EXHIBIT 1.1
[JESUP & LAMONT LOGO]
SECURITIES CORPORATION
650 FIFTH AVENUE
NEW YORK, NY 10019
NASD TELEPHONE: (212) 307-2660
SIPC FAX: (212) 757-7478
March 19, 2004
Mr. Alan M. Wright
Senior Vice President,
Finance & Administration and
Chief Financial Officer
Domino's Farms, Lobby L
24 Frank Lloyd Wright Drive
Ann Arbor, MI 48105
Dear Alan:
This letter (together with Exhibits A, B and C annexed hereto and made a
part hereof, all of which taken together constitute this "Engagement Agreement")
confirms our complete understanding with respect to the retention of Jesup &
Lamont Securities Corporation, a registered broker/dealer, ("Jesup" or "Jesup &
Lamont") as placement agent in connection with the placement to investors
arranged directly by Jesup (the "Placement") of certain securities (the
"Securities") of Aastrom Biosciences, Inc., (the "Company"). It is estimated
that the gross proceeds of the Placement shall be up to $15 million and less
than 19.99% of common shares outstanding as governed by Nasdaq rules.
Upon the terms and subject to the conditions set forth hereinafter, the
parties hereto agree as follows:
1. APPOINTMENT. The Company hereby retains Jesup and Jesup hereby
agrees to act as the Company's exclusive placement agent in connection with the
Placement, effective as of the date hereof (the "Effective Date").
2. SCOPE AND CERTAIN CONDITIONS OF SERVICES. The Company
expressly acknowledges and agrees the obligations of Jesup hereunder are on a
reasonable best efforts basis only and that the execution of the Agreement does
not constitute a commitment by Jesup to purchase the Securities and does not
ensure the successful placement of the Securities or any portion thereof, or the
success of securing any other financing on behalf of the Company.
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3. FEES AND COMMISSIONS. In consideration for the services
rendered by Jesup in connection with the Placement, the Company agrees to pay
Jesup the following fees and other compensation:
(a) a success fee (the "Success Fee") equal to 6% of the gross
proceeds of the Placement. The Success Fee is due and payable
to Jesup immediately upon the closing of the Placement and
shall be disbursed directly to Jesup simultaneously with the
delivery of the proceeds of the Placement to the Company.
(b) warrants of the Company (the "Placement Agent Warrants")
issuable to Jesup, or its designee simultaneously with the
closing of the Placement, equal to 7% of the aggregate number
of Securities sold in the Placement. The Placement Agent
Warrants shall entitle the holder thereof to purchase
securities of the Company at a purchase price of 1.25 times
the initial market price, and shall be exercisable for a
period of five years after the closing of the Placement.
However, after one year, the Company shall have the option to
force the exercise of the Warrants should the market price
reach the lower of [3.0 or that accepted by the investors]
times the initial market price for thirty consecutive trading
days The Placement Agent Warrants shall be satisfactory in
form and substance to Jesup and its counsel and shall contain
provisions for, among other things, [cashless exercise for
Agent only, if underlying shares are not registered and
effective] anti-dilution protection in the event of merger,
consolidation, reclassification, reorganization and other
similar events.
4. EXPENSES. The Company shall promptly reimburse Jesup & Lamont
for all out-of-pocket expenses, including, without limitation, fees and expenses
of its legal counsel, incurred in rendering services under this Engagement
Agreement promptly upon presentation by Jesup & Lamont of an itemized statement
of such expenses, up to a cap of $40,000.00.
5. TERM OF RETENTION. This Engagement Agreement shall terminate
at the close of business on the 20th full trading day following the execution of
this Engagement Agreement, unless (a) it is extended by agreement of the parties
hereto; or (b) it is terminated sooner by either party hereto providing not less
than 30 days prior written notice to the other party. The exclusivity period for
marketing shall be five trading days.
Notwithstanding anything herein to the contrary, the obligation to
pay the Fees and Compensation set forth in paragraph 3 and the Expenses as set
forth in paragraph 4 above, the provisions of paragraphs 2, 6, and 8 of Exhibit
A, all of the terms of Exhibit B and all of the terms of Exhibit C shall survive
any termination or expiration of this Engagement Agreement. Moreover, it is
expressly understood and agreed by the parties hereto that any equity of the
Company, secured or placed within twelve (12) months of the termination or
expiration of this
EXHIBIT 1.1
Engagement Agreement with any investors first identified and/or contacted by
Jesup & Lamont while the exclusivity period was in effect, and/or who
participated in this Placement, shall result in such fees and compensation being
due and payable by the Company to Jesup & Lamont as required by paragraph 3 and
4 of this Engagement Agreement.
