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Exhibit
10.1
2,781,100
Shares
Warrants to Purchase
1,390,550 Shares
SCOLR PHARMA,
INC.
Common
Stock
PLACEMENT AGENCY
AGREEMENT
November 28,
2007
THINKEQUITY PARTNERS LLC
31 West 52nd Street
Suite 1700
New York, New York 10019
Ladies and Gentlemen:
SCOLR Pharma, Inc., a
Delaware corporation (the “ Company ”), proposes
to issue and sell to certain investors (each, an “
Investor ” and, collectively, the “
Investors ”), (i) up to an aggregate of 2,781,100
shares (the “ Shares ”) of the Company’s
common stock, par value $0.001 per share (the “ Common
Stock ”), and (ii) warrants to purchase up to
1,390,550 shares of Common Stock (the “ Warrants
” and, together with the Shares, the “
Securities ”). The shares of Common Stock issuable
upon exercise of the Warrants are hereinafter referred to as the
“ Warrant Shares. ” The Company desires to
engage ThinkEquity Partners LLC (the “ Placement Agent
”) as its exclusive placement agent in connection with such
issuance and sale of the Securities.
The Company has prepared and
filed with the Securities and Exchange Commission (the “
Commission ”) a registration statement on Form S-3
(File No. 333-129275) under the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the “ Securities Act ”), and such
amendments to such registration statement as may have been required
to the date of this Agreement. Such registration statement has been
declared effective by the Commission. Such registration statement,
at any given time, including amendments thereto at such time, the
exhibits and any schedules thereto at such time, the documents
incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Securities Act at such time and the documents and
information otherwise deemed to be a part thereof or included
therein by Rule 430A, 430B or 430C under the Securities Act or
otherwise pursuant to the Securities Act at such time, is herein
called the “ Registration Statement .” Any
registration statement filed by the Company in connection with the
Registration Statement pursuant to Rule 462(b) under the Securities
Act is called the “ Rule 462(b) Registration
Statement, ” and, from and after the date and time of
filing of the Rule 462(b) Registration Statement, the term “
Registration Statement ” shall include the Rule 462(b)
Registration Statement.
The Company proposes to file
with the Commission pursuant to Rule 424 under the Securities Act a
final prospectus supplement to the form of prospectus included in
the Registration Statement in the form heretofore delivered to the
Placement Agent. Such prospectus included in the Registration
Statement at the time it was declared effective by the Commission
or in the form in which it has been most recently filed with the
Commission on or prior to the date of this Agreement is hereinafter
called the “ Base Prospectus .” Such prospectus
supplement, in the form in which it shall be filed with the
Commission pursuant to Rule 424(b) (including the Base Prospectus
as so supplemented) is hereinafter called the “
Prospectus .” Any preliminary form of Prospectus which
is filed or used prior to filing of the Prospectus is hereinafter
called a “ Preliminary Prospectus .” Any
reference herein to the Base Prospectus, any Preliminary Prospectus
or the Prospectus or to any amendment or supplement to any of the
foregoing shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Securities Act as of the date of such prospectus,
and, in the case of any reference herein to the Prospectus, also
shall be deemed to include any documents incorporated by reference
therein, and any supplements or amendments thereto, filed with the
Commission after the date of filing of the Prospectus under Rule
424(b) under the Securities Act, and prior to the termination of
the offering of the Securities.
For purposes of this
Agreement, all references to the Registration Statement, the Base
Prospectus, any Preliminary Prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval System (“
EDGAR ”). Any reference in this Agreement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include any documents incorporated by reference therein
pursuant to Form S-3 under the Securities Act, as of the date of
such Registration Statement or prospectus; any reference to any
amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents
filed under the Exchange Act, and incorporated therein, in each
case after the date of any Preliminary Prospectus or the
Prospectus, as the case may be; any reference to any amendment to
the Registration Statement shall be deemed to refer to and include
any annual report of the Company filed pursuant to
Section 13(a) or 15(d) of the Exchange Act after the effective
date of the Registration Statement that is incorporated by
reference in the Registration Statement.
1. Agreement to Act as
Placement Agent; Delivery and Payment . On the basis of the
representations, warranties and agreements of the Company herein
contained, and subject to the terms and conditions set forth in
this Agreement:
(a) The Company hereby
engages the Placement Agent to act as its exclusive placement agent
in connection with the offer and sale by the Company of Securities
to the Investors. The Placement Agent hereby agrees, as agent of
the Company, to use its best efforts to solicit offers to purchase
the Securities from the Company upon the terms and conditions set
forth in the Prospectus. Prior to the earlier of (i) the date
on which this Agreement is terminated and (ii) the Closing
Date (as defined below), the Company shall not, without the prior
written consent of the Placement Agent, solicit or accept offers to
purchase the 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 Agent in accordance herewith.
