Exhibit 5.1
828,571 SHARES
HALOZYME THERAPEUTICS, INC.
SHARES OF COMMON STOCK
($0.001 PAR VALUE)
PLACEMENT AGENT AGREEMENT
December 13, 2005
SG COWEN & CO., LLC
RODMAN & RENSHAW, LLC
ROTH CAPITAL PARTNERS, LLC
c/o SG Cowen & Co., LLC
1221 Avenue of the Americas
New York, New York 10020
Dear Sirs:
Halozyme Therapeutics, Inc., a Nevada corporation (the "COMPANY"),
proposes to sell to the Purchasers, pursuant to the terms of this Placement
Agent Agreement (this "AGREEMENT") and the 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 828,571 shares of Common Stock, $0.001 par value
(the "COMMON STOCK"), of the Company. The aggregate of 828,571 shares so
proposed to be sold is hereinafter referred to as the "STOCK." The Company
hereby confirms its agreement with the placement agents named on Schedule I
attached hereto (the "PLACEMENT AGENTS"), as set forth below. SG Cowen & Co.,
LLC is acting as the representative of the Placement Agents and in such capacity
is hereinafter referred to as the "REPRESENTATIVE." Certain terms used herein
are defined in Section 14 hereof.
1. AGREEMENT TO ACT AS PLACEMENT AGENTS; PLACEMENT OF SECURITIES. On the basis
of the representations, warranties and agreements of the Company and its
Subsidiary (as defined below) herein contained, and subject to all the terms and
conditions of this Agreement:
(a) The Company hereby authorizes the Placement Agents to act as its
exclusive agents 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"). Until the Closing Date (as defined in Section 3
hereof), the Company shall not, without the prior consent of the
Representative, solicit or accept offers to purchase the Stock otherwise
than through the Placement Agents.
(b) The Placement Agents agree, as agents of the Company, to use their
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 Agents 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 Agents
and accepted by the Company, but the Placement Agents 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 Agents be obligated to purchase any Stock
for its own account and, in soliciting purchases of Stock, the Placement
Agents shall act solely as the Company's agent and not as principals.
Notwithstanding the foregoing and except as otherwise provided in Section
1(c), it is understood and agreed that the Placement Agents (or their
affiliates) may, solely at their discretion and without any obligation to
do so, purchase Stock as principals.
(c) Subject to the provisions of this Section 1, offers for the purchase
of Stock may be solicited by the Placement Agents as agents for the
Company at such times and in such amounts as the Placement Agents deem
advisable. Each 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. Each Placement Agent shall have the right, in its discretion
reasonably exercised, without 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 by each of the parties thereto.
(e) As compensation for services rendered, on the Closing Date the Company
shall pay to the Placement Agents by wire transfer of immediately
available funds to an account or accounts designated by the
Representative, 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.
(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 Agents
harmless against any loss, claim or damage arising from or as a result of
such default by the Company.
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ITS SUBSIDIARY. The Company
and its Subsidiary represent and warrant to, and agrees with, the several
Placement Agents 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. 333-125731),
which became effective as of June 17, 2005, 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 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 the placement of the Stock and the plan
of distribution thereof and has advised the Representative of all further
information (financial and other) with respect to the Company required 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 the
"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, including all exhibits thereto (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
which is "contained," "included," "described," "set forth" 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. For purposes of this Agreement, "FREE
WRITING PROSPECTUS" has the meaning set forth in Rule 405 under the
Securities Act and the "TIME OF SALE PROSPECTUS" means the
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preliminary prospectus, if any, together with the free writing
prospectuses, if any, used in connection with the Offering, including any
documents, incorporated by reference therein.
(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, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, each 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, the Time of Sale
Prospectus, if any, and the Prospectus Supplement, as amended or
supplemented, did not and will not contain as of the 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, the Time of Sale
Prospectus, if any, 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 Time of Sale Prospectus, if any, or 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 any Placement Agent specifically for use in the
Registration Statement, the Time of Sale Prospectus, if any, or the
Prospectus Supplement, which information the parties hereto agree is
limited to the Placement Agents' Information as defined in Section 16. No
post-effective amendment to the Registration Statement reflecting any
facts or events arising after the date thereof 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 (x) have not been filed as
required pursuant to the Securities Act or (y) will not be filed within
the requisite time period. There are no contracts or other documents
required to be described in the Base Prospectus, the Time of Sale
Prospectus, if any, or Prospectus Supplement, or to be filed as exhibits
or
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schedules to the Registration Statement, which have not been described or
filed as required.
(c) The Company is eligible to use free writing prospectuses in connection
with the Offering pursuant to Rules 164 and 433 under the Securities Act.
Any free writing prospectus that the Company is required to file pursuant
to Rule 433(d) under the Securities Act has been, or will be, filed with
the Commission in accordance with the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder.
Each free writing prospectus that the Company has filed, or is required to
file, pursuant to Rule 433(d) under the Securities Act or that was
prepared by or behalf of or used by the Company complies or will comply in
all material respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder. The Company
will not, without the Representative's consent, prepare, use or refer to,
any free writing prospectus.
(d) The Company has delivered, or will as promptly as practicable deliver,
to the Representative 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, the Time of Sale Prospectus, if any,
and the Prospectus Supplement, as amended or supplemented, in such
quantities and at such places as the Representative reasonably requests.
Neither the Company nor any of its directors and officers has distributed
and none of them will distribute, prior to the completion of the
distribution of Stock, any offering material in connection with the
offering and sale of the Stock other than the Base Prospectus, the Time of
Sale Prospectus, if any, the Prospectus Supplement, the Registration
Statement, copies of the documents incorporated by reference therein and
any other materials permitted by the Securities Act.