6. DUE DILIGENCE. The role of Jesup & Lamont as the placement
agent in connection with the Placement is subject to and contingent upon the
satisfactory completion of a due diligence review of, among other things, the
Company's assets, business, future prospects and current and projected financial
condition. If at the completion of its due diligence review Jesup is not
satisfied with the results of its due diligence, this Engagement Agreement shall
be immediately terminated by Jesup
8. PUBLIC ANNOUNCEMENTS. Prior to any press release or other
public disclosure relating to services hereunder, the Company and Jesup & Lamont
shall confer and reach agreement upon the contents of any such disclosure.
9. OFFERS AND SALES TO INSTITUTIONAL AND ACCREDITED INVESTORS.
Offers and sales of the Securities in connection with the Placement shall be
made only to "qualified institutional buyers", as such term is defined in Rule
l44A under the Securities Act of 1933, as amended (the "Act") and "accredited
investors", and as such term is defined in Rule 501(a) of Regulation D
promulgated under the Act.
10. NO GENERAL SOLICITATION. Any offers made in connection with
the Placement of the Securities will be made only to prospective purchasers on
an individual basis and no general solicitation or general solicitation or
general advertising in any form will be used to place the Securities.
11. MISCELLANEOUS. As more specifically set forth on Exhibit C,
this Engagement Agreement shall be governed in accordance with the laws of the
State of New York, without giving effect to conflicts of laws generally.
This Engagement Agreement constitutes the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and there is no agreements or understandings with respect hereto which are not
contained in this Engagement Agreement. This Engagement Agreement may be
modified only in writing signed by the party to be charged.
EXHIBIT 1.1
If the foregoing correctly sets forth our understanding with respect
to the subject matter hereto, please confirm the same by executing and returning
to us the duplicate copy of this Engagement Agreement.
Very truly yours,
Stephen J. DeGroat
Chairman
Agreed and Accepted
as of this 19th day of March, 2004
AASTROM BIOSCIENCES, INC.
By: s/ A M wright
Name: Alan M. Wright
Title: Senior V.P. Administrative. & Financial Operations, CFO
EXHIBIT 1.1
EXHIBIT A
STANDARD TERMS AND CONDITIONS
1. The Company shall promptly provide Jesup & Lamont with all relevant
information about the Company (to the extent available to the Company)
that shall be reasonably requested or required by Jesup & Lamont which
information shall be true, accurate and correct in all material respects,
to the best of the company's knowledge, at the time furnished.
2. Jesup & Lamont shall keep all information obtained from the Company
strictly confidential except: (a) for information which is otherwise
publicly available, or previously known to Jesup & Lamont or was obtained
by Jesup & Lamont independently of the Company and without breach of Jesup
& Lamont's agreement with the Company; (b) Jesup & Lamont may disclose
such information to its affiliates, shareholders, officers, directors,
representatives, agents, employees and attorneys, and to financial
institutions, but shall ensure, to the best of its ability, that all such
persons will keep such information strictly confidential; (c) pursuant to
any order of a court of competent jurisdiction or other governmental body;
and (d) upon prior written consent of the Company, which consent shall not
be unreasonably withheld or delayed. In the event that Jesup shall be
required to disclose confidential information in accordance with section
2(c) of this Exhibit A, Jesup & Lamont will give written notice to the
Company of such order within forty-eight (48) hours of receipt of such
order.
3. The Company recognizes that in order for Jesup & Lamont to perform
properly its obligations in a professional manner, it is necessary that
Jesup & Lamont be informed of any changes in operations and the Company
agrees to keep Jesup informed, to the extent practicable, and further
agrees to allow Jesup to participate in meetings and discussions between
the Company, on the one hand, and investors and potential investors
introduced relating to the matters covered by the terms of Jesup &
Lamont's engagement, on the other hand.