(b) Upon the occurrence of
the Closing (as defined below), as compensation for services
rendered, the Company shall pay to the Placement Agent an aggregate
of six percent (6.0%) of the gross proceeds received by the
Company from its sale of the Securities (the “ Placement
Fee ”); provided , that the total amount of the
Placement Fee paid to the Placement Agent shall be reduced by
$112,509 and the Company shall pay $112,509 to Taglich Brothers,
Inc. as full compensation for its services as financial advisor to
the Company in connection with the offering of the Securities. The
Company expressly acknowledges and agrees that the Placement
Agent’s obligations hereunder are on a best efforts basis and
this Agreement shall not give rise to a commitment by the Placement
Agent or any of its affiliates to underwrite or purchase any of the
Securities or otherwise provide any financing, and the Placement
Agent shall have no authority to bind the Company in respect of the
sale of any Securities. The sale of the Securities shall be made
pursuant to subscription agreements in the form included as
Exhibit A hereto (the “ Subscription Agreements
”). The Placement Agent shall communicate to the Company each
reasonable offer or indication of interest received by it to
purchase Securities. The Company shall have the sole right to
accept offers to purchase the Securities and may, at the
Company’s sole discretion, reject any such offer in whole or
in part, and, except as set forth in the following proviso and in
Section 4 hereof, in no event shall fees be payable by the
Company on any proposed purchase that is rejected for any reason or
that otherwise does not close for any reason; provided,
however, that if at any time prior to June 30, 2008 the
Company shall sell securities, or enter into an agreement to sell
securities that subsequently results in the consummation of the
sale of securities, to any person whose offer or indication of
interest to purchase Securities in this Offering was rejected, in
whole or in part, by the Company or whose purchase of Securities in
this Offering did not close for any reason, then the Company shall
pay to the Placement Agent in cash at the time such subsequent sale
is completed an aggregate of six percent (6.0%) of the gross
proceeds received by the Company from any such subsequent sale of
securities . Notwithstanding the foregoing, it is understood and
agreed that the Placement Agent or any of its affiliates may,
solely at its discretion and without any obligation to do so,
purchase Securities as principal; provided , however
, that any such purchases by the Placement Agent (or its
affiliates) shall be fully disclosed to the Company and approved by
the Company in accordance with the previous sentence.
(c) Concurrently with the
execution and delivery of this Agreement, the Company, the
Placement Agent and Heller Ehrman LLP, as escrow agent (the “
Escrow Agent ”), shall enter into an escrow agreement
(the “ Escrow Agreement ”), pursuant to which an
escrow account (the “ Escrow Account ”) will be
established for the benefit of the Company and the Investors. Prior
to the
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Closing, each such Investor shall
deposit into the Escrow Account an amount equal to the product of
(x) the number of Securities such Investor has agreed to
purchase and (y) the purchase price per unit of Securities as
set forth on the cover page of the Prospectus (the “
Purchase Amount ”). The aggregate of all such Purchase
Amounts deposited by all of the Investors is herein referred to as
the “ Escrow Funds .” On the Closing Date, the
Company and the Placement Agent shall cause the Escrow Agent to
disburse the Escrow Funds to the Company and the Placement Agent as
provided in the Escrow Agreement and the Company shall, or shall
cause its transfer agent to, deliver the Securities purchased by
such Investors.
(d) Payment of the purchase
price for, and delivery of, the Securities shall be made at a
closing (the “ Closing ”) at the offices of DLA
Piper US LLP, counsel for the Company, located at 701 Fifth Avenue,
Suite 7000, Seattle, Washington 98104, at 10:00 a.m., local time,
on the third or fourth business day (as permitted under Rule 15c6-1
under the Securities Exchange Act of 1934, as amended (collectively
with the rules and regulations promulgated thereunder, the “
Exchange Act ”)), after the determination of the
public offering price of the Securities (such date of payment and
delivery being herein called the “ Closing Date
”). All such actions taken at the Closing shall be deemed to
have occurred simultaneously. No Securities which the Company has
agreed to sell pursuant to this Agreement and the Subscription
Agreements shall be deemed to have been purchased and paid for by
an Investor, or sold by the Company, until such Securities shall
have been delivered to such Investor against payment therefor by
such Investor. If the Company shall default in its obligations to
deliver Securities to an Investor whose offer it has accepted, the
Company shall indemnify and hold the Placement Agent harmless
against any loss, claim or damage arising from or as a result of
such default by the Company.
(e) The Securities shall be
registered in such names and in such denominations as the Placement
Agent shall request by written notice delivered to the Company at
least two (2) business days prior to the Closing Date and as
shall have been agreed to by the Company pursuant to
Section 1(b) hereof.
