Exhibit 10.1
7,770,000 Shares
Common Stock
PLACEMENT AGENCY
AGREEMENT
April 5, 2005
CIBC World Markets Corp.
Leerink Swann & Co.
As Placement Agents
c/o CIBC World Markets Corp.
300 Madison Avenue
New York, New York 10017
Ladies and Gentlemen:
Avanir Pharmaceuticals, a California
corporation (the “Company”), proposes, subject to the
terms and conditions contained herein, to issue and sell 7,770,000
shares (the “Shares”) of common stock, no par value
(the “Common Stock”), directly to certain investors
(collectively, the “Investors”). The Company desires to
engage you as its placement agents (the “Placement
Agents”) in connection with such issuance and sale. The
Shares are more fully described in the Registration Statement (as
hereinafter defined).
The Company has prepared and filed
in conformity with the requirements of the Securities Act of 1933,
as amended (the “Securities Act”), and the published
rules and regulations thereunder (the “Rules”) adopted
by the Securities and Exchange Commission (the
“Commission”) a Registration Statement (as hereinafter
defined) on Form S-3 (No. 333-114389), which became
effective as of April 28, 2004 (the “Effective Date”)
including a base prospectus relating to the Shares (the “Base
Prospectus”), and such amendments and supplements thereto as
may have been required to the date of this Agreement. Copies of
such Registration Statement (including all amendments and
supplements thereto) and of the related Base Prospectus have
heretofore been delivered by the Company to you. The term
“Registration Statement” as used in this Agreement
means the initial registration statement (including all exhibits,
financial schedules and all documents and information deemed to be
a part of the Registration Statement through incorporation by
reference or otherwise), as amended and/or supplemented to the date
of this Agreement, including the Base Prospectus. If the Company
has filed an abbreviated registration statement to register
additional Shares pursuant to Rule 462(b) under the Rules (the
“462(b) Registration Statement”), then any reference
herein to the Registration Statement shall also be deemed to
include such 462(b) Registration Statement. The prospectus
supplement relating to the Shares in the form in which it will be
filed with the Commission pursuant to and in accordance with Rule
424(b) under the Securities Act is hereinafter referred to as the
“Prospectus Supplement.” The term
“Prospectus” as used in this Agreement means the Base
Prospectus together with the Prospectus Supplement. As used herein,
the terms “Base Prospectus,” “Prospectus,”
“Registration Statement,” “Rule 462
Registration Statement,” and “Prospectus
Supplement” shall include any documents incorporated by
reference therein, and any reference to any amendment or supplement
to the Registration Statement or the Prospectus shall be deemed to
refer to and include any document filed under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
after the date of the Base Prospectus by the Company with the
Commission and on or before the Closing Date, which documents are
deemed to be incorporated therein by reference.
In connection with their duties as
Placement Agents, the Company hereby confirms that the Placement
Agents are authorized to distribute the Prospectus (as from time to
time amended or supplemented if the Company furnishes amendments or
supplements thereto to the Placement Agents).
1. Agreement to Act as
Placement Agent; Delivery and Payment . On the basis of the
representations, warranties and agreements contained in, and
subject to the terms and conditions of, this Agreement:
(a) The Placement Agents agree
to act as the Company’s exclusive placement agents in
connection with the issuance and sale, on a reasonable-efforts
basis, by the Company of the Shares to the Investors. The Placement
Agents shall have no authority to bind the Company. The Company
acknowledges and agrees that the Placement Agents’ engagement
hereunder is not an agreement by the Placement Agents or any of
their affiliates to underwrite or purchase any securities or
otherwise provide any financing. As compensation for their services
hereunder, the Company agrees to pay on the Closing Date (as
defined below) the Placement Agents by wire transfer of immediately
available funds six percent (6%) of the proceeds received by the
Company from the sale of the Shares (the “Transaction
Fee”). CIBC World Markets Corp. shall be entitled to retain
sixty-seven percent (67%) of the Transaction Fee, and shall pay
Leerink Swan & Co. shall be entitled to retain sixty
thirty-three percent (33%) of the Transaction Fee in accordance
with customary syndicate settlement procedures.
(b) Payment of the purchase
price for, and delivery of the Shares shall be made at a closing
(the “Closing”) at the offices of Heller Ehrman LLP,
located at 4350 La Jolla Village Drive, 7 th Floor, San
Diego, California, 92122-1246, at 9:00 a.m., California time, on
the Closing Date to take place on the third or fourth business day
(as permitted under Rule 15c6-1 under the Exchange Act after
the determination of the public offering price of the Shares (such
time and date of payment and delivery being herein called the
“Closing Date”). All actions taken at the Closing shall
be deemed to have occurred simultaneously.
