration Statement or the
Prospectus Supplement or in any amendment or supplement thereto, (ii)
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, but with respect to each of clause (i) and this
clause (ii) only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission
25
was made in reliance upon and in conformity with written information
furnished to the Company through the Placement Agent specifically for
use therein, or (iii) any act or failure to act, or any alleged act or
failure to act, by the Placement Agent in connection with, or relating
in any manner to, the Stock or the Offering contemplated hereby to the
extent that it is determined in a final judgment by a court of
competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such act or failure to act undertaken
or omitted to be taken by such Placement Agent through its gross
negligence or willful misconduct, and shall reimburse the Company
Indemnified Parties for any legal or other expenses reasonably incurred
by such parties in connection with investigating or preparing to defend
or defending against or appearing as third party witness in connection
with any such loss, claim, damage, liability or action as such expenses
are incurred; provided that the parties hereto hereby agree that such
written information provided by the Placement Agent consists solely of
the Placement Agent's Information. This indemnity agreement is not
exclusive and will be in addition to any liability, which the Placement
Agent and the Purchasers might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity
to the Company Indemnified Parties. Notwithstanding the provisions of
this Section 7(b), in no event shall any indemnity under this Section
7(b) exceed the total compensation received by the Placement Agent in
accordance with Section 1(e).
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 7, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under
this Section 7 except to the extent it has been materially prejudiced
by such failure; and, provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 7. If
any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that
it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not
be liable to the indemnified party under this Section 7 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that any indemnified party shall have
the right to employ separate counsel in any such action and to
participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i)
the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have
been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to
those available to the indemnifying party and in
26
the reasonable judgment of such counsel it is advisable for such
indemnified party to employ separate counsel or (iii) the indemnifying
party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which
case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any
time for all such indemnified parties, which firm shall be designated
in writing by the Placement Agent, if the indemnified parties under
this Section 7 consist of any Placement Agent Indemnified Party, or by
the Company if the indemnified parties under this Section 7 consist of
any Company Indemnified Parties. Each indemnified party, as a condition
of the indemnity agreements contained in Sections 7(a) and 7(b) shall
use all reasonable efforts to cooperate with the indemnifying party in
the defense of any such action or claim. Subject to the provisions of
Section 7(d) below, no indemnifying party shall be liable for any
settlement, compromise or consent to the entry of judgment in
connection with any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with
its written consent or if there be a final judgment for the plaintiff
in any such action (other than a judgment entered with the consent of
such indemnified party), the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If at any time an indemnified party shall have requested that
an indemnifying party reimburse the indemnified party for fees and
expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by this Section 7
effected without its written consent if (i) such settlement is entered
into more than 45 days after receipt by such indemnifying party of the
request for reimbursement, (ii) such indemnifying party shall have
received notice of the terms of such settlement at least 30 days prior
to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with
such request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
Section 7(a) or 7(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Placement Agent on the
other from the offering of the Stock or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
Company on the one hand and the
27
Placement Agent on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Placement Agent on the other with respect to such
offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company bears to the total
compensation received by the Placement Agent with respect to the Stock
purchased under this Agreement. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company
on the one hand or the Placement Agent on the other, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission;
provided that the parties hereto agree that the written information
furnished to the Company by the Placement Agent for use in the
Prospectus Supplement consists solely of the Placement Agent's
Information. The Company and the Placement Agent agree that it would
not be just and equitable if contributions pursuant to this Section
7(e) 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, damage or liability,
or action in respect thereof, referred to above in this Section 7(e)
shall be deemed to include, for purposes of this Section 7(e), 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(e), the Placement
Agent shall not be required to contribute any amount in excess of the
amount by which the total price at which the Stock was offered and sold
to the public less the amount of any damages which such Placement Agent
has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
8. TERMINATION. This Agreement may be terminated by the Placement Agent in
its absolute discretion by notice given to the Company if: (a) at any time after
the execution and delivery of this Agreement and prior to the Closing Date: (i)
trading or quotation in any of the Company's securities shall have been
suspended or limited by the Commission or by the NASD, or trading in securities
generally on the Nasdaq National Market or the New York Stock Exchange, shall
have been suspended or limited, or minimum or maximum prices shall have been
generally established on any of such stock exchanges by the Commission or the
NASD; (ii) a general banking moratorium shall have been declared by any United
States federal, New York or Illinois authorities; (iii) there should develop,
occur or come into effect or existence any event, action, state, condition or
major financial occurrence of national or international consequence, or any
outbreak or escalation of national or international hostilities or any crisis or
calamity, including, without limitation, related to terrorist activity, or any
change in the United States or international financial markets, or any
28
substantial change in the United States' or international political, financial
or economic conditions, or in any law or regulation, as in the judgment of the
Placement Agent seriously adversely affects or will seriously and adversely
affect the financial markets or the business, operations or affairs of the
Company; (iv) in the judgment of the Placement Agent there shall have occurred
any Material Adverse Effect; or (v) the Company shall have sustained a loss by
strike, fire, flood, earthquake, accident or other calamity of such character as
may interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured; or (b)
in the case of any of the events specified Sections 6(i) or 6(l), such event
singly or together with any other event, makes it, in the Placement Agent's
judgment, impracticable or inadvisable to market the Stock in the manner and on
the terms contemplated in the Base Prospectus and the Prospectus Supplement. Any
termination pursuant to this Section 8 shall be without liability on the part of
any party hereto to any other party except that the provisions of Sections 5, 7
and 9 shall at all times be effective and shall survive such termination.
9. REIMBURSEMENT OF PLACEMENT AGENT'S EXPENSES. If the sale of the Stock
provided for herein is not consummated because any condition to the obligations
of the Placement Agent and the Purchasers set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 8 hereof or because of
any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by the Placement Agent, the Company will reimburse the Placement Agent
upon demand for all reasonable out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by the Placement
Agent in connection with this Agreement and the proposed purchase and sale of
the Stock and, upon demand, the Company shall pay the full amount thereof to ▇▇
▇▇▇▇▇.
10. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the Placement Agent, the
Purchasers, the Company, and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
other than the persons mentioned in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Company contained in
this Agreement shall also be for the benefit of the Placement Agent Indemnified
Parties, and the indemnities of the Placement Agent shall also be for the
benefit of the Company Indemnified Parties. It is understood that the Placement
Agent's responsibility to the Company is solely contractual in nature and the
Placement Agent does not owe the Company, or any other party, any fiduciary duty
as a result of this Agreement.
11. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company and the Placement Agent, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Placement Agent,
29
the Company, or any person controlling any of them and shall survive delivery of
and payment for the Stock.
12. NOTICES. All statements, requests, notices and agreements hereunder
shall be in writing, and:
(a) if to the Placement Agent, shall be delivered or sent by mail,
telex or facsimile transmission to ▇▇ ▇▇▇▇▇ Securities Corporation,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq. (Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy to: ▇▇▇▇▇ Raysman
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq. (Fax: ▇▇▇-▇▇▇-▇▇▇▇).