2. Representations and
Warranties of the Company . The Company represents and warrants
to the Placement Agent as follows:
(a) Registration
Statement . The Company and the transactions contemplated by
this Agreement meet the requirements and comply with the conditions
for the use of Form S-3 under the Securities Act. The offering of
the Securities by the Company complies with the applicable
requirements of Rule 415 under the Securities Act. The Company has
complied to the Commission’s satisfaction with all requests
of the Commission for additional or supplemental information. The
Registration Statement has become effective under the Securities
Act. No stop order preventing or suspending use of the Registration
Statement, any Preliminary Prospectus or the Prospectus or the
effectiveness of the Registration Statement, has been issued by the
Commission, and no proceedings for such purpose have been
instituted or, to the Company’s knowledge, are contemplated
or threatened by the Commission.
(b) Compliance with
Registration Requirements . Each part of the Registration
Statement or any post-effective amendment thereto, at the time such
part became effective (including each deemed effective date with
respect to the Placement Agent pursuant to Rule 430A or Rule 430B
under the Securities Act) and as of the Closing Date, complied and
will comply, in all material respects, with the requirements of the
Securities Act and did not and 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 Prospectus, at the time of filing or
the time of first use within the meaning of the Securities Act and
as of the Closing Date, complied and will comply, in all material
respects, with the requirements of the Securities Act and did not
and will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided, that the Company makes no
representations or warranty in this paragraph with respect to any
Placement Agent Information (as defined in Section 7
).
(c) Disclosure Package
. As of the Time of Sale (as defined below) and as of the Closing
Date, neither (A) any Issuer General Free Writing
Prospectus(es) (as defined below) issued at or prior to the Time of
Sale, the Statutory Prospectus (as defined below) and the
information included on Exhibit E hereto (which information
the Placement Agent hereby agrees to convey orally to prospective
purchasers at or prior to confirming sales of the Securities in the
offering), all considered together (collectively, the “
Disclosure Package ”), nor (B) any individual
Issuer Limited-Use Free Writing Prospectus (as defined below), when
considered together with the Disclosure Package, included or will
include any untrue statement of a material fact or omitted or will
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made,
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not misleading; provided, that the
Company makes no representations or warranty in this paragraph with
respect to any Placement Agent Information (as defined in
Section 7). No statement of material fact included in the
Prospectus has been omitted from the Disclosure Package and no
statement of material fact included in the Disclosure Package that
is required to be included in the Prospectus has been omitted
therefrom. As used in this paragraph and elsewhere in this
Agreement:
(1) “ Time of
Sale ” with respect to any Investor, means 10:00 a.m.
Eastern time on the Business Day immediately following the date of
this Agreement.
(2) “ Statutory
Prospectus ” as of any time means the Prospectus
(including any Preliminary Prospectus), as amended or supplemented
immediately prior to the Time of Sale, including any document
incorporated by reference therein.
(3) “ Issuer Free
Writing Prospectus ” means any “issuer free writing
prospectus,” as defined in Rule 433 under the Securities Act
(“Rule 433”), relating to the Securities in the form
filed or required to be filed with the Commission or, if not
required to be filed, in the form retained in the Company’s
records pursuant to Rule 433(g) under the Securities
Act.
(4) “ Issuer General
Free Writing Prospectus ” means any Issuer Free Writing
Prospectus that is intended for general distribution to prospective
investors as identified on Schedule I hereto, and does not
include a “bona fide electronic road show” as defined
in Rule 433.
(5) “ Issuer
Limited-Use Free Writing Prospectus ” means any Issuer
Free Writing Prospectus that is not an Issuer General Free Writing
Prospectus, including any “bona fide electronic road
show” as defined in Rule 433, that is made available without
restriction pursuant to Rule 433(d)(8)(ii), even though not
required to be filed with the Commission.
(d) Conflict with
Registration Statement . Each Issuer Free Writing Prospectus,
as of its issue date and at all subsequent times through the
completion of the offering and sale of the Securities or until any
earlier date that the Company notified or notifies the Placement
Agent, did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information
contained in the Registration Statement, any Statutory Prospectus
or the Prospectus including any document incorporated by reference
therein and any prospectus supplement deemed to be a part thereof
that has not been superseded or modified; provided , that
the Company makes no representations or warranty in this paragraph
with respect to any Placement Agent Information.
(e) Distributed
Materials . The Company has not, directly or indirectly,
distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the
Securities other than any Preliminary Prospectus, the Disclosure
Package or the Prospectus, and other materials, if any, permitted
under the Securities Act to be distributed and consistent with
Section 3(d) below. The Company will file with the
Commission all Issuer Free Writing Prospectuses required to be
filed in the time required under Rule 433(d) under the Securities
Act. The Company has satisfied or will satisfy the conditions in
Rule 433 under the Securities Act to avoid a requirement to file
with the Commission any electronic road show in connection with the
offering of the Securities. The parties hereto agree and understand
that the content of any and all “road shows” related to
the offering of the Securities contemplated hereby is solely the
property of the Company.