(e) Each of the Company and Halozyme, Inc., a wholly-owned subsidiary of
the Company (the "SUBSIDIARY"), 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 Subsidiary taken as a whole (a "MATERIAL ADVERSE
EFFECT").
(f) The Stock to be issued and sold by the Company hereunder and under the
Subscription Agreements 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
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similar rights. The Stock conforms to the description thereof contained in
the Base Prospectus, the Prospectus Supplement and the Time of Sale
Prospectus, if any.
(g) The Company has an authorized capitalization as set forth in the Base
Prospectus, the Prospectus Supplement and the Time of Sale Prospectus, if
any, all of the issued and outstanding shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable, have been issued in compliance with federal and state
securities laws, and conform to the description thereof contained in the
Base Prospectus, the Prospectus Supplement and the Time of Sale
Prospectus, if any. None of the outstanding shares of Common Stock was
issued in violation of any preemptive rights, rights of first refusal or
other similar rights to subscribe for or purchase securities of the
Company. There are no authorized or outstanding options, warrants,
preemptive rights, rights of first refusal or other rights to purchase, or
equity or debt securities convertible into or exchangeable or exercisable
for, any capital stock of the Company that have been granted by the
Company other than: (i) those accurately described in the Base Prospectus
or ii) those issued pursuant to existing stock option plans. The
description of the Company's stock option, stock bonus and other stock
plans or arrangements, and the options or other rights granted thereunder,
as described in the Base Prospectus, completely, accurately and fairly
present the information required to be shown with respect to such plans,
arrangements, options and rights.
(h) All the outstanding shares of capital stock of the Subsidiary have
been duly authorized and validly issued, are fully paid and non-assessable
and, except to the extent set forth in the Base Prospectus, are owned
directly by the Company, free and clear of any claim, lien, encumbrance,
security interest, defect or restriction upon voting or transfer or any
other claim of any kind ("LIENS").
(i) The Company has the full right, power and authority to enter into this
Agreement and each of the Subscription Agreements and to perform and to
discharge its obligations hereunder and thereunder; and each of this
Agreement and each of the Subscription Agreements 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, except as 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 Company herein may be
legally unenforceable.
(j) The execution, delivery and performance of this Agreement and the
Subscription Agreements 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
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agreement or instrument to which the Company or its Subsidiary is a party
or by which the Company or its Subsidiary is bound or to which any of the
property or assets of the Company or its Subsidiary is subject, except any
such conflicts, breaches or violations which would not reasonably be
expected to have a Material Adverse Effect, nor will such actions result
in any violation of the provisions of the charter or bylaws of the Company
or its Subsidiary 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 its Subsidiary 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 or 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, except as redacted pursuant to confidential
treatment requests. Other than as described in the Base Prospectus, no
such franchise, contract, lease, instrument or other document has been
suspended or terminated for convenience or default by the Company or its
Subsidiary or any of the other parties thereto, neither the Company or its
Subsidiary has sent or received any communication regarding intent not to
renew any such franchise, contract, lease, instrument or other document,
and neither the Company nor its Subsidiary has received notice or any
other knowledge of any such pending or threatened suspension, termination
or non-renewal, except for such pending or threatened suspensions,
terminations or non-renewals that would not reasonably be expected to,
singularly or in the aggregate, have a Material Adverse Effect.
(l) All existing minute books of the Company and its Subsidiary, including
all existing records of all meetings and actions of the board of directors
(including, Audit, Compensation, Nominating and Governance and other board
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 Agents and counsel for the Placement Agents.
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 or its Subsidiary that are not properly approved and/or recorded
in the Corporate Records.
(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
Subscription Agreements, except such as have been obtained or made (or
will be timely 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 by the
Company in the manner contemplated herein and in the Base Prospectus and
the Prospectus Supplement.
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(n) Except as described in the Base Prospectus, (i) no person has the
right, contractual or otherwise, to cause the Company to issue or sell to
it any shares of Common Stock or shares of any other capital stock or
other equity interests of the Company, (ii) no person has any preemptive
rights, resale rights, rights of first refusal or other rights to purchase
from the Company any shares of Common Stock or shares of any other capital
stock or other securities of the Company, and (iii) except as provided
herein, no person has the right to act as an underwriter, placement agent
or financial advisor to the Company in connection with and as a result of
the offer and sale of the Stock, in the case of each of the foregoing
clauses (i), (ii) and (iii), whether as a result of the filing or
effectiveness of the Registration Statement or the sale of the Stock as
contemplated thereby or otherwise; no person has the right, contractual or
otherwise, to cause the Company to register under the Securities Act any
shares of Common Stock or shares of any other capital stock or other
securities of the Company, or to include any such shares or interests in
the Registration Statement or the offering contemplated thereby, whether
as a result of the filing or effectiveness of the Registration Statement
or the sale of the Stock as contemplated thereby or otherwise, except for
persons and entities who have had their shares already registered under
the Securities Act, who have expressly waived such right or who have been
given timely and 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 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 date hereof.
(o) The financial statements, together with the related notes and
schedules, of the Company included in the Base Prospectus, the Prospectus
Supplement or the Registration Statement, the Time of Sale Prospectus, if
any, or incorporated by reference therein, as the case may be, present
fairly the financial condition, results of operations and cash flows of
the Company and its consolidated subsidiary as of the dates and for the
periods indicated, comply in all material respects with the Securities Act
and the Rules and Regulations thereunder, and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved; provided, however, that
statements that are unaudited are subject to year-end adjustments and do
not contain notes required under generally accepted accounting principles.
No other financial statements or supporting schedules or exhibits are
required by the Securities Act or the Rules and Regulations thereunder to
be included in the Base Prospectus, the Prospectus Supplement or the
Registration Statement, the Time of Sale Prospectus, if any, or
incorporated by reference therein, as the case may be.
