Warrants to Purchase 2,925,300
Shares
ANADYS PHARMACEUTICALS,
INC.
PLACEMENT AGENT
AGREEMENT
Cowen and Company,
LLC
1221 Avenue of the Americas
New York, New York 10020
1.
Introductory .
Anadys Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), proposes to issue and sell to certain
purchasers (each a “Purchaser” and collectively, the
“Purchasers”) up to an aggregate of 8,358,000 shares of
common stock, $0.001 par value (the “Common Stock”), of
the Company and warrants (the “Warrants”) to purchase
2,925,300 shares of Common Stock in Units (each a
“Unit”) consisting of (i) one share of Common
Stock and (ii) one Warrant to purchase 0.35 of a share of
Common Stock. The aggregate of 8,358,000 shares of Common Stock so
proposed to be sold is hereinafter referred to as the
“Stock” and the number of shares of Common Stock
issuable upon exercise of the Warrants is hereinafter referred to
as the “Warrant Stock.” The Warrant Stock, together
with the Stock and the Warrants, are referred to herein as the
“Securities.” The Company hereby confirms that Cowen
and Company, LLC (“Cowen” or the “Placement
Agent”) acted as Placement Agent in the sale of the Units in
accordance with the terms and conditions of this Placement Agent
Agreement (this “Agreement”).
2.
Agreement to Act as
Placement Agent; Placement of Securities. On the basis
of the representations, warranties and agreements of the Company
contained herein, and subject to all the terms and conditions of
this Agreement:
(I) The Company
hereby acknowledges that the Placement Agent acted and is acting as
its sole agent to solicit offers for the purchase of all or part of
the Units from the Company in connection with the proposed offering
of the Units (the “Offering”). Until the Closing Date
(as defined in Section 4 hereof), the Company shall not,
without the prior written consent of the Placement Agent, solicit
or accept offers to purchase the Stock or the Warrants otherwise
than through the Placement Agent.
(II) The Company
hereby acknowledges that the Placement Agent, as agent of the
Company, used its best efforts to solicit offers to purchase the
Units from the Company and the Placement Agent, as agent of the
Company, agrees to continue to use its best efforts to solicit
offers to purchase the Units, on the terms and subject to the
conditions set forth in the Prospectus (as defined below). The
Placement Agent shall use commercially reasonable efforts to assist
the Company in obtaining performance by each Purchaser whose offer
to purchase the Units has been solicited by the Placement Agent and
accepted by the Company, including the prompt execution by such
Purchaser of a subscription agreement to purchase the Units, but
the Placement Agent shall not, except as otherwise provided in this
Agreement, be obligated to disclose the identity of any potential
purchaser or have any liability to the Company in the event any
such purchase is not consummated for any reason. Under no
circumstances will the Placement Agent be obligated to underwrite
or purchase any Stock or Warrants for its own account and, in
soliciting purchases of Units, the Placement Agent acted solely as
the Company’s agent and not as principal. Notwithstanding the
foregoing and except as otherwise provided in this
Section 2(II), it is understood and agreed that the Placement
Agent (or its affiliates) may, solely at its discretion and without
any obligation to do so, purchase the Units as
principal.
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(III) Subject to
the provisions of this Section 2, offers for the purchase of
Units were and may be solicited by the Placement Agent as agent for
the Company at such times and in such amounts as the Placement
Agent deemed or deems advisable. The Placement Agent shall
communicate to the Company, orally or in writing, each reasonable
offer to purchase Units received by it as agent of the Company. The
Company shall have the sole right to accept offers to purchase the
Units and may reject any such offer, in whole or in part. The
Placement Agent has the right, in its discretion, reasonably
exercised, without notice to the Company, to reject any offer to
purchase Units received by it, in whole or in part, and any such
rejection shall not be deemed a breach of this
Agreement.
(IV) The Units are
being sold to the Purchasers at a price of US$2.09375 per Unit. The
purchases of the Units by the Purchasers shall be evidenced by the
execution of subscription agreements by each of the Purchasers and
the Company.