(f) Not an Ineligible
Issuer . (1) At the time of filing the Registration
Statement and (2) at the date hereof, the Company was not and
is not an “ineligible issuer,” as defined in Rule 405
under the Securities Act, without taking account of any
determination by the Commission pursuant to Rule 405 that it is not
necessary that the Company be considered an ineligible issuer,
including, without limitation, for purposes of Rules 164 and 433
under the Securities Act with respect to the offering of the
Securities as contemplated by the Prospectus.
(g) Incorporated
Documents . The documents incorporated by reference in the
Disclosure Package and in the Prospectus, when they became
effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and were filed
on a timely basis with the Commission and none of such documents
contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
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(h) Due Incorporation
. The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
Delaware, with the corporate power and authority to own its
properties and to conduct its business as currently being carried
on and as described in the Registration Statement, the Disclosure
Package and the Prospectus. The Company is duly authorized to
transact business as a foreign corporation and validly exists under
the laws of Washington and each other jurisdiction in which its
ownership or leasing of property or the conduct of its business
requires such qualification, except where the failure to be so
qualified and in good standing would not, individually or in the
aggregate, result in any material adverse effect upon, or material
adverse change in, the general affairs, business, operations,
properties, financial condition, or results of operations or
prospects of the Company taken as a whole (a “ Material
Adverse Effect ”).
(i) Subsidiaries . The
Company has no significant subsidiaries (as such term is defined in
Rule 1-02(w) of Regulation S-X promulgated by the Commission) and
does not own any beneficial interest, directly or indirectly, in
any corporation, partnership, joint venture or other business
entity.
(j) Capitalization .
All of the issued and outstanding shares of capital stock of the
Company, including the outstanding shares of Common Stock, have
been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, were not issued in violation of any
preemptive right or other rights to subscribe for or to purchase or
acquire any securities of the Company that have not been waived in
writing.
(k) The Securities .
The Shares have been duly and validly authorized by the Company
and, when issued, delivered and paid for in accordance with the
terms of this Agreement and the Subscription Agreements, will have
been duly and validly issued and will be fully paid and
nonassessable and will not be subject to any statutory or
contractual preemptive rights or other rights to subscribe for or
to purchase or acquire any shares of Common Stock of the Company
which have not been waived or complied with. The Warrants conform,
or when issued will conform, to the description thereof contained
in the Disclosure Package and the Prospectus and have been duly and
validly authorized by the Company and upon delivery to the
Investors at the Closing Date will be valid and binding obligations
of the Company, enforceable in accordance with their terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights and
remedies of creditors generally or subject to general principles of
equity. The Warrant Shares initially issuable upon exercise of the
Warrants have been duly and validly authorized and reserved for
issuance by the Company and when issued, delivered and paid for in
accordance with the terms thereof, will have been duly and validly
issued and will be fully paid and non-assessable and will not be
subject to any statutory or contractual preemptive rights or other
rights to subscribe for or to purchase or acquire any shares of
Common Stock of the Company which have not been waived or complied
with.
(l) No Registration
Rights . Neither the filing of the Registration Statement nor
the offering or sale of the Securities as contemplated by this
Agreement gives rise to any rights, other than those which have
been duly waived or satisfied, for or relating to the registration
of any shares of Common Stock or other securities of the Company
which have not been duly waived or complied with.
(m) Description of Capital
Stock . The capital stock of the Company, including the
Securities, conforms as to legal matters to the description
thereof, if any, contained or incorporated by reference in the
Registration Statement, the Disclosure Package and the Prospectus,
and the Company had authorized and outstanding capital stock as set
forth or incorporated by reference in the Prospectus as of the date
thereof. The certificates for the Securities are in due and proper
form and the holders of the Securities will not be subject to
personal liability by reason of being such holders.
(n) Due Authorization and
Enforceability . This Agreement and each Subscription Agreement
has been duly authorized, executed and delivered by the Company,
and constitutes a valid, legal and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except as rights to indemnity hereunder may be limited by
federal or state securities laws and except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization
or similar laws affecting the rights of creditors generally and
subject to general principles of equity.
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(o) No Violation . The
Company is not in breach or violation of or in default (nor has any
event occurred which with notice, lapse of time or both would
result in any breach or violation of, or constitute a default)
(i) under the provisions of its certificate of incorporation
or bylaws or (ii) in the performance or observance of any
term, covenant, obligation, agreement or condition contained in any
indenture, mortgage, deed of trust, bank loan or credit agreement
or other evidence of indebtedness, or any license, lease, contract
or other agreement or instrument to which the Company is a party or
by which any of its properties may be bound or affected, or
(iii) in the performance or observance 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 any of its properties, as applicable (including, without
limitation, those administered by the Food and Drug Administration
of the U.S. Department of Health and Human Services (the “
FDA ”) or by any foreign, federal, state or local
governmental or regulatory authority performing functions similar
to those performed by the FDA), except, with respect to clauses
(ii) and (iii) above, to the extent any such
contravention has been duly waived or would not result in a
Material Adverse Effect.
