ELECTRO-OPTICAL SCIENCES,
INC.
2,312,384 Shares of Common Stock
and 346,858 Related Warrants
PLACEMENT AGENCY
AGREEMENT
JEFFERIES &
COMPANY, INC.
520 Madison Avenue
New York, New York 10022
Introductory. Electro-Optical Sciences, Inc., a Delaware
corporation (the “ Company ”), proposes to issue
and sell to certain purchasers (collectively, the “
Purchasers ”) 2,312,384 shares (the “
Shares ”) of Common Stock, par value $0.001 per share
(the “ Common Stock ”), of the Company and
related warrants to purchase 346,858 shares of Common Stock
(“ Warrants, ” together with the Shares, the
“ Securities ”). The Securities will be offered
and sold to the Purchasers in a private placement (the “
Placement ”) without being registered under the
Securities Act of 1933, as amended, and the rules and regulations
of the Securities and Exchange Commission (the “
Commission ”) thereunder (collectively, the “
Securities Act ”), in reliance upon Section 4(2)
(“ Section 4(2) ”) thereof and/or
Regulation D (“ Regulation D ”)
thereunder. Jefferies & Company, Inc. (“ Jefferies
”) has agreed to act as placement agent (the “
Placement Agent ”) in connection with the Placement,
subject to the terms, conditions and other provisions of this
Agreement.
The Securities are
to be sold to the Purchasers pursuant to a Securities Purchase
Agreement (the “ Purchase Agreement ”) to be
entered into by the Company and the Purchasers. The Warrants are to
be issued pursuant to the Purchase Agreement and will be
exerciseable into duly and validly issued, fully paid and
non-assessable shares (such shares, the “ Warrant
Shares ”) of Common Stock on the terms, and subject to
the conditions, set forth in the Warrant.
Holders of the
Securities will be entitled to the benefits of a Registration
Rights Agreement (the “ Resale Registration Rights
Agreement ”) to be entered into between the Company and
the Purchasers pursuant to which the Company will agree, among
other things, to file with the Commission a shelf registration
statement pursuant to Rule 415 under the Securities Act (the
“ Resale Registration Statement ”) covering the
resale of the Shares and Warrant Shares, and to use its reasonable
best efforts to cause the Resale Registration Statement to be
declared effective within the time periods specified in the Resale
Registration Rights Agreement.
This Agreement,
the Purchase Agreement, the Warrant and the Resale Registration
Rights Agreement are referred to herein collectively as the “
Transaction Documents ,” and the transactions
contemplated hereby and thereby are referred to herein collectively
as the “ Transactions .”
The Company hereby
confirms its agreement with the Placement Agent as
follows:
Section 1. Representations, Warranties and Agreements of
the Company and the Placement Agent.
A. Representations, Warranties and Agreements of the
Company . In addition to the other representations,
warranties and agreements contained in the Agreement, the Company
hereby represents, warrants and agrees with, the Placement Agent as
follows:
(a)
Placement Materials. The Company has not distributed and
will not distribute any materials in connection with the Placement
other than the drafts or definitive versions of the Transaction
Documents and the term sheet relating thereto.
(b) The
Placement Agency Agreement. The Company has all necessary power and
authority to execute and deliver this Placement Agency Agreement
and to perform its obligations hereunder; this Placement Agency
Agreement has been duly authorized by the Company and, when
executed and delivered by the Company, will constitute a valid and
binding agreement of the Company, enforceable against the Company
in accordance with its terms subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors’ rights generally and to
general principles of equity and except as rights to indemnity or
contribution hereunder may be limited by federal or state
securities laws.
(c)
Independent Accountants Eisner, LLP, who have expressed
their opinion with respect to the financial statements (which term
as used in this Agreement includes the related notes thereto)
included in the SEC Documents, are (i) independent public or
certified public accountants as required by the Exchange Act,
(ii) in compliance with the applicable requirements relating
to the qualification of accountants under Rule 2-01 of
Regulation S-X and (iii) a registered public accounting
firm as defined by the Public Company Accounting Oversight Board
whose registration has not been suspended or revoked and who has
not requested such registration to be withdrawn.