(p) Except as set forth in the Base Prospectus, there is no legal or
governmental proceeding pending to which the Company or its Subsidiary is
a party or of which any property or assets of the Company or its
Subsidiary is the subject which is required to be described in the Base
Prospectus, and is not described therein, or which, singularly or in the
aggregate, if determined adversely to the Company or its Subsidiary, might
have a Material Adverse
8
Effect or would prevent or adversely affect the ability of the Company or
its Subsidiary to perform its obligations under this Agreement; 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 its Subsidiary have good and marketable title to all
property (real and personal) described in the Registration Statement, the
Base Prospectus and the Prospectus Supplement and the Time of Sale
Prospectus, if any as being owned by the Company or its Subsidiary, free
and clear of any Liens, except for those Liens that do not materially
interfere with the use made or proposed to be made of such property by the
Company or its Subsidiary or that would not have a Material Adverse
Effect; all the property described in the Registration Statement, the Base
Prospectus the Time of Sale Prospectus, if any, and the Prospectus
Supplement as being held under lease by the Company or its Subsidiary is
held thereby under valid, subsisting and enforceable leases except where
the failure to be valid, subsisting or enforceable would not have a
Material Adverse Effect.
(r) Neither the Company nor its Subsidiary is (i) in violation of any
provision of its charter or bylaws, (ii) 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) 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 or its Subsidiary, or any of their
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 or its
Subsidiary exists or, to the Company's knowledge, is threatened or
imminent, which might be expected to have a Material Adverse Effect.
Neither the Company nor its Subsidiary is aware that any key employee of
the Company or its Subsidiary or significant group of employees of the
Company or its
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Subsidiary plans to terminate employment with the Company or its
Subsidiary.
(u) Each of the Company and its Subsidiary has fulfilled its obligations,
if any, under the minimum funding standards of Section 302 of the United
States 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
Subsidiary 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. Each of the Company and its Subsidiary 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 Company or its Subsidiary 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 its Subsidiary maintain insurance in such amounts and
covering such risks as is adequate for the conduct of its business and the
value of its properties and as is customary for companies engaged in
similar businesses in similar industries; all such insurance is fully in
force on the date hereof and will be fully in force on the Closing Date.
(w) Each of the Company and its Subsidiary has made all filings,
applications and submissions required by, and possesses all approvals,
licenses, certificates, certifications, clearances, 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 business
as presently conducted (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 each of the Company and its Subsidiary 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 each of the
Company and its Subsidiary has not received any notice of proceedings
relating to the limitation, revocation, cancellation, suspension,
modification or non-renewal of any such Permit which, singularly 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
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transactions in the ordinary course of business, except as set forth in or
contemplated by the Base Prospectus.
(x) Cacciamatta Accountancy Corp., 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, as the case may be, are independent
registered public accountants with respect to the Company within the
meaning of the Securities Act and the Rules and Regulations.
(y) Each of the Company and its Subsidiary 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 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.
(z) The principal executive officer and principal financial officer of the
Company have made all certifications required by the Sarbanes-Oxley Act of
2002 and the rules and regulations promulgated in connection therewith
(the "SARBANES-OXLEY ACT"), and the statements contained in any such
certification are complete and correct. The Company maintains "disclosure
controls and procedures" (as defined in Rule 13a-14(c) under the Exchange
Act), and such controls and procedures are designed (i) to ensure that
information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission's rules
and forms and (ii) to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act
is accumulated and communicated to the Company's management, including its
principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure. The
Company does not have any material weaknesses in internal controls, and to
the Company's knowledge there has been no fraud, whether or not material,
that involves management or other employees of the Company or its
Subsidiary who have a significant role in the Company's internal controls.
The Company is otherwise in compliance in all respects with all applicable
effective provisions of the Sarbanes-Oxley Act and the rules and
regulations promulgated by the Commission (and intends to comply with all
applicable provisions that are not yet effective upon effectiveness).
(aa) Each of the Company and its Subsidiary 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
11
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. Except as described in
the Base Prospectus, since the end of the Company's most recent fiscal
year, there has been no change in the Company's or its Subsidiary's
internal control over financial reporting that has materially affected, or
is reasonably likely to materially affect, the Company's internal control
over financial reporting.
(bb) Each of the Company and its Subsidiary (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 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 (exclusive of any
supplement thereto). Neither the Company nor its Subsidiary has been named
as a "POTENTIALLY RESPONSIBLE PARTY" under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
(cc) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of medical wastes, toxic
wastes, hazardous wastes or hazardous substances by the Company or its
Subsidiary (or, to the Company's knowledge, any of the Company's or its
Subsidiary's predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Company or its
Subsidiary in violation of any applicable Environmental Law which would
require remedial action under any applicable Environmental Law, except for
any violation or remedial action which would not cause, singularly or in
the aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such
property or of any medical wastes, toxic wastes, hazardous wastes or
hazardous substances due to or caused by the Company or its Subsidiary or
with respect to which the Company or its Subsidiary had knowledge, except
for any such spill, discharge, leak, emission, injection, escapes,
dumpings or releases which would not cause or would not be reasonably
likely to cause, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings or releases, a
Material Adverse Effect; and the terms "hazardous substances," "toxic
wastes," "hazardous wastes" and "medical wastes" shall have the meanings
specified in any applicable Environmental Laws.
12
(dd) In the ordinary course of its business, the Company and its
Subsidiary periodically reviews the effect of Environmental Laws on the
business, operations and properties of each of the Company and its
Subsidiary 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
and its Subsidiary has reasonably concluded that such associated costs and
liabilities would not, singularly 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.