(p) No Conflict . The
execution, delivery and performance by the Company of this
Agreement, each Subscription Agreement and the Escrow Agreement and
the consummation of the transactions herein contemplated, including
the issuance and sale by the Company of the Securities and the
issuance of the Warrant Shares upon due exercise of the Warrants in
accordance with their terms will not conflict with or result in a
breach or violation of, or constitute a default under (nor
constitute any event which with notice, lapse of time or both would
result in any breach or violation of or constitute a default under)
(i) the provisions of the certificate of incorporation or
by-laws of the Company, (ii) any material indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or
instrument to which the Company is a party or by which it or any of
its properties may be bound or affected, except for such conflicts,
breaches or violations that will not, individually or in the
aggregate, result in a Material Adverse Effect, or (iii) any
material federal, state, local or foreign law, regulation or rule
or any decree, judgment or order applicable to the
Company.
(q) No Consents
Required . No approval, authorization, consent or order of or
filing with any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, or of or
with any self-regulatory organization or other non-governmental
regulatory authority (including, without limitation, the American
Stock Exchange (the “AmEx”)), or approval of the
stockholders of the Company is required in connection with the
issuance and sale of the Securities or the consummation by the
Company of the transactions contemplated hereby other than
(i) as may be required under the Securities Act, (ii) any
necessary qualification of the Securities under the securities or
blue sky laws of the various jurisdictions in which the Securities
are being offered by the Placement Agent and (iii) under the
rules and regulations of the Financial Industry Regulatory
Authority (“ FINRA ”). The Company has full
power and authority to enter into this Agreement and each
Subscription Agreement and to authorize, issue and sell the
Securities as contemplated by this Agreement and each Subscription
Agreement.
(r) Absence of Material
Changes . Subsequent to the respective dates as of which
information is given in the Disclosure Package, except as disclosed
in any documents the Company files with or furnishes to the
Commission under the Exchange Act after such date and prior to the
termination of the offering of the Securities, (i) the Company
has not incurred any material liability or obligation, direct or
contingent, or entered into any material transaction not in the
ordinary course of business; (ii) the Company has not
purchased any of the Company’s outstanding capital stock, or
declared, paid or otherwise made any dividend or distribution of
any kind on the Company’s capital stock; and (iii) there
has not been any change in the capital stock (other than a change
in the number of outstanding shares of Common Stock due to the
issuance of shares upon the exercise of outstanding options or
warrants or the conversion of convertible indebtedness), or
material change in the short-term debt or long-term debt of the
Company (other than upon conversion of convertible indebtedness) or
any issue of options, warrants, convertible securities or other
rights to purchase the capital stock (other than grants of stock
options under the Company’s stock option plans existing on
the date hereof) of the Company, or any Material Adverse
Effect.
(s) Permits . The
Company possesses all necessary licenses, authorizations, consents
and approvals and has made all necessary filings required under any
federal, state, local or foreign law, regulation or rule
(including, without limitation, those from
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the FDA, and any other foreign, federal,
state or local government or regulatory authorities performing
functions similar to those performed by the FDA), in order to
conduct its business as currently conducted. The Company is not in
violation of, or in default under, or has received notice of any
proceedings relating to revocation or modification of, any such
license, authorization, consent or approval except where such
violation, default or proceedings would not, individually or in the
aggregate, have a Material Adverse Effect. The Company is in
compliance in all material respects with all applicable federal,
state, local and foreign laws, regulations, orders or decrees,
except where the failure to be in compliance would not have a
Material Adverse Effect.
(t) Legal Proceedings
. There are no legal or governmental proceedings pending or, to the
Company’s knowledge, threatened or contemplated to which the
Company is or would be a party or of which any of its properties is
or would be subject at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission,
board, body, authority or agency, or before or by any
self-regulatory organization or other non-governmental regulatory
authority (including, without limitation, the AmEx), except
(i) as described in the Registration Statement, the
Prospectus, and the Disclosure Package, (ii) any such
proceeding, which, if resolved adversely to the Company, would not
result in a judgment, decree or order having, individually or in
the aggregate, a Material Adverse Effect or (iii) any such
proceeding that would not prevent or materially and adversely
affect the ability of the Company to consummate the transactions
contemplated hereby. The Disclosure Package contains in all
material respects the same description of the foregoing matters
contained in the Prospectus.
(u) Statutes;
Contracts . There are no statutes or regulations applicable to
the Company or contracts or other documents of the Company which
are required to be described in the Registration Statement, the
Disclosure Package or the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act, which have not been
so described or filed.