(c) Payment of the purchase
price for the Shares shall be made to or upon the order of the
Company by wire transfer in Federal (same day) funds to the
Company, upon delivery the Shares, through the facilities of The
Depository Trust Company, to such persons, and shall be registered
in such name or names and shall be in such denominations, as the
Placement Agents may request at least one business day before the
Closing Date. Payment of the purchase price for the Shares shall be
made on the Closing Date by the Investors directly to the Company
or as the Placement Agents otherwise direct.
(d) The purchases of the Shares
by the Investors shall be evidenced by the execution of a purchase
agreement substantially in the form attached hereto as
Exhibit A.
(e) Prior to the earlier of
(i) the date on which this Agreement is terminated and
(ii) the Closing Date, the Company shall not, without the
prior written consent of CIBC World
Markets Corp. , solicit or accept offers to purchase shares
of its Common Stock or other equity linked securities (other than
pursuant to the exercise of options or warrants to purchase shares
of Common Stock that are outstanding at the date hereof) otherwise
than through the Placement Agents.
2. Representations and
Warranties of the Company . The Company represents and warrants
to each Placement Agent as of the date hereof and as of the Closing
Date, as follows:
(a) The Company meets the
requirements for use of Form S-3 under the Securities Act. On the
Effective Date, the Registration Statement complied, and on the
date of the Prospectus, the date any post-effective amendment to
the Registration Statement becomes effective, the date any
supplement or amendment to the Prospectus is filed with the
Commission and the Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will
comply, in all material respects, with the requirements of the
Securities Act and the Rules and the Exchange Act and the rules and
regulations of the Commission thereunder. The Registration
Statement did not, as of the Effective Date, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. The Prospectus, as of its date,
the date any supplement or amendment is filed with the Commission
and the Closing Date will not contain any untrue statement of a
material fact or omit 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. The Prospectus delivered to the Placement Agents
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by
Regulation S-T. Notwithstanding the foregoing, none of the
representations and warranties in this paragraph 2(a) shall apply
to statements in, or omissions from, the Registration Statement or
the Prospectus made in reliance upon, and in conformity with,
information herein or otherwise furnished in writing by the
Placement Agents for use in the Registration Statement or the
Prospectus. With respect to the preceding sentence, the Company
acknowledges that the only information furnished in writing by the
Placement Agent for use in the Registration Statement or the
Prospectus is the statements contained under the caption
“Plan of Distribution” in the Prospectus
Supplement.
(b) The Registration Statement
is effective under the Securities Act and no stop order preventing
or suspending the effectiveness of the Registration Statement or
suspending or preventing the use of the Prospectus has been issued
by the Commission and no proceedings for that purpose have been
instituted or are threatened under the Securities Act. Any required
filing of the Prospectus and any supplement thereto pursuant to
Rule 424(b) of the Rules has been or will be made in the manner and
within the time period required by such Rule 424(b).
(c) The documents incorporated
by reference in the Registration Statement and the Prospectus, at
the time they became effective or were filed with the Commission,
as the case may be, complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, and any further documents so filed
and incorporated by reference in the Registration Statement and the
Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(d) The financial statements of
the Company (including all notes and schedules thereto) included or
incorporated by reference in the Registration Statement and
Prospectus present fairly the financial position of the Company and
its consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders’ equity and cash flows
of the Company and its consolidated subsidiaries for the periods
specified; and such financial statements and related schedules and
notes thereto, and the unaudited financial information filed with
the Commission as part of the Registration Statement, comply as to
form with the applicable accounting requirements under the
Securities Act and have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the
periods involved. The summary and selected financial data included
in the Prospectus present fairly the information shown therein as
at the respective dates and for the respective periods specified
and have been presented on a basis consistent with the consolidated
financial statements set forth in the Prospectus and other
financial information.
(e) Deloitte & Touche LLP,
whose reports are filed with the Commission as a part of the
Registration Statement, are and, during the periods covered by
their reports, were independent registered public accountants as
required by the Securities Act and the Rules.
(f) The Company and each of its
subsidiaries is duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of
incorporation or organization. The Company and each of its
subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted by it or location of the assets or
properties owned, leased or licensed by it requires such
qualification, except for such jurisdictions where the failure to
so qualify individually or in the aggregate would not have a
material adverse effect on the assets, properties, condition,
financial or otherwise, or in the capitalization, results of
operations, business affairs or business prospects of the Company
and its subsidiaries considered as a whole (a “Material
Adverse Effect”); and to the Company’s knowledge, no
proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing, or seeking to revoke, limit or curtail,
such power and authority or qualification.