(ee) Each of the Company and its Subsidiary owns, possesses, licenses or
has other rights to use all foreign and domestic patents, patent
applications, trade and service marks, trade and service mark
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, the Prospectus Supplement and the Time of
Sale Prospectus, if any, to be conducted. Except as set forth in the Base
Prospectus, (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 each of the
Company's and the Subsidiary's rights in or to any such Intellectual
Property, and neither the Company nor its Subsidiary 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 or its Subsidiary infringe or otherwise violate
any patent, trademark, copyright, trade secret or other proprietary rights
of others, and neither the Company nor its Subsidiary 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 patent application
that is part of the Intellectual Property; (g) there is no pending or, to
the best of the Company's knowledge, threatened action, suit, proceeding
or claim by others claiming the ownership of and interest in the
Intellectual Property; and (h) to the best of the Company's knowledge, the
Company and its Subsidiary have taken all steps necessary to perfect its
ownership of and interest in the Intellectual Property.
(ff) The clinical, pre-clinical and other studies and tests conducted by
or on behalf of or sponsored by the Company or its Subsidiary that are
described or referred to in the Base Prospectus or Prospectus Supplement
were and, if still pending, are being conducted in accordance with all
statutes, laws, rules and
13
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 that are described or referred to in the Base Prospectus or
Prospectus Supplement are accurate and complete in all material respects
and fairly present the published data derived from such studies and tests,
and each of the Company and its Subsidiary has no knowledge of other
studies or tests the results of which are materially inconsistent with or
otherwise call into question the results described or referred to in the
Base Prospectus, the Time of Sale Prospectus, if any, or the Prospectus
Supplement. Neither the Company nor its Subsidiary has 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 modification of such studies or tests. For the
avoidance of doubt, the Company makes no representation or warranty that
the results of any studies, tests or preclinical or clinical trials
conducted by or on behalf of the Company will be sufficient to obtain
governmental approval from the FDA or any foreign, state or local
governmental body exercising comparable authority.
(gg) Each of the Company and its Subsidiary has established and
administers a compliance program (including a written compliance policy)
applicable to the Company and its Subsidiary, to assist the Company, its
Subsidiary and their directors, officers and employees of the Company and
its Subsidiary 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 its Subsidiary 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
filing, declaration, listing, registration, report or submission; all such
filings, declarations, listings, registrations, reports or submissions
were in compliance with applicable laws when filed and 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 or its Subsidiary on the one hand and the directors, officers,
stockholders, customers or suppliers of the Company or its Subsidiary on
the other hand which is required to be described in the Base Prospectus or
the Prospectus Supplement, and which is not so described.
(jj) To the Company's knowledge, neither the Company nor any other person
associated with or acting on behalf of the Company including, without
14
limitation, any director, officer, agent or employee of the Company or its
Subsidiary, has, directly or indirectly, while acting on behalf of the
Company or its Subsidiary (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses, or
received or retained any funds, relating to political activity; (ii) made
any unlawful payment from corporate funds to, or received or retained any
unlawful funds from, foreign or domestic government officials or employees
or to or from foreign or domestic political parties or campaigns; (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any other unlawful payment or received or retained
any other unlawful funds.
(kk) Neither the Company nor its Subsidiary is and, 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.
(ll) 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, the Prospectus Supplement and the Time of Sale
Prospectus, if any, has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
(mm) Other than as contemplated by this Agreement, neither the Company nor
its Subsidiary is a party to any contract, agreement or understanding with
any person that would give rise to a valid claim against the Company or
its Subsidiary or the Placement Agents for a brokerage commission,
finder's fee or like payment in connection with the offering and sale of
the Stock.
(nn) Neither the Company nor its Subsidiary has sustained, since the date
of the latest audited financial statements included in the Base Prospectus
or the Registration Statement, or incorporated by reference therein, as
the case may be, 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.
(oo) Except as set forth in or as otherwise contemplated by the
Registration Statement or, the Base Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement or, the Base Prospectus, there has not been (i) any material
adverse change, or any development that would reasonably be expected to
result in a material adverse change, in the business, properties,
management, financial condition or results of operations of the Company
taken as a whole, (ii) any transaction which is material to the Company
taken as a whole, (iii) any obligation, direct or contingent (including
any off-balance sheet obligations), incurred by the Company outside the
ordinary course of business, which is material to the Company taken as a
whole, (iv) any change in the capital stock (other than the issuance of
shares of Common Stock upon exercise of stock options and warrants
disclosed as outstanding in the Registration Statement and the Base
Prospectus, if any, and the grant of options under existing stock option
plans
15
described in the Registration Statement and the Base Prospectus) or
outstanding indebtedness of the Company or (v) any dividend or
distribution of any kind declared, paid or made on the capital stock of
the Company.
(pp) Any statistical and market-related data included in the Registration
Statement, the Base Prospectus, the Prospectus Supplement or the Time of
Sale Prospectus, if any, are based on or derived from sources that the
Company believes to be reliable and accurate, and the Company has obtained
the written consent to the use of such data from such sources to the
extent required.
(qq) The Stock is registered under the Exchange Act and is duly listed and
admitted and authorized for trading, subject to official notice of
issuance, on the American Stock Exchange ("AMEX") and the Company has
taken no action designed to terminate, or likely to have the effect of
terminating the registration of the Common Stock under the Exchange Act or
delisting or suspending from trading the Common Stock from AMEX, nor has
the Company received any information suggesting that the Commission or the
National Association of Securities Dealers, Inc. ("NASD") is contemplating
terminating or suspending such registration or listing.
(rr) Neither the Company, its Subsidiary nor, to the Company's knowledge,
any of the Company's or its Subsidiary's 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.