(V) As
compensation for services rendered, on the Closing Date,
(A) the Company shall pay to the Placement Agent by wire
transfer of immediately available funds to an account or accounts
designated by the Placement Agent, an aggregate amount equal to
US$0.125625 per Unit.
(VI) No Units that
the Company has agreed to sell pursuant to this Agreement shall be
deemed to have been purchased and paid for, or sold by the Company,
until such Units shall have been delivered to the Purchaser thereof
against payment by such Purchaser. If the Company shall default in
its obligations to deliver Units to a Purchaser whose offer it has
accepted, the Company shall indemnify and hold the Placement Agent
harmless against any loss, claim, damage or expense arising from or
as a result of such default by the Company in accordance with the
procedures set forth in Section 8 herein.
3.
Representations and
Warranties of the Company
(I) The Company
represents and warrants to the Placement Agent and the Purchasers,
as of the date hereof, and agrees with the Placement Agent and the
Purchasers, that:
(a) A
registration statement of the Company on Form S-3 (File
No. 333-158342) (including all pre-effective amendments
thereto, the “Initial Registration Statement”) in
respect of the Securities has been filed with the Securities and
Exchange Commission (the “Commission”) pursuant to
Rule 415 under the Securities Act of 1933, as amended (the
“Securities Act”). The Company meets the requirements
for use of Form S-3 under the Securities Act, and the rules and
regulations of the Commission thereunder (the “Rules and
Regulations”). The Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore
delivered to the Placement Agent, and, excluding exhibits thereto,
have been declared effective by the Commission in such form and
meet the requirements of the Securities Act and the Rules and
Regulations. Other than (i) a registration statement, if any,
increasing the size of the Offering filed pursuant to Rule 462(b)
under the Securities Act and the Rules and Regulations (a
“Rule 462(b) Registration Statement”) and
(ii) the Prospectus (as defined below) contemplated by this
Agreement to be filed pursuant to Rule 424(b) of the Rules and
Regulations in accordance with Section 5 hereof and
(iii) any Issuer Free Writing Prospectus (as defined below),
no other document with respect to the offer and sale of the Units
has heretofore been filed with the Commission. The aggregate market
value of the Company’s voting and non-voting common equity
held by non-affiliates of the Company was at least $75 million
within 60 days prior to the date of filing of the Initial
Registration Statement. No stop order suspending the effectiveness
of the Initial Registration Statement, any post-effective amendment
thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose or pursuant to Section 8A
of the Securities Act has been initiated or, to the knowledge of
the Company, threatened by the Commission. The prospectus filed as
part of the registration statement in the form in which it has most
recently been filed with the Commission on or prior to the date of
this Agreement, is hereinafter called the “Base
Prospectus” and any prospectus subject to completion included
in the Registration Statement or any preliminary prospectus
(including any preliminary prospectus supplement) relating to the
Units filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations is hereinafter called a “Preliminary
Prospectus.” The various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, in
each case including all exhibits thereto and including (i) the
information contained in the Prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations and deemed by
virtue of Rules 430B and 430C under the Securities Act to be
part of the Initial Registration
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Statement at
the time it became effective and (ii) the documents
incorporated by reference in the Rule 462(b) Registration Statement
at the time the Rule 462(b) Registration Statement became
effective, are hereinafter collectively called the
“Registration Statements.” The base prospectus included
in the Initial Registration Statement at the time of effectiveness
thereof, as supplemented by the final prospectus supplement dated
the date hereof relating to the offer and sale of the Units, in the
form filed pursuant to and within the time limits described in Rule
424(b) under the Rules and Regulations, is hereinafter called the
“Prospectus.”
Any reference
herein to any Registration Statement, Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein. 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 after the
date of such Preliminary Prospectus or the Prospectus under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be. Any reference to any
amendment to the Registration Statements 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 date of this
Agreement that is incorporated by reference in the Registration
Statements.