(g) The Company and each of its
subsidiaries has all requisite corporate power and authority, and
all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or
regulatory bodies or any other person or entity (collectively, the
“Permits”), to own, lease and license its assets and
properties and conduct its business, all of which are valid and in
full force and effect, except where the lack of such Permits,
individually or in the aggregate, would not have a Material Adverse
Effect. The Company and each of its subsidiaries has fulfilled and
performed in all material respects all of its material obligations
with respect to such Permits and no event has occurred that allows,
or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of
the rights of the Company thereunder. Except as may be required
under the Securities Act and state and foreign Blue Sky laws, no
other Permits are required to enter into, deliver and perform this
Agreement and to issue and sell the Shares.
(h) The Company and each of its
subsidiaries owns or possesses legally enforceable rights to use
all patents, patent rights, inventions, collaborative research
agreements, trademarks, trademark applications, trade names,
service marks, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge
(collectively, “Intangibles”) necessary to the conduct
of its business as described in the Registration Statement and the
Prospectus. Except as set forth in the Prospectus, (a) there
are no material rights of third parties to any such Intangibles;
(b) there is no material infringement by third parties of any
such Intangibles; (c) there is no pending or threatened
action, suit, proceeding or claim by others challenging the
Company’s rights in or to any such Intangibles, and the
Company and each subsidiary is unaware of any facts which would
form a reasonable basis for any such claim; (d) to the
knowledge of the Company, there is no pending or threatened action,
suit, proceeding or claim by others challenging the validity or
scope of any such Intangibles, and the Company and each subsidiary
is unaware of any facts which would form a reasonable basis for any
such claim; (e) to the knowledge of the Company, there is no
pending or threatened action, suit, proceeding or claim by others
that the Company or any subsidiary infringes or otherwise violates
any patent, trademark, copyright, trade secret or other proprietary
rights of others, and the Company and each subsidiary is unaware of
any other fact which would form a reasonable basis for any such
claim; (f) to the knowledge of the Company, there is no U.S.
patent or published U.S. patent application which contains claims
that dominate or may dominate any Intellectual Property described
in the Prospectus as being owned by or licensed to the Company or
any subsidiary or that interferes with the issued or pending claims
of any such Intangibles; and (g) there is no prior art of
which the Company or any subsidiary is aware that may render any
U.S. patent held by the Company invalid or any U.S. patent
application held by the Company or any subsidiary unpatentable
which has not been disclosed to the U.S. Patent and Trademark
Office.
(i) Except as set forth in the
Prospectus, the Company and each of its subsidiaries has good and
marketable title in fee simple to all real property, and good and
marketable title to all other property owned by it, in each case
free and clear of all liens, encumbrances, claims, security
interests and defects, except such as would not have a Material
Adverse Effect. Except as set forth in the Prospectus, all property
held under lease by the Company and its subsidiaries is held by
them under valid, existing and enforceable leases, free and clear
of all liens, encumbrances, claims, security interests and defects,
except such as would not have a Material Adverse Effect. Subsequent
to the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there has not
been any Material Adverse Effect; (ii) neither the Company nor
any of its subsidiaries has sustained any loss or interference with
its assets, businesses or properties (whether owned or leased) from
fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which
would have a Material Adverse Effect; and (iii) since the date
of the latest balance sheet included or incorporated by reference
in the Registration Statement and the Prospectus, neither the
Company nor its subsidiaries has (A) issued any securities or
incurred any liability or obligation, direct or contingent, for
borrowed money, except such liabilities or obligations incurred in
the ordinary course of business, (B) entered into any
transaction not in the ordinary course of business or
(C) declared or paid any dividend or made any distribution on
any shares of its stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any
shares of its capital stock.
(j) There is no document,
contract or other agreement required to be described in the
Registration Statement or Prospectus or to be filed as an exhibit
to the Registration Statement which is not described or filed as
required by the Securities Act or Rules. Each description of a
contract, document or other agreement in the Registration Statement
and the Prospectus accurately reflects in all material respects the
terms of the underlying contract, document or other agreement. Each
contract, document or other agreement described in the Registration
Statement and Prospectus or listed in the Exhibits to the
Registration Statement or incorporated by reference is in full
force and effect and is valid and enforceable by and against the
Company or its subsidiary, as the case may be, in accordance with
its terms. Neither the Company nor any of its subsidiaries, if a
subsidiary is a party, nor to the Company’s knowledge, any
other party, is in default in the observance or performance of any
term or obligation to be performed by it under any such agreement,
and no event has occurred which with notice or lapse of time or
both would constitute such a default, in any such case which
default or event, individually or in the aggregate, would have a
Material Adverse Effect. No default exists, and no event has
occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any
term, covenant or condition, by the Company or its subsidiary, if a
subsidiary is a party thereto, of any other agreement or instrument
to which the Company or any of its subsidiaries is a party or by
which Company or its properties or business or a subsidiary or its
properties or business may be bound or affected which default or
event, individually or in the aggregate, would have a Material
Adverse Effect.