(ss) Neither the Company, its Subsidiary, nor any of the Company's or its
Subsidiary's officers, directors or affiliates has offered, or caused any
Placement Agent to offer, Stock to any person with the intent to influence
unlawfully (i) a customer or supplier of the Company to alter the
customer's or supplier's level or type of business with the Company or
(ii) a trade journalist or publication to write or publish favorable
information about the Company or any of their respective products or
services.
(tt) There are no affiliations with the NASD among the Company's officers,
directors or, to the best of the knowledge of the Company, any five
percent or greater stockholder of the Company, except as set forth in the
Base Prospectus or otherwise disclosed in writing to the Placement Agents.
(uu) The Company has provided the Placement Agents true, correct, and
complete copies of all documentation pertaining to any extension of credit
in the form of a personal loan made, directly or indirectly, by the
Company to any director or executive officer of the Company, or to any
family member or affiliate of any director or executive officer of the
Company that is currently outstanding; and since December 31, 2003, the
Company has not, directly or indirectly: (i) extended credit, arranged to
extend credit, or renewed any extension of credit, in the form of a
personal loan, to or for any director or executive officer of the Company,
or to or for any family member or affiliate
16
of any director or executive officer of the Company; or (ii) made any
material modification, including any renewal thereof, to any term of any
personal loan to any director or executive officer of the Company, or any
family member or affiliate of any director or executive officer, which
loan was outstanding on December 31, 2003, except as disclosed in the Base
Prospectus or the Registration Statement.
(vv) The Company has taken all necessary actions to ensure that, upon and
at all times after the AMEX shall have approved the Stock for inclusion,
it will be in compliance with all applicable corporate governance
requirements set forth in the AMEX Rules that are then in effect and is
actively taking steps to ensure that it will be in compliance with other
applicable corporate governance requirements set forth in the AMEX Rules
not currently in effect upon and all times after the effectiveness of such
requirements.
(ww) No approval of the stockholders of the Company under the rules and
regulations of any trading market, and no approval of the stockholders of
the Company thereunder is required for the Company to issue and deliver to
the Purchasers the Stock.
Any certificate signed by any officer of the Company and delivered to the
Placement Agents or counsel for the Placement Agents in connection with the
offering of the Stock shall be deemed a representation and warranty by the
Company, as to the matters covered thereby, to the Placement Agents and the
Purchasers.
3. THE CLOSING. The time and date of closing and delivery of the documents
required to be delivered to the Placement Agents pursuant to Section 6 hereof
shall be at 10:00 A.M., local time, on December 16, 2005 (the "CLOSING DATE") at
the office of DLA Piper Rudnick Gray Cary LLP located at 4365 Executive Drive,
Suite 1100, San Diego, CA 92101.
4. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the Placement
Agents and the Purchasers:
(a) (i) to make no further amendment or supplement prior to the Closing
Date to the Registration Statement or any amendment or supplement to the
Prospectus Supplement, without the prior written consent of the
Representative, which consent shall not be unreasonably withheld, except
for the supplement to the form of prospectus included in the Registration
Statement (Registration File No. 333-125731), which became effective as of
June 17, 2005, relating to the placement of 9,171,429 shares of Common
Stock, as fled with the Commission on December 13, 2005 pursuant to Rule
424(b)(5); (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
Representative 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 Representative
with copies thereof; (iii) to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company with
the Commission and AMEX pursuant to Section 13(a), 15 or 15(d) of the
17
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 Representative, 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
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) To 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 Agents 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 Agents or
counsel for the Placement Agents, 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
Representative 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 the Representative
with a copy of such proposed amendment or supplement and will not file
such amendment or supplement to which the Representative reasonably and
timely objects.
(c) To furnish promptly to the Representative and to counsel for the
Representative 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.
18
(d) To deliver promptly to the Representative such number of the following
documents as the Representative 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
the date of such amendment or supplement); (iv) the Time of Sale
Prospectus, if any, and (v) any document incorporated by reference in the
Base Prospectus, the Time of Sale Prospectus, if any, or the 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 and the Representative
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) To promptly take from time to time such actions as the Representative
may reasonably request to qualify the Stock for offering and sale under
the securities, or blue sky, laws of such jurisdictions (including without
limitation any post-filing requirements) as the Representative may
designate and to continue such qualifications in effect for so long as
required for the distribution of the Stock, and the Company will pay the
fee of the NASD in connection with its review of the Offering, if
applicable. The Company shall not be obligated to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified or to file
a general consent to service of process in any jurisdiction.
(g) 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 the Representative, other than the
Company's sale of the Stock, the Company's sale of 9,171,429 shares of
Common Stock pursuant to the supplement to the form of prospectus included
in the Registration Statement, filed with the Commission on December 13,
2005 pursuant to Rule 424(b)(5), and shares of Common Stock pursuant to
the supplement to the form of prospectus included and shares or options to
purchase shares pursuant to currently existing stock plans, currently
outstanding options, warrants or rights. The Company will cause each of
its executive officers and directors to furnish to the Placement Agents,
prior to the Closing Date, a letter, substantially in the form of Exhibit
B attached 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,
19
without the prior written consent of the Representative. If (i) the
Company issues an earnings release or material news or a material event
relating to the Company occurs during the last 17 days of the lock-up
period, or (ii) prior to the expiration of the lock-up period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the lock-up period, the restrictions imposed
by this Section 4(g) shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event.
(h) Prior to the Closing Date, to furnish to the Placement Agents, 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, the Time of
Sale Prospectus, if any, or the Registration Statement.
(i) Prior to the Closing Date, not to 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 Representative is
notified), without the prior written consent of the Representative, unless
in the judgment of the Company and its counsel, and after notification to
the Representative, such press release or communication is required by
law. In such event, the Company shall consult with the Representative as
to the contents of such press release.