(b) As of
the Applicable Time (as defined below) and as of the Closing Date,
as the case may be, neither (i) any General Use Free Writing
Prospectus(es) (as defined below) issued at or prior to the
Applicable Time and the Pricing Prospectus (as defined below),
considered together (collectively, the “General Disclosure
Package”), (ii) any individual Limited Use Free Writing
Prospectus (as defined below), nor (iii) the bona fide
electronic road show (as defined in Rule 433(h)(5) of the
Rules and Regulations that has been made available without
restriction to any person), when considered together with the
General Disclosure Package, included or will include any untrue
statement of a material fact or omitted or will 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, however , that the Company makes no
representations or warranties as to information contained in or
omitted from the Pricing Prospectus, in reliance upon, and in
conformity with, written information furnished to the Company by
the Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement
Agent’s Information as defined in Section 17. As used in
this paragraph (b) and elsewhere in this Agreement:
“Applicable
Time” means 10:00 P.M., New York time, on the date of this
Agreement or such other time as agreed to by the Company and the
Placement Agent.
“Pricing
Prospectus” means the Base Prospectus, as amended and
supplemented immediately prior to the Applicable Time, including
any document incorporated by reference therein and any prospectus
supplement deemed to be a part thereof, including the final
prospectus supplement dated the date hereof.
“Issuer Free
Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 of the Rules and
Regulations relating to the Stock 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) of the Rules and Regulations.
“General Use
Free Writing Prospectus” means any Issuer Free Writing
Prospectus that is identified on Schedule A to this
Agreement.
“Limited Use
Free Writing Prospectuses” means any Issuer Free Writing
Prospectus that is not a General Use Free Writing
Prospectus.
(c) No
order preventing or suspending the use of any Preliminary
Prospectus, any Issuer Free Writing Prospectus or the Prospectus
relating to the Offering has been issued by the Commission, and no
proceeding for that purpose or pursuant to Section 8A of the
Securities Act has been instituted or, to the knowledge of the
Company, threatened by the Commission, and any Preliminary
Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Securities Act and the
Rules and Regulations, and did 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 the
light of the circumstances
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under which
they were made, not misleading; provided, however , that the
Company makes no representations or warranties as to information
contained in or omitted from any Preliminary Prospectus, in
reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agent specifically for
inclusion therein, which information the parties hereto agree is
limited to the Placement Agent’s Information as defined in
Section 17.
(d) At the
respective times the Registration Statements and any amendments
thereto became or become effective, at the date of this Agreement
and at the Closing Date, each Registration Statement and any
amendments thereto conformed and will conform in all material
respects to the requirements of the Securities Act and the Rules
and Regulations and did not and will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, not misleading; and the Prospectus and any amendments or
supplements thereto, at the time the Prospectus or any amendment or
supplement thereto was issued and at the Closing Date, conformed
and will conform in all material respects to the requirements of
the Securities Act and the Rules and Regulations 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 light of the circumstances under which they were made,
not misleading; provided , however , that the
foregoing representations and warranties in this paragraph
(d) shall not apply to information contained in or omitted
from the Registration Statements or the Prospectus, or any
amendment or supplement thereto, in reliance upon, and in
conformity with, written information furnished to the Company by
the Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement
Agent’s Information (as defined in Section 17). The
Prospectus contains all required information under the Securities
Act with respect to the Units and the distribution of the
Units.
(e) Each
Issuer Free Writing Prospectus, if any, as of its issue date and at
all subsequent times through the completion of the offer and sale
of the Units or until any earlier date that the Company notified or
notifies the Placement Agent as described in Section 5, did
not, does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the
Registration Statement, Pricing 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, or included or would include an untrue
statement of a material fact or omitted or would omit 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
prevailing at the subsequent time, not misleading. The foregoing
sentence does not apply to statements in or omissions from any
Issuer Free Writing Prospectus in reliance upon, and in conformity
with, written information furnished to the Company by the Placement
Agent specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agent’s
Information (as defined in Section 17).