(v) Independent
Accountants . Grant Thornton LLP, who has certified certain of
the financial statements of the Company, is (i) an independent
public accounting firm within the meaning of the Securities Act,
(ii) a registered public accounting firm (as defined in
Section 2(a)(12) of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”)), and (iii) not in violation
of the auditor independence requirements of the Sarbanes-Oxley
Act.
(w) Financial
Statements . The financial statements of the Company, together
with the related schedules and notes thereto, set forth or
incorporated by reference in the Registration Statement, the
Disclosure Package and the Prospectus, comply in all material
respects with the applicable requirements of the Securities Act and
the Exchange Act, as applicable, and present fairly in all material
respects (i) the financial condition of the Company, taken as
a whole, as of the dates indicated and (ii) the consolidated
results of operations, stockholders’ equity and changes in
cash flows of the Company, taken as a whole, for the periods
therein specified; and such financial statements and related
schedules and notes thereto have been prepared in conformity with
United States generally accepted accounting principles,
consistently applied throughout the periods involved (except as
otherwise stated therein and subject, in the case of unaudited
financial statements, to the absence of footnotes and normal
year-end adjustments). There are no other financial statements
(historical or pro forma) that are required to be included in the
Registration Statement, the Disclosure Package and the Prospectus;
and the Company does not have any material liabilities or
obligations, direct or contingent (including any off-balance sheet
obligations), not disclosed in the Registration Statement, the
Disclosure Package and the Prospectus; and all disclosures
contained in the Registration Statement, the Disclosure Package and
the Prospectus regarding “non-GAAP financial measures”
(as such term is defined by the rules and regulations of the
Commission) comply with Regulation G of the Exchange Act and
Item 10(e) of Regulation S-K promulgated by the Commission, to
the extent applicable, and present fairly the information shown
therein and the Company’s basis for using such
measures.
(x) No Material Adverse
Change . There has not been any material adverse change in the
business, properties, management, financial condition or results of
operations of the Company taken as a whole, from that set forth in
the Disclosure Package (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(y) Not an Investment
Company . The Company is not, nor after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, will be required
to register as an “investment company” as defined in
the Investment Company Act of 1940, as amended (the “
Investment Company Act ”).
- 7 -
(z) Good Title to
Property . The Company has good and valid title to all property
(whether real or personal) described in the Registration Statement,
the Disclosure Package and the Prospectus as being owned by it, in
each case free and clear of all liens, claims, security interests,
other encumbrances or defects, except such as are described in the
Registration Statement, the Disclosure Package and the Prospectus
and those that would not, individually or in the aggregate,
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such
property by the Company. All of the property described in the
Registration Statement, the Disclosure Package and the Prospectus
as being held under lease by the Company is held thereby under
valid, subsisting and enforceable leases, without any liens,
restrictions, encumbrances or claims, except those that,
individually or in the aggregate, are not material and do not
materially interfere with the use made and proposed to be made of
such property by the Company.
(aa) Intellectual Property
Rights . The Company owns, or has obtained valid and
enforceable licenses for, or other rights to use, the inventions,
patent applications, patents, trademarks (both registered and
unregistered), tradenames, copyrights, trade secrets and other
proprietary information described in the Registration Statement,
the Disclosure Package and the Prospectus as being owned or
licensed by it or which are necessary for the conduct of all or any
material part of its business, except where the failure to own,
license or have such rights would not, individually or in the
aggregate, result in a Material Adverse Effect (collectively,
“ Intellectual Property ”); except as described
in the Registration Statement, the Disclosure Package and the
Prospectus (i) to the Company’s knowledge, there are no
third parties who have or will be able to establish rights to any
Intellectual Property, except for the ownership rights of the
owners of the Intellectual Property which is licensed to the
Company; (ii) to the Company’s knowledge, there is no
infringement by third parties of any Intellectual Property;
(iii) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others
challenging the Company’s rights in or to, or the validity,
enforceability, or scope of, any Intellectual Property owned by or
licensed to the Company, and the Company is unaware of any facts
that could form a reasonable basis for any such claim;
(iv) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the
Company infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any facts which could form a reasonable
basis for any such claim; (v) to the Company’s
knowledge, there is no material patent or patent application that
contains claims that interfere with the issued or pending claims of
any of the Intellectual Property; and (vi) to the
Company’s knowledge, there is no prior art that may render
any material patent owned by the Company invalid, nor is there any
prior art known to the Company that may render any material patent
application owned by the Company unpatentable.
(bb) Taxes . The
Company has timely filed all material federal, state, local and
foreign income and franchise tax returns (or timely filed
applicable extensions therefor) that have been required to be filed
and is not in default in the payment of any material amount of
taxes which were payable pursuant to said returns or any
assessments with respect thereto, other than any which the Company
is contesting in good faith and for which adequate reserves have
been provided and reflected in the Company’s financial
statements included or incorporated by reference in the
Registration Statement, the Disclosure Package and the Prospectus.