(d)
Stock Exchange Listing . The Company shall cause the Shares
and Warrant Shares to be listed on The NASDAQ Capital Market prior
to the effectiveness of the Resale Registration Statement and shall
use its reasonable best efforts to maintain the continued listing
of such Shares and Warrant Shares.
(e)
Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required . The Company’s
execution, delivery and performance of the Placement Agency
Agreement and the consummation of the transactions contemplated
thereby (i) will not result in any violation of the provisions
of the charter or by laws of the Company, (ii) will not
conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any security interest,
mortgage, pledge, lien, charge, encumbrance or adverse claim upon
any property or assets of the Company pursuant to, or require the
consent of any other party to any under any indenture, mortgage,
loan or credit agreement, note, contract, franchise, lease or other
instrument to which the Company is a party or by which it may be
bound, or to which any of the property or assets of the Company is
subject and (iii) will not result in any violation of any law,
administrative regulation or administrative or court decree
applicable to the Company for such
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conflicts,
breaches, defaults or violations as would not, individually or in
the aggregate, result in a Material Adverse Effect. No consent,
approval, authorization or other order of, or registration or
filing with, any court or other governmental or regulatory
authority or agency, is required for the Company’s execution,
delivery and performance of the Placement Agency Agreement and the
consummation of the transactions contemplated thereby.
(f)
QIBs and Accredited Investors . The Company will not offer
or sell any of the Securities to any person whom it reasonably
believes is not (i) a “qualified institutional
buyer” as defined in Rule 144A (“ QIBs
”) or (ii) an “accredited investor” (as
defined in clauses (1), (2), (3), (5), (6) and (7) of
Rule 501(a) of Regulation D).
(g)
Purchasers; Compliance With Rule 502(d) . Assuming the
accuracy of the representations and warranties of the Purchasers in
the Purchase Agreement, the Company will exercise reasonable care
to assure that the Purchasers are not “underwriters”
within the meaning of Section 2(a)(11) of the Securities Act
and, without limiting the foregoing, that such purchases will
comply with Rule 502(d) under the Securities Act.
(h) The
representations, warranties and agreements of the Company contained
in Section 3 of the Purchase Agreement are hereby incorporated
by reference in this Agreement, as if made directly by the Company
to the Placement Agent on the date of this Agreement, with the
understanding that:
(i)
any defined terms used in such incorporated sections shall have the
meanings given to them in this Agreement or, if no definition is
given to them in this Agreement, such defined terms will have the
meanings given to them in the incorporated sections;
(ii)
in the event of a conflict in meaning or defined term between the
incorporated sections and this Agreement, this Agreement shall
control; and
(iii)
this agreement is included in the definition of Transaction
Documents thereunder .
The Company
acknowledges that the Placement Agent and, for purposes of the
opinion to be delivered pursuant to Section 4 hereof, counsel
to the Company, will rely upon the accuracy and truthfulness of the
foregoing representations and hereby consents to such
reliance.
B. Representations, Warranties and Agreements of the
Placement Agent . The Placement Agent hereby represents,
warrants and covenants to, and agrees with, the Company as
follows:
(a)
No General Solicitation . The Placement Agent will not
solicit offers for the Company for the Shares and Warrants by means
of any form of general solicitation or general advertising in
violation of the Securities Act (including, without limitation,
Rule 502(c) of Regulation D thereunder) in connection with the
offering of the Shares and Warrants or in any manner involving a
public offering within the meaning of Section 4(2). The
Placement Agent will conduct the Placement in accordance with all
federal and state securities laws applicable to the offering of the
Shares and Warrants, and the Placement Agent will not distribute
any written
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information
that has not been furnished to it, and approved in writing, by the
Company; provided that for the purposes hereof, the Transaction
Documents and the term sheets relating thereto will be deemed
furnished by the Company.
(b)
Limitation on Offerees . The Placement Agent will solicit
offers for the Company for the Shares and Warrants only from
persons whom it reasonably believes to be (i) a QIB or
(ii) an “accredited investor.”