4. The Company acknowledges and agrees that any report or opinion, oral or
written, delivered to it by Jesup & Lamont is prepared solely for its
confidential use and shall not be reproduced, summarized, or referred to
in any public document or given or otherwise divulged to any other person,
other than its officers and directors, its employees on a need to know
basis, and its attorneys, without Jesup & Lamont's prior written consent,
except as may be required by applicable law or regulation, which consent
shall not be unreasonably withheld or delayed.
5. No fee payable by the Company to any other financial advisor or lender
shall reduce or otherwise affect any fee payable by the Company to Jesup &
Lamont.
EXHIBIT 1.1
6. The Company represents and warrants that: (a) it has full right, power and
authority to enter into this Agreement and to perform all of its
obligations hereunder; (b) the Agreement has been duly authorized and
executed and constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms; and (c) the execution and
delivery of the Agreement and the consummation of the transactions
contemplated hereby does not conflict with or result in a breach of (i)
the Company's certificate of incorporation or by-laws or (ii) any
agreement to which the Company is a party or by which any of their
property or assets is bound.
7. Nothing contained in the Agreement shall be construed to place Jesup &
Lamont and the Company in the relationship of partners or joint venturers.
Neither Jesup & Lamont nor the Company shall represent itself as the agent
or legal representative of the other for any purpose whatsoever nor shall
either have the power to obligate or bind the other in any manner
whatsoever. Jesup & Lamont in performing its services hereunder, shall at
all times be an independent contractor.
8. The Agreement has been and is made solely for the benefit of Jesup &
Lamont, the Company and each of the persons, agents, employees, officers,
directors and controlling persons referred to in Exhibit B and their
respective heirs, executors, personal representatives, successors and
assigns, and nothing contained in the Agreement shall confer any rights
upon, nor shall this Agreement be construed to create any rights in, any
person who is not a party to such Agreement, other than as set forth in
this paragraph.
9. The rights and obligations of either party under this Agreement may not be
assigned without the prior written consent of the other party hereto and
any other purported assignment shall be null and void without any force or
effect. Any waiver by any party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
provisions of this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not
be construed or considered to be a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other
term of this Agreement. Any waiver of a provision of this Agreement must
be in writing executed by all of the parties hereto.
10. This Agreement and the agreements to be executed in connection herewith
express the entire understanding of the parties and supersedes all prior
and contemporaneous agreements and undertakings of the parties with
respect to the subject matter of this Agreement.
11. All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and shall be mailed, hand delivered,
or faxed and confirmed by letter sent certified or registered mail or sent
by overnight delivery service to the party whom it is addressed at the
following address or such other address as such party may advise the other
in a writing delivered in accordance herewith.
EXHIBIT 1.1
To the Company:
Aastrom Biosciences, Inc.
Domino's Farms, Lobby L
24 Frank Lloyd Wright Drive Telephone: (734) 930-5555
Ann Arbor, MI 48105 Facsimile: (734) 930-5546
To Jesup & Lamont:
Jesup & Lamont Securities Corporation
650 Fifth Avenue
Third Floor Telephone: 212-307-2660
New York, New York 10019 Facsimile: 212-307-2684
EXHIBIT 1.1
EXHIBIT B
INDEMNIFICATION
Recognizing that transactions of the type contemplated in this
engagement sometimes result in litigation and that the role of Jesup & Lamont is
advisory, the Company agrees to indemnify and hold harmless Jesup & Lamont, its
affiliates and their respective officers, directors, employees, agents and
controlling persons within the meaning of Section 15 of the Securities Act of
1933, as amended (the "Act") or Section 20(a) of the Securities Exchange Act of
1934, as amended (an "Indemnified Party" or collectively, the "Indemnified
Parties"), from and against any and all loss, charge, claim, damage, expense and
liability whatsoever, including, but not limited to, all attorneys fees and
expenses (hereinafter a "Claim" or "Claims"), related to or arising in any
manner out of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact made by the Company relating to any
capital raising assignment performed by Jesup & Lamont on behalf of the Company
or any omission or alleged omission of the Company to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (ii) any transaction, proposal or any other matter (items (i) and
(ii) being hereinafter referred to as a "Matter" or "Matters") contemplated by
the engagement of Jesup & Lamont hereunder, and will promptly reimburse the
Indemnified Parties for all expenses (including reasonable fees and expenses of
legal counsel) as incurred in connection with the investigation of, preparation
for or defense of any pending or threatened Claim related to or arising in any
manner out of any Matter contemplated by the engagement of Jesup & Lamont
hereunder, or any action or proceeding arising therefrom (collectively,
"Proceedings"), whether or not such Indemnified party is a formal party to any
such Proceeding. Notwithstanding the foregoing, the Company shall not be liable
in respect of any Claims that a court of competent jurisdiction has judicially
determined by final judgment (and the time to appeal has expired or the last
right of appeal has been denied) resulted solely from the gross negligence or
willful misconduct of an Indemnified Party. The Company further agrees that it
will not, without the prior written consent of Jesup & Lamont settle compromise
or consent to the entry of any judgment in any pending or threatened proceeding
in respect of which indemnification may be sought hereunder (whether or not
Jesup & Lamont or any Indemnified Party is an actual or potential party to such
Proceeding), unless such settlement, compromise or consent includes an
unconditional release of Jesup & Lamont and each other Indemnified Party
hereunder from all liability arising out of such proceeding.