(b) if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to Northfield Laboratories Inc., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, M.D. (Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, One
Prudential Plaza, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq. (Fax: ▇▇▇-▇▇▇-▇▇▇▇).
13. DEFINITIONS OF CERTAIN TERMS. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday, a legal holiday, a day on which banking institutions or trust
companies are authorized or obligated by law to close in New York City
or any day on which the Nasdaq National Market is not open for trading.
"EFFECTIVE DATE" shall mean each date and time that the
Registration Statement (and any post-effective amendment or amendments
thereto) became or becomes effective.
"EXECUTION TIME" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"INTERFERENCE PROCEEDING" shall have the meaning set forth in
35 U.S.C. Section 135.
"TO THE COMPANY'S KNOWLEDGE" shall mean that which the Company
knows or should have known using the exercise of reasonable due
diligence.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15. PLACEMENT AGENT'S INFORMATION. The parties hereto acknowledge and agree
that, for all purposes of this Agreement, the Placement Agent's Information
consists solely of the statements concerning the Placement Agent contained in
the first paragraph under the heading "Plan of Distribution" in the Prospectus
Supplement.
16. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section,
30
paragraph or provision of this Agreement is for any reason determined to be
invalid or unenforceable, there shall be deemed to be made such minor changes
(and only such minor changes) as are necessary to make it valid and enforceable.
17. GENERAL. This Agreement constitutes the entire agreement of the parties
to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. In this Agreement, the masculine, feminine and neuter
genders and the singular and the plural include one another. The section
headings in this Agreement are for the convenience of the parties only and will
not affect the construction or interpretation of this Agreement. This Agreement
may be amended or modified, and the observance of any term of this Agreement may
be waived, only by a writing signed by the Company and the Placement Agent.
18. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
31
If the foregoing is in accordance with your understanding of the
agreement between the Company and the Placement Agent, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
NORTHFIELD LABORATORIES INC.
By:______________________________
Name:
Title:
Accepted as of
the date first above written:
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
By:_______________________________
Name:
Title:
32
EXHIBIT A
FORM OF SUBSCRIPTION AGREEMENT
33
EXHIBIT B
FORM OF PLACEMENT AGENT'S WARRANT
34
EXHIBIT C
FORM OF LOCK-UP AGREEMENT
35
EXHIBIT A
FORM OF SUBSCRIPTION AGREEMENT
Northfield Laboratories Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
The undersigned (the "Investor") hereby confirms its agreement with you as
follows:
1. This Subscription Agreement (this "Agreement") is made as of the date set
forth below between Northfield Laboratories Inc., a Delaware corporation (the
"Company"), and the Investor.
2. The Company has authorized the sale and issuance to certain investors of up
to _______________________ shares (the "Shares," which term includes the Firm
Shares and the Optional Shares as described below) of its Common Stock, par
value $.01 per share (the "Common Stock"), subject to adjustment by the
Company's Board of Directors, for a purchase price of $5.60 per share (the
"Purchase Price").
3. The offering and sale of the Shares (the "Offering") are being made pursuant
to an effective Registration Statement on Form S-3 (including the Prospectus
contained therein (the "Core Prospectus"), the "Registration Statement") filed
by the Company with the Securities and Exchange Commission (the "Commission").
Upon the consummation of the sale of the Shares pursuant to the Offering, the
Company intends to file a Prospectus Supplement (the "Prospectus Supplement")
with the Commission containing certain supplemental information regarding the
Shares and terms of the Offering.
4. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor the number of shares
(the "Firm Shares") of Common Stock set forth below under the heading "Firm
Shares" for an aggregate purchase price set forth below. In addition, the
Company also agrees to sell to the Investor, at the Investor's option, up to the
number of additional shares (the "Optional Shares") of Common Stock set forth
below under the heading "Optional Shares" at a price per share equal to the
Purchase Price. The Shares shall be purchased pursuant to the Terms and
Conditions for Purchase of Shares attached hereto as Annex I and incorporated
herein by this reference as if fully set forth herein. Unless otherwise
requested by the Investor, the Shares purchased by the Investor will be
delivered by electronic book-entry at the Depository Trust Company ("DTC"),
registered in the Investor's name and address as set forth below and will be
released by Computershare Investor Services LLC, the Company's transfer agent
(the "Transfer Agent"), to the Investor at the First Closing or the Option
Closing, as the case may be.
5. The Investor represents that except as set forth below (a) it has had no
position, office or other material relationship within the past three years with
the Company or its affiliates and (b) it has no direct or indirect affiliation
or association with any NASD member. Exceptions:
--------------------------------------------------------------------------------
(If no exceptions, write "none." If left blank,
response will be deemed to be "none.")
Firm Shares Optional Shares
----------- ---------------
Number of Shares: Number of Shares:
---------------------- ---------------------
Aggregate Purchase Price $ Aggregate Purchase Price $
------------- -------------
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
Dated as of: , 2003
---------------------
"INVESTOR"
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
Address:
-------------------------------
-------------------------------
Agreed and Accepted
this __________, 2003:
NORTHFIELD LABORATORIES INC.
By:
-------------------------------
Title:
----------------------------
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ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES
1. AUTHORIZATION AND SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of the Shares.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES; SUBSCRIPTION DATE.
2.1 At the First Closing (as defined in Section 3.1), the
Company will sell to the Investor, and the Investor will purchase from the
Company, upon the terms and conditions hereinafter set forth, the number of Firm
Shares set forth on the signature page to which these Terms and Conditions for
Purchase of Shares are attached as Annex I (the "Signature Page") for the
aggregate purchase price therefor set forth on the Signature Page.
2.2 At the Option Closing (as defined in Section 3.2), the
Company, at the Investor's option, will sell to the Investor, and the Investor
will purchase from the Company, upon the terms and conditions hereinafter set
forth, up to the number of Optional Shares set forth on the Signature Page for
an aggregate purchase price equal to the number of Optional Shares being
purchased by the Investor multiplied by the Purchase Price.
2.3 The Company proposes to enter into this same form of
Subscription Agreement with certain other investors (the "Other Investors") and
expects to complete sales of Shares to them. The Investor and the Other
Investors are hereinafter sometimes collectively referred to as the "Investors,"
and this Agreement and the Subscription Agreements executed by the Other
Investors are hereinafter sometimes collectively referred to as the
"Agreements."
2.4 Investor acknowledges that the Company intends to pay ▇▇
▇▇▇▇▇ Securities Corporation (the "Placement Agent") a fee in respect of the
sale of Shares to the Investor.
2.5 The Company has entered into a Placement Agent Agreement
(the "Placement Agreement") with the Placement Agent that contains certain
representations, warranties, covenants and agreements of the Company that may be
relied upon by the Investor. A copy of the Placement Agreement is available upon
request.