(f) The
documents incorporated by reference in the Prospectus, when they
were filed with the Commission, conformed 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 none of such documents contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, in the light of the circumstances under
which they were made; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents
are filed with the Commission, 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 any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
in the light of the circumstances under which they are
made.
(g) The
Company has not, directly or indirectly, distributed and will not
distribute any offering material in connection with the Offering
and sale of the Units other than any Preliminary Prospectus, the
Prospectus and other materials, if any, permitted under the
Securities Act and consistent with Section 5 below. The
Company will file with the Commission all Issuer Free Writing
Prospectuses (other than a “road show,” as described in
Rule 433(d)(8) of the Rules and Regulations) in the time and
manner required under Rules 163(b)(2) and 433(d) of the Rules and
Regulations.
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(h) At the
time of filing the Initial Registration Statement, any 462(b)
Registration Statement and any post-effective amendments thereto,
and at the date hereof, the Company was not, and the Company
currently is not, an “ineligible issuer,” as defined in
Rule 405 of the Rules and Regulations.
(i) The
Company and each of its subsidiaries (as defined in
Section 15) have been duly incorporated and are validly
existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation, are duly qualified to do
business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires
such qualification, and have all power and authority necessary to
own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to
so qualify or have such power or authority would not have,
singularly or in the aggregate, a material adverse effect on the
condition (financial or otherwise), results of operations, business
or prospects of the Company and its subsidiaries taken as a whole
(a “Material Adverse Effect”). The Company owns or
controls, directly or indirectly, only the following corporations,
partnerships, limited liability partnerships, limited liability
companies, associations or other entities: Anadys Pharmaceuticals
Europe GmbH and Anadys Development Limited.
(j) This
Agreement has been duly authorized, executed and delivered by the
Company.
(k) The
Company has the full right, power and authority to enter into the
Escrow Agreement (the “Escrow Agreement”) dated as of
the date hereof by and among the Company, the Placement Agent and
the escrow agent named therein (the “Escrow Agent”),
and to perform and to discharge its obligations thereunder. The
Escrow Agreement has been duly authorized, executed and delivered
by the Company, and constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms, except that
such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now
or hereafter in effect, affecting creditors’ rights
generally.
(l) The
Stock to be issued and sold by the Company to the Purchasers has
been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein and in the Escrow
Agreement, will be duly and validly issued, fully paid and
nonassessable and free of any preemptive or similar rights and will
conform to the description thereof contained in the General
Disclosure Package and the Prospectus. The Warrants have been duly
authorized, and when executed and delivered by the Company, will
constitute valid and binding obligations of the Company enforceable
in accordance with their terms, except that such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect,
affecting creditors’ rights generally. The Warrant Stock has
been duly authorized and reserved for issuance pursuant to the
terms of the Warrants, and when issued by the Company upon valid
exercise of the Warrants and payment of the exercise price, will be
duly and validly issued, fully paid and nonassessable and free of
any preemptive or similar rights and will conform to the
description thereof contained in the General Disclosure Package and
the Prospectus
(m) The
Company has an authorized capitalization as set forth in the
General Disclosure Package and the Prospectus, and all of the
issued shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable,
have been issued in compliance with federal and state securities
laws, and conform to the description thereof contained in the
General Disclosure Package and the Prospectus. None of the
outstanding shares of Common Stock was issued in violation of any
preemptive rights, rights of first refusal or other similar rights
to subscribe for or purchase securities of the Company. As of the
date set forth in the General Disclosure Package and the
Prospectus, there were no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other
rights to purchase, or equity or debt securities convertible into
or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately
described in the General Disclosure Package and the Prospectus.
Since such date, the Company has not issued any securities other
than Common Stock issued pursuant to the exercise of warrants or
upon the exercise of stock options previously outstanding under the
Company’s stock option plans and the issuance of Common Stock
pursuant to employee stock purchase plans.