(c) This
Agreement has been duly authorized, executed and delivered by the
Placement Agent and constitutes a valid and binding obligation of
the Placement Agent, enforceable against the Placement Agent in
accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors’ rights generally and to general
principles of equity and except as rights to indemnity or
contribution hereunder may be limited by federal or state
securities laws.
(d) The
Placement Agent shall not deliver to any offeree, without the
written consent of the Company, any information concerning the
Placement other than the Transaction Documents and the term sheet
relating thereto. The Placement Agent shall deliver, or cause to be
delivered, the Transaction Documents to each offeree prior to the
sale of any Shares and Warrants to such offeree.
(e) The
Placement Agent is a registered broker dealer in good standing in
every state in which offers and sales of the Shares and Warrants
will be made.
(f) The
Placement Agent acknowledges that the Company has the right, in its
sole discretion, to reject any Purchaser.
Section 2. Engagement of Placement Agent; Fees;
Expenses.
(a)
Engagement of Jefferies . The Company hereby engages
Jefferies as the Placement Agent, and the Company hereby authorizes
Jefferies to act as such in connection with the Placement. On the
basis of the representations, warranties and agreements of the
Company contained in this Agreement and subject to, and in
accordance with, the terms, conditions and other provisions hereof,
Jefferies agrees to act as Placement Agent to place the Shares and
Warrants as contemplated by this Agreement. The Company
acknowledges that the Placement Agent’s engagement hereunder
is on a “best efforts” basis and does not constitute
any firm commitment or undertaking, express or implied, on the part
of the Placement Agent to purchase or place any of the Shares and
Warrants and does not constitute any representation, warranty or
agreement that any financing will be available to the
Company.
(b)
Placement Agent’s Fee and Expenses . As compensation
for the Placement Agent’s services hereunder, the Company
hereby agrees to pay the Placement Agent on the closing date of the
Placement (the “Closing Date”) a placement fee equal to
$500,000 (the “Placement Fee”). in cash payable by wire
transfer in same-day funds on the Closing Date to the account or
accounts designated to the Company in writing by the Placement
Agent. The Company shall not be responsible for reimbursing the
Placement Agent for any of its expenses in connection with its
engagement hereunder except that the Company agrees to reimburse
the Placement Agent for (i) for the reasonable fees and
expenses of its counsel up to a maximum of
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$75,000 in the
event that (A) Fidelity Investments (including any of its
affiliates) purchases Securities for an amount equal to or greater
than $6,000,000 and (B) Wasatch Funds (including any of its
affiliates) purchases Securities for an amount equal to or greater
than $1,000,000 and (ii) for the reasonable fees and expenses of
its counsel up to a maximum of $25,000 if only one of the
conditions specified in clauses (i)(A) and (i)(B) above is
satisfied; provided, however , that to the extent that the
Company rejects the participation of Wasatch (or any of its
affiliates) as a Purchaser pursuant to section 1B(f) above, Wasatch
shall be deemed to have purchased Securities in the requisite
amounts for the purposes of the Company’s obligation to
reimburse the Placement Agent in accordance with the foregoing
clauses (i)(A) and (i)(B); provided further, that to the
extent that the Company rejects the participation of Fidelity
Investments (or any of its affiliates) as a Purchaser pursuant to
section 1B(f) above, the Company agrees to reimburse the Placement
Agent for all of the fees and expenses of its counsel.
(c)
Placement Agent as Independent Contractor . The Company
hereby acknowledges that, in connection with the Transactions,
(i) the Placement, including the determination of the offering
price of the Shares and Warrants and any related discounts,
commissions and fees, shall be an arm’s-length commercial
transaction between the Company and the Purchasers, (ii) the
Placement Agent will be acting as an independent contractor and
will not be the agent or fiduciary of the Company or its
stockholders, creditors, employees, the Purchasers or any other
party, (iii) the Placement Agent shall not assume an advisory
or fiduciary responsibility in favor of the Company (irrespective
of whether the Placement Agent has advised or is currently advising
the Company on other matters) and the Placement Agent shall have no
obligation to the Company with respect to the Transactions except
as may be set forth expressly herein, (iv) the Placement Agent
and its affiliates may be engaged in a broad range of transactions
that involve interests that differ from those of the Company and
(v) the Placement Agent shall not provide any legal, accounting,
regulatory or tax advice with respect to the Transactions and the
Company shall consult its own legal, accounting, regulatory and tax
advisors to the extent it deems appropriate.