3. CLOSINGS AND DELIVERY OF THE SHARES.
3.1 FIRM SHARES. The completion of the purchase and sale of
the Firm Shares (the "First Closing") will occur at a place and time (the "First
Closing Date") to be specified by the Company and the Placement Agent, and of
which the Investors will be notified in advance by the Placement Agent. At the
First Closing, the Company will cause the Transfer Agent to deliver to the
Investor by electronic book-entry the number of Firm Shares set forth on the
signature page hereto registered in the name of the Investor or, if so indicated
on the Stock Certificate Questionnaire attached hereto as Exhibit A, in the name
of a nominee designated by the Investor.
3.2 OPTIONAL SHARES. The Investor shall also have the option
(the "Option") to purchase the Optional Shares. The Option may be exercised as
to all or any part of the Optional Shares at any time, and from time to time,
not more than sixty (60) days subsequent to the date of this Agreement. No
Optional Shares shall be sold and delivered unless the Firm Shares previously
have been, or
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simultaneously are, sold and delivered. The right to purchase the Optional
Shares or any portion thereof may be surrendered and terminated at any time upon
notice by Investor to the Company.
The Option, if exercised, shall be exercised by written notice
(the "Option Notice") being given to the Company by Investor setting forth the
number of Optional Shares to be purchased by such Investor. The completion of
the purchase and sale of the Optional Shares (the "Option Closing") will occur
at a place and time (the "Option Closing Date", and together with the First
Closing Date, the "Closing Dates") to be specified by the Company and the
Placement Agent, and of which such Investor will be notified in advance by the
Placement Agent. Each date and time for delivery of and payment for the Optional
Shares shall in no event be earlier than two (2) business days nor later than
five (5) business days after written notice is given. At the Option Closing, the
Company will cause the Transfer Agent to deliver to the Investor by electronic
book-entry the number of Optional Shares set forth in the Option Notice
registered in the name of the Investor or, if so indicated on the Stock
Certificate Questionnaire attached hereto as Exhibit A, in the name of a nominee
designated by the Investor.
3.3 The Company's obligation to issue the Firm Shares and the
Optional Shares to the Investor will be subject to the receipt by the Company of
the purchase price for the Shares being purchased hereunder as set forth on the
Signature Page and the accuracy of the representations and warranties made by
the Investor and the fulfillment of those undertakings of the Investor to be
fulfilled prior to the applicable Closing Date.
The Investor's obligation to purchase the Firm Shares and the
Optional Shares will be subject to the accuracy of the representations and
warranties made by the Company and the fulfillment of those undertakings of the
Company to be fulfilled prior to the applicable Closing Date, including, without
limitation, those contained in the Placement Agreement. The Investor's
obligations are expressly not conditioned on the purchase by any or all of the
other Investors of the Shares that they have agreed to purchase from the
Company.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR.
4.1 The Investor represents and warrants to, and covenants
with, the Company that (a) the Investor is knowledgeable, sophisticated and
experienced in making, and is qualified to make decisions with respect to,
investments in shares presenting an investment decision like that involved in
the purchase of the Shares, including investments in securities issued by the
Company and investments in comparable companies, and has requested, received,
reviewed and considered all information it deemed relevant in making an informed
decision to purchase the Shares, (b) the Investor has answered all questions on
the Signature Page for use in preparation of the Prospectus Supplement and the
answers thereto are true and correct as of the date hereof and will be true and
correct as of the Closing Dates and (c) the Investor, in connection with its
decision to purchase the number of Shares set forth on the Signature Page,
relied only upon the SEC Documents and the representations and warranties of the
Company contained herein.
4.2 The Investor acknowledges, represents and agrees that no
action has been or will be taken in any jurisdiction outside the United States
by the Company or the Placement Agent that would permit an offering of the
Shares, or possession or distribution of offering materials in connection with
the issue of the Shares, in any jurisdiction outside the United States where
action for that purpose is required. Each Investor outside the United States
will comply with all applicable laws and regulations in each foreign
jurisdiction in which it purchases, offers, sells or delivers Shares or has in
its possession or distributes any offering material, in all cases at its own
expense. The Placement Agent is not authorized to make any representation or use
any information in connection with the issue, placement, purchase and
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sale of the Shares, except as set forth or incorporated by reference in the Core
Prospectus or the Prospectus Supplement.
4.3 The Investor further represents and warrants to, and
covenants with, the Company that (a) the Investor has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (b) this
Agreement constitutes a valid and binding obligation of the Investor enforceable
against the Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investors
herein may be legally unenforceable.
4.4 The Investor understands that nothing in this Agreement or
any other materials presented to the Investor in connection with the purchase
and sale of the Shares constitutes legal, tax or investment advice. The Investor
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of Shares.
4.5 The Investor represents, warrants and agrees that it has
not engaged in any short selling of the Company's securities, or established or
increased any "put equivalent position" as defined in Rule 16(a)-1(h) under the
Securities Exchange Act of 1934 with respect to the Company's securities, within
the past 10 trading days.
5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made
by the Company and the Investor herein will survive the execution of this
Agreement, the delivery to the Investor of the Shares being purchased and the
payment therefor.
6. NOTICES. All notices, requests, consents and other communications
hereunder will be in writing, will be mailed (a) if within the domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile or (b) if delivered
from outside the United States, by International Federal Express or facsimile,
and will be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by
nationally recognized overnight carrier, one business day after so mailed, (iii)
if delivered by International Federal Express, two business days after so
mailed, (iv) if delivered by facsimile, upon electric confirmation of receipt
and will be delivered as addressed as follows:
(a) if to the Company, to:
Northfield Laboratories Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
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(b) with a copy mailed to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
One Prudential Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
(c) if to the Investor, at its address on the Signature Page
hereto, or at such other address or addresses as may have been furnished to the
Company in writing.
7. CHANGES. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor.
8. HEADINGS. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and will not be deemed to
be part of this Agreement.
9. SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein will
not in any way be affected or impaired thereby.
10. GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law that would require the application
of the laws of any other jurisdiction.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will constitute an original, but all of which, when
taken together, will constitute but one instrument, and will become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
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EXHIBIT A
NORTHFIELD LABORATORIES INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be registered in
(this is the name that will appear on your stock ----------------
certificate(s)). You may use a nominee name if appropriate:
2. The relationship between the Investor and the registered
holder listed in response to item 1 above: ----------------
3. The mailing address of the registered holder listed in
response to item 1 above: ----------------
4. The Social Security Number or Tax Identification Number of
the registered holder listed in the response to item 1 ----------------
above:
EXHIBIT B
Warrant to Purchase up to 73,821 Shares of Common Stock
of
Northfield Laboratories Inc.