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(n) All
the outstanding shares of capital stock of each subsidiary of the
Company have been duly authorized and validly issued, are fully
paid and nonassessable and, except to the extent set forth in the
General Disclosure Package and the Prospectus, are owned by the
Company directly or indirectly through one or more wholly-owned
subsidiaries, free and clear of any claim, lien, encumbrance,
security interest, restriction upon voting or transfer or any other
claim of any third party.
(o) The
execution, delivery and performance of this Agreement, the Escrow
Agreement and the Warrants by the Company, the issue and sale of
the Stock and issue of the Warrant Stock upon exercise of the
Warrants by the Company and the consummation of the transactions
contemplated hereby and thereby will not (i) conflict with or
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the
charter or by-laws of the Company or any of its subsidiaries or
(iii) result in any violation of any statute or any order,
rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or
any of their properties or assets.
(p) Except
for the registration of the Securities under the Securities Act and
such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act, and
applicable state securities laws, the Financial Industry Regulatory
Authority, Inc. (“FINRA”) and the Nasdaq Stock Market
LLC (“Nasdaq”) in connection with the purchase of the
Units and exercise of the Warrants by the Purchasers, no consent,
approval, authorization or order of, or filing or registration
with, any court or governmental agency or body is required for the
execution, delivery and performance of this Agreement, the Escrow
Agreement or the Warrants by the Company and the consummation of
the transactions contemplated hereby and thereby.
(q) Ernst
& Young LLP, who have certified certain financial statements
included or incorporated by reference in the Registration
Statements, the General Disclosure Package and the Prospectus, and
have audited the Company’s internal control over financial
reporting and management’s assessment thereof, is an
independent registered public accounting firm within the meaning of
Article 2-01 of Regulation S-X and the Public Company
Accounting Oversight Board (United States) (the
“PCAOB”).
(r) The
financial statements, together with the related notes, included or
incorporated by reference in the General Disclosure Package, the
Prospectus and in each Registration Statement fairly present the
financial position and the results of operations and changes in
financial position of the Company and its consolidated subsidiaries
at the respective dates or for the respective periods therein
specified. Such statements and related notes have been prepared in
accordance with generally accepted accounting principles in the
United States applied on a consistent basis except as may be set
forth in the Prospectus. The financial statements, together with
the related notes, included or incorporated by reference in the
General Disclosure Package and the Prospectus comply in all
material respects with the Securities Act and the Rules and
Regulations thereunder. No other financial statements or supporting
schedules or exhibits are required by the Securities Act or the
Rules and Regulations thereunder to be included or incorporated by
reference in the General Disclosure Package, the Prospectus or the
Registration Statements.
(s) Neither the Company nor any of its
subsidiaries has sustained, since the date of the latest audited
financial statements included or incorporated by reference in the
General Disclosure Package and the Prospectus, any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the General Disclosure Package
and the Prospectus; and, since such date, there has not been any
change in the capital stock (other than Common Stock of the Company
issued pursuant to the exercise of warrants or upon the exercise of
stock options previously outstanding under the Company’s
stock option plans and the issuance of Common Stock pursuant to
employee stock purchase plans) or long-term debt of the Company or
any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the business, general affairs, management, financial
position, stockholders’ equity or results of operations
of
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the Company and
its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the General Disclosure Package and the
Prospectus.
(t) Except
as set forth in the General Disclosure Package or the Prospectus,
there is no legal or governmental proceeding pending to which the
Company or any of its subsidiaries is a party or of which any
property or assets of the Company or any of its subsidiaries is the
subject that is required to be described in the Registration
Statements or the General Disclosure Package and is not described
therein, or that, singularly or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, might have a
Material Adverse Effect or would prevent or adversely affect the
ability of the Company to perform its obligations under this
Agreement or the Escrow Agreement; and to the best of the
Company’s knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others.