(j) To apply the net proceeds from the sale of the Stock as set forth in
the Prospectus Supplement under the heading "USE OF PROCEEDS."
(k) To comply in all material respects with all applicable securities and
other applicable laws, rules and regulations, including, without
limitation, the Sarbanes-Oxley 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 Sarbanes-Oxley Act.
(l) To engage and maintain, at its expense, a registrar and transfer agent
for the Stock.
(m) To not take any action prior to the Closing Date which would require
the Prospectus Supplement to be amended or supplemented pursuant to
Section 4(b).
(n) To supply the Representative 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.
(o) The Company will use its best efforts to ensure that the Stock is
quoted on the AMEX at the Closing Date.
20
(p) To furnish to the Placement Agents a copy of each proposed free
writing prospectus to be prepared by or on behalf of, used by, or referred
to by the Company and not use or refer to any free writing prospectus to
which the Representative reasonably objects.
(q) Not to take any action that would result in any Placement Agent or the
Company being required to file with the Commission pursuant to Rule 433(d)
under the Securities Act a free writing prospectus prepared by or on
behalf of any Placement Agent that such Placement Agent otherwise would
not have been required to file thereunder.
(r) If the Time of Sale Prospectus, if any, is being used and any event
shall occur or condition exist as a result of which it is necessary to
amend or supplement the Time of Sale Prospectus in writing in order to
make the statements therein, not misleading, or if, in the opinion of
counsel to the Placement Agents, it is necessary to amend or supplement
the Time of Sale Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Placement Agents upon request, either amendments or supplements to the
Time of Sale Prospectus so that the statements in the Time of Sale
Prospectus as so amended or supplemented will not, in light of the
circumstances when the Time of Sale Prospectus is delivered to a
prospective purchaser, be misleading or so that the Time of Sale
Prospectus, as amended or supplemented, will comply with law.
5. PAYMENT OF EXPENSES. The Company agrees with the Placement Agents to pay (a)
the costs incident to the authorization, issuance, sale, preparation and
delivery of the Stock to the Purchasers 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) any
applicable listing or other similar fees; (e) 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 fees and expenses of counsel to the Placement
Agents); (f) all fees and expenses of the registrar and transfer agent of the
Stock; (g) fifty percent (50%) of the fees and expenses of the Placement Agents'
legal counsel; 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 and the travel and other expenses incurred by Company
personnel in connection with any "roadshow" including, without limitation, any
expenses advanced by the Placement Agents on the Company's behalf (which will be
promptly reimbursed)).
6. CONDITIONS TO THE OBLIGATIONS OF THE PLACEMENT AGENTS AND THE PURCHASERS, AND
THE SALE OF THE STOCK. The respective obligations of each
21
Placement Agent and the Purchasers, and the closing of the sale of the Stock
hereunder are subject to the accuracy, when made and on the Closing Date, of the
representations and warranties on the part of the Company and its Subsidiary
contained herein, to the accuracy of the statements of the Company and its
Subsidiary made in any certificates pursuant to the provisions hereof, to the
performance by the Company and of its Subsidiary 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, the Time of Sale
Prospectus, if any, or the Prospectus Supplement or otherwise) shall have
been complied with to the reasonable satisfaction of the Representative.
Any filings required to be made by the Company in accordance with Section
4(a) shall have been timely filed with the Commission.
(b) None of the Placement Agents shall have discovered and disclosed to
the Company on or prior to the Closing Date that the Registration
Statement, the Base Prospectus, the Time of Sale Prospectus, if any, 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 Agents, 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, execution, delivery and validity of each of this
Agreement, the Stock, the Registration Statement, the Base Prospectus, the
Time of Sale Prospectus, if any, 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 Agents, 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) The Placement Agents shall have received from each of (i) DLA Piper
Rudnick Gray Cary US LLP, corporate counsel for the Company (ii) Hale Lane
Peek Dennison and Howard, special counsel for the Company (iii) DLA Piper
Rudnick Gray Cary US LLP, intellectual property counsel for the Company,
such counsel's written opinion, addressed to the Placement Agents and the
Purchasers and dated as of the Closing Date, in form and substance
reasonably satisfactory to the Placement Agents as set forth in Exhibits
C-1, C-2 and C-3 attached hereto, respectively.
DLA Piper Rudnick Gray Cary US LLP shall also have furnished to the
Placement Agents a written statement, addressed to the Placement Agents
and the Purchasers and dated the Closing Date, in form and substance
satisfactory to the Representative, 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
22
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, the Time of Sale Prospectus, if any, 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, the Time of Sale Prospectus, if any, or
the Prospectus Supplement or any further amendment or supplement to any
such incorporated document made by the Company prior to the 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 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, the Time of Sale Prospectus, if any, or
the Prospectus Supplement.