PLACEMENT AGENT'S WARRANT
Dated: July 28, 2003
This certifies that ▇▇ ▇▇▇▇▇ SECURITIES CORPORATION (herein sometimes
called the "PLACEMENT AGENT") or its permitted transferee (the Placement Agent
or any such transferee is sometimes herein called the "HOLDER") is entitled to
purchase from NORTHFIELD LABORATORIES INC., a Delaware corporation (the
"COMPANY"), at the price and during the period as hereinafter specified, up to
73,821 shares (the "SHARES") (equal to three percent (3%) of the number of
Shares (as defined below)) of common stock, $0.01 par value per share of the
Company (the "COMMON STOCK") sold pursuant to the purchase agreements in the
form included as Exhibit A to the Placement Agency Agreement (defined below) at
a purchase price of $[_____] per share (equal to the average volume weighted
closing price of a Share, as reported on the Nasdaq National Market for the five
Trading Days (as defined herein) preceding the Closing Date (as defined in the
Placement Agency Agreement), subject to adjustment as described below (as so
adjusted from time to time, the "EXERCISE PRICE")), at any time during the
four-(4) year period commencing one (1) year from the Closing Date.
This Placement Agent's Warrant (the "PLACEMENT AGENT'S WARRANT") is
issued pursuant to a Placement Agency Agreement between the Company and ▇▇ ▇▇▇▇▇
Securities Corporation, as Placement Agent, in connection with a public
offering, through the commercially reasonable efforts of the Placement Agent, of
up to 2,460,714 Shares as therein described (the "PLACEMENT AGENCY AGREEMENT").
All capitalized terms used herein and not otherwise defined, shall have the
meanings ascribed to such terms in the Placement Agency Agreement.
1. EXERCISE. The rights represented by the Placement Agent's Warrant
shall be exercisable at the Exercise Price, and during the periods as follows:
(a) During the period from the Closing Date to and through
July 27, 2004 (the "FIRST ANNIVERSARY DATE"), inclusive, the Holder shall have
no right to purchase any Shares hereunder.
(b) At any time and from time to time between, July 28, 2004
and July 29, 2008, (the expiration of five (5) years from the Closing Date, i.e.
the "EXPIRATION DATE") inclusive, the Holder shall have the right to purchase
such number of Shares hereunder as is determined pursuant to Section 1(c) hereof
at the Exercise Price.
(c) This Placement Agent's Warrant shall be exercisable for
such number of shares (rounded to the nearest whole number) as is equal to the
aggregate number of shares of Firm Stock plus the aggregate number of shares of
Optional Stock purchased by the Purchasers at the First Closing and any Option
Closings multiplied by 0.03.
(d) After the Expiration Date, the Holder shall have no right
to purchase all or any portion of the Shares hereunder.
2. PAYMENT FOR SHARES; ISSUANCE OF CERTIFICATES; NET EXERCISE.
(a) The rights represented by the Placement Agent's Warrant
may be exercised at any time within the periods above specified, in whole or in
part, by (i) the surrender of the Placement Agent's Warrant (with the purchase
form at the end hereof properly executed) at the principal executive office of
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the Holder at the address of the Holder appearing on the
books of the Company); (ii) payment to the Company of the Exercise Price then in
effect for the number of Shares specified in the above-mentioned purchase form
together with applicable stock transfer taxes, if any; and (iii) delivery to the
Company of a duly executed agreement signed by the person(s) designated in the
purchase form to the effect that such person(s) agree(s) to be bound by the
provisions of Section 6 and subsections (b), (c) and (d) of Section 7 hereof.
The Placement Agent's Warrant shall be deemed to have been exercised, in whole
or in part to the extent specified, immediately prior to the close of business
on the date the Placement Agent's Warrant is surrendered and payment is made in
accordance with the foregoing provisions of this Section 2, and the person or
persons in whose name or names the certificates for the Shares shall be issuable
upon such exercise shall become the holder or holders of record of such Shares
at that time and date. The Shares and the certificates for the Shares so
purchased shall be delivered to the Holder within a reasonable time, not
exceeding ten (10) business days, after the rights represented by this Placement
Agent's Warrant shall have been so exercised.
(b) Notwithstanding anything to the contrary contained in
Section 2(a), the Holder may elect to exercise this Placement Agent's Warrant in
whole or in part on a "cashless exercise basis" by receiving Shares equal to the
value (as determined below) of this Placement Agent's Warrant, or any part
hereof, upon surrender of the Placement Agent's Warrant at the principal office
of the Company together with notice of such election in which event the Company
shall issue to the Holder a number of Shares computed using the following
formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to the Holder;
Y = the number of Shares issuable upon exercise of
this Placement Agent's Warrant or, if only a
portion of this Placement Agent's Warrant is
being exercised, the portion of this Placement
Agent's Warrant being canceled (at the date of
such calculation);
2
A = the fair market value of one share of Common
Stock (at the date of such calculation);
B = the Exercise Price (as adjusted to the date of
such calculation).
For the purpose of any computation under this Subsection 2(b), the fair market
value per share of Common Stock at any date shall be deemed to be the closing
price of the Common Stock on the Trading Day immediately preceding the date as
of which the fair market value is being determined, provided that if the Common
Stock is not then listed on any market or exchange, then the fair market value
shall be the average of the closing bid prices for the Common Stock on the OTC
Bulletin Board, or, if such is not available, the Pink Sheets LLC (formerly the
National Quotation Bureau), or otherwise the average of the closing bid prices
for the Common Stock quoted by two market-makers of the Common Stock, or
otherwise such fair market value shall be determined in good faith by the
Corporation and the Holders. "TRADING Day" shall mean any day on which the
principal United States securities exchange or trading market on which the
Common Stock is listed or traded (the "PRINCIPAL MARKET") as reported by
Bloomberg Financial Markets ("BLOOMBERG'S") is open for trading. "Closing price"
shall mean the last sale price for the Common Stock on the Principal Market on
any particular Trading Day.
3. TRANSFER. (a) The Placement Agent's Warrant shall not be sold,
transferred, assigned, or hypothecated for a period of one (1) year commencing
on the Closing Date, except that it may be transferred to successors of the
Holder.
(b) Any transfer of this Placement Agent's Warrant shall be
effected by the Holder by (i) executing the form of assignment at the end hereof
and (ii) surrendering the Placement Agent's Warrant for cancellation at the
office or agency of the Company referred to in Section 2 hereof, accompanied by
(x) a written instrument of transfer in form reasonably satisfactory by the
Company, duly executed by the registered Holder thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney-in-fact, (y) a
certificate (signed by an officer of the Holder if the Holder is a corporation)
stating that each transferee is a permitted transferee under this Section 3; and
(z) an opinion of counsel, reasonably satisfactory in form and substance to the
Company, to the effect that this Placement Agent's Warrant or the Shares, as
applicable, may be sold or otherwise transferred without registration under the
Securities Act of 1933, as amended (the "ACT").