(u) Neither the Company nor any of its
subsidiaries (i) is in violation of its charter or by-laws,
(ii) is in default in any respect, and no event has occurred
which, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which it
is a party or by which it is bound or to which any of its property
or assets is subject or (iii) is in violation in any respect
of any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject except
any violations or defaults that, in the cases of clauses
(ii) and (iii) of this section (u), singularly or in the
aggregate, would not have a Material Adverse Effect.
(v) The
Company and each of its subsidiaries possess all licenses,
certificates, authorizations and permits issued by, and have made
all declarations and filings with, the appropriate state, federal
or foreign regulatory agencies or bodies that are necessary or
desirable for the ownership of their respective properties or the
conduct of their respective businesses as described in the General
Disclosure Package and the Prospectus except where any failures to
possess or make the same, singularly or in the aggregate, would not
have a Material Adverse Effect, and the Company has not received
notification of any revocation or modification of any such license,
certificate, authorization or permit and has no reason to believe
that any such license, certificate, authorization or permit will
not be renewed.
(w) Neither the Company nor any of its
subsidiaries is or, after giving effect to the Offering of the
Units and the application of the proceeds thereof as described in
the General Disclosure Package and the Prospectus, will become an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.
(x) Neither the Company nor, to the
knowledge of the Company, any of its officers, directors or
affiliates has taken or will take, directly or indirectly, any
action designed or intended to stabilize or manipulate the price of
any security of the Company, or which caused or resulted in, or
which might in the future reasonably be expected to cause or result
in, stabilization or manipulation of the price of any security of
the Company.
(y) The
Company and its subsidiaries own or possess the right to use all
patents, trademarks, trademark registrations, service marks,
service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights described in the General
Disclosure Package and the Prospectus as being owned by them for
the conduct of their respective businesses as now conducted and as
currently proposed to be conducted, and the Company is not aware of
any claim to the contrary or any challenge by any other person to
the rights of the Company and its subsidiaries with respect to the
foregoing. To the Company’s knowledge, the Company’s
business as now conducted and as proposed to be conducted does not
and will not infringe or conflict with any patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses or
other intellectual property or franchise right of any person except
as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. Except as
described in the General Disclosure Package and the Prospectus, no
claim has been made against the Company alleging the infringement
by the Company of any patent, trademark, service mark, trade name,
copyright, trade secret, license in or other intellectual property
right or franchise right of any person, except as would not,
individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
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(z) The
Company and each of its subsidiaries have good and marketable title
in fee simple to, or have valid rights to lease or otherwise use,
all items of real or personal property that are material to the
business of the Company and its subsidiaries taken as a whole, in
each case free and clear of all liens, encumbrances, claims and
defects that may result in a Material Adverse Effect.
(aa) No
labor disturbance by the employees of the Company or any of its
subsidiaries exists or, to the best of the Company’s
knowledge, is imminent that might be expected to have a Material
Adverse Effect. Except as set forth in the General Disclosure
Package or the Prospectus, the Company is not aware that any key
employee or significant group of employees of the Company or any
subsidiary voluntarily plans to terminate employment with the
Company or any such subsidiary.
(bb) No
“prohibited transaction” (as defined in
Section 406 of the Employee Retirement Income Security Act of
1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), or
Section 4975 of the Internal Revenue Code of 1986, as amended
from time to time (the “Code”)) or “accumulated
funding deficiency” (as defined in Section 302 of ERISA)
or any of the events set forth in Section 4043(b) of ERISA (other
than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with
respect to any employee benefit plan of the Company or any of its
subsidiaries that could have a Material Adverse Effect; each such
employee benefit plan is in compliance in all material respects
with applicable law, including ERISA and the Code; the Company has
not incurred and does not expect to incur liability under Title IV
of ERISA with respect to the termination of, or withdrawal from,
any “pension plan”; and each “pension plan”
(as defined in ERISA) 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 could cause
the loss of such qualification.