(e) The Placement Agents shall have received from Brown Raysman Millstein
Felder & Steiner LLP, such opinion or opinions, dated the Closing Date and
addressed to the Placement Agents, with respect to the issuance and sale
of the Stock, the Registration Statement, the Base Prospectus, the Time of
Sale Prospectus, if any, the Prospectus Supplement (together with any
supplement thereto) and other related matters as the Representative 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 Agents and the
Purchasers a certificate, dated as of the Closing Date, executed by its
Chief Executive Officer and its Chief Financial Officer on behalf of the
Company stating that (i) such officers have carefully examined the
Registration Statement, the Base Prospectus, the Time of Sale Prospectus,
if any, and the Prospectus Supplement and, in their opinion, the
Registration Statement (including the Base Prospectus) as of its effective
date, the Time of Sale Prospectus, if any, as of each such 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,
23
(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, the Time of Sale
Prospectus, if any, or the Prospectus Supplement and that is not already
included in such document by reason of materials incorporated by reference
therein, (iii) to the best of their knowledge after reasonable
investigation, as of the Closing Date, the representations and warranties
of the Company and its Subsidiary in this Agreement are true and correct
and the Company and its Subsidiary have complied with all agreements and
covenants contained in this Agreement and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing
Date, (iv) subsequent to the date of the most recent financial statements
included or incorporated by reference in the Base Prospectus, there has
been no change in the financial position or results of operation of the
Company and its Subsidiary that could have a Material Adverse Effect, or
any material change, or any material development including a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company taken as a whole, except
as set forth in, or contemplated by, the Base Prospectus, and (v) the
Registration Statement became effective on June 17, 2005, and to their
knowledge, as of the Closing Date (I) no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been commenced or are pending before or
are contemplated by the Commission and (II) no action has been taken by
any governmental agency, body or official, and no injunction, restraining
order or order of any nature by any federal or state court has been
issued, which would prevent the issuance of the Stock.
(g) On the Closing Date, the Placement Agents shall have received from
Cacciamatta Accountancy Corp. a letter, addressed to the Placement Agents
and dated the Closing Date confirming, as of the Closing Date (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, the Time of Sale Prospectus, if any, and the Prospectus
Supplement as of a date not more than three Business Days prior to the
Closing Date), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the comfort letter
delivered to the Placement Agents on December 12, 2005.
(h) (i) Neither the Company nor its Subsidiary shall have sustained since
the date of the latest audited financial statements included or
incorporated by reference in the Base Prospectus or 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 (ii) except for the exercise of stock options in the
ordinary course of the Company's business, since such date there shall not
have been any change in the capital stock or long-term debt of the Company
or its Subsidiary 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
24
the Company or its Subsidiary, otherwise than as set forth in or
contemplated by the Base Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the
Representative, 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, the Time of Sale
Prospectus, if any, and the Prospectus Supplement.
(i) The Stock is registered under the Exchange Act and, as of the Closing
Date, the Stock shall be listed and admitted and authorized for trading on
the AMEX and satisfactory evidence of such actions shall have been
provided to the Representative. The Company shall have taken no action
designed to, or likely to have the effect of terminating the registration
of the Stock under the Exchange Act or delisting or suspending from
trading the Stock from AMEX, nor has the Company received any information
suggesting that the Commission or the AMEX is contemplating terminating
such registration or listing.
(j) At the Execution Time, the Company shall have furnished to the
Representative a letter substantially in the form of Exhibit B hereto from
each executive officer and director of the Company. ---------
(k) 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 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 any other calamity or crisis or any change in general economic,
political or financial conditions in the United States or elsewhere, if
the effect of any such event in clause (iii) or (iv) makes it, in the sole
judgment of the Representative, 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.
(l) 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 the Closing Date, prevent the issuance
or sale of the Stock or materially and adversely affect or potentially
materially and adversely affect the business or operations of the Company;
and no injunction, restraining order or order of any other nature by any
federal or state court of
25
competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance or sale of the Stock or materially and
adversely affect or potentially materially and adversely affect the
business or operations of the Company.
(m) 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 this Agreement and any other documents relating thereto
which are required to be filed therewith.
(n) The Company shall have entered into Subscription Agreements with each
of the Purchasers and such agreements shall be in full force and effect.
(o) Prior to the Closing Date, the Company shall have furnished to the
Placement Agents such further information, certificates and documents as
the Representative 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 Agents.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless the Placement Agents,
their respective officers, employees, representatives and agents and each
person, if any, who controls such Placement Agents 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 a material fact contained in the
Base Prospectus, the Registration Statement, the Time of Sale Prospectus,
if any, 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, the Time of Sale Prospectus, if
any, 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 any
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
26
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 an untrue statement or alleged untrue
statement in or omission or alleged omission from the Base Prospectus, the
Registration Statement, the Time of Sale Prospectus, if any, or the
Prospectus Supplement or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by or
on behalf of any Placement Agent through the Representative specifically
for use therein, which information the parties hereto agree is limited to
the Placement Agents' Information (as defined in Section 16). 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) Each Placement Agent, severally and not jointly, 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, the Time of
Sale Prospectus, if any, or the Prospectus Supplement or in any amendment
or supplement thereto or (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 in each case only to the extent
that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of that Placement
Agent through the Representative specifically for use therein, 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
Agents consist solely of the Placement Agents Information. This indemnity
agreement is not exclusive and will be in addition to any liability, which
each of the Placement Agents 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 by any
Placement Agent under this
27
Section 7(b) exceed the total compensation received by such 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 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 in accordance with the terms hereof 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 Representative,
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
28
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 Agents 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 Placement Agents 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 Agents 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 Agents
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 Agents 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 Agents for use in the Prospectus
Supplement consists solely of the Placement Agents' Information. The
Company and the Placement Agents agree that it would not be just and
equitable if contributions pursuant to this Section 7(e)
29
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 Agents shall not be
required to contribute any amount in excess of the total compensation
received by such Placement Agent in accordance with Section 1(e) 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.
(f) The Placement Agents' obligations to contribute as provided in this
Section 7(f) are several in proportion to the total compensation received
by each of the Placement Agents in accordance with Section 1(e) and not
joint.
8. TERMINATION. The obligations of the Placement Agents and the Purchasers
hereunder and under the Subscription Agreements may be terminated by the
Representative, in its absolute discretion by notice given to the Company prior
to delivery (including electronic delivery) of and payment for the Stock if,
prior to that time, any of the events described in Sections 6(i) or 6(l) have
occurred or if the Purchasers shall decline to purchase the Stock for any reason
permitted under this Agreement or the Subscription Agreements.