Upon any transfer of this Placement Agent's Warrant or any
part thereof in accordance with the first sentence of this Section 3(b), the
Company shall issue, in the name or names specified by the Holder (including the
Holder), a new Placement Agent's Warrant or Warrants of like tenor and
representing in the aggregate rights to purchase the same number of Shares as
are purchasable hereunder at such time.
(c) Any attempted transfer of this Placement Agent's Warrant
or any part thereof in violation of this Section 3 shall be null and void ab
initio.
4. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all Shares which may be purchased hereunder will, upon
issuance and delivery against payment therefor of the requisite purchase price,
be duly
3
and validly issued, fully paid and nonassessable. The Company further covenants
and agrees that, during the periods within which the Placement Agent's Warrant
may be exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of its Common Stock to provide for the exercise of
the Placement Agent's Warrant.
5. NO VOTING OR DIVIDEND RIGHTS. The Placement Agent's Warrant shall
not entitle the Holder to any voting rights or other rights, including without
limitation notice of meetings of other actions or receipt of dividends, as a
stockholder of the Company.
6. REGISTRATION RIGHTS. The Company covenants and agrees that, during
the periods within which the Placement Agent's Warrant may be exercised, the
Company will, upon the written request of the Placement Agent, use its
commercially reasonable efforts to amend or supplement the registration
statement filed on Form S-3 in connection with the offering of the Common Stock
that is subject to the Placement Agency Agreement in order to include any
additional information as, in the opinion of counsel to the Placement Agent, may
be required to permit a public offering of all or any of the Shares underlying
the Placement Agent's Warrant (the "REGISTRABLE SECURITIES"). In the event that,
during any such periods, the Registrable Securities may not be publicly offered
under such registration statement, the Holders of Placement Agent's Warrants
shall have the following registration rights:
(a) Except as provided in Section 6(b), the Company shall
advise the Holder or its permitted transferee, whether the Holder holds the
Placement Agent's Warrant or has exercised the Placement Agent's Warrant and
holds Shares, by written notice at least ten (10) business days prior to the
filing of any new registration statement thereto under the Act, covering any
equity securities of the Company, for its own account or for the account of
others, except for any registration statement filed on Form S-4 or S-8 (or other
comparable form), and will, during the four (4) year period from the First
Anniversary Date, upon the request of the Holder, include in any such new
registration statement (the "REGISTRATION STATEMENT") such information as may be
required to permit a public offering of, all or any of the Registrable
Securities.
(b) At any time during the four (4) year period beginning on
the First Anniversary Date, a 50% Holder (as defined below) may request that the
Company register under the Act any and all of the Registrable Securities held by
such 50% Holder, at the Company's expense (except as provided below). Except as
otherwise expressly provided herein, the holders of Registrable Securities may
exercise the demand registration rights provided in this Section 6(b) only on
one occasion. Upon the receipt of any such notice, the Company will promptly,
but no later than four weeks after receipt of such notice, file a post-effective
amendment to any existing registration statement or a new registration statement
pursuant to the Act (such post-effective amendment or new registration
statement, a "DEMAND REGISTRATION STATEMENT"), so that such designated
Registrable Securities may be publicly sold under the Act as promptly as
practicable thereafter and the Company shall, subject to Section 6(h), use its
commercially reasonable efforts to cause such Demand Registration Statement to
become effective (including the taking of such reasonable steps as are necessary
to obtain the removal of any stop order) within 120 days after the receipt of
such notice, provided, that such 50%
4
Holder shall furnish the Company with appropriate information in connection
therewith as the Company may reasonably request in writing. The 50% Holder may,
at its option, request the registration of any of Registrable Securities in a
registration statement made by the Company as contemplated by Section 6(a) or in
connection with a request made pursuant to this Section 6(b), in either case
prior to acquisition of the Shares issuable upon exercise of the Placement
Agent's Warrant. Subject to Section 6(h), within ten days after receiving any
such notice pursuant to this Section 6(b), the Company shall give notice to any
other Holders of the Placement Agent's Warrant, advising that the Company is
proceeding with such Demand Registration Statement and offering to include
therein, pursuant to Section 6(a), the Shares underlying that part of the
Placement Agent's Warrant held by the other Holders, provided that they shall
furnish the Company with such appropriate information (relating to the
intentions of such Holders) in connection therewith as the Company shall
reasonably request in writing.
(c) The term "50% HOLDER" as used in this Section 6 shall mean
the Holder(s) of at least 50% of the Placement Agent's Warrant and/or the Shares
underlying the Placement Agent's Warrant upon the initial issuance of the
Placement Agent's Warrant, as the same may have been adjusted pursuant to
Section 8.
(d) For so long as the Registrable Securities included in any
Registration Statement or Demand Registration Statement remain unsold, but in
any event not longer than 270 days after the date of effectiveness of such
Registration Statement or Demand Registration Statement (plus the number of
days, if any, that such Registration Statement or Demand Registration Statement
has been suspended pursuant to the provisions of Section 6(h)), the Company
shall, subject to Section 6(h), use its commercially reasonable efforts to (i)
maintain the effectiveness of such Registration Statement or Demand Registration
Statement; (ii) timely file all reports required under the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission (the "COMMISSION") thereunder; (iii) file such
post-effective amendments to the Registration Statement or Demand Registration
Statement as may be necessary so that the Registration Statement or Demand
Registration Statement does not contain any misstatement of a material fact or
omit to state any material fact required to make the statements therein not
misleading; (iv) supply prospectuses and such other documents as any Holder
whose Registrable Securities are included in such Registration Statement or
Demand Registration Statement may reasonably request in order to facilitate the
public sale or other disposition of such Registrable Securities; (v) register
and qualify any of the Registrable Securities for sale in such jurisdictions
within the United States (x) as any such Holder designates and (y) with respect
to which the Company obtained a qualification in connection with its initial
public offering, provided that the nothing in this clause (v) shall require the
Company to qualify to do business as a foreign corporation, submit to taxation
in any jurisdiction or to file a general consent to service of process in any
jurisdiction in which it is not otherwise so qualified or required to file such
a consent at the time; and (vi) do any and all other acts and things which may
be necessary or desirable to enable any such Holder to consummate the public
sale or other disposition of the Registrable Securities included in the
Registration Statement or Demand Registration Statement, all at no expense to
such Holder or the Placement Agent (except as provided in the immediately
following sentence). All costs and expenses in connection with any Registration
Statement or
5
Demand Registration Statement shall be borne by the Company, except that the
Holder(s) shall bear the fees of their own counsel and any other advisors
retained by them and any underwriting discounts or sales or other commissions
applicable to any of the Registrable Securities sold by them. In connection with
any Registration Statement or Demand Registration Statement, the Company shall
furnish indemnification in the manner provided in Section 7 hereof, and each
Holder whose Registrable Securities are included therein shall furnish
information and indemnification in the manner provided in Section 7. Subject to
Section 6(g), the Company shall have the right to include additional shares of
Common Stock to be issued and sold by the Company in any Demand Registration
Statement.