The Company has no tax deficiency that has been or, to the
knowledge of the Company, might be asserted or threatened against
it that would result in a Material Adverse Effect.
(cc) Insurance . The
Company maintains 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 as of the
Closing Date. The Company has no reason to believe that it will not
be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost
that would not have a Material Adverse Effect.
(dd) Accounting
Controls . The Company 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 authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
- 8 -
(ee) Disclosure
Controls . The Company has established, maintains and evaluates
“disclosure controls and procedures” (as such term is
defined in Rule 13a-15(e) and 15d-15(e) 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) have been evaluated for effectiveness as
of the end of the last fiscal period covered by the Registration
Statement; and (iii) such disclosure controls and procedures
are effective to perform the functions for which they were
established. Except as described in the Registration Statement,
there are no significant deficiencies or material weaknesses in the
design or operation of internal controls which could adversely
affect the Company’s ability to record, process, summarize,
and report financial data to management and the Board of Directors.
The Company is not aware of any fraud, whether or not material,
that involves management or other employees who have a role in the
Company’s internal controls; and since the date of the most
recent evaluation of such disclosure controls and procedures, there
have been no significant changes in internal controls or in other
factors that could significantly affect internal controls,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
(ff) Corrupt Practices
. Neither the Company nor, to the Company’s knowledge, any
other person associated with or acting on behalf of the Company,
including without limitation any director, officer, agent,
representative or employee of the Company has, directly or
indirectly, while acting on behalf of the Company (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, or (iv) made any other unlawful
payment that would result in a Material Adverse Effect.
(gg) No Price
Stabilization . Neither the Company nor, to the Company’s
knowledge, any of its officers, directors, affiliates or
controlling persons has taken or will take, directly or indirectly,
any action designed 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 any security of the
Company to facilitate the sale or resale of the
Securities.
(hh) No Undisclosed
Relationships . No relationship, direct or indirect, exists
between or among the Company on the one hand and the directors,
officers, stockholders, customers or suppliers of the Company on
the other hand which is required to be described in the
Registration Statement, the Disclosure Package and the Prospectus,
which has not been so described.
(ii) Sarbanes-Oxley
Act . The Company and, to its knowledge after due inquiry, all
of the Company’s directors and officers, in their capacities
as such, are in compliance in all material respects with all
applicable effective provisions of the Sarbanes-Oxley Act and any
related rules and regulations promulgated by the
Commission.
(jj) Brokers Fees .
Except for a $112,509 fee payable to Taglich Brothers, Inc. for
services as financial advisor to the Company, which fee shall be
payable out of the Placement Fee, the Company is not a party to any
contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against the
Company or the Placement Agent for a brokerage commission,
finder’s fee or other like payment in connection with the
offering and sale of the Securities.
(kk) Exchange Act
Requirements . The Company has filed in a timely manner all
reports required to be filed pursuant to Sections 13(a), 13(e), 14
and 15(d) of the Exchange Act during the preceding 12 months
(except to the extent that Section 15(d) requires reports to
be filed pursuant to Sections 13(d) and 13(g) of the Exchange Act,
which shall be governed by the next clause of this sentence); and
the Company has filed in a timely manner all reports required to be
filed pursuant to Sections 13(d) and 13(g) of the Exchange Act
since January 1, 2004.
(ll) FINRA
Affiliations . To the Company’s knowledge, there are no
affiliations or associations between (i) any member of FINRA
and (ii) the Company or any of the Company’s officers,
directors or 5% or greater security holders, except as set forth in
the Registration Statement, the Disclosure Package and the
Prospectus.
- 9 -
(mm) Compliance with
Environmental Laws . The Company (i) is in compliance with
any and all applicable foreign, federal, state and local laws,
orders, rules, regulations, directives, decrees and judgments
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 all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business and (iii) is in compliance with all terms and
conditions of any such permit, license or approval, except where
such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or
approvals would not, individually or in the aggregate, result in a
Material Adverse Effect. There are no costs or liabilities
associated with Environmental Laws (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) which
could, individually or in the aggregate, result in a Material
Adverse Effect.
(nn) No Labor Disputes
. Except for matters that could not, individually or in the
aggregate, result in a Material Adverse Effect (i) there is
(A) no unfair labor practice complaint pending or, to the
Company’s knowledge after due inquiry, threatened against the
Company before the National Labor Relations Board, and no grievance
or arbitration proceeding arising out of or under collective
bargaining agreements is pending or threatened, (B) no strike,
labor dispute, slowdown or stoppage pending or, to the
Company’s knowledge after due inquiry, threatened against the
Company and (C) no union representation dispute currently
existing concerning the employees of the Company, and (ii) to
the Company’s knowledge (A) no union organizing
activities are currently taking place concerning the employees of
the Company and (B) there has been no violation of any
federal, state, local or foreign law relating to discrimination in
the hiring, promotion or pay of employees or any applicable wage or
hour laws concerning the employees of the Company.