In order to provide for just and equitable contribution in any case in
which (i) an Indemnified Party is entitled to indemnification pursuant to this
Engagement Agreement but it is judicially determined by the entry of a final
judgment decree by a court of competent jurisdiction and the time to appeal has
expired or the last right of appeal has been denied) that such indemnification
may not be enforced in such case, or (ii) contribution may be required by the
Company in circumstances for which an Indemnified Party is otherwise entitled to
indemnification under the Agreement, then, and in each such case, the Company
shall contribute
EXHIBIT 1.1
to the aggregate losses, Claims, damages and/or liabilities in an amount equal
to the amount for which indemnification was held unavailable.
The Company further agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or
otherwise) to the Company for or in connection with Jesup & Lamont's
engagement hereunder except for Claims that a court of competent
jurisdiction shall have determined by final judgment (and the time
to appeal has expired or the last right of appeal has been denied)
resulted solely from the gross negligence or willful misconduct of
such Indemnified Party. The indemnity, reimbursement and
contribution obligations of the Company set forth herein shall be in
addition to any liability which the Company may otherwise have and
shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company or an
Indemnified Party.
The indemnity, reimbursement and contribution provisions set forth
herein shall remain operative and in full force and effect regardless of (i) any
withdrawal, termination or consummation of or failure to initiate or consummate
any Matter referred to herein, (ii) any investigation made by or on behalf of
any party hereto or any person controlling (within the meaning of Section 15 of
the Securities act of 1933 as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended) any party hereto, (iii) any termination or the
completion or expiration of this Engagement Agreement with Jesup & Lamont and
(iv) whether or not Jesup & Lamont shall, or shall not be called upon to, render
any formal or informal advice in the course of such engagement.
Unless otherwise defined, capitalized terms used herein shall have
the meaning ascribed to them in the Engagement Agreement.
EXHIBIT 1.1
EXHIBIT C
JURISDICTION
Each of the Company and Jesup & Lamont hereby irrevocably: (a) submits to
the jurisdiction of any court of the State of New York or any federal court
sitting in the State of New York for the purposes of any suit, action or other
proceeding arising out of the Agreement between the Company and Jesup & Lamont
which is brought by or against either party; (b) agrees that all claims in
respect of any suit, action or proceeding may be heard and determined in any
such court; and (c) to the extent that The Company or Jesup & Lamont has
acquired, or hereafter may acquire, any immunity from jurisdiction of any such
court or from any legal process therein, each of them hereby waives, to the
fullest extent permitted by law, such immunity.
Each of Jesup & Lamont and the Company hereby waives, and the Company
agrees not to assert in any such suit, action or proceeding, in each case, to
the fullest extent permitted by applicable law, any claim that: (a) the Company
is not personally subject to the jurisdiction of any such court; (b) it is
immune from any legal process (whether through service or notice, attachment
prior to judgement, attachment in the aid of execution, execution or otherwise)
with respect to it or its property; (c) any such suit, action or proceeding is
brought in an inconvenient forum; (d) the venue of any such suit, action or
proceeding is improper; or (e) this Agreement may not be enforced in or by any
such court.
Nothing in these provisions shall effect any party's right to serve
process in any manner permitted by law or limit its rights to bring a proceeding
in the competent courts of any jurisdiction or jurisdictions or to enforce in
any lawful manner a judgement obtained in one jurisdiction in any other
jurisdiction.