(e) Notwithstanding the foregoing set forth in this Section 6,
the Company shall not be required to include in any Registration Statement or
any Demand Registration Statement any Registrable Securities which in the
opinion of counsel to the Company (which opinion is reasonably acceptable to
counsel to the Placement Agent) would be saleable without restriction or
limitation under the holding period requirements or volume limitations under
Rule 144 (or its successor) if the Placement Agent's Warrant was exercised
pursuant to Section 2(b) herein.
(f) If any registration pursuant to this Section 6 is in the
form of an underwritten offering, the Company will select and obtain the
investment banker or investment bankers and manager or managers that will
administer the offering. The Company shall (together with each Holder whose
Registrable Securities are included in such offering) enter into an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting. If any Holder disapproves of the terms of the underwriting, it may
elect to withdraw therefrom by written notice to the Company and the managing
underwriter, and upon such withdrawal the original request of such Holder to
cause Registrable Securities to be registered shall not be deemed to constitute
a request for registration pursuant to Section 6(b), provided that the
withdrawal of one or more Holders shall not affect the determination of whether
any request made pursuant to Section 6(b) was made by a 50% Holder, and provided
further that if all Holders who have requested inclusion of their shares in a
Demand Registration pursuant to Section 6(b) withdraw their Registrable
Securities, then, notwithstanding anything to the contrary in this Placement
Agent's Warrant, any Holders who request registration of Registrable Securities
pursuant to Section 6(b) in the future shall be responsible for and pay all
expenses incurred by the Company in connection with such future registration.
(g) (i) In the event that any registration pursuant to Section
6(a) shall be in connection with an underwritten offering, and the managing
underwriter determines in good faith and advises in writing that the number of
Registrable Securities to be included in such offering, together with the number
of shares of Common Stock to be included in the Registration Statement by the
Company or other holders of the Company's securities with the right to request
inclusion in the Registration Statement, if any, exceeds the number of shares of
Common Stock that it is advisable to offer and sell at such time or would
interfere with the successful marketing of the Common Stock covered by the
Registration Statement, then priority for including shares of Common Stock in
the Registration Statement, up to the number advised by the managing
underwriter, shall be allocated first, to the Company and each other person who
has
6
requested inclusion of shares of Common Stock pursuant to a "demand"
registration right, pro rata in proportion to the respective number of shares of
Common Stock to be included by them, and second, to the extent of any remaining
capacity as advised by the managing underwriter, to the Holders requesting
registration of their Registrable Securities and each other person who has
requested inclusion of shares of Common Stock pursuant to a "piggyback"
registration right, pro rata in proportion to the respective number of shares of
Common Stock (including Registrable Securities) to be included by them. (ii) In
the event that any registration pursuant to Section 6(b) shall be in connection
with an underwritten offering, and the managing underwriter determines in good
faith and advises in writing that the number of Registrable Securities to be
included in such offering, together with the number of shares of Common Stock to
be included in the Demand Registration Statement by the Company or other holders
of the Company's securities with the right to request inclusion in the Demand
Registration Statement, if any, exceeds the number of shares of Common Stock
that it is advisable to offer and sell at such time or would interfere with the
successful marketing of the Common Stock covered by the Demand Registration
Statement, then priority for including shares of Common Stock in the Demand
Registration Statement, up to the number advised by the managing underwriter,
shall be allocated first, to the 50% Holder and each other person who has
requested inclusion of shares of Common Stock pursuant to a "demand"
registration right, pro rata in proportion to the respective number of shares of
Common Stock to be included by them, and second, to the extent of any remaining
capacity as advised by the managing underwriter, to the Company and each other
person (including any Holder who is not a 50% Holder and who requests inclusion
of Registrable Securities in the Demand Registration Statement pursuant to
Section 6(a)) who has requested inclusion of shares of Common Stock pursuant to
a "piggyback" registration right, pro rata in proportion to the respective
number of shares of Common Stock (including Registrable Securities) to be
included by them.
(h) In any registration initiated by the Company or by any
person having "demand" registration rights (other than a 50% Holder exercising
such rights pursuant to Section 6(b)) in which Holders request inclusion of
their Registrable Securities pursuant to Section 6(a), if at any time after
giving notice of its intention to register securities and prior to the effective
date of the Registration Statement the Company or such other person shall
determine for any reason not to register or to delay registration of it
securities, the Company may, at its election, give written notice of such
determination to each Holder that has requested inclusion of Registrable
Securities in the Registration Statement and (x) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration and (y) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities for the same period as the delay in registering such
other securities. If (i) at any time when a prospectus relating to Registrable
Securities is required to be delivered under the Act, the Company discovers
that, or any event occurs as a result of which, the prospectus (including any
supplement thereto) included in any Registration Statement or Demand
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (ii) the
7
Commission issues any stop order suspending the effectiveness of any
Registration Statement or proceedings are initiated or threatened for that
purpose, then the Company shall promptly deliver a written notice to such effect
to each Holder whose Registrable Securities are included in such Registration
Statement or Demand Registration Statement, and each such Holder shall
immediately upon receipt of such notice discontinue its disposition of
Registrable Securities pursuant to such Registration Statement or Demand
Registration Statement until its receipt of the copies of the supplemented or
amended prospectus contemplated by the immediately following sentence and, if so
directed by the Company, shall deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, then in such Holder's possession
of the prospectus or prospectus supplement relating to such Registrable
Securities current at the time of receipt of such notice. As promptly as
practicable following the event or discovery referred to in clause (i) of the
immediately preceding sentence, the Company shall prepare and furnish to the
Holders whose Registrable Securities are included in such Registration Statement
or Demand Registration Statement a reasonable number of copies of an amendment
or supplement of such prospectus so that, as thereafter delivered to purchasers
of such Registrable Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Notwithstanding
anything to the contrary in this Section 6 if the filing or maintenance of any
Registration Statement or Demand Registration Statement would require the
Company to make a disclosure that would, in the reasonable judgment of the
Company's Board of Directors, have a material adverse effect on the business,
operations, properties, prospects or financial condition of the Company or on
pending or imminent transactions, the Company shall have the right, exercisable
for a period not to exceed in the aggregate 60 consecutive calendar days in any
period of twelve consecutive months (the "Blackout Period") upon written notice
to the Holders, to delay the filing of any Registration Statement or Demand
Registration Statement or of any amendment thereto, to suspend its obligation to
maintain the effectiveness of any Registration Statement or Demand Registration
Statement and to suspend the use of any prospectus or prospectus supplement in
connection with any Registration Statement or Demand Registration Statement.
Each Holder agrees that upon receipt of any such notice from the Company, it
shall immediately cease all efforts to dispose of Registrable Securities
pursuant to such Registration Statement or Demand Registration Statement until
such time as the Company shall notify it of the end of such restrictions or, if
earlier, the expiration of the Blackout Period.