(cc) There
has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any
kind of toxic or other wastes or other hazardous substances by, due
to, or caused by the Company or any of its subsidiaries (or, to the
best of the Company’s knowledge, any other entity for whose
acts or omissions the Company or any of its subsidiaries is or may
be liable) upon any of the property now or previously owned or
leased by the Company or any of its subsidiaries, or upon any other
property, in violation of any statute or any ordinance, rule,
regulation, order, judgment, decree or permit or which would, under
any statute or any ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any
liability, except for any violation or liability that would not
have, singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; there has been no disposal,
discharge, emission or other release of any kind onto such property
or into the environment surrounding such property of any toxic or
other wastes or other hazardous substances with respect to which
the Company or any of its subsidiaries have knowledge, except for
any such disposal, discharge, emission, or other release of any
kind that would not have, singularly or in the aggregate with all
such discharges and other releases, a Material Adverse
Effect.
(dd) The
Company and its subsidiaries each (i) has filed all necessary
federal, state and foreign income and franchise tax returns,
(ii) has paid all federal state, local and foreign taxes due
and payable for which it is liable, and (iii) does not have
any tax deficiency or claims outstanding or assessed or, to the
best of the Company’s knowledge, proposed against it that
could reasonably be expected to have a Material Adverse
Effect.
(ee) The
Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate
for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies
engaged in similar businesses in similar industries.
(ff) The
Company and each of its subsidiaries maintains a system of internal
control over financial reporting (as such term is defined in
Rule 13a-15 of the General Rules and Regulations under the
Exchange Act (the “Exchange Act Rules”)) that complies
with the requirements of the Exchange Act and has been designed 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 conformity with GAAP
and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s
general or specific authorization; and
9
(iv) the
recorded accountability for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with
respect to any differences. The Company maintains effective
internal control over financial reporting (as such term is defined
in Rule 13a-15 of the Exchange Act Rules). Except as described
in the General Disclosure Package, since the end of the
Company’s most recent audited fiscal year, there has been (A)
no material weakness in the Company’s internal control over
financial reporting (whether or not remediated) and (B) no
change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over
financial reporting. The Company maintains disclosure controls and
procedures (as such is defined in Rule 13a-15 of the Exchange
Act Rules) that comply with the requirements of the Exchange Act;
such disclosure controls and procedures have been designed to
ensure that information required to be disclosed by the Company and
its subsidiaries is accumulated and communicated to the
Company’s management, including the Company’s principal
executive officer and principal financial officer by others within
those entities, such disclosure controls and procedures are
effective in all material respects to perform the functions for
which they were established.
(gg) The
minute books of the Company and each of its subsidiaries that would
be a “significant subsidiary” within the meaning of
Rule 1-02(w) of Regulation S-X have been made available
to the Placement Agent and counsel for the Placement Agent, and
such books (i) contain a complete summary of all meetings and
actions of the board of directors (including each board committee)
and stockholders of the Company and each of such subsidiaries since
the time of its respective incorporation or organization through
the date of the latest meeting and action, and (ii) accurately
in all material respects reflect all transactions authorized in
such minutes or written consents.
(hh) There
is no franchise, lease, agreement or document required by the
Securities Act or by the Rules and Regulations to be described in
the General Disclosure Package, the Prospectus or any document
incorporated therein, or to be filed as an exhibit to the
Registration Statements that is not described or filed therein as
required; and all descriptions of any such franchises, leases,
agreements or documents contained in the General Disclosure
Package, the Prospectus or any document incorporated therein are
accurate and complete descriptions of such documents in all
material respects. Other than as described in the General
Disclosure Package and the Prospectus, no such franchise, lease,
agreement or document has been suspended or terminated for
convenience or default by the Company or any of the other parties
thereto, and the Company has not received notice or any other
knowledge of any such pending or threatened suspension or
termination, except for such pending or threatened suspensions or
terminations that would not reasonably be expected to, singularly
or in the aggregate, have a Material Adverse Effect.