(k) Neither the Company nor any
of its subsidiaries is in violation of any term or provision of
(i) its charter or by-laws or (ii) of any franchise,
license, permit, judgment, decree, order, statute, rule or
regulation, except, with respect to subsection (ii), where the
consequences of such violation, individually or in the aggregate,
would not have a Material Adverse Effect.
(l) This Agreement has been duly
authorized, executed and delivered by the Company.
(m) Neither the execution,
delivery and performance of this Agreement by the Company nor the
consummation of any of the transactions contemplated hereby
(including, without limitation, the issuance and sale by the
Company of the Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with
or result in the breach of any term or provision of, or constitute
a default (or an event which with notice or lapse of time or both
would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge
or encumbrance upon any properties or assets of the Company or its
subsidiaries pursuant to the terms of, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which either the
Company or its subsidiaries or any of their properties or
businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the
Company or any of its subsidiaries or violate any provision of the
charter or by-laws of the Company or any of its subsidiaries,
except for such consents or waivers which have already been
obtained and are in full force and effect or that the failure to
obtain would not, individually or in the aggregate, have a Material
Adverse Effect.
(n) The Company has authorized
and outstanding capital stock as set forth under the caption
“Capitalization” in the Prospectus, and since such date
there has been no change in the capital stock of the Company except
for issuances pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding warrants described in
the Prospectus. The certificates evidencing shares of Common Stock
are in due and proper legal form. All of the issued and outstanding
shares of Common Stock have been duly and validly issued and are
fully paid and nonassessable. There are no statutory preemptive or
other similar rights to subscribe for or to purchase or acquire any
shares of Common Stock of the Company or any of its subsidiaries or
any such rights pursuant to its Articles of Incorporation or
by-laws or any agreement or instrument to or by which the Company
or any of its subsidiaries is a party or bound. The Shares, when
delivered by the Company pursuant to this Agreement, will be duly
and validly issued, fully paid and nonassessable and none of them
will be issued in violation of any preemptive or other similar
right. Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right
calling for the issuance of, and there is no commitment, plan or
arrangement to issue, any share of stock of the Company or any of
its subsidiaries or any security convertible into, or exercisable
or exchangeable for, such stock. The Common Stock and the Shares
conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus.
All outstanding shares of capital stock of each of the
Company’s subsidiaries have been duly authorized and validly
issued, and are fully paid and nonassessable and are owned directly
by the Company or by another wholly-owned subsidiary of the Company
free and clear of any security interests, liens, encumbrances,
equities or claims, other than those described in the
Prospectus.
(o) Except as set forth in the
Company’s Current Report on Form 8-K filed March 14,
2005, no holder of any security of the Company has any right, which
has not been waived, to have any security owned by such holder
included in the Registration Statement or to demand registration of
any security owned by such holder for a period of 90 days
after the date of this Agreement. Each director and executive
officer of the Company and other Company shareholders listed on
Schedule I has delivered to the Placement Agents his
enforceable written lock-up agreement in the form attached to this
Agreement as Exhibit B hereto (“Lock-Up
Agreement”).
(p) All necessary corporate
action has been duly and validly taken by the Company to authorize
the execution, delivery and performance of this Agreement and the
issuance and sale of the Shares by the Company. This Agreement has
been duly and validly authorized, executed and delivered by the
Company and constitutes and will constitute legal, valid and
binding obligations of the Company enforceable against the Company
in accordance with their respective terms, except as rights to
indemnity under Section 6 of the Agreement may be limited by
applicable law and as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally
and by general equitable principles.
(q) Neither the Company nor any
of its subsidiaries is involved in any labor dispute or, to the
knowledge of the Company, is any such dispute threatened, which
dispute would have a Material Adverse Effect. The Company is not
aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers or contractors which
would have a Material Adverse Effect. The Company is not aware of
any threatened or pending litigation between the Company or its
subsidiaries and any of its executive officers or directors which,
if adversely determined, could have a Material Adverse Effect nor
is the Company aware of any plan of any such officers or directors
to leave the employment of the Company.
(r) No transaction has occurred
between or among the Company and any of its officers or directors,
shareholders or any affiliate or affiliates of any such officer or
director or shareholder that is required to be described in and is
not described in the Registration Statement and the Prospectus.