7. INDEMNIFICATION. (a) Whenever pursuant to Section 6 a Registration
Statement or Demand Registration Statement relating to any Shares issued upon
exercise of the Placement Agent's Warrant is filed under the Act, amended or
supplemented, the Company will indemnify and hold harmless each Holder of the
securities covered by such Registration Statement or Demand Registration
Statement, amendment or supplement (such Holder being hereinafter called the
"DISTRIBUTING HOLDER"), and each person, if any, who controls (within the
meaning of the Act) the Distributing Holder, and each underwriter (within the
meaning of the Act) of such securities and each person, if any, who controls
(within the meaning of the Act) any such underwriter, against any losses,
claims, damages or liabilities, joint or several, to which the Distributing
Holder,
8
any such controlling person or any such underwriter may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities, or
actions in respect thereof, arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any such
Registration Statement or Demand Registration Statement as declared effective or
any final prospectus constituting a part thereof or any amendment or supplement
thereto, (ii) the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading or (iii) any act or failure to act, or any alleged act or failure
to act, by any Distributing Holder in connection with, or relating in any manner
to, the Registration Statement or Demand Registration Statement or the offering
contemplated thereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above; (provided that the Company shall not be
liable in the case of any matter covered by this clause (iii) to the extent that
it is determined in a final judgment by a court of competent jurisdiction that
such loss, claim, damage, liability or action resulted directly from any such
act or failure to act undertaken or omitted to be taken by such Distributing
Holder through its gross negligence or willful misconduct) and will reimburse
the Distributing Holder or such controlling person or underwriter promptly upon
demand for any legal or other expense reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
Registration Statement or Demand Registration Statement, said preliminary
prospectus, said final prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished by such Distributing
Holder or any other Distributing Holder for use in the preparation thereof and
provided further, that the indemnity agreement provided in this Section 7(a)
with respect to any preliminary prospectus shall not inure to the benefit of any
Distributing Holder, controlling person of such Distributing Holder, underwriter
or controlling person of such underwriter from whom the person asserting any
losses, claims, charges, liabilities or litigation based upon any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state therein a material fact, received such preliminary prospectus,
if a copy of the prospectus in which such untrue statement or alleged untrue
statement or omission or alleged omission was corrected has not been sent or
given to such person within the time required by the Act and the rules and
regulations of the Commission thereunder. This indemnity agreement is not
exclusive and will be in addition to any liability, which the Company might
otherwise have and shall not limit any rights or remedies that may otherwise be
available at law or in equity to each Distributing Holder.
(b) The Distributing Holder will indemnify and hold harmless
the Company, each of its directors, each of its officers who have signed said
Registration Statement or Demand Registration Statement and such amendments and
supplements thereto, and each person, if any, who controls the Company (within
the meaning of the Act) against any losses, claims, damages or liabilities,
joint or several, to which the Company or any such director, officer or
controlling person may become subject, under
9
the Act or otherwise, insofar as such losses, claims, damages or liabilities, or
actions in respect thereof, arise out of or are based upon (i) any untrue or
alleged untrue statement of any material fact contained in said Registration
Statement or Demand Registration Statement, said preliminary prospectus, said
final prospectus, or said amendment or supplement, or (ii) are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in said Registration
Statement or Demand Registration Statement, said preliminary prospectus, said
final prospectus or said amendment or supplement in reliance upon and in
conformity with written information furnished by such Distributing Holder for
use in the preparation thereof; and will reimburse the Company or any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred.
This indemnity agreement is not exclusive and will be in addition to any
liability, which each Distributing Holder might otherwise have and shall not
limit any rights or remedies that may otherwise be available at law or in equity
to the Company.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 7, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party for
indemnity or contribution to the extent it is not prejudiced as a proximate
result of such failure. In case any such action is brought against any
indemnified party, and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it shall elect, jointly with any other
indemnifying party similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that a conflict may
arise between the positions of the indemnifying party and the indemnified party
in conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party's election so to
assume the defense of such action and approval by the indemnified party of
counsel (which approval shall not be unreasonably withheld or delayed), the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless: (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood,
10
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), representing the
indemnified parties who are parties to such action); (ii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action; or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party satisfactory to the indemnified
party at the expense of the indemnifying party, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
(d) The indemnifying party under this Section 7 shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld or delayed, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party against any loss,
claim, damage, liability or expense by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have
been sought hereunder by such indemnified party, unless such settlement,
compromise or consent includes: (i) an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action,
suit or proceeding; and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(e) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred, but in
all cases, no later than forty-five (45) days after invoice to the indemnifying
party.
(f) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or 7(b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect the
relative fault of such indemnifying party on the one hand and the Distributing
Holder on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the "control" stockholders on the one
hand or the Distributing Holder on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and each Distributing Holder agree that it would not be
just and equitable if contributions pursuant to this Section 7(f) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 7(f). The amount paid or
11
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 7(f) shall be deemed to include 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(f): (i) each Distributing Holder shall not be required to contribute
any amount in excess of the amount of proceeds received by such Holder from
sale(s) of such Holder's Shares pursuant to the Registration Statement or Demand
Registration Statement; and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. ADJUSTMENT OF EXERCISE PRICE. The Exercise Price in effect at the
time and the number and kind of securities purchasable upon the exercise of the
Warrant shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, (iii) combine or reclassify its outstanding shares
of Common Stock into a smaller number of shares, or (iv) enter into any
transaction whereby the outstanding shares of Common Stock of the Company are at
any time changed into or exchanged for a different number or kind of shares or
other security of the Company or of another corporation through reorganization,
merger, consolidation, liquidation or recapitalization, then appropriate
adjustments in the number of Shares (or other securities for which such Shares
have previously been exchanged or converted) subject to this Placement Agent's
Warrant shall be made and the Exercise Price in effect at the time of the record
date for such dividend or distribution or of the effective date of such
subdivision, combination, reclassification, reorganization, merger,
consolidation, liquidation or recapitalization shall be proportionately adjusted
so that the Holder of this Placement Agent's Warrant exercised after such date
shall be entitled to receive the aggregate number and kind of shares of Common
Stock which, if this Placement Agent's Warrant had been exercised by such Holder
immediately prior to such date, the Holder would have been entitled to receive
upon such dividend, distribution, subdivision, combination, reclassification,
reorganization, merger, consolidation, liquidation or recapitalization. For
example, if the Company declares a 2 for 1 stock distribution and the Exercise
Price hereof immediately prior to such event was $7.00 per Share and the number
of Shares issuable upon exercise of this Placement Agent's Warrant was 85,500,
the adjusted Exercise Price immediately after such event would be $3.50 per
Share and the adjusted number of Shares issuable upon exercise of this Placement
Agent's Warrant would be 171,000. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) Whenever the Exercise Price is adjusted, as herein
provided, the Company shall promptly cause a notice setting forth the adjusted
Exercise Price and adjusted number of Shares issuable upon exercise of the
Placement Agent's Warrant to be mailed to the Holder, at its address set forth
herein, and shall cause a certified copy thereof to be mailed to the Company's
transfer agent, if any. The Company may retain a firm of independent certified
public accountants selected by the Board of Directors (who
12
may be the regular accountants employed by the Company) to make any computation
required by this Section 8, and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment.