9. REIMBURSEMENT OF PLACEMENT AGENTS' EXPENSES. If the sale of the Stock
provided for herein is not consummated because any condition to the obligations
of the Placement Agents 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 Agents, the Company will reimburse the Placement Agents
upon demand for all out-of-pocket expenses (including fees and disbursements of
counsel and any expenses advanced by the Placement Agents on the Company's
behalf) that shall have been incurred by the Placement Agents 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 Representative.
10. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Placement Agents, 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
30
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 Agents shall also be for the benefit of the Company
Indemnified Parties.
11. ABSENCE OF FIDUCIARY RELATIONSHIP. The Company acknowledges and agrees that:
(a) each Placement Agent's responsibility to the Company is solely
contractual in nature, the Placement Agents have been retained solely to
act as placement agents in connection with the sale of the Stock and no
fiduciary, advisory or agency relationship between the Company and the
Placement Agents has been created in respect of any of the transactions
contemplated by this Agreement, irrespective of whether any of the
Placements Agents has advised or is advising the Company on other matters;
(b) the price of the Stock set forth in this Agreement was established by
the Company following discussions and arms-length negotiations with the
Representative, the Purchasers, and the Company is capable of evaluating
and understanding, and understands and accepts, the terms, risks and
conditions of the transactions contemplated by this Agreement;
(c) the Company has been advised that the Placement Agents and their
affiliates are engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the Placement
Agents have no obligation to disclose such interests and transactions to
the Company by virtue of any fiduciary, advisory or agency relationship;
and
(d) the Company waives, to the fullest extent permitted by law, any claims
it may have against the Placement Agents for breach of fiduciary duty or
alleged breach of fiduciary duty and agrees that the Placement Agents
shall have no liability (whether direct or indirect) to the Company in
respect of such a fiduciary duty claim or to any person asserting a
fiduciary duty claim on behalf of or in right of the Company, including
stockholders, employees or creditors of the Company.
12. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company, its Subsidiary and the Placement Agents, 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 Agents, the Company, the Purchasers or any person
controlling any of them and shall survive delivery of and payment for the Stock.
13. NOTICES. All statements, requests, notices and agreements hereunder shall be
in writing, and:
(a) if to the Placement Agents, shall be delivered or sent by mail, telex
or facsimile transmission to SG Cowen & Co., LLC, 1221 Avenue of the
Americas, New York, New York 10020, Attention: Veronica Iuliano (E-mail)
(Fax: 212-278-7995), with a copy to: Brown Raysman Millstein Felder &
31
Steiner LLP, 900 Third Avenue, New York, New York 10022, Attention: Stuart
Bressman, Esq. (Fax: 212-895-2900).
(b) if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to Halozyme Therapeutics, Inc., 11588 Sorrento
Valley Road, Suite 17, San Diego, CA 92121, Attention: David A. Ramsay
(Fax: (858) 259-2539, with a copy to: DLA Piper Rudnick Gray Cary US LLP,
4365 Executive Drive, Suite 1100, San Diego, CA 92121, Attention: Douglas
J. Rein (Fax: (858) 677-1477).
14. 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" and words of similar import shall mean that
which the Company or its Subsidiary knows or should have known using the
exercise of reasonable due diligence.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. PLACEMENT AGENTS' INFORMATION. The parties hereto acknowledge and agree
that, for all purposes of this Agreement, the Placement Agents' Information
consists solely of the statements concerning the Placement Agents contained in
the third paragraph under the heading "Plan of Distribution" in the Prospectus
Supplement.
17. 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, 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.
18. 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
32
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 Agents.
19. 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.
20. CONSENT TO ACT AS REPRESENTATIVE. Rodman & Renshaw, LLC ("RR") and Roth
Capital Partners, LLC ("ROTH") each consent and agree that SG Cowen & Co., LLC
("SG COWEN") will act as Representative of the Placement Agents under this
Agreement and with respect to the sale of the Stock. Accordingly, each of RR and
Roth authorizes SG Cowen to manage the Offering and the sale of the Stock and to
take such action in connection therewith as SG Cowen in its sole discretion
deems appropriate or desirable, consistent with the provisions of each Agreement
Among Underwriters previously entered into between SG Cowen and RR, and SG Cowen
and Roth, respectively, taking into account that the Offering of the Stock will
be in the form of a best efforts placement and not a firm commitment
underwriting.
33
If the foregoing is in accordance with your understanding of the
agreement between the Company and the Placement Agents, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
HALOZYME THERAPEUTICS, INC.
By: /s/David Ramsay
------------------------
Name: David Ramsay
Title: Secretary and CFO
Accepted as of the date first above written:
SG COWEN & CO., LLC
By: /s/ Richard E. Gormley
---------------------------------
Name: Richard E. Gormley
Title: Managing Director
RODMAN & RENSHAW, LLC
By: /s/ Thomas G. Pinou
---------------------------------
Name: Thomas G. Pinou
Title: Chief Financial Officer
ROTH CAPITAL PARTNERS, LLC
By: /s/ Theodore D. Roth
---------------------------------
Name: Theodore D. Roth
Title: Managing Director
34
SCHEDULE 1
PLACEMENT AGENTS
SG Cowen & Co., LLC
Rodman & Renshaw, LLC
Roth Capital Partners, LLC
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EXHIBIT A
FORM OF SUBSCRIPTION AGREEMENT
36
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
37
EXHIBIT C-1
LEGAL OPINION OF DLA PIPER RUDNICK GRAY CARY US LLP
EXHIBIT C-2
LEGAL OPINION OF HALE LANE PEEK DENNISON AND HOWARD
39
EXHIBIT C-3
LEGAL OPINION OF DLA PIPER RUDNICK GRAY CARY US LLP