(s) The Company has not taken,
nor will it take, directly or indirectly, any action designed to or
which might reasonably be expected to cause or result in, or which
has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the
Common Stock or any security of the Company to facilitate the sale
or resale of any of the Shares.
(t) The Company and each of its
subsidiaries has filed all Federal, state, local and foreign tax
returns which are required to be filed through the date hereof,
which returns are true and correct in all material respects or has
received timely extensions thereof, and has paid all taxes shown on
such returns and all assessments received by it to the extent that
the same are material and have become due. There are no tax audits
or investigations pending, which if adversely determined would have
a Material Adverse Effect; nor are there any material proposed
additional tax assessments against the Company or any of its
subsidiaries.
(u) The Shares have been duly
authorized for quotation on the American Stock Exchange, subject to
official Notice of Issuance.
(v) The Company has taken no
action designed to, or likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or the
quotation of the Common Stock on the American Stock Exchange, nor
has the Company received any notification that the Commission or
the American Stock Exchange is contemplating terminating such
registration or quotation, respectively.
(w) The books, records and
accounts of the Company and its subsidiaries accurately and fairly
reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of,
the Company and its subsidiaries. The Company and each of its
subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurances 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 accordance with generally
accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(x) The Company and its
subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are customary in the businesses in which they are engaged or
propose to engage after giving effect to the transactions described
in the Prospectus; all policies of insurance and fidelity or surety
bonds insuring the Company or any of its subsidiaries or the
Company’s or its subsidiaries’ respective businesses,
assets, employees, officers and directors are in full force and
effect; the Company and each of its subsidiaries are in compliance
with the terms of such policies and instruments in all material
respects; and neither the Company nor any subsidiary of the Company
has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that is not materially greater
than the current cost. To the Company’s knowledge, neither
the Company nor any of its subsidiaries has been denied any
insurance coverage which it has sought or for which it has
applied.
(y) Each approval, consent,
order, authorization, designation, declaration or filing of, by or
with any regulatory, administrative or other governmental body
necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions
herein contemplated required to be obtained or performed by the
Company (except such additional steps as may be necessary to
qualify the Shares under the state securities or Blue Sky laws) has
been obtained or made and is in full force and effect.
(z) Other than JP Morgan, a
greater than 5% shareholder of the Company, there are no known
affiliations with the National Association of Securities Dealers,
Inc. (the “NASD”) among the Company’s officers,
directors or any five percent or greater shareholder of the
Company, except as set forth in the Registration Statement,
otherwise disclosed in writing to the Placement Agents.
(aa) (i) Each of the
Company and each of its subsidiaries is in compliance in all
material respects with all rules, laws and regulation relating to
the use, treatment, storage and disposal of toxic substances and
protection of health or the environment (“Environmental
Law”) which are applicable to its business; (ii) neither
the Company nor its subsidiaries has received any notice from any
governmental authority or third party of an asserted claim under
Environmental Laws; (iii) each of the Company and each of its
subsidiaries has received all material permits, licenses or other
approvals required of it under applicable Environmental Laws to
conduct its business and is in compliance with all material terms
and conditions of any such permit, license or approval; (iv) to the
Company’s knowledge, no facts currently exist that will
require the Company or any of its subsidiaries to make future
material capital expenditures to comply with Environmental Laws;
and (v) no property which is or has been owned, leased or
occupied by the Company or its subsidiaries has been designated as
a Superfund site pursuant to the Comprehensive Environmental
Response, Compensation of Liability Act of 1980, as amended (42
U.S.C. Section 9601, et. seq.) (“CERCLA”) or
otherwise designated as a contaminated site under applicable state
or local law. Neither the Company nor any of its subsidiaries has
been named as a “potentially responsible party” under
CERCLA.
(bb) In the ordinary course of
its business, the Company periodically reviews the effect of
Environmental Laws on the business, operations and properties of
the Company and its subsidiaries, in the course of which the
Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating
expenditures required for clean up, closure of properties or
compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such
review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a
Material Adverse Effect.
(cc) The Company is not and,
after giving effect to the offering and sale of the Shares and the
application of proceeds thereof as described in the Prospectus,
will not be an “investment company” within the meaning
of the Investment Company Act of 1940, as amended (the
“Investment Company Act”).
(dd) The Company or any other
person associated with or acting on behalf of the Company
including, without limitation, any director, officer, agent or
employee of the Company or its subsidiaries, has not, directly or
indirectly, while acting on behalf of the Company or its
subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
relating to political activity; (ii) made any unlawful payment
to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate
funds; (iii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; (iv) made any other
unlawful payment; or (v) violated the Company’s code of
ethics.