(c) In the event that at any time, as a result of an
adjustment made pursuant to the provisions of this Section 8, the Holder of the
Placement Agent's Warrant thereafter shall become entitled to receive any shares
of the Company other than Common Stock, thereafter the number of such other
shares so receivable upon exercise of the Placement Agent's Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in Sections 8(a) above.
9. GOVERNING LAW. This Agreement shall be governed by and in accordance
with the laws of the State of New York without regard to conflicts of laws
principles thereof.
10. BINDING EFFECT ON SUCCESSORS. In case of any consolidation of the
Company with, or merger of the Company into, any other entity, or in case of any
sale or conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the Company at
any time prior to the Expiration Date, then as a condition of such
consolidation, merger or sale or conveyance, the Company shall give written
notice of consolidation, merger, sale or conveyance to the Holder and, from and
after the effective date of such consolidation, merger, sale or conveyance the
Placement Agent's Warrant shall represent only the right to receive the
consideration that would have been issuable in respect of the Shares underlying
the Placement Agent's Warrant in such consolidation, merger, sale or conveyance
had the Placement Agent's Warrant been exercised in full immediately prior to
such effective time and the Holder shall have no further rights under this
Placement Agent's Warrant other than the right to receive such consideration.
11. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Placement Agent's Warrant. The Company shall, in lieu of
issuing any fractional share, pay the holder entitled to such fraction a sum in
cash equal to such fraction multiplied by the then effective Exercise Price.
12. LOST WARRANTS. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
13. HEADINGS. The headings of the several sections and paragraphs of
this Warrant are inserted for convenience only and do not constitute a part of
this Warrant.
14. MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
13
15. SURVIVAL. The rights and obligations of the Company, of the holder
of this Warrant and of the holder of Shares issued upon exercise of this Warrant
shall survive the exercise of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Placement Agent's
Warrant to be signed by its duly authorized officers under its corporate seal,
and this Placement Agent's Warrant to be dated July 28, 2003.
NORTHFIELD LABORATORIES INC.
By:
----------------------------------------
Name:
Title:
14
PURCHASE FORM
(To be signed only upon exercise of Warrant)
The undersigned, the holder of the foregoing Placement Agent's Warrant,
hereby irrevocably elects to exercise the purchase rights represented by such
Warrant for, and to purchase thereunder, _______________ Shares of Common Stock,
$0.01 par value per share (the "SHARES"), of NORTHFIELD LABORATORIES INC. and
either
[ ] tenders herewith payment of the aggregate Exercise Price in respect of
the Shares in full, in the amount of $_________; or
[ ] elects pursuant to Section 2(b) of such Warrant to convert such Warrant
into Common Stock on a cashless exercise basis; and
[ ] requests that the certificates for the Shares issued in the name(s) of,
and delivered to _________________, whose address(es) is (are):
Dated: __________________________
By:
---------------------------
---------------------------
---------------------------
Address
TRANSFER FORM
(To be signed only upon transfer of Placement Agent's Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto ______________________________ the right to purchase Shares
represented by the foregoing Placement Agent's Warrant to the extent of
__________ Shares, and appoints _________________________ attorney to transfer
such rights on the books of Northfield Laboratories Inc., with full power of
substitution in the premises. The undersigned believes that each transferee is a
permitted transferee under Section 3 of the Placement Agent's Warrant.
Dated: ____________________________
By:
-----------------------------
-----------------------------
-----------------------------
Address
In the presence of:
---------------------------
EXHIBIT C
FORM OF LOCK-UP AGREEMENT
JULY __, ▇▇▇▇
▇▇ ▇▇▇▇▇ Securities Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
RE: NORTHFIELD LABORATORIES INC. - OFFERING OF COMMON STOCK
Dear Sirs:
In order to induce ▇▇ ▇▇▇▇▇ Securities Corporation ("▇▇ ▇▇▇▇▇") to
enter in to a certain placement agent agreement with Northfield Laboratories
Inc., a Delaware corporation (the "COMPANY"), with respect to the offering of
shares of the Company's Common Stock, par value $.01 per share ("COMMON STOCK"),
the undersigned hereby agrees that for a period of 90 days following the date of
the final prospectus (the "FINAL PROSPECTUS") filed by the Company with the
Securities and Exchange Commission in connection with such offering, the
undersigned will not, without the prior written consent of ▇▇ ▇▇▇▇▇, directly or
indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of, any shares of Common Stock (including, without limitation,
Common Stock which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations promulgated under the Securities Act
of 1933 (the "SECURITIES ACT") and the Securities Exchange Act of 1934, as the
same may be amended or supplemented from time to time (such shares, the
"BENEFICIALLY OWNED SHARES")) or securities convertible into or exercisable or
exchangeable for Common Stock, (ii) enter into any swap, hedge or similar
agreement or arrangement that transfers in whole or in part, the economic risk
of ownership of the Beneficially Owned Shares or securities convertible into or
exercisable or exchangeable in Common Stock or (iii) engage in any short selling
of the Common Stock. Notwithstanding the foregoing, nothing contained herein
will be deemed to restrict or prohibit the transfer of shares of Common Stock,
Beneficially Owned Shares or securities convertible into or exercisable or
exchangeable for shares of Common Stock (i) as a bona fide gift, provided the
recipient thereof agrees in writing to be bound by the terms thereof or (ii) as
a distribution to partners, retired partners or the estates of such partners or
retired partners or shareholders of the undersigned, provided that the
distributees thereof agree in writing to be bound by the terms thereof.
Anything contained herein to the contrary notwithstanding, any person
to whom shares of Common Stock or Beneficially Owned Shares are transferred from
the undersigned from and after the date hereof shall be bound by the terms of
this Agreement.
In addition, the undersigned hereby confirms that the undersigned does
not have the right to request or demand registration pursuant to the Securities
Act of any shares of Common Stock that are registered in the name of the
undersigned or that are Beneficially Owned Shares. In order to enable the
aforesaid covenants to be enforced, the undersigned hereby consents to the
placing of legends and/or stop-transfer orders with the transfer agent of the
Common Stock with respect to any shares of Common Stock or Beneficially Owned
Shares.
SIGNATURE BLOCK FOR A NATURAL PERSON
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Name:
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Please Print
Date:
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SIGNATURE BLOCK FOR A CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY
Name of corporation, partnership, trust or other entity, including type of
entity and jurisdiction of organization:
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Please Print
By:
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Name:
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Please Print
Title:
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Please Print
Date:
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[Signature Page to Lock-Up Agreement]