(d)
Company Responsible for Information . The Company is and
will be solely responsible for the contents of any and all written
or oral communications provided to any actual or prospective
purchaser of the Securities with the approval of the Company; and
the Company recognizes that the Placement Agent, in acting pursuant
to this Agreement, will be using information provided by the
Company and its agents and representatives and the Placement Agent
does not assume responsibility for and may rely, without
independent verification, on the accuracy and completeness of any
such information.
(e)
Notification of Potential Purchasers . In order to allow
proper coordination of the proposed Placement, during the term of
this engagement, the Company will promptly notify the Placement
Agent of any potential purchasers known to the Company to be
interested in purchasing any of the Securities, and the Company
will keep the Placement Agent fully and promptly informed of the
status of any discussions or negotiations between the Company and
any such potential purchasers.
(f)
Confidentiality . The Company agrees that any information or
advice rendered by the Placement Agent or any of its
representatives in connection with this
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engagement is
for the confidential use of the Company only and the Company will
not, and will not permit any third party to, disclose or otherwise
refer to such advice or information, or to the Placement Agent, in
any manner without the Placement Agent’s prior written
consent.
Section 3. Additional Covenants and Agreements of the
Company . The Company further covenants and agrees with the
Placement Agent as follows:
(a)
Placement Agent’s Review of Proposed Amendments and
Supplements . During the period beginning on the date hereof
and ending on the Closing Date, prior to amending or supplementing
any SEC Document, the Company shall furnish to the Placement Agent
for review a copy of each such proposed amendment or supplement,
and the Company shall not file any such proposed amendment or
supplement to which the Placement Agent shall have reasonably
objected.
(b)
Amendments and Supplements . If, prior to the Closing Date,
any event shall occur or condition exist as a result of which it is
necessary to amend or supplement any SEC Document in order to make
the statements therein, in the light of the circumstances, not
misleading, or if in the opinion of the Placement Agent or counsel
for the Placement Agent it is otherwise necessary to amend or
supplement any SEC Document to comply with law, the Company agrees
to promptly prepare and furnish at its own expense to the Placement
Agent, amendments or supplements to such SEC Document so that the
statements in such SEC Document as so amended or supplemented will
not, in the light of the circumstances, be misleading or so that
such SEC Document, as amended or supplemented, will comply with
law. Neither the Placement Agent’s consent to, or delivery
of, any such amendment or supplement shall constitute a waiver of
any of the Company’s obligations under this
Section 3(b).
(c)
Marketing; Due Diligence . The Company shall participate,
and cause its officers and representatives to participate, in the
Placement, including in the marketing of the Securities and meeting
with prospective purchasers of any of the Securities, and afford
prospective purchasers the opportunity to conduct customary due
diligence and make inquiries relevant to their investment decisions
regarding the Securities.
(d)
Blue Sky Compliance . The Company shall reasonably cooperate
with the Placement Agent and counsel for the Placement Agent to
qualify or register all of the Securities for sale under (or obtain
exemptions from the application of) the state securities or blue
sky laws of those jurisdictions designated by the Placement Agent,
shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for the
distribution of all of the Securities. The Company shall not be
required to qualify as a foreign corporation or to take any action
that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would
be subject to taxation as a foreign corporation. The Company will
advise the Placement Agent promptly of the suspension of the
qualification or registration of (or any such exemption relating
to) the Securities for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any
such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof
at the earliest possible moment.
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(e)
Use of Proceeds. The Company shall apply the net proceeds
from the sale of the Securities sold by it for the purposes as set
forth in the Purchase Agreement .
(f)
Transfer Agent. The Company shall maintain, at its expense,
a registrar and transfer agent for the shares of Common Stock
(including the Warrant Shares).
(g)
Agreement Not to Offer or Sell Additional Shares; Lock-Up
Agreements for Directors and Officers; Enforcement of Existing
Lock-Up Agreements .