(ee) Except as described the
Prospectus, the Company has not sold or issued any shares of Common
Stock during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Rule 144A under,
or Regulations D or S of, the Securities Act, other than shares
issued pursuant to employee benefit plans, qualified stock options
plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(ff) The Company has fulfilled
its obligations, if any, under the minimum funding standards of
Section 302 of the U.S. 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 its employees 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 “Reportable
Event” (as defined in 12 ERISA) has occurred with respect to
any “Pension Plan” (as defined in ERISA) for which the
Company could have any liability.
(gg) None of the Company or its
directors and officers has distributed and will not distribute
prior to the later of (i) the Closing Date, and
(ii) completion of the distribution of the Shares, any
offering material in connection with the offering and sale of the
Shares other than any preliminary prospectus and the
Prospectus.
(hh) The statistical,
scientific and market-related data included in the Prospectus are
based on or derived from sources which the Company believes to be
reliable and accurate.
(ii) The Company has
established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 under the Exchange Act),
which (i) are designed to ensure that material information
relating to the Company is made known to the Company’s
principal executive officer and its principal financial officer by
others within those entities, particularly during the periods in
which the periodic reports required under the Exchange Act are
being prepared; (ii) provide for the periodic evaluation of the
effectiveness of such disclosure controls and procedures as of the
end of each of the Company’s quarterly and annual fiscal
periods; and (iii), as of the end of the periods covered by each
periodic report filed under the Exchange Act and incorporated by
reference into the Prospectus, were effective in all material
respects to perform the functions for which they were established.
Based on the evaluation of its disclosure controls and procedures,
the Company is not aware of (i) any significant deficiency in
the design or operation of internal controls which could adversely
affect the Company’s ability to record, process, summarize
and report financial data or any material weaknesses in internal
controls; or (ii) any fraud, whether or not material, that
involves management or other employees who have a significant role
in the Company’s internal controls. Since the date of the
most recent evaluation of such disclosure controls and procedures,
there have been no changes that have materially affected, or are
reasonably likely to materially affect, the Company’s
internal control over financial reporting, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
(jj) There are no material
off-balance sheet arrangements (as defined in Item 303 of
Regulation S-K) that have or are reasonably likely to have a
material current or future effect on the Company’s financial
condition, revenues or expenses, changes in financial condition,
results of operations, liquidity, capital expenditures or capital
resources.
(kk) The Company’s Board
of Directors has validly appointed an audit committee whose
composition satisfies the requirements of the American Stock
Exchange Company Guide and the Board of Directors and/or the audit
committee has adopted a charter that satisfies the requirements of
the American Stock Exchange Company Guide. The audit committee has
reviewed the adequacy of its charter within the past twelve
months.
(ll) There is and has been no
failure on the part of the Company and any of the Company’s
directors or officers, in their capacities as such, to comply with
any provision of the Sarbanes Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the
“Sarbanes Oxley Act”), including Section 402
related to loans and Sections 302 and 906 related to
certifications.
(mm) The Company is not a party
to any contract, agreement or understanding with any person that
would give rise to a valid claim against the Company or the
Placement Agents for a brokerage commission, finder’s fee or
like payment in connection with the offering and sale of the
Shares
(nn) The operations of the
Company are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of
the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator
involving the Company with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company, threatened.
(oo) The Company nor, to the
knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any joint
venture partner or other person or entity, for the purpose of
financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
(pp) Neither the Company nor,
to the best of the Company’s knowledge, any employee or agent
of the Company, has made any contribution or other payment to
(i) any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character required
to be disclosed in the Prospectus or (ii) any clinical
researcher in violation of any federal, state or foreign law or any
rule or policy of the Food and Drug Administration
(“FDA”).
(qq) The Company’s
auditors, Deloitte & Touche USA LLP, have performed the
procedures set out in Statement on Auditing Standards No. 101
(“SAS 101”) for a review of interim financial
information and there has nothing that has come to the
Company’s attention that would prevent the auditors from
providing the report as described in SAS 101 on the financial
statements for the quarter ended December 31, 2004 (the
“Quarterly Financial Statements”).
(rr) The consolidated financial
statements incorporated by reference in the Registration Statement
(i) comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
Exchange Act, and the related rules and regulations adopted by the
Commission, (ii) were prepared in accordance with GAAP, and
(iii) are, for the financial information contained therein,
consistent with the audited and unaudited financial statements of
the Company.
Any certificate signed by any officer
of the Company and delivered to the Placement Agents or their
counsel in connection with the offering of the Shares shall be
deemed a representation and warranty by the Company, as to matters
covered thereby, to each Placement Agent.