(ii) No
relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, that is
required to be described in the General Disclosure Package and the
Prospectus and that is not so described.
(jj) No
person or entity has the right to require registration of shares of
Common Stock or other securities of the Company or any of its
subsidiaries because of the filing or effectiveness of the
Registration Statements or otherwise, except for persons and
entities who have expressly waived such right in writing or who
have been given timely and proper written notice and have failed to
exercise such right within the time or times required under the
terms and conditions of such right.
(kk) Neither the Company nor any of its
subsidiaries own any “margin securities” as that term
is defined in Regulation U of the Board of Governors of the
Federal Reserve System (the “Federal Reserve Board”),
and none of the proceeds of the sale of the Stock or the exercise
of the Warrants will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security, for the
purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Stock to be
considered a “purpose credit” within the meanings of
Regulation T, U or X of the Federal Reserve Board.
(ll) Other
than any agreements between the Company and the Placement Agent,
neither the Company nor any of its subsidiaries is a party to any
agreement or understanding with any person that would give rise to
a valid claim against the Company or the Placement Agent for a
brokerage commission, finder’s fee or like
10
payment in
connection with the offering and sale of the Units or any
transaction contemplated by this Agreement.
(mm) The
Company, within 60 days of the date hereof and within
60 days of the filing of the Initial Registration Statement,
had a non-affiliate, public common equity float of at least
$100 million and annual trading volume of at least three
million shares.
(nn) No
forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act)
contained in either the General Disclosure Package or the
Prospectus has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
(oo) The
Stock and the Warrant Stock has been duly authorized for quotation
on the Nasdaq’s Global Market
(“Nasdaq”).
(pp) The
Company is in compliance with all applicable provisions of the
Sarbanes-Oxley Act of 2002 and all rules and regulations
promulgated thereunder or implementing the provisions thereof (the
“Sarbanes-Oxley Act”).
(qq) The
Company is in compliance with all applicable corporate governance
requirements set forth in the Nasdaq Rules.
(rr) Neither the Company nor any of its
subsidiaries nor, to the Company’s knowledge, any employee or
agent of the Company or any subsidiary, has (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.
(ss) There
are no transactions, arrangements or other relationships between
and/or among the Company, any of its affiliates (as such term is
defined in Rule 405 of the Securities Act) and any
unconsolidated entity, including, but not limited to, any
structured finance, special purpose or limited purpose entity, that
could reasonably be expected to materially affect the
Company’s liquidity or the availability of or requirements
for its capital resources, which transaction, arrangement or other
relationship is required to be described in the General Disclosure
Package, the Prospectus or any document incorporated therein and
that has not been described as required.
(tt) There
are no outstanding loans, advances (except normal advances for
business expense in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company, except as disclosed in the
General Disclosure Package and the Prospectus.
(uu) The
operations of the Company and its subsidiaries 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, applicable
money laundering statutes and applicable rules and regulations
thereunder (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 or any of its subsidiaries with respect to the Money
Laundering Laws is pending, or to the Company’s knowledge,
threatened.
(vv) Neither the Company nor any of its
subsidiaries nor, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and, to the
Company’s knowledge, the Company will not directly or
indirectly use the proceeds of the Offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, 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.
11
4. Purchase, Sale and Delivery of the
Stock. The Company, the Placement Agent, and the Escrow
Agent have entered into the Escrow Agreement, pursuant to which an
escrow account will be established, at the Company’s expense,
for the benefit of the Purchasers (the “Escrow
Account”). Prior to the Closing Date (defined below),
(i) unless otherwise agreed by the Company and the Placement
Agent, each of the Purchasers will deposit an amount equal to the
price per Unit as shown on the cover page of the Prospectus (as
hereinafter defined) multiplied by the number of shares of Units
purchased by it in the Escrow Account, and (ii) the Escrow
Agent will notify the Company and the Placement Agent in writing
whether the Purchasers have deposited in the Escrow Account funds
in the amount equa
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