(i)
During the period commencing on the date hereof and ending on the
earlier of (x) the 150 th day following the Closing Date and
(y) 30 days after the Effective Date (as defined in the
Resale Registration Rights Agreement) (the “ Lock-up
Period ”), the Company will not, without the prior
written consent of Jefferies (which consent may be withheld at the
sole discretion of Jefferies), directly or indirectly, sell, offer,
contract or grant any option to sell, pledge, transfer or establish
an open “put equivalent position” within the meaning of
Rule 16a-1(h) under the Exchange Act, or otherwise dispose of
or transfer, or announce the offering of, or file any registration
statement under the Securities Act in respect of, any shares of
Common Stock, options or warrants to acquire shares of Common Stock
or securities exchangeable or exercisable for or convertible into
shares of Common Stock (other than as contemplated by the
Transaction Documents with respect to the Securities); provided,
however, that the Company may issue shares of its Common Stock,
options to purchase its shares of Common Stock or shares of Common
Stock upon exercise of options, pursuant to any stock option, stock
bonus or other stock plan or arrangement described in the SEC
Documents.
(ii)
On or prior to the date hereof, the Company shall have furnished to
the Placement Agent an agreement in the form of
Exhibit A hereto from each director and officer and
each beneficial owner (as defined and determined according to
Rule 13d-3 under the Exchange Act) of five or more percent of
the outstanding issued share capital of the Company, and such
agreement shall be in full force and effect on the Closing
Date.
(h)
Existing Lock-Up Agreement . The Company will enforce all
existing agreements between the Company and any of its security
holders, if any, that prohibit the sale, transfer, assignment,
pledge or hypothecation of any of the Company’s securities in
connection with the Placement. In addition, the Company will direct
the transfer agent to place stop transfer restrictions upon any
such securities of the Company that are bound by such existing
“lock-up” agreements for the duration of the periods
contemplated in such agreements .
(i)
Investment Limitation . The Company shall not invest, or
otherwise use the proceeds received by the Company from its sale of
the Securities in such a manner as would require the Company to
register as an investment company under the Investment Company
Act.
(j)
No Stabilization or Manipulation . The Company will not
take, directly or indirectly, any action designed to or that might
be reasonably expected to cause or result in stabilization or
manipulation of the price of any of the Securities or any other
reference security, whether to facilitate the sale or resale of the
Securities or otherwise.
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Section 4. Conditions of the Placement Agent’s
Obligations . The obligations of the Placement Agent as
provided herein shall be subject to the accuracy of the
representations, warranties and agreements of the Company set forth
herein as of the date hereof and as of the Closing Date as though
then made, to the timely performance by the Company of its
covenants and other obligations hereunder, and to each of the
following conditions:
(a)
Accountant’s Comfort Letter (b) . On the
Closing Date, the Placement Agent shall have received from Eisner,
LLP a letter dated the Closing Date addressed to the Placement
Agent, in form and substance reasonably satisfactory to the
Placement Agent confirming that they are (A) registered independent
public or certified public accountants as required by the Exchange
Act and (B) in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01
of Regulation S-X.
(b)
No Material Adverse Change . For the period from and after
the date of this Agreement and prior to the Closing Date, in the
judgment of the Placement Agent, there shall have not occurred any
Material Adverse Change.
(c)
Opinions of Counsel for the Company . On the Closing Date,
the Placement Agent shall have received the opinion of counsel for
the Company, dated as of such Closing Date, in form and substance
reasonably satisfactory to the Placement Agent as set forth in
Exhibit B .
(d)
Officers’ Certificate . On the Closing Date, the
Placement Agent shall have received a written certificate executed
by the Chairman of the Board, Chief Executive Officer or President
of the Company and the Chief Financial Officer or Chief Accounting
Officer of the Company, dated as of the Closing Date, to the effect
that:
(i)
for the period from and after the date of this Agreement and prior
to the Closing Date, there has not occurred any Material Adverse
Change;
(ii)
the representations, warranties and covenants of the Company set
forth in Section 1(A) of this Agreement are true and correct with
the same force and effect as though expressly made on and as of
such Closing Date; and
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