(oo) ERISA . The
Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder (“ ERISA
”); no “reportable event” (as defined in ERISA)
has occurred with respect to any “pension plan” (as
defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any “pension plan” or
(ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published
interpretations thereunder (the “Code”); and each
“pension plan” for which the Company would have any
liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure
to act, which would cause the loss of such
qualification.
(pp) AmEx; Exchange Act
Registration . The Common Stock is registered pursuant to
Section 12(b) of the Exchange Act and is listed on the AmEx,
and the Company has taken no action designed to, or likely to have
the effect of, termination the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the AmEx,
nor has the Company received any notification that the Commission
or FINRA is contemplating terminating such registration or listing.
The Company has complied in all material respects with the
applicable requirements of the AmEx for maintenance of listing of
the Common Stock thereon.
(qq) Statistical or
Market-Related Data . Any statistical, industry-related and
market-related data included or incorporated by reference in the
Registration Statement, the Disclosure Package and the Prospectus,
are based on or derived from sources that the Company reasonably
and in good faith believes to be reliable and accurate, and such
data agree with the sources from which they are derived.
(rr) Clinical Studies
. The clinical, pre-clinical and other studies and tests conducted
by or on behalf of or sponsored by the Company or in which the
Company or its products or product candidates have participated
that are described in the Registration Statement, the Disclosure
Package and the Prospectus were and, if still pending, are being
conducted in accordance in all material respects with all statutes,
laws, rules and regulations, as applicable (including, without
limitation, those administered by the FDA or by any foreign,
federal, state or local governmental or regulatory authority
performing functions similar to those performed by the
- 10 -
FDA) and with standard medical and
scientific research procedures. The descriptions in the
Registration Statement, the Disclosure Package and the Prospectus
of the results of such studies and tests are accurate and complete
in all material respects and fairly present the published data
derived from such studies and tests. The Company has not received
any notices or other correspondence from the FDA or any other
foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the
FDA with respect to any ongoing clinical or pre-clinical studies or
tests requiring the termination, suspension or material
modification of such studies or tests, which termination,
suspension or material modification could reasonably be expected to
result in a Material Adverse Effect. The Company is in compliance
with all applicable federal, state, local and foreign laws,
regulations, orders and decrees governing its business as
prescribed by the FDA, or any other federal, state or foreign
agencies or bodies, including those bodies and agencies engaged in
the regulation of pharmaceuticals or biohazardous substances or
materials, except where noncompliance could not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse
Effect.
Any certificate signed by any
officer of the Company and delivered to the Placement Agent or to
counsel for the Placement Agent in connection with the offering of
the Securities shall be deemed a representation and warranty by the
Company to the Placement Agent as to the matters covered
thereby.
3. Covenants . The
Company covenants and agrees with the Placement Agent as
follows:
(a) Reporting Obligations;
Exchange Act Compliance . The Company will (i) file the
Preliminary Prospectus and the Prospectus with the Commission
within the time periods specified by Rule 424(b) and Rules 430A,
430B and 430C, as applicable, under the Securities Act,
(ii) timely file any Issuer Free Writing Prospectus to the
extent required by Rule 433 under the Securities Act, if
applicable, (iii) file timely all reports and any definitive
proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the Prospectus
and during such period as the Prospectus would be required by law
to be delivered (whether physically or through compliance with Rule
172 under the Securities Act or any similar rule) (the “
Prospectus Delivery Period ”), and (iv) furnish
copies of each Issuer Free Writing Prospectus, if any, (to the
extent not previously delivered) to the Placement Agent prior to
11:00 a.m. Eastern time, on the second business day next succeeding
the date of this Agreement in such quantities as the Placement
Agent shall reasonably request.
(b) Abbreviated
Registration Statement . If the Company elects to rely upon
Rule 462(b) under the Securities Act, the Company shall file a
registration statement under Rule 462(b) with the Commission in
compliance with Rule 462(b) by 8:00 a.m., Eastern time, on the
business day next succeeding the date of this Agreement, and the
Company shall at the time of filing either pay to the Commission
the filing fee for such Rule 462(b) registration statement or give
irrevocable instructions for the payment of such fee pursuant to
the Rules and Regulations.
(c) Amendments or
Supplements . The Company will not, during the Prospectus
Delivery Period in connection with the offering contemplated by
this Agreement, file any amendment or supplement to the
Registration Statement or the Prospectus unless a copy thereof
shall first have been submitted to the Placement Agent within a
reasonable period of time prior to the filing thereof and the
Placement Agent shall not have reasonably objected thereto in good
faith.
(d) Free Writing
Prospectuses; Final Term Sheet . The Company will (i) not
make any offer relating to the Securities that would constitute an
“issuer free writing prospectus” (as defined in Rule
433) or tha
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