3. [RESERVED]
4. Conditions of the
Placement Agent’s Obligations . The obligations of the
Placement Agents under this Agreement are several and not joint.
The respective obligations of the Placement Agents are subject to
each of the following terms and conditions:
(a) The Prospectus shall have
been timely filed with the Commission in accordance with Section
5(a) of this Agreement.
(b) No order preventing or
suspending the use of any preliminary prospectus or the Prospectus
shall have been or shall be in effect and no order suspending the
effectiveness of the Registration Statement shall be in effect and
no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional
information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have
been complied with to the satisfaction of the Commission and the
Placement Agents.
(c) The representations and
warranties of the Company contained in this Agreement and in the
certificates delivered pursuant to Section 4(d) shall be true and
correct when made and on and as of the Closing Date as if made on
such date. The Company shall have performed, in all material
respects, all covenants and agreements and satisfied all the
conditions contained in this Agreement required to be performed or
satisfied by it at or before the Closing Date.
(d) The Placement Agents shall
have received on the Closing Date a certificate, addressed to the
Placement Agents and dated the Closing Date, of the chief executive
or chief operating officer and the chief financial officer or chief
accounting officer of the Company to the effect that: (i) the
representations, warranties and agreements of the Company in this
Agreement were true and correct when made and are true and correct
as of the Closing Date; (ii) the Company has performed all
covenants and agreements and satisfied, in all material respects,
all conditions contained herein; (iii) they have carefully
examined the Registration Statement and the Prospectus and, in
their opinion (A) as of the Effective Date, the Registration
Statement did not, and as of its date, the Prospectus 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, in light of the circumstances under
which they were made, not misleading, and (B) since the
Effective Date no event has occurred which should have been set
forth in a supplement or otherwise required an amendment to the
Registration Statement or the Prospectus; and (iv) no stop
order suspending the effectiveness of the Registration Statement
has been issued and, to their knowledge, no proceedings for that
purpose have been instituted or are pending under the Securities
Act.
(e) The Placement Agents shall
have received on the Closing Date a signed letter from Deloitte
& Touche LLP addressed to the Placement Agents and dated the
Closing Date, in the form set forth on Exhibit F attached
hereto, containing statements and information of the type
ordinarily included in accountants’ “comfort
letters” to underwriters with respect to the financial
statements and certain financial information contained in the
Registration Statement and the Prospectus.
(f) The Placement Agents shall
have received on the Closing Date from Heller Ehrman LLP, counsel
for the Company, an opinion, addressed to the Placement Agents and
dated the Closing Date, in the form set forth on Exhibit C
attached hereto.
(g) All proceedings taken in
connection with the sale of the Shares as herein contemplated shall
be reasonably satisfactory in form and substance to the Placement
Agents, and their counsel and the Placement Agents shall have
received from Wilson Sonsini Goodrich & Rosati, a Professional
Corporation, a favorable opinion, addressed to the Placement Agent
and dated the Closing Date, covering such matters as are
customarily covered in transactions of this type, and the Company
shall have furnished to Wilson Sonsini Goodrich & Rosati such
documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(h) The Placement Agents shall
have received copies of the Lock-up Agreements executed by each
person listed on Schedule I hereto.
(i) The Shares shall have been
approved for quotation on the American Stock Exchange and listed
and admitted and authorized for trading on the American Stock
Exchange, subject only to official notice of issuance. Satisfactory
evidence of such actions shall have been provided to the Placement
Agents.
(j) The Placement Agents shall
have received on the Closing Date from Heller Ehrman LLP, special
regulatory counsel for the Company, an opinion, addressed to the
Placement Agents and dated the Closing Date, stating in effect the
matters set forth on Exhibit D hereto.
(k) The Placement Agents shall
have received on the Closing Date from Knobbe Martens Olson &
Bear LLP, special intellectual property counsel for the Company, an
opinion, addressed to the Placement Agents and dated the Closing
Date, stating in effect the matters set forth on Exhibit E
hereto.
(l) The Company shall have
furnished or caused to be furnished to the Placement Agents such
further certificates or documents as the Placement Agents shall
have reasonably requested.
5. Covenants of the
Company.
(a) The Company covenants and
agrees as follows:
(i) The Company shall prepare
the Prospectus in a form approved by the Placement Agent and file
such Prospectus pursuant to Rule 424(b) under the Securities Act
not later than the Commission’s close of business on the
second business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required
by the Rules.
(ii) The Company shall promptly
advise the Placement Agents in writing (A) when any
post-effective amendment to the Registration Statement shall have
become effective or any supplement to the Prospectus shall have
been filed, (B) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus or for
any additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the
use of any preliminary prospectus or the institution or threatening
of any proceeding for that purpose and (D) of the receipt by
the Company of any notification with respect to the suspension of
the qualification of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The
Company shall not file any amendment of the Registration Statement
or supplement to the Prospectus or any document incorporated by
reference in the Registration Statement unless the Company has
furnished each Placement Agent a copy for its review prior to
filing and shall not file any such proposed amendment or supplement
to which the Placement Agents reasonably object. The Company shall
use its best efforts to prevent the issuance of any such stop order
and, if issued, to obtain as soon as possible the withdrawal
thereof.
(iii) If, at any time when a
prospectus relating to the Shares is required to be delivered under
the Securities Act and the Rules, any event occurs as a result of
which the Prospectus as then amended or supplemented would include
any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light
of the circumstances under which they were made not misleading, or
if it shall be necessary to amend or supplement the Prospectus to
comply with the Securities Act or the Rules, the Company promptly
shall prepare and file with the Commission, subject to the second
sentence of paragraph (ii) of this Section 5(a), an
amendment or supplement which shall correct such statement or
omission or an amendment which shall effect such compliance.
(iv) The Company shall make
generally available to its security holders and to the Placement
Agents as soon as practicable an earnings statement which shall
satisfy the provisions of Section 11(a) of the Securities Act or
Rule 158 of the Rules.
(v) The Company shall furnish to
the Placement Agents and counsel for the Placement Agent, without
charge, signed copies of the Registration Statement (including all
exhibits thereto and amendments thereof) and, so long as delivery
of a prospectus by a Placement Agent or dealer may be required by
the Securities Act or the Rules, as many copies of any preliminary
prospectus and the Prospectus and any amendments thereof and
supplements thereto as the Placement Agents may reasonably request.
If applicable, the copies of the Registration Statement and
Prospectus and each amendment and supplement thereto furnished to
the Placement Agents will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(vi) The Company shall cooperate
with the Placement Agents and their counsel in endeavoring to
qualify the Shares for offer and sale in connection with the
offering under the laws of such jurisdictions as the Placement
Agents may designate and shall maintain such qualifications in
effect so long as required for the distribution of the Shares;
provided, however, that the Company shall not be required in
connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation as doing
business in any jurisdiction.
(vii) The Company, during the
period when the Prospectus is required to be delivered under the
Securities Act and the Rules or the Exchange Act, will file all
reports and other documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the Exchange
Act within the time periods required by the Exchange Act and the
regulations promulgated thereunder.
(viii) Without the prior written
consent of CIBC World Markets Corp., for a period of 60 days
after the date of this Agreement, the Company shall not issue, sell
or register with the Commission (other than on Form S-8 or on any
successor form), or otherwise dispose of, directly or indirectly,
any equity securities of the Company (or any securities convertible
into, exercisable for or exchangeable for equity securities of the
Company), except for: (i) the issuance of the Shares pursuant
to the Registration Statement; (ii) the issuance of shares
pursuant to the Company’s existing employee benefit plans or
upon exercise of outstanding warrants as described in the
Registration Statement and the Prospectus; (iii) any corporate
strategic development transaction; provided that in each of cases
(iii) none of these securities may be transferred within such
60-day period and the Company shall enter stop transfer
instructions with its transfer agent and registrar with respect to
any such securities; or (iv) the registration with the
Commission of 2,000,000 shares of Class A common stock issued
to IriSys, Inc. on March 8, 2005. In the event that during
this period any shares are issued to any person identified on
Schedule I hereto, such shares shall be subject to the Lock-Up
Agreement executed by such person.
(ix) On or before completion of
this offering, the Company shall make all filings required under
applicable securities laws and by the American Stock Exchange
(including any required registration under the Exchange Act).
(x) Prior to the Closing Date,
the Company will issue no press release or other communications
directly or indirectly and hold no press conference with respect to
the Company, the condition, financial or otherwise, or the
earnings, business affairs or business prospects of any of them, or
the offering of the Shares without the prior written consent of the
Placement Agents unless in the judgment of the Company and its
counsel, and after notification to the Placement Agents, such press
release or communication is required by law.
(xi) The Company will apply the
net proceeds from the offering of the Shares in the manner set
forth under “Use of Proceeds” in the Prospectus.
(b) The Company agrees to pay,
or reimburse if paid by the Placement Agents, whether or not the
transactions contemplated hereby are consummated or this Agreement
is terminated, all costs and expenses incident to the performance
of the obligations of the Company under this Agreement including
those relating to: (i) the